EXECUTION COPY
--------------
AGREEMENT AND PLAN OF MERGER
Among
Tyco International, Ltd.,
T3 Acquisition Corp.
and
ElectroStar, Inc.
Dated as of November 27, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................. 2
SECTION 1.02. Company Actions........................................... 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger................................................ 4
SECTION 2.02. Closing................................................... 4
SECTION 2.03. Effective Time............................................ 4
SECTION 2.04. Effects of the Merger..................................... 4
SECTION 2.05. Articles of Incorporation and By-laws..................... 4
SECTION 2.06. Directors................................................. 5
SECTION 2.07. Officers.................................................. 5
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock................................... 5
SECTION 3.02. Exchange of Certificates.................................. 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization.............................................. 7
SECTION 4.02. Subsidiaries.............................................. 7
SECTION 4.03. Capitalization............................................ 7
SECTION 4.04. Authority................................................. 8
SECTION 4.05. Consents and Approvals; No Violations..................... 8
SECTION 4.06. SEC Reports and Financial Statements...................... 9
SECTION 4.07. Absence of Certain Changes or Events...................... 9
SECTION 4.08. No Undisclosed Liabilities................................ 10
SECTION 4.09. Information Supplied...................................... 10
SECTION 4.10. Benefit Plans............................................. 10
SECTION 4.11. Other Compensation Arrangements........................... 11
SECTION 4.12. Litigation................................................ 11
SECTION 4.13. Permits; Compliance with Law.............................. 11
SECTION 4.14. Tax Matters............................................... 12
SECTION 4.15. State Takeover Statutes................................... 13
SECTION 4.16. Brokers; Fees and Expenses................................ 13
SECTION 4.17. Intellectual Property..................................... 14
SECTION 4.18. Vote Required............................................. 14
SECTION 4.19. Labor Matters............................................. 15
(i)
SECTION 4.20. Title to Property......................................... 15
SECTION 4.21. Environmental Matters..................................... 15
SECTION 4.22. Accounts Receivable....................................... 16
SECTION 4.23 Customers................................................. 16
SECTION 4.24 Interested Party Transactions............................. 16
SECTION 4.25 Absence of Certain Payments............................... 16
SECTION 4.26 Insurance................................................. 16
SECTION 4.27 Product Liability and Recalls............................. 16
SECTION 4.28 Inventory................................................. 17
SECTION 4.29 Full Disclosure........................................... 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 5.01. Organization.............................................. 17
SECTION 5.02. Authority................................................. 17
SECTION 5.03. Consents and Approvals; No Violations..................... 18
SECTION 5.04. Information Supplied...................................... 18
SECTION 5.05. Interim Operations of Sub................................. 18
SECTION 5.06. Brokers................................................... 18
SECTION 5.07. Financing................................................. 18
SECTION 5.08. Board Determination....................................... 18
SECTION 5.09. Full Disclosure........................................... 19
ARTICLE VI
COVENANTS
SECTION 6.01. Covenants of the Company.................................. 19
SECTION 6.02. No Solicitation........................................... 21
SECTION 6.03. Other Actions............................................. 22
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Shareholder Approval; Preparation of Proxy Statement...... 23
SECTION 7.02. Access to Information..................................... 23
SECTION 7.03. Reasonable Efforts........................................ 23
SECTION 7.04. Company Stock Options; Plans.............................. 24
SECTION 7.05. Directors................................................. 24
SECTION 7.06. Fees and Expenses......................................... 25
SECTION 7.07. Indemnification; Insurance................................ 25
SECTION 7.08 Employment and Benefit Arrangements....................... 25
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger...................................... 26
ARTICLE IX
(ii)
TERMINATION AND AMENDMENT
SECTION 9.01. Termination............................................... 26
SECTION 9.02. Effect of Termination..................................... 28
SECTION 9.03. Amendment................................................. 28
SECTION 9.04. Extension; Waiver......................................... 28
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Nonsurvival of Representations and Warranties............. 28
SECTION 10.02. Notices................................................... 28
SECTION 10.03. Interpretation............................................ 29
SECTION 10.04. Counterparts.............................................. 30
SECTION 10.05. Entire Agreement; Third Party Beneficiaries............... 30
SECTION 10.06. Governing Law............................................. 30
SECTION 10.07. Publicity................................................. 30
SECTION 10.08. Assignment................................................ 30
SECTION 10.09. Enforcement............................................... 30
Exhibit A - Conditions of the Offer
(iii)
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of November
27, 1996, among Tyco International, Ltd., a Massachusetts corporation
("PARENT"), T3 Acquisition Corp., a Florida corporation and a wholly owned
subsidiary of Parent ("SUB"), and ElectroStar, Inc., a Florida corporation
(the "COMPANY").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "OFFER") to purchase all the outstanding shares of
Common Stock, par value $0.01 per share, of the Company (the "COMPANY COMMON
STOCK"; the outstanding shares of Company Common Stock being hereinafter
collectively referred to as the "SHARES") at a purchase price of $14.00 per
share (the "OFFER PRICE"), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this
Agreement; and the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger (as defined below), recommending that the
Company's shareholders accept the Offer and approving the acquisition of
Shares by Sub pursuant to the Offer and the Shareholder Agreement (as defined
below); and
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have each approved the merger of Sub into the Company (the "MERGER"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each share of Company Common Stock, other than shares of Company Common Stock
owned directly or indirectly by Parent or the Company, will be converted into
the right to receive the price per share paid in the Offer; and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Parent, Sub and certain
shareholders of the Company are entering into a Shareholder Agreement (the
"SHAREHOLDER AGREEMENT") pursuant to which (i) if necessary to validly tender
shares in the Offer, the sole holder of the Company's outstanding shares of
Class B non-voting common stock, par value $0.01 per share (the "CLASS B
COMMON STOCK"), has agreed to convert such shares into shares of Company
Common Stock, and (ii) each of such holder and certain other shareholders
have, among other things, agreed to tender all of its Shares in the Offer,
upon the terms and subject to the conditions set forth in the Shareholder
Agreement; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER.
(a) Subject to the provisions of this Agreement, as promptly as
practicable but in no event later than five business days after the date of
the public announcement by Parent and the Company of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer. The obligation of
Sub to, and of Parent to cause Sub to, commence the Offer and accept for
payment, and pay for, any Shares tendered pursuant to the Offer shall be
subject only to those conditions set forth in Exhibit A (the "OFFER
CONDITIONS") (any of which may be waived in whole or in part by Sub in its
sole discretion, provided that, without the consent of the Company, Sub shall
not waive the Minimum Condition (as defined in Exhibit A)) and to the terms
and conditions of this Agreement. The initial scheduled expiration date of
the Offer shall be 20 business days after the Offer is commenced. Sub
expressly reserves the right to modify the terms of the Offer, except that,
without the consent of the Company, Sub shall not (and Parent shall not cause
Sub to) (i) reduce the number of Shares subject to the Offer, (ii) reduce the
Offer Price, (iii) add to the Offer Conditions, (iv) except as provided in
the next sentence, extend the expiration date of the Offer, (v) change the
form of consideration payable in the Offer or (vi) amend any other term of
the Offer in any manner adverse to the holders of the Shares. Notwithstanding
the foregoing, Sub may, without the consent of the Company, (A) extend the
Offer, if at the scheduled or extended expiration date of the Offer any of
the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived (PROVIDED, HOWEVER, that the
expiration date may not be extended beyond January 31, 1997 without the
consent of the Company), (B) extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer, or (C)
if all Offer Conditions are satisfied or waived but the number of shares of
Common Stock tendered is less than 80% of the then outstanding number of
shares of Company Common Stock (determined on a fully diluted basis for all
outstanding stock options, Class B Common Stock and any other rights to
acquire Shares), extend the Offer for an aggregate period of not more than 10
business days (for all such extensions) beyond the latest expiration date
that would be permitted under clause (A) or (B) of this sentence. Subject to
the terms and conditions of the Offer and this Agreement, Sub shall, and
Parent shall cause Sub to, accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon
as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (the "SCHEDULE
14D-1") with respect to the Offer, which shall contain an offer to purchase
and a related letter of transmittal and summary advertisement (such Schedule
14D-1 and the documents included therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). Parent and Sub agree that the Offer Documents shall comply as to
form in all material respects with the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or
given to the Company's shareholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to
information supplied by the Company or any of its shareholders specifically
for inclusion or incorporation by reference in the Offer Documents. Parent,
Sub and the Company each agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect,
and Parent and Sub further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of Shares, in each
case as and to the extent required by applicable Federal securities laws.
The Company and its counsel shall be given reasonable opportunity to review
and comment upon the Offer Documents prior to their filing with
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the SEC or dissemination to the shareholders of the Company. Parent and Sub
agree to provide the Company and its counsel in writing any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the
Offer.
