Exhibit 99(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
AUTOMATIC DATA PROCESSING, INC.,
FIS ACQUISITION CORP.
and
XXXXXXXXXX GRAPHICS INTERNATIONAL, INC.
Dated as of May 2, 2000
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01 The Offer........................................................................................1
SECTION 1.02 Company Actions..................................................................................3
SECTION 1.03 Shareholder Lists................................................................................4
SECTION 1.04 Directors........................................................................................4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger.......................................................................................5
SECTION 2.02 Consummation of the Merger.......................................................................5
SECTION 2.03 Effects of the Merger............................................................................5
SECTION 2.04 Certificate of Incorporation and Bylaws..........................................................5
SECTION 2.05 Directors and Officers...........................................................................6
SECTION 2.06 Conversion of Shares.............................................................................6
SECTION 2.07 Conversion of Common Stock of Purchaser..........................................................6
SECTION 2.08 Stockholders'Meeting.............................................................................6
SECTION 2.09 Merger Without Meeting of Shareholders...........................................................6
SECTION 2.10 Withholding Taxes................................................................................7
ARTICLE III
PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Payment for Shares...............................................................................7
SECTION 3.02 Closing of the Company's Transfer Books..........................................................8
SECTION 3.03 Existing Stock Options...........................................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification...................................................................9
SECTION 4.02 Capitalization..................................................................................10
SECTION 4.03 Authority for this Agreement....................................................................11
SECTION 4.04 Consents and Approvals; No Violation............................................................11
SECTION 4.05 Reports; Financial Statements...................................................................12
SECTION 4.06 Absence of Certain Changes......................................................................13
SECTION 4.07 Schedule 14D-9; Offer Documents and Proxy Statement.............................................13
SECTION 4.08 Brokers.........................................................................................14
SECTION 4.09 Employee Benefit Matters........................................................................14
SECTION 4.10 Litigation, etc.................................................................................17
SECTION 4.11 Tax Matters.....................................................................................17
SECTION 4.12 Compliance with Law.............................................................................19
SECTION 4.13 Environmental Matters...........................................................................19
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SECTION 4.14 Intellectual Property...........................................................................20
SECTION 4.15 Real Property...................................................................................21
SECTION 4.16 Material Contracts..............................................................................22
SECTION 4.17. Opinion of Financial Advisor....................................................................22
SECTION 4.18. Vote Required...................................................................................22
SECTION 4.19. Anti-takeover Plan; State Takeover Statutes.....................................................23
SECTION 4.20. Insurance.......................................................................................23
SECTION 4.21. Accounts Receivable.............................................................................23
SECTION 4.22. Customers.......................................................................................23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01 Organization and Qualification..................................................................24
SECTION 5.02 Authority for this Agreement....................................................................24
SECTION 5.03 Offer Documents; Proxy Statement................................................................24
SECTION 5.04 Consents and Approvals; No Violation............................................................24
SECTION 5.05 Operations of Purchaser.........................................................................25
SECTION 5.06 Brokers.........................................................................................25
SECTION 5.07 Litigation......................................................................................25
SECTION 5.08 Sufficient Funds................................................................................25
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company..............................................................25
SECTION 6.02 No Solicitation.................................................................................28
SECTION 6.03 Access to Information...........................................................................29