SECTION 1.02. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly
called and held, duly and unanimously adopted resolutions (i) approving this
Agreement, the Offer and the Merger (and such approval is sufficient to
render inapplicable the provisions of Sections 607.0901 and 607.0902 of the
Florida Business Corporations Act (the "CORPORATION LAW")), (ii) determining
that the terms of the Offer and the Merger are fair, from a financial point
of view, to, and in the best interests of, the Company's shareholders, and
(iii) recommending that the Company's shareholders accept the Offer, tender
their shares pursuant to the Offer and approve and adopt this Agreement. The
Company represents that its Board of Directors has received the opinion of
Alex. Xxxxx & Sons Incorporated that the proposed consideration to be
received by the holders of Shares pursuant to the Offer and the Merger is
fair, from a financial point of view, to such holders, and a complete and
correct signed copy of such opinion has been delivered by the Company to
Parent.
(b) On the date the Offer Documents are filed with the SEC, or promptly
thereafter, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9,
as amended from time to time, the "SCHEDULE 14D-9") containing the
recommendation described in paragraph (a) and shall mail the Schedule 14D-9
to the shareholders of the Company. The Schedule 14D-9 shall comply as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or
warranty is made by the Company with respect to information supplied by
Parent or Sub specifically for inclusion in the Schedule 14D-9. Each of the
Company, Parent and Sub agrees promptly to correct any information provided
by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended
or supplemented to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to shareholders of the Company. The Company
agrees to provide Parent and its counsel in writing any comments the Company
or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall cause
its transfer agent to furnish Sub promptly with mailing labels containing the
names and addresses of the record holders of Shares as of a recent date and
of those persons becoming record holders subsequent to such date, together
with copies of all lists of shareholders, security position listings and
computer files and all other information in the Company's possession or
control regarding the beneficial owners of Shares, and shall furnish to Sub
such information and assistance (including updated lists of shareholders,
security position listings and computer files) as Parent may reasonably
request in communicating the Offer to the Company's shareholders. Subject to
the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents
necessary to consummate the
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Merger, Parent and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will, upon request, deliver, and will use
their best efforts to cause their agents to deliver, to the Company all
copies of such information then in their possession or control.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Corporation Law, Sub
shall be merged with and into the Company at the Effective Time (as defined
in Section 2.03). Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the Corporation Law. At
the election of Parent, any direct or indirect wholly owned subsidiary (as
defined in Section 10.03) of Parent may be substituted for Sub as a
constituent corporation in the Merger. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect the
foregoing.
SECTION 2.02. CLOSING. The closing of the Merger will take place at
10:00 a.m. (New York time) on a date to be specified by Parent or Sub, which
shall be no later than the second business day after satisfaction or waiver
of the conditions set forth in Article VIII (the "CLOSING DATE"), at the
offices of Kramer, Levin, Naftalis & Xxxxxxx, counsel to Parent, unless
another date, time or place is agreed to in writing by the parties hereto.
SECTION 2.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "CERTIFICATE OF MERGER") executed in accordance with the
relevant provisions of the Corporation Law and shall make all other filings
or recordings required under the Corporation Law. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Florida Secretary of State, or at such other time as Sub and the Company
shall agree should be specified in the Certificate of Merger (the time the
Merger becomes effective being hereinafter referred to as the "EFFECTIVE
TIME").
SECTION 2.04. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the applicable provisions of the Corporation Law.
SECTION 2.05. ARTICLES OF INCORPORATION AND BY-LAWS.
(a) The Articles of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law; except (A) that Article III
thereof shall be amended and restated to provide in its entirety that the
number of shares of capital stock that the Surviving Corporation shall be
authorized to issue shall consist of 1,000 shares of common stock, (B)
Article V thereof shall be amended and restated to provide in its entirety
that the Surviving Corporation's Board shall consist of not less than three
nor more than eleven members, with the exact number to be fixed from time to
time by resolution of the Board, and (C) Article VIII thereof shall be
eliminated.
(b) The by-laws of the Sub as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
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SECTION 2.06. DIRECTORS. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. OFFICERS. The officers of the Company immediately prior
to the Effective Time and such other persons as Parent shall designate shall
be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the
Surviving Corporation.
(b) CANCELLATION OF PARENT OWNED STOCK. Each share of Company Common
Stock that is owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) CANCELLATION OF COMPANY OWNED STOCK. All Shares (as hereinafter
defined) that are held in the treasury of the Company or by any wholly owned
subsidiary of the Company and any Shares owned by Parent, Sub or any other
wholly owned subsidiary of Parent shall be cancelled and no consideration
shall be delivered in exchange therefor.
(d) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 3.01(e),
each Share (and each share of Class B Common Stock, if any shall be
outstanding, which, for purposes of this Article III, shall be included in
the term "Shares") issued and outstanding (other than Shares to be canceled
in accordance with Section 3.01(b)) shall be converted into the right to
receive from the Surviving Corporation in cash, without interest, the price
paid in the Offer (the "MERGER CONSIDERATION"). As of the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration,
without interest.
(e) SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a person
(a "DISSENTING SHAREHOLDER") who objects to the Merger and complies with all
the provisions of Florida law concerning the right of holders of Company
Common Stock to dissent from the Merger and require appraisal of their Shares
("DISSENTING SHARES") shall not be converted as described in Section 3.01(c)
but shall become the right to receive such consideration as may be determined
to be due to such Dissenting Shareholder pursuant to the laws of the State of
Florida. If, after the Effective Time, such Dissenting Shareholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to the Corporation Law, his Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of any
demands for appraisal of Shares received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect
to any such demands.
SECTION 3.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent shall designate a
bank or trust company to act as paying agent in the Merger (the "PAYING
AGENT"), and, from time to time on, prior to or after the Effective Time,
Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the times necessary
for the payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to Section 3.01 (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent).
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (the "CERTIFICATES"), (i) a letter of transmittal (which
shall specify
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that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Paying Agent or to such other agent
or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01, and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate (other than Certificates representing Dissenting Shares) shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which
the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.01. No interest will be paid or will accrue
on the cash payable upon the surrender of any Certificate. In the event any
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the payment of the Merger
Consideration in respect of the shares represented by such Certificate,
require the owner of such lost, stolen or destroyed Certificate 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 Paying
Agent.
(c) No FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash paid
upon the surrender of Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates.
At the Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article III.
(d) NO LIABILITY. At any time following the expiration of six months
after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to any applicable abandoned property, escheat or similar law) only as
general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. ORGANIZATION. The Company and each of its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority could not be reasonably expected to (i) prevent or
materially delay the consummation of the Offer and/or the Merger or (ii) have
a material adverse effect (as defined in Section 10.03) on the Company. The
Company and each of its subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing
could not reasonably be expected to have a material adverse effect on the
Company or prevent or materially delay the consummation of the Offer and/or
the Merger. The Company has made available to Parent complete and correct
copies of its Articles of Incorporation and By-laws and the certificates of
incorporation and by-laws (or similar organizational documents) of its
subsidiaries.
SECTION 4.02. SUBSIDIARIES. The only subsidiaries of the Company are
Electro-Etch Circuits, Inc., a California and Xxxxxxx Astro Circuits, Inc., a
Utah corporation (the "Subsidiaries"). All the outstanding shares of capital
stock of each such subsidiary are owned by the Company, by another wholly
owned subsidiary of the Company or by the Company and another wholly owned
subsidiary of the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "LIENS"), except for a first priority lien granted to Xxxxxx
Financial, Inc. upon the capital stock of the Subsidiaries pursuant to a
Credit Agreement dated as of January 31, 1996, and are duly authorized,
validly issued, fully paid and nonassessable. Except for the capital stock of
its subsidiaries and the Company's ownership interest in certain incidental
investments (the aggregate book value of which do not exceed $5,000), the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
SECTION 4.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 21,782,934 shares of Company Common Stock, 782,934 shares
of Class B Common Stock and 1,000,000 shares of preferred stock, par value
$0.01 per share ("COMPANY PREFERRED STOCK"). At the close of business on
November 20, 1996, 1996, (i) 6,916,360 shares of Company Common Stock were
issued and outstanding, (ii) 620,737 shares of Class B Common Stock were
issued and outstanding, (iii) 499,129 shares of Company Common Stock were
reserved for issuance upon exercise of outstanding Company Stock Options (as
defined in Section 7.04), and (iv) no shares of Company Preferred Stock were
issued and outstanding. Except as set forth above, and except for shares
issued upon the exercise of Company Stock Options since November 20, 1996, as
of the date of this Agreement, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of the Company are, and all shares
which may be issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are
no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Company may vote.
Except as set forth above, as of the date of this Agreement, there are not any
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
7
securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there are not
any outstanding contractual obligations (i) of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or (ii) of the Company to vote or to dispose of any
shares of the capital stock of any of its subsidiaries. Except as set forth
in Section 4.03 of the disclosure schedule annexed hereto (the "DISCLOSURE
SCHEDULE"), there are no restrictions on the right of the Company to vote or
dispose of any shares of the capital stock of its subsidiaries.
SECTION 4.04. AUTHORITY. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of the terms of this Agreement by the holders of a
majority of the Shares (the "COMPANY SHAREHOLDER APPROVAL")). The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Shareholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of
Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally.
SECTION 4.05. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Schedule 14D-9 and a proxy statement relating to
any required approval by the Company's shareholders of this Agreement (the
"PROXY STATEMENT")), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), and Sections 607.1103 - 607.1105 of the
Corporation Law, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the Articles of Incorporation or By-laws of the
Company or of the similar organizational documents of any of its subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "GOVERNMENTAL
ENTITY") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings could not reasonably be expected
to have a material adverse effect on the Company or prevent or materially
delay the consummation of the Offer and/or the Merger), (iii) except as set
forth in Section 4.05 of the Disclosure Schedule, result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be
bound; PROVIDED, HOWEVER, that certain contracts and agreements, the material
ones of which are listed in Section 4.05 of the Disclosure Schedule, (A)
provide for their termination upon a change of control of the Company or (B)
contain provisions restricting their assignment, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its subsidiaries or any of their properties or assets, except
in the case of clauses (iii) or (iv) for violations, breaches or defaults that
could not reasonably be expected to have a material adverse effect on the
Company or prevent or materially delay the consummation of the Offer and/or
the Merger.
SECTION 4.06. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
filed with the SEC, and has heretofore made available to Parent true and
complete copies of, all forms, reports,
8
schedules, statements and other documents (other than preliminary materials)
required to be filed by it under the Exchange Act or the Securities Act of
1933 (the "SECURITIES ACT") from and after December 1, 1995 (such forms,
reports, schedules, statements and other documents, including any financial
statements or schedules included therein, are referred to as the "COMPANY SEC
DOCUMENTS"). The Company SEC Documents, at the time filed, (a) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be,
and the applicable rules and regulations of the SEC thereunder. Except to
the extent revised or superseded by a subsequently filed Company SEC
Document, the Company SEC Documents do not contain an untrue statement of a
material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X promulgated by the SEC) and fairly present (subject, in the
case of the unaudited statements, to normal, recurring audit adjustments,
none of which will be material) the consolidated financial position of the
Company and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. None of the Company's subsidiaries is required to file any forms,
reports, schedules, statements or other documents with the SEC.
SECTION 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Documents, as contemplated by Section 7.04 or as set forth
in Section 4.07 of the Disclosure Schedule, since September 30, 1996, the
Company and its subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice, and there has not been
any material adverse change (as defined in Section 10.03) with respect to the
Company. Except as disclosed in the Company SEC Documents, as contemplated by
Section 7.04 or as set forth in Section 4.07 of the Disclosure Schedule, since
September 30, 1996, there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution with respect to the Company's
capital stock or any redemption, purchase or other acquisition of any of its
capital stock, (ii) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, (iii) any material change in accounting methods,
principles or practices by the Company, (iv) (w) any granting by the Company
or any of its subsidiaries to any executive officer of the Company or any of
its subsidiaries of any increase in compensation, except in the ordinary
course of business (including in connection with promotions) consistent with
past practice or as was required under employment agreements in effect as of
September 30, 1996, (x) any granting by the Company or any of its subsidiaries
to any such officer of any increase in severance or termination pay, except as
part of a standard employment package to any person promoted or hired, or as
was required under employment, severance or termination agreements in effect
as of September 30, 1996, (y) except employment arrangements in the ordinary
course of business consistent with past practice with employees other than any
executive officer of the Company, any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with any
such employee or executive officer or (z) except as contemplated by Section
7.04, any increase in or establishment of any bonus, insurance, deferred
compensation, pension, retirement, profit-sharing, stock option (including the
granting of stock options, stock appreciation rights, performance awards or
restricted stock awards or the amendment of any existing stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan or agreement or arrangement, (v) any
damage, destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a material adverse effect on the Company,
(vi) any amendments or changes in the Articles of Incorporation or Bylaws of
the Company, (vii) any material revaluation by the Company of any of its
9
assets, including writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business, or (viii)
any other action or event that would have required the consent of Parent
pursuant to Section 6.01 had such action or event occurred after the date of
this Agreement.
SECTION 4.08. NO UNDISCLOSED LIABILITIES. Except as and to the extent
set forth in the Company SEC Documents or in Section 4.08 of the Disclosure
Schedule, as of September 30, 1996, neither the Company nor any of its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of the
Company and its subsidiaries (including the notes thereto). Since September
30, 1996, except as and to the extent set forth in the Company SEC Documents
or in Section 4.08 of the Disclosure Schedule and except for liabilities or
obligations incurred in the ordinary course of business consistent with past
practice, neither the Company nor any of its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
that could be reasonably expected to have a material adverse effect on the
Company, or would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of the Company and its
subsidiaries (including the notes thereto).
SECTION 4.09. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant
to Rule 14f-1 promulgated under the Exchange Act (the "INFORMATION STATEMENT")
or (iv) the Proxy Statement, will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times the
Offer Documents, the Schedule 14D-9 and the Information Statement are filed
with the SEC or first published, sent or given to the Company's shareholders,
or, in the case of the Proxy Statement (if applicable), at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting (as defined in Section 7.01), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Schedule
14D-9, the Information Statement and the Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or
Sub specifically for inclusion or incorporation by reference therein.
10
SECTION 4.10. BENEFIT PLANS.
(a) Except as set forth in Section 4.10 of the Disclosure Schedule, each
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (a "PENSION
PLAN"), "employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
(a "WELFARE PLAN") and each other plan, arrangement or policy (written or
oral) relating to stock options, stock purchases, compensation, deferred
compensation, bonuses, severance, fringe benefits or other employee benefits,
in each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or its subsidiaries for the benefit of any
present or former employee, officer or director (each of the foregoing, a
"BENEFIT PLAN") has been administered in all material respects in accordance
with its terms. The Company and its subsidiaries and all the Benefit Plans
are in compliance in all material respects with the applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended (the "CODE"), all other
applicable laws and all applicable collective bargaining agreements. Section
4.10 of the Disclosure Schedule sets forth a list of all material Benefit
Plans. Except as set forth in Section 4.10(a) of the Disclosure Schedule,
none of the Welfare Plans promises or provides retiree medical or other
retiree welfare benefits to any person. To the knowledge of the Company, no
fiduciary of a Benefit Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, which breach
would reasonably be expected to result in any material liability to the
Company. Each Benefit Plan intended to qualify under section 401(a) of the
Code and each trust intended to qualify under section 501(a) of the Code is
the subject of a favorable determination letter from the IRS, and nothing has
occurred which would reasonably be expected to impair such determination. All
contributions required to be made with respect to any Benefit Plan pursuant to
the terms of the Benefit Plan or any collective bargaining agreement, have
been made on or before their due dates.
(b) None of the Pension Plans is subject to Title IV of ERISA and none
of the Company or any other person or entity that, together with the Company,
is or was treated as a single employer under Section 414 of the Code or
pursuant to Title IV of ERISA (each, including the Company, a "COMMONLY
CONTROLLED ENTITY") has any liability under Title IV of ERISA (whether actual
or contingent) with respect to a Pension Plan, or to any other employee
pension benefit plan that is or was maintained, contributed to or required to
be contributed to by a Commonly Controlled Entity (other than for
contributions not yet due) or to the Pension Benefit Guaranty Corporation
(other than for payment of premiums not yet due), which liability has not been
fully paid.
(c) No Commonly Controlled Entity is required to contribute to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has
withdrawn from any multiemployer plan where such withdrawal has resulted or
would result in any "withdrawal liability" (within the meaning of Section 4201
of ERISA) that has not been fully paid or as to which a commonly controlled
entity would have liability pursuant to Section 4212(c) of ERISA.
(d) Each Benefit Plan that is a Welfare Plan may be amended or
terminated at any time after the Effective Time without material liability to
the Company or its subsidiaries.
SECTION 4.11. OTHER COMPENSATION ARRANGEMENTS. Except as disclosed in
the Company SEC Documents or in Section 4.11 of the Disclosure Schedule, and
except as provided in this Agreement, as of the date of this Agreement,
neither the Company nor any of its subsidiaries is a party to any oral or
written (i) consulting agreement not terminable on not more than 60 calendar
days notice and involving the payment of more than $100,000 per annum, (ii)
agreement with any executive officer or other key employee of the Company or
any of its subsidiaries (x) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction
involving the Company of the nature contemplated by this Agreement or (y)
providing any term of employment or compensation guarantee extending for a
period longer than two years or the payment of more than $100,000 per year or
(iii) agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock
11
plan or stock purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
SECTION 4.12. LITIGATION. Except as disclosed in the Company SEC
Documents or Section 4.12 of the Disclosure Schedule, there is no suit, claim,
action, proceeding or investigation pending before any Governmental Entity or,
to the best knowledge of the Company, threatened against the Company or any of
its subsidiaries that could reasonably be expected to have a material adverse
effect on the Company or prevent or materially delay the consummation of the
Offer and/or the Merger. Except as disclosed in the Company SEC Documents or
Section 4.12 of the Disclosure Schedule, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
that could reasonably be expected to have a material adverse effect on the
Company or prevent or materially delay the consummation of the Offer and/or
the Merger.