SECTION 6.04 Reasonable Efforts; Further Actions.............................................................30
SECTION 6.05 Indemnification and Insurance...................................................................30
SECTION 6.06 Employee Matters................................................................................32
SECTION 6.07 Proxy Statement.................................................................................32
SECTION 6.08 Notification of Certain Matters.................................................................33
SECTION 6.09 Press Releases..................................................................................33
SECTION 6.10 Industrial Site Recovery Act Compliance.........................................................33
SECTION 6.11 Designated Business.............................................................................33
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger......................................34
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination.....................................................................................34
SECTION 8.02 Effect of Termination...........................................................................35
SECTION 8.03 Fees and Expenses...............................................................................36
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SECTION 8.04 Amendment.......................................................................................36
SECTION 8.05 Extension; Waiver; Remedies.....................................................................37
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties......................................................37
SECTION 9.02 Entire Agreement; Assignment....................................................................37
SECTION 9.03 Validity........................................................................................37
SECTION 9.04 Notices.........................................................................................38
SECTION 9.05 Governing Law...................................................................................39
SECTION 9.06 Descriptive Headings............................................................................39
SECTION 9.07 Parties in Interest.............................................................................39
SECTION 9.08 Counterparts....................................................................................39
SECTION 9.09 Certain Definitions.............................................................................40
EXHIBIT A ..................................................................................................A-1
EXHIBIT B ..................................................................................................B-1
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GLOSSARY OF DEFINED TERMS
DEFINED TERMS DEFINED IN SECTION
------------- -------------------
Acceptance Date Section 3.03(a)
Acquisition Proposal Section 6.02(f)(i)
Agreement Opening Paragraph
Authorizations Section 4.13(a)(ii)
Certificates Section 3.01(b)
Closing Section 2.02
Code Section 2.10
Company Opening Paragraph
Company Intellectual Property Rights Section 4.14(e)
Company Permits Section 4.12
Company SEC Reports Section 4.05(a)
Company Securities Section 4.02(a)
Confidentiality Agreement Section 6.02(b)
Continuing Directors Section 1.04(b)
Copyrights Section 4.14(d)(ii)
Corporation Section 2.04
Corporation Law Recitals
Designated Business Section 6.11
Disclosure Letter Article IV
Effective Time Section 2.02
Employee Benefit Plans Section 4.09(a)
Environmental Law Section 4.13(b)
ERISA Section 4.09(a)
ERISA Affiliates Section 4.09(c)
Environmental Law Section 4.13(b)
Exchange Act Section 1.01(a)
Expiration Date Exhibit A
Existing Stock Options Section 3.03
Governmental Entity Section 4.04
Hazardous Substance Section 4.13(c)
HSR Act Section 4.04
Indemnified Parties Section 6.05
Intellectual Property Rights Section 4.14(d)
ISRA Section 4.04
ISRA Approval Section 6.10
Material Adverse Effect Section 9.09(e)
Material Contract Section 4.16(a)
Merger Section 2.01
Merger Agreement Exhibit A
Merger Consideration Section 2.06
Minimum Tender Condition Exhibit A
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Offer Section 1.01(a)
Offer Conditions Section 1.01(a)
Offer Documents Section 1.01(b)
Offer Price Section 1.01(a)
Option Consideration Section 3.03
Parent Opening Paragraph
Parent Benefit Plan Section 6.06
Patents Section 4.14(d)(iii)
Paying Agent Section 3.01(a)
Payment Fund Section 3.01(a)
Person Section 9.09(f)
Plan of Merger Section 1.02(a)
Potential Acquirer Section 6.02(a)
Preferred Stock Section 4.02(a)
Preliminary Proxy Statement Section 6.07
Proxy Statement Section 4.07(b)
Prudential Section 1.02(a)
Purchaser Opening Paragraph
Real Property Leases Section 4.15(b)
Release Section 4.13(d)
Schedule TO Section 1.01(b)
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Securities Act Section 4.05(a)
Shares Section 1.01(a)
Special Meeting Section 2.08
Software Section 4.14(d)(iv)
Stock Option Plans Section 3.03(a)
Stock Purchase Plan Section 3.03(a)
Subsequent Period Section 1.01(a)(ii)
Subsidiary Section 9.09(g)
Subsidiary Securities Section 4.02(b)
Superior Proposal Section 6.02(f)(ii)
Surviving Corporation Section 2.01
Takeover Laws Section 1.02(a)
Tax Section 9.09(h)
Tax Returns Section 9.09(i)
Termination Fee Section 8.03(b)
Trademarks Section 4.14(d)(i)
Transfer Agent Section 1.03
WARN Section 4.09(l)
1999 Financial Statements Section 4.05(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
May 2, 2000, among AUTOMATIC DATA PROCESSING, INC., a Delaware corporation
("PARENT"), FIS ACQUISITION CORP., a New Jersey corporation and a wholly owned
subsidiary of Parent ("PURCHASER") and XXXXXXXXXX GRAPHICS INTERNATIONAL, INC.,
a New Jersey corporation (the "COMPANY").