SECTION 4.13. PERMITS; COMPLIANCE WITH LAW. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "COMPANY PERMITS"), except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals that
could not reasonably be expected to have a material adverse effect on the
Company. The Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure so to comply could not
reasonably be expected to have a material adverse effect on the Company.
Except as disclosed in the Company SEC Documents or in the Disclosure
Schedule, the businesses of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for violations that could not reasonably be expected to have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. As of the date of this
Agreement, no investigation or review by any Governmental Entity with respect
to the Company or any of its subsidiaries is pending or, to the best knowledge
of the Company, threatened, nor has any Governmental Entity indicated an
intention to conduct any such investigation or review, other than, in each
case, those the outcome of which could not be reasonably expected to have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.14. TAX MATTERS.
(a) The Company and each of its subsidiaries has filed all Federal
income tax returns and all other material tax returns and reports required to
be filed by it. All such returns are complete and correct in all material
respects (except to the extent a reserve has been established on the most
recent financial statements contained in the Company SEC Documents (the "MOST
RECENT FINANCIAL STATEMENTS")). Each of the Company and each of its
subsidiaries has paid (or the Company has paid on its subsidiaries' behalf)
all taxes required to be paid by it (without regard to whether a tax return is
required or to the amount shown on any tax return), except taxes for which an
adequate reserve has been established on the Most Recent Financial Statements.
The Most Recent Financial Statements reflect an adequate reserve for all taxes
payable by the Company and its subsidiaries for all taxable periods and
portions thereof through the date of such financial statements.
(b) Except as set forth in Section 4.14 of the Disclosure Schedule, no
material tax return of the Company or any of its subsidiaries is under audit
or examination by any taxing authority, and no written or unwritten notice of
such an audit or examination has been received by the Company or any of its
subsidiaries. Each material deficiency resulting from any audit or
examination relating to taxes by any taxing authority has been paid, except
for deficiencies being contested in good faith. No material issues relating
to taxes were raised in writing by the relevant taxing authority during any
presently pending audit or examination, and no material issues relating to
taxes were raised in writing by the relevant taxing authority in any completed
audit or examination that can reasonably be expected to recur in a later
12
taxable period. The Federal income tax returns of the Company and each of
its subsidiaries consolidated in such returns have not been examined by and
settled with the Internal Revenue Service.
(c) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any taxes and
no power of attorney with respect to any taxes has been executed or filed with
any taxing authority.
(d) No material liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for liens for
taxes not yet due.
(e) None of the Company or any of its subsidiaries is liable for taxes
of any other person (other than taxes of the Company and its subsidiaries) or
is a party to or is bound by any tax sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with respect to taxes
(including any advance pricing agreement, closing agreement or other agreement
relating to taxes with any taxing authority).
(f) None of the Company or any of its subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method
of accounting, the completed contract method of accounting, the long-term
contract method of accounting, the cash method of accounting or Section 481 of
the Code or comparable provisions of state, local or foreign tax law.
(g) As used in this Agreement, "TAXES" shall include all Federal, state,
local and foreign income, property, sales, excise, withholding and other
taxes, tariffs or governmental charges of any nature whatsoever, together with
all interest, penalties and additions imposed with respect to such amounts.
(h) Neither the Company nor, to the best knowledge of the Company, any
of its subsidiaries has filed a consent pursuant to or agreed to the
application of Section 341(f) of the Code.
(i) The Company is not a "United States real property holding company"
as defined in Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(j) Neither the Company nor any of its subsidiaries is a party to any
joint venture, partnership, or other arrangement or contract which could be
treated as a partnership for federal income tax purposes.
(k) Neither the Company nor any of this subsidiaries has entered into
any sale leaseback or any leveraged lease transaction that fails to satisfy
the requirements of Revenue Procedure 75-21 (or similar provisions of foreign
law).
(l) Neither the Company nor any of its subsidiaries is 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.
(m) Except as set forth in Section 4.14 of the Disclosure Schedule,
neither the Company nor any of its subsidiaries has ever been a Subchapter S
corporation (as defined in Section 1361 (a)(1) of the Code).
(n) All material elections with respect to taxes affecting the Company
and its subsidiaries are disclosed or attached to the Company's tax returns.
13
(o) There are no private letter rulings in respect of any tax pending
between the Company or its subsidiaries and any taxing authority.
SECTION 4.15. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the acquisition
of Shares by Sub pursuant to the Offer and the Shareholder Agreement and such
approval is sufficient to render inapplicable to the Offer, the Merger, this
Agreement and the Shareholder Agreement and the transactions contemplated by
this Agreement and the Shareholder Agreement the provisions of Sections
607.0901 and 607.0902 of the Corporation Law. To the best knowledge of the
Company, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Offer, the Merger, this Agreement, the
Shareholder Agreement or any of the transactions contemplated by this
Agreement.
SECTION 4.16. BROKERS; FEES AND EXPENSES. No broker, investment banker,
financial advisor or other person, other than Alex. Xxxxx & Sons Incorporated
and Trivest II, Inc., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar 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 furnished to Parent true and complete copies of all written
agreements or arrangements, and reduced to writing and furnished to Parent the
terms of all unwritten agreements or arrangements, providing for any such
broker's, finder's financial advisor's or similar fee or commission between
the Company and either of Alex. Xxxxx & Sons Incorporated and Trivest II, Inc.
SECTION 4.17. INTELLECTUAL PROPERTY.
(a) Except to the extent that the inaccuracy of any of the following (or
the circumstances giving rise to such inaccuracy) could not reasonably be
expected to have a material adverse effect on the Company:
(1) the Company and each of its subsidiaries owns, or is licensed
or otherwise has the legally enforceable right to use (in each case,
clear of any liens or encumbrances of any kind), all Intellectual
Property used in or necessary for the conduct of its business as
currently conducted;
(2) no claims are pending or, to the best knowledge of the Company,
threatened that the Company or any of its subsidiaries is infringing on
or otherwise violating the rights of any person with regard to any
Intellectual Property used by, owned by and/or licensed to the Company or
its subsidiaries and, to the best knowledge of the Company, there are no
valid grounds for any such claims;
(3) to the best knowledge of the Company, no person is infringing
on or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by and/or
licensed to the Company or its subsidiaries.
(4) to the best knowledge of the Company, there are no valid
grounds for any claim challenging the ownership or validity of any
Intellectual Property owned by the Company or any of its subsidiaries or
challenging the Company's or any of its subsidiaries' license or legally
enforceable right to use any Intellectual Property licensed by it; and
(5) to the best knowledge of the Company, all patents, registered
trademarks, service marks and copyrights held by the Company and each of
its subsidiaries are valid and subsisting.
14
(b) For purposes of this Agreement, "INTELLECTUAL PROPERTY" means
trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of
any such registration or application; inventions, discoveries and ideas,
whether patented, patentable or not in any jurisdiction; trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrighted, copyrightable or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or
proprietary rights and computer programs and software (including source code,
object code and data); licenses, immunities, covenants not to xxx and the like
relating to the foregoing; and any claims or causes of action arising out of
or related to any infringement or misappropriation of any of the foregoing.
SECTION 4.18. VOTE REQUIRED. In the event that Section 607.1104 of the
Corporation Law is inapplicable and unavailable to effectuate the Merger, the
affirmative vote of the holders of a majority of the outstanding shares of
Company Stock is the only vote of the holders of any class of capital stock
necessary to approve this Agreement and the Merger.
SECTION 4.19. LABOR MATTERS. Except as set forth in Section 4.19 of the
Disclosure Schedule or the Company SEC Documents, (i) there are no
controversies pending or, to the knowledge of the Company or any of its
subsidiaries, threatened, between the Company or any of its subsidiaries and
any of their respective employees, which controversies have had, or could
reasonably be expected to have, a material adverse effect; (ii) neither the
Company nor any of its subsidiaries is a party to any material 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 such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the
Company or any of its subsidiaries which could reasonably be expected to have
a material adverse effect.
SECTION 4.20. TITLE TO PROPERTY. Except as set forth in Section 4.20 of
the Disclosure Schedule, the Company and each of its subsidiaries have good
and defensible title to all of their properties and 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 detract from the value of or interfere with the present use of the
property affected thereby or which could not reasonably be expected to have a
material adverse effect; and, to the knowledge of the Company, all leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property are in good standing, 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 good
standing, validity and effectiveness or the existence of such default or event
of default could not reasonably be expected to have a material adverse effect.
SECTION 4.21. ENVIRONMENTAL MATTERS. Except as set forth in Section
4.21 of the Disclosure Schedule or the Company SEC Documents, and except in
all cases as have not had and could not reasonably be expected to have a
material adverse effect, to the best knowledge of the Company, the Company and
each of its subsidiaries (i) have obtained all applicable permits, licenses
and other authorization which are required to be obtained under all applicable
federal, state or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder ("Environmental Laws") relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic
material or wastes into ambient air, surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal,
15
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes by the Company or its subsidiaries (or their respective
agents); (ii) are in compliance with all terms and conditions of such
required permits, licenses and authorization, and also are in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iii) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws or
any event, condition, circumstance, activity, practice, incident, action or
plan which is reasonably likely to interfere with or prevent continued
compliance with or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or
proceeding against the Company or any of its subsidiaries based on or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, emission, discharge or release into
the environment of any pollutant, contaminant, or hazardous or toxic material
or waste; and (iv) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
SECTION 4.22. ACCOUNTS RECEIVABLE. The accounts receivable of the
Company and its subsidiaries as reflected in the most recent financial
statements contained in the Company SEC Documents, to the extent uncollected
on the date hereof, and the accounts receivable reflected on the books of the
Company and its subsidiaries are valid and existing and represent monies due,
and the Company has made reserves reasonably considered adequate for
receivables not collectible in the ordinary course of business, and (subject
to the aforesaid reserves) are subject to no refunds or other adjustments and
to no defenses, rights of setoff, assignments, restrictions, encumbrances or
conditions enforceable by third parties on or affecting any thereof, except
for such refunds, adjustments, defenses, rights of setoff, assignments,
restrictions, encumbrances or conditions as would not reasonably be expected
to have a material adverse effect.
SECTION 4.23 CUSTOMERS. Section 4.23 of the Disclosure Schedule sets
forth a list of the Company's twenty five (25) largest customers (detailed, in
the case of government agencies, by separate government agency) in terms of
gross sales for the fiscal year ended December 31, 1995. Except as set forth
in Section 4.23 of the Disclosure Schedule, since December 31, 1995, there
have not been any changes in the business relationships of the Company with
any of the customers named therein that would constitute a material adverse
effect.
SECTION 4.24 INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 4.24 of the Disclosure Schedule or the Company SEC Documents, since
December 31, 1995, 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, except for contracts with terms no less
favorable to the Company than would reasonably be expected in a similar
transaction with an unaffiliated third party.
SECTION 4.25 ABSENCE OF CERTAIN PAYMENTS. None of the Company, any of
its subsidiaries or any of their respective affiliates, officers, directors,
employees or agent or other people acting on behalf of any of them have (i)
engaged in any activity prohibited by the United States Foreign Corrupt
Practices Act of 1977 or any other similar law, regulation, decree, directive
or order of any other country and (ii) without limiting the generality of the
preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
None of the Company, any of its subsidiaries or any of their respective
affiliates, directors, officers, employees or agents of other persons acting
on behalf of any of them, has accepted or received any unlawful contributions,
payments, gifts or expenditures.
SECTION 4.26 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 of all normal risks
incident to the business of the Company and its subsidiaries and their
respective properties and assets and are in character and amount at least
equivalent to that carried by persons engaged in similar
16
businesses and subject to the same or similar perils or hazards, except as
could not reasonably be expected to have a material adverse effect.
SECTION 4.27 PRODUCT LIABILITY AND RECALLS.
(a) Except a disclosed in Section 4.27 of the Disclosure Schedule or the
Company SEC Documents, the Company is not aware of any claim, or the basis of
any claim, against the Company or any of this 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 any alleged defective nature
of its products or services, which could reasonably be expected to have a
material adverse effect.
(b) Except as disclosed in Section 4.27 of the Disclosure Schedule or
the Company SEC Documents, there is not pending or, to the knowledge of the
Company, threatened recall or investigation of any product sold by the
Company, which recall or investigation could reasonably be expected to have a
material adverse effect.
SECTION 4.28 INVENTORY. The inventories of the Company and its
subsidiaries as reflected in the most recent financial statements contained in
the Company SEC Documents, or acquired by the Company or any of its
subsidiaries after the date thereof, (i) are carried at an amount not in
excess of the lower of cost or net realizable value, and (ii) do not include
any inventory which is obsolete, surplus or not usable or saleable in the
lawful and ordinary course of business of the Company and its subsidiaries as
heretofore conducted, in each case net of reserves provided therefor.
SECTION 4.29 FULL DISCLOSURE. (i) No statement contained in any
certificate or schedule furnished or to be furnished by the Company or its
subsidiaries to Parent or Sub in, or pursuant to the provisions of, this
Agreement and (ii) none of the monthly consolidated financial statements for
October 1996 and November 1996 furnished or to be furnished by the Company to
Parent, including the accompanying commentary, contains or shall contain any
untrue statement of a material fact or omits or will omit to state any
material fact necessary, in the light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. ORGANIZATION. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power and authority could not be reasonably expected to prevent or materially
delay the consummation of the Offer and/or the Merger. Each of Parent and Sub
is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing could not reasonably be expected to
prevent or materially delay the consummation of the Offer and/or the Merger.
Each of Parent and Sub has made available to the Company complete and correct
copies of its articles of incorporation and by-laws.
SECTION 5.02. AUTHORITY. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions
17
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on
the part of Parent and Sub are necessary to authorize this Agreement or to
consummate such transactions except, in the event that Section 607.1104 of
the Corporation Law is applicable and available to effectuate the Merger,
such proceedings as may be required by such statute. No vote of Parent
shareholders is required to approve this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Sub, as the case may be, and, assuming this Agreement constitutes
a valid and binding obligation of the Company, constitutes a valid and
binding obligation of each of Parent and Sub enforceable against them in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally.
SECTION 5.03. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act, Sections 607.1103 -
607.1105 of the Corporation Law, neither the execution, delivery or
performance of this Agreement by Parent and Sub nor the consummation by Parent
and Sub of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate/articles
of incorporation or by-laws of Parent and Sub, (ii) require any filing with,
or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings could not be reasonably expected to prevent
or materially delay the consummation of the Offer and/or the Merger), (iii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which Parent or any
of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of
clauses (iii) and (iv) for violations, breaches or defaults which could not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 5.04. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's shareholders, or, in the case of the Proxy Statement, at the time
the Proxy Statement is first mailed to the Company's shareholders or at the
time of the Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference therein.
SECTION 5.05. INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
SECTION 5.06. BROKERS. No broker, investment banker, financial advisor
or other person, other than Xxxxxxxxx, Xxxxxxxx & Company, the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with
18
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Sub.
SECTION 5.07. FINANCING. Parent has readily available funds to
purchase, or to cause Sub to purchase, all the Shares pursuant to the Offer
and the Merger and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
SECTION 5.08. BOARD DETERMINATION. The Board of Directors of Parent, at
a meeting duly called and held, duly and unanimously adopted resolutions
approving this Agreement, the Offer and the Merger, determining that the terms
of the Offer and the Merger are fair, from a financial point of view, to, and
in the best interests of, Parent.
SECTION 5.09. FULL DISCLOSURE. No statement contained in any
certificate or schedule furnished or to be furnished by Parent or Sub to the
Company in, or pursuant to the provisions of, this Agreement contains or shall
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary, in the light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE VI
COVENANTS
---------
SECTION 6.01. COVENANTS OF tHE COMPANY. Until such time as Parent's
designees shall constitute a majority of the members of the Board of Directors
of the Company, the Company agrees as to itself and its subsidiaries that
(except as expressly contemplated or permitted by this Agreement, as set forth
in the Disclosure Schedule or to the extent that Parent shall otherwise
consent in advance, which consent shall not be unreasonably withheld and shall
subsequently be confirmed in writing):
(a) ORDINARY COURSE. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course and the Company shall, and shall cause its subsidiaries
to, use all reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and
others having business dealings with the Company and its subsidiaries.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not, and shall not
permit any of its subsidiaries to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock, except for
dividends by a direct or indirect wholly owned subsidiary of the Company 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 or (iii)
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or its subsidiaries or any other securities thereof.
(c) Issuance of Securities. The Company shall not, and shall not permit
any of its subsidiaries to, issue, deliver, sell, pledge or encumber, or
authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible
into, or any rights, warrants, calls, subscriptions or options to acquire, any
such shares or convertible securities, or any other ownership interest
(including stock appreciation rights or phantom stock) other than (i) the
issuance of shares of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement and in accordance with the
terms of such Company Stock Options, (ii) the issuance of shares of Company
Common Stock upon the conversion of shares of Class B Common Stock outstanding
on the date of this Agreement and in accordance with the terms of such Class B
Common Stock or (iii) issuances by a wholly-owned subsidiary of the Company of
its capital stock to its parent.
19
(d) GOVERNING DOCUMENTS. The Company shall not, and shall not permit
any of its subsidiaries to, amend or propose to amend its certificate or
articles of incorporation or by-laws (or similar organizational documents).
(e) NO ACQUISITIONS. The Company shall not, and shall not permit any of
its subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or any substantial assets of
(other than inventory and equipment in the ordinary course consistent with
past practice, to the extent not otherwise prohibited by this Agreement), or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof.
(f) NO DISPOSITIONS. Other than dispositions in the ordinary course of
business consistent with past practice, the Company shall not, and shall not
permit any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of its assets.
(g) INDEBTEDNESS. The Company shall not, and shall not permit any of
its subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for working capital borrowings incurred in the
ordinary course of business consistent with past practice under the Company's
credit facility existing and in effect on the date of this Agreement, or (ii)
make any loans, advances or capital contributions to, or investments in, any
other person, other than, with respect to both clause (i) and (ii) above, (A)
to the Company or any direct or indirect wholly owned subsidiary of the
Company or (B) any advances to employees in accordance with past practice.
(h) ADVICE OF CHANGES; FILINGS. The Company shall confer with Parent on
a regular and frequent basis as reasonably requested by Parent, report on
operational matters and promptly advise Parent orally and, if requested by
Parent, in writing of any change or event having, or which, insofar as can
reasonably be foreseen, is likely to have, a material adverse effect on the
Company. The Company shall promptly provide to Parent (or its counsel) copies
of all filings made by the Company with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby.
(i) ACCOUNTING CHANGES. The Company shall not make any material change,
other than in the ordinary course of business, consistent with past practice,
or as required by the SEC or law, with respect to any accounting methods,
principles or practices used by the Company (except insofar as may be required
by a change in generally accepted accounting principles).
(j) DISCHARGE OF LIABILITIES. Except for fees and expenses related to
the transactions contemplated herein, the Company shall not, and shall not
permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of (i) liabilities recognized or disclosed
in the Most Recent Financial Statements, or (ii) liabilities incurred since
the date of such financial statements in the ordinary course of business
consistent with past practice. The Company shall not, and shall not permit any
of its subsidiaries to, waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party.
(k) COMPENSATION OF COMPANY EMPLOYEES. Except as provided in Section
4.07 of the Disclosure Schedule or in Section 7.04, the Company and its
subsidiaries will not, without the prior
20
written consent of Parent, except as may be required by law, (i) enter into,
adopt, amend or terminate any Company Benefit Plan or other employee benefit
plan or any agreement, arrangement, plan or policy for the benefit of any
director, executive officer or current or former key employee, (ii) increase
in any manner the compensation or fringe benefits of, or pay any bonus to,
any director, executive officer or key employee, except as required by any
Company Benefit Plan or agreement with such employees existing on the date of
this Agreement, (iii) enter into, adopt, amend or terminate any Company
Benefit Plan or other benefit plan or agreement, arrangement, plan or policy
for the benefit of any employees who are not directors, executive offices or
current or former key employees of the Company, other than increases in the
compensation of employees made in the ordinary course of business consistent
with past practice, or (iv) pay any benefit not required by any plan or
arrangement as in effect as of the date hereof (including the granting of,
acceleration of exercisability of or vesting of stock options, stock
appreciation rights or restricted stock).
(l) MATERIAL CONTRACTS. Neither the Company nor any of its subsidiaries
shall (i) modify, amend or terminate any material contract or agreement to
which the Company or such subsidiary is a party, or (ii) waive, release or
assign any material rights or claims.
(m) NO DISSOLUTION, ETC. The Company shall not authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation of the Company or any of its subsidiaries.
(n) TAX ELECTION. Except as set forth in Section 4.14 of the Disclosure
Schedule, the Company shall not make any tax election or settle or compromise
any material income tax liability.
(o) OTHER ACTIONS. The Company shall not nor will it permit any of its
subsidiaries to take or agree or commit to take any action that is reasonably
likely to result in any of the Company's representations or warranties
hereunder being untrue in any material respect at, or as of any time prior to,
the Effective Time.
(p) GENERAL. The Company shall not, and shall not permit any of its
subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions described in this Section 6.01.
21
SECTION 6.02. NO SOLICITATION.
(a) The Company and its officers, directors, employees, representatives
and agents shall immediately cease any discussions or negotiations with any
parties that may be ongoing with respect to an Acquisition Proposal (as
hereinafter defined). From and after the date hereof until the termination of
this Agreement, the Company shall not, nor shall it permit any of its
subsidiaries to, authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing non-public information or assistance), or
knowingly take any other action to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal; PROVIDED, HOWEVER, that if, at any time
the Board of Directors of the Company determines in good faith, after
consultation with independent legal counsel (who may be the Company's
regularly engaged independent counsel), that it is necessary to do so in
order to comply with its fiduciary duties to the Company's shareholders under
applicable law, the Company may, in response to an unsolicited Acquisition
Proposal, and subject to compliance with Section 6.02(c), (x) furnish
information with respect to the Company to any person pursuant to a
confidentiality agreement in reasonably customary form, and (y) participate
in discussions or negotiations regarding such Acquisition Proposal. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means any inquiry,
proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 20% or more of the assets of the Company and its
subsidiaries or 20% or more of any class of equity securities of the Company
or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries, any
merger, consolidation, business combination, sale of all or substantially all
the assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries (other than the transactions
between the parties hereto contemplated by this Agreement), or any other
transaction the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Offer and/or the Merger or
which could reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated hereby.
(b) Except as set forth in this Section 6.02, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that the Board of Directors of the
Company determines in good faith, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent counsel),
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's shareholders under applicable law, the Board of Directors of the
Company may (subject to the other provisions of Section 6.02) withdraw or
modify its approval or recommendation of the Offer, this Agreement and the
Merger, approve or recommend a Superior Proposal (as defined below), cause the
Company to enter into an agreement with respect to a Superior Proposal or
terminate this Agreement, but in each case only at a time that is after the
fifth business day following Parent's receipt of written notice (a "NOTICE OF
SUPERIOR PROPOSAL") advising Parent that the Board of Directors of the Company
has received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal. In addition, if the Company proposes to enter into an agreement with
respect to any Acquisition Proposal, it shall concurrently with entering into
such agreement pay, or cause to be paid, to Parent the Termination Fee (as
such term is defined in Section 7.06(b)). For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any bona fide proposal made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 20% of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board
22
of Directors of the Company determines in its good faith judgment (based on
the advice of a financial advisor of nationally recognized reputation) to be
more favorable to the Company's shareholders than the Offer and the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly advise
Parent orally and in writing of any request for information or of any
Acquisition Proposal, the material terms and conditions of such request or
Acquisition Proposal and the identity of the person making such request or
Acquisition Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
the Company's shareholders if, in the good faith judgment of the Board of
Directors of the Company, after consultation with independent legal counsel
(who may be the Company's regularly engaged independent counsel), failure so
to disclose would be inconsistent with its fiduciary duties to the Company's
shareholders under applicable law; PROVIDED, HOWEVER, neither the Company nor
its Board of Directors nor any committee thereof shall, except as permitted by
Section 6.02(b), withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer, this Agreement or the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal.
SECTION 6.03. OTHER ACTIONS. Except as contemplated by Section 6.02 or
the other provisions of this Agreement, the Company shall not, and shall not
permit any of its subsidiaries to, take any action that could reasonably be
expected to result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not
so qualified becoming untrue in any material respect or (iii) any of the Offer
Conditions not being satisfied in all material respects.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
SECTION 7.01. SHAREHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT.
(a) If the Company Shareholder Approval is required by law, the Company
will, at Parent's request, as soon as practicable following acceptance for
payment of and payment for shares of Company Common Stock by Sub in the Offer,
duly call, give notice of, convene and hold a meeting of its shareholders (the
"SHAREHOLDERS MEETING") for the purpose of obtaining the Company Shareholder
Approval. The Company will, through its Board of Directors, recommend to its
shareholders that the Company Shareholder Approval be given. Notwithstanding
the foregoing, if Sub or any other subsidiary of Parent shall acquire at least
80% of the outstanding Shares, the parties shall, at the request of Parent,
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
Shareholders Meeting in accordance with Section 607.1104 of the Corporation
Law.
(b) If the Company Shareholder Approval is required by law, the Company
will, at Parent's request, as soon as practicable following acceptance for
payment of and payment for shares of Company Common Stock by Sub in the Offer,
prepare and file a preliminary Proxy Statement (or, if applicable, an
information statement in lieu of a proxy statement pursuant to Rule 14C under
the Exchange Act, with all references herein to the Proxy Statement being
deemed to refer to such information statement, to the extent applicable) with
the SEC and will use its best efforts to respond to any comments of the SEC or
its staff and to cause the Proxy Statement to be mailed to the Company's share-
holders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the
23
SEC or its staff for amendments or supplements to the Proxy Statement or
for additional information and will supply Parent with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Shareholders Meeting
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company will promptly prepare and mail
to its shareholders such an amendment or supplement. The Company will not
mail any Proxy Statement, or any amendment or supplement thereto, to which
Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any subsidiary of Parent to be voted
in favor of the Company Shareholder Approval.
SECTION 7.02. ACCESS TO INFORMATION. Upon reasonable notice and subject
to restrictions contained in confidentiality agreements to which the Company
is subject (from which it shall use reasonable efforts to be released), the
Company shall, and shall cause each of its subsidiaries to, afford to Parent
and to the officers, employees, accountants, counsel and other representatives
of Parent access, during normal business hours to all their respective
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause each of its subsidiaries to) furnish
promptly to Parent (a) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to SEC
requirements and (b) all other information concerning its business, properties
and personnel as Parent may reasonably request. Except as otherwise agreed to
by the Company, unless and until Parent and Sub shall have purchased a
majority of the outstanding Shares pursuant to the Offer or otherwise, and
notwithstanding termination of this Agreement, the terms of the
confidentiality letter agreement, dated as of October 30, 1996, between the
Company and Parent shall apply to all information about the Company which has
been furnished under this Agreement by the Company to Parent or Sub.
SECTION 7.03. REASONABLE EFFORTS. Each of the Company, Parent and Sub
agrees to use its reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements which may be
imposed on itself with respect to the Offer and the Merger (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity)
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
subsidiaries in connection with the Offer and the Merger. Each of the
Company, Parent and Sub will, and will cause its subsidiaries to, use its
reasonable efforts to take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public
or private third party required to be obtained or made by Parent, Sub, the
Company or any of their subsidiaries in connection with the Offer and the
Merger or the taking of any action contemplated thereby or by this Agreement,
except that no party need waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of or hold separate any
assets or otherwise take any action that would require a waiver of, or that is
inconsistent with the satisfaction of, the conditions of the Offer set forth
in clause (iii) or (iv) of subsection (a) of Exhibit A hereto.
24
SECTION 7.04. COMPANY STOCK OPTIONS; PLANS.
(a) Parent and the Company shall, effective as of the Effective Time,
(i) cause each outstanding option to purchase Company Common Stock (a
"COMPANY STOCK OPTION") issued pursuant to the Company's Second Amended and
Restated Stock Option Plan (the "COMPANY STOCK OPTION PLAN"), whether or not
exercisable or vested, to become fully exercisable and vested, (ii) cause
each Company Stock Option that is outstanding to be canceled and (iii) in
consideration of such cancellation and, except to the extent that Parent or
Sub and the holder of any such Company Stock Option otherwise agree, cause
the Company (or, at Parent's option, Sub) to pay such holders of Company
Stock Options an amount in respect thereof equal to the product of (x) the
excess, if any, of the Offer price over the exercise price of each such
Company Stock Option and (y) the number of shares of Company Common Stock
subject to the Company Stock Option immediately prior to its cancellation
(such payment to be net of applicable withholding taxes).
(b) Except as may otherwise be agreed by Parent or Sub and the Company,
the Company Stock Option Plan shall terminate as of the Effective Time, and no
holder of Company Stock Options or any participant in the Company Stock Option
Plan shall have any rights thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
(c) Except as may otherwise be agreed by Parent or Sub and the Company,
all other plans, programs or arrangements providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any of
its subsidiaries shall terminate as of the Effective Time, and no participant
in any such plans, programs or arrangements shall have any rights thereunder
to acquire any equity securities of the Company, the Surviving Corporation or
any subsidiary thereof.
SECTION 7.05. DIRECTORS. Promptly upon the acceptance for payment of,
and payment for, any Shares by Sub pursuant to the Offer which represent at
least a majority of the outstanding Shares (on a fully diluted basis), 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 Exchange Act,
representation on the Board of Directors equal to the product of (a) the
total number of directors on the Board of Directors and (b) the percentage
that the number of shares of Company Common Stock purchased by Sub bears to
the number of shares of Company Common Stock outstanding; PROVIDED, HOWEVER,
that in the event that Sub's designees are elected to the Board of Directors
of the Company, until the Effective Time such Board of Directors shall have
at least two directors who are directors on the date of this Agreement and
who are not officers of the Company (the "INDEPENDENT DIRECTORS"); and
PROVIDED FURTHER that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining
Independent Director shall designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if
no Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers or affiliates of the
Company or any of its subsidiaries, or officers or affiliates of Parent or
any of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable law, the
Company shall take all action requested by Parent necessary to effect any
such election, including mailing to its shareholders the Information
Statement containing the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees to
make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required
to be included in the Information Statement with respect to Sub's designees).
In connection with the foregoing, the Company will promptly, at the option
of Parent, either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current directors as is
necessary to enable Sub's designees to be elected or appointed to, and to
constitute a majority of, the Company's Board of Directors as provided above.
25
SECTION 7.06. FEES AND EXPENSES.
(a) Except as provided below in this Section 7.06, all fees and expenses
incurred in connection with the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) If (i) Parent or Sub terminates this Agreement under Section
9.01(c)(iii) or Section 9.01(d), (ii) either Parent or the Company terminates
this Agreement under Section 9.01(b)(i), the Minimum Condition has failed to
be satisfied and such failure is the result of any of the parties to the
Shareholder Agreement having breached its obligation thereunder to tender its
Shares in the Offer or (iii) the Company terminates this Agreement pursuant
to Section 9.01(e), the Company shall assume and pay, or cause to be paid, a
termination fee in the amount of $3,000,000 (the "Termination Fee").
SECTION 7.07. INDEMNIFICATION; INSURANCE.
(a) Parent and Sub agree that all rights to indemnification for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors or officers (the "INDEMNIFIED PARTIES") of the
Company and its subsidiaries as provided in their respective certificates or
articles of incorporation or by-laws (or similar organizational documents) or
existing indemnification contracts shall survive the Merger and shall continue
in full force and effect in accordance with their terms.
(b) 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
Company's existing D&O Insurance 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 200% 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.
(c) This Section 7.07 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties and their respective heirs, personal
representatives, successors and assigns, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
SECTION 7.08 EMPLOYMENT AND BENEFIT ARRANGEMENTS.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to honor all employment, severance, termination and retirement
agreements to which the Company is a party, as such agreements are in effect
on the date hereof.
(b) For a one-year period following the Effective Time, Parent shall
cause the Surviving Corporation to provide those employees who are employees
of the Surviving Corporation at the Effective Time with benefits that are, in
the aggregate, no less favorable to such employees as are the benefits of the
Company available to such employees immediately prior to the Effective Time.
(c) The provisions of this Section 7.08 are not intended to create
rights of third party beneficiaries.
26
ARTICLE VIII
CONDITIONS
----------
SECTION 8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) COMPANY SHAREHOLDER APPROVAL. If required by applicable law, the
Company Shareholder Approval shall have been obtained.
(b) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Governmental Entity or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that
each of the parties shall have used reasonable efforts (subject to the other
terms and conditions of this Agreement) to prevent the entry of any such
injunction or other order and to have vacated as promptly as possible any
injunction or other order that may be entered.
(c) PURCHASE OF SHARES. Sub shall have previously accepted for payment
and paid for Shares tendered pursuant to the Offer.
ARTICLE IX
TERMINATION AND AMENDMENT
-------------------------
SECTION 9.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance with
its terms without Sub having accepted for payment any Shares pursuant to
the Offer or (y) Sub shall not have accepted for payment any Shares
pursuant to the Offer prior to the 60th day after commencement of the
Offer; PROVIDED, HOWEVER, that the right to terminate this Agreement
pursuant to this Section 9.01(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure of any such condition or if the failure of such
condition results from facts or circumstances that constitute a breach of
representation, warranty or covenant under this Agreement by such party;
or
(ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for,
shares of Company Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable; PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this Section 9.01(b)(ii) shall not be available to
any party that has failed to perform its obligations under Section 7.03
or the proviso contained in Section 8.01(b);
27
(c) by Parent or Sub if
(i) (A) the representations and warranties of the Company in
Section 4.03 shall not have been true and correct in all material
respects when made, or (B) any representation or warranty of the Company
shall not have been true and correct in all material respects when made,
except in any case where such failure to be true and correct would not,
in the aggregate, (x) have a material adverse effect, or (y) prevent or
materially delay the consummation of the Offer and/or the Merger;
(ii) (A) the representations and warranties of the Company in
Section 4.03 (other than representations and warranties made as of a
specified date) shall have ceased at any later date to be true and
correct in all material respects as if made as of such later date, or
(B) any representation or warranty of the Company (other than
representations and warranties made as of a specified date) shall have
ceased at any later date to be true and correct in all material respects
as if made at such later date, except in any case where such failure to
be true and correct would not, (x) in the aggregate, have a material
adverse effect or (y) prevent or materially delay the consummation of the
Offer and/or the Merger; or
(iii) the Company shall have failed to comply in any material
respect with any of its material obligations or covenants contained
herein;
PROVIDED, HOWEVER, that the right of Parent or Sub to terminate this Agreement
pursuant to this clause shall not be available if Sub or any affiliate of Sub
shall acquire any shares of Company Common Stock pursuant to the Offer;
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(e) of Exhibit A to this Agreement;
(e) by the Company in connection with entering into a definitive
agreement in accordance with Section 6.02(b), provided it has complied with
all provisions thereof, including the notice provisions therein and the
payment of the Termination Fee, and provided that the Company shall not have
breached in any material respect the provisions of Section 6.02(a);
(f) by the Company, if
(i) any representation or warranty of Parent or Sub shall not have
been true and correct in all material respects when made or shall have
ceased at any later date to be true and correct in all material respects
as if made at such later date; or
(ii) Parent or Sub fails to comply in any material respect with any
of its material obligations or covenants contained herein;
(g) by the Company, if Sub shall have failed to commence the Offer
within five business days following the date of the initial public
announcement of the Offer (except as a result of any acts or omissions of the
Company that constitutes a material breach of this Agreement).
SECTION 9.02. EFFECT OF TERMINATION. In the event of a termination of
this Agreement by either the Company or Parent as provided in Section 9.01,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers, directors, shareholders or affiliates, except with respect to the
last sentence of Section 1.02(c), Section 4.16, Section 5.06, the last
sentence of Section 7.02, Section 7.06, this Section 9.02 and Article X;
PROVIDED, HOWEVER, that nothing herein shall relieve any party for liability
for any breach hereof.
28
SECTION 9.03. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after obtaining the Company Shareholder Approval (if
required by law), but, after any such approval, no amendment shall be made
which by law requires further approval by such shareholders (or which reduces
the amount or changes the consideration to be delivered to such shareholders)
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Following the election or appointment of the Sub's designees pursuant
to Section 7.05 and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors then in office shall be required by the
Company to (i) amend or terminate this Agreement by the Company, (ii) exercise
or waive any of the Company's rights or remedies under this Agreement or (iii)
extend the time for performance of Parent and Sub's respective obligations
under this Agreement.
SECTION 9.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of those rights.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time or, in
the case of the Company, shall survive the acceptance for payment of, and
payment for, Shares by Sub pursuant to the Offer.
SECTION 10.02. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to Parent or Sub, to
Tyco International, Ltd.
Xxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: General Counsel
Telecopy No.: (000) 000-0000
Confirm No.: (000) 000-0000
29
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Confirm No.: (000) 000-0000
and
(b) if to the Company, to
ElectroStar, Inc.
000 Xxxxx 000 Xxxx
Xxxxx, Xxxx 00000
Attn: President
Telecopy No.: (000) 000-0000
Confirm No.: (000) 000-0000
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff,
Xxxxx & Xxxxxxx, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Confirm No.: (000) 000-0000
SECTION 10.03. INTERPRETATION. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or
a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are 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 phrase "MADE AVAILABLE" in this Agreement shall mean that
the information referred to has been made available if requested by the party
to whom such information is to be made available. As used in this Agreement,
the term "SUBSIDIARY" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person, and the term "AFFILIATE" shall have the meaning set forth in
Rule 12b-2 promulgated under the Exchange Act. As used in this Agreement,
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, when used in
connection with the Company, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) that, individually or in the aggregate with any such other changes or
effects, is materially adverse to the business, prospects, assets (including
intangible assets), financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Notwithstanding the foregoing,
a material adverse change or material adverse effect shall not include any
material adverse change or material adverse effect to the extent caused by any
change resulting from the announcement of the Offer or the Merger.
SECTION 10.04. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or
30
more counterparts have been signed by each of the parties and delivered to
the other parties, it being understood that all parties need not sign the
same counterpart.
SECTION 10.05. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 7.07 and Section
7.08, are not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
SECTION 10.06. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York and, to the
extent provided herein, the Corporation Law, without regard to any applicable
conflicts of law.
SECTION 10.07. PUBLICITY. Except as otherwise required by law or the
rules of the New York Stock Exchange or the Nasdaq National Market, for so
long as this Agreement is in effect, neither the Company nor Parent shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
SECTION 10.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION 10.09. ENFORCEMENT. The parties agree that irreparable damage
would occur 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 addition, each of
the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of New York in the
event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court, and (iii) agrees that such party will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in
any court other than a Federal court sitting in the State of New York. The
prevailing party in any judicial action shall be entitled to receive from the
other party reimbursement for the prevailing party's reasonable attorneys'
fees and disbursements, and court costs.
31
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
TYCO INTERNATIONAL, LTD.
By: /s/ J. Xxxx XxXxx
--------------------------------------------
Name: J. Xxxx XxXxx
Title: Vice President
T3 ACQUISITION CORP.
By: /s/ J. Xxxx XxXxx
--------------------------------------------
Name: J. Xxxx XxXxx
Title: Vice President
ELECTROSTAR, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
32
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless (i) there shall have been validly tendered and
not withdrawn prior to the expiration of the Offer such number of Shares that
would constitute a majority of the outstanding Shares (determined on a fully
diluted basis for all outstanding stock options, Class B Common Stock and any
other rights to acquire Shares) (the "MINIMUM CONDITION") and (ii) any
waiting period under the HSR Act applicable to the purchase of Shares
pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not
be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate
the Offer if, at any time on or after the date of this Agreement and before
the acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction
of Parent or any of its subsidiaries that constitutes a breach of this
Agreement):
(a) there shall have been instituted, pending or threatened any action
or proceeding by any court or other Government Entity which (i) seeks to
challenge the acquisition by Parent or Sub (or any of its affiliates) of
shares of Company Common Stock pursuant to the Offer, restrain or prohibit the
making or consummation of the Offer or the Merger, or obtain damages in
connection therewith in an amount which would reasonably be expected to have a
material adverse effect; (ii) seeks to make the purchase of or payment for
some or all of the shares of Common Stock pursuant to the Offer or the Merger
illegal; (iii) seeks to impose limitations on the ability of Parent (or any of
its affiliates) effectively to acquire or hold, or to require Parent or the
Company or any of their respective affiliates or subsidiaries to dispose of or
hold separate, any material portion of the assets or the business of Parent
and its affiliates or any material portion of the assets or the business of
the Company and its subsidiaries taken as a whole, as a result of the Offer or
the Merger; or (iv) seeks to impose material limitations on the ability of
Parent (or its affiliates) to exercise full rights of ownership of the shares
of Company Common Stock purchased by it, including, without limitation, the
right to vote the shares purchased by it on all matters properly presented to
the shareholders of the Company;
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any statute, rule,
regulation, judgment, decree, order or injunction, other than the application
to the Offer or the Merger of applicable waiting periods under the HSR Act,
that is reasonably likely to directly or indirectly result in any of the
consequences referred to in clauses (i) through (iv) of subsection (a) above;
(c) (A) the representations and warranties of the Company in Section
4.03 of this Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct in
all material respects as if made as of such later date (other than
representations and warranties made as of a specified date) or (B) any of the
representations and warranties made by the Company in this Agreement shall not
have been true and correct in all material respects when made, or shall
thereafter have ceased to be true and correct in all material respects as if
made as of such later date (other than representations and warranties made as
of a specified date), except in any case where such failure to be true and
correct would not, in the aggregate, (x) have a material adverse effect, or
(y) prevent or materially delay the consummation of the Offer and/or the
Merger;
(d) the Company shall not in all material respects have performed in a
timely manner any material obligation and agreement and complied in all
material respects in a timely manner with any material covenant of the Company
to be performed or complied with by it under this Agreement;
(e) (i) the Board of Directors of the Company shall have failed to
approve and recommend or shall have withdrawn or modified in a manner adverse
to Parent or Sub its approval or recommendation of the Offer, the Merger or
this Agreement, or approved or recommended any Acquisition Proposal, (ii) the
Company shall have entered into any agreement with respect to any Superior
Proposal in accordance with Section 6.02(b) of this Agreement or (iii) the
Board of Directors of the Company thereof shall have resolved to take any of
the foregoing actions;
(f) any change, development, effect or circumstance shall have occurred
or be threatened (other than any affecting the electronics industry generally)
that would reasonably be expected to have a material adverse effect on the
Company;
(g) 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 five
business days; or
(h) the Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Parent in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and Sub and
may, except as otherwise provided in this Agreement, be asserted by Parent or
Sub regardless of the circumstances giving rise to any such condition and may
be waived by Parent or Sub, in whole or in part, at any time and from time to
time, in the sole discretion of Parent. The failure by Parent or Sub 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 an ongoing right which may be asserted at
any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be
returned by the Paying Agent to the tendering shareholders.
2