RECITALS
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that this Agreement and the transactions
contemplated hereby, including the Merger (as defined in Section 2.01), are
advisable and fair to, and in the best interests of, their respective
shareholders;
WHEREAS, the Board of Directors of the Company has adopted
resolutions approving the acquisition of the Company by Parent and Purchaser,
this Agreement and the transactions contemplated hereby, and has agreed to
recommend that the Company's shareholders approve the plan of merger (as such
term is used in Section 14A:10-1 of the New Jersey Business Corporation Act (the
"CORPORATION LAW")) contained in this Agreement and the transactions
contemplated hereby and tender their Shares (as defined in Section 1.01(a)(i));
WHEREAS, simultaneously with the execution and delivery of
this Agreement, certain shareholders of the Company have entered into a Voting
and Tender Agreement, dated as of the date hereof, with Parent; and
WHEREAS, Parent, Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 THE OFFER.
(a) (i) Provided that this Agreement shall not have been
terminated in accordance with Section 8.01 and that none of the events set forth
in clause (iii) of Exhibit A hereto shall have occurred or be existing,
Purchaser shall, and Parent shall cause Purchaser to, as promptly as practicable
(but in no event later than seven (7) business days following the public
announcement of the terms of this Agreement) commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")) an offer to purchase all outstanding shares of common stock of the
Company, without par value (the "SHARES"), at a price (such price, or any higher
price as may be paid in the Offer, the "OFFER PRICE") of $22 per Share, net to
the seller in cash (such tender offer, as it may be amended and supplemented
from time to time as permitted under this Agreement, the "OFFER"). The
obligation
of Purchaser to consummate the Offer and to accept for payment and to pay for
any Shares tendered pursuant thereto shall be subject to only the terms and
conditions set forth in this Agreement and to those conditions set forth in
Exhibit A hereto (the "OFFER CONDITIONS"), any of which (other than the Minimum
Tender Condition (as defined in Exhibit A)) may be waived by Purchaser in its
sole discretion. The initial expiration date of the Offer shall be the twentieth
business day following the commencement of the Offer (determined in accordance
with Rule 14d-1(e)(6) under the Exchange Act). Purchaser expressly reserves the
right to modify the terms of the Offer, except that, without the prior written
consent of the Company, Purchaser shall not (A) decrease the Offer Price or
change the form of the consideration payable in the Offer, (B) decrease the
number of Shares sought pursuant to the Offer, (C) impose additional conditions
to the Offer, (D) change the conditions to the Offer or (E) make any other
change in the terms or conditions of the Offer which is adverse to the holders
of Shares.
(ii) Subject to the terms and conditions of this Agreement and
to the satisfaction or waiver of the Offer Conditions as of any scheduled
expiration of the initial offering period of the Offer, Purchaser shall accept
for payment and pay for Shares validly tendered and not withdrawn pursuant to
the Offer as soon as practicable after such scheduled expiration.
Notwithstanding the foregoing, Purchaser and Parent shall have the right to, (A)
extend the Offer, from time to time, if at the expiration date of the Offer
(with respect to either the initial offering period or an extended offering
period, as the case may be) any of the conditions to the Offer have not been
satisfied or waived, (B) extend the Offer for any period required by any
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, or (C) elect to
provide one or more subsequent offering periods of up to an additional twenty
(20) business days in the aggregate (collectively, the "SUBSEQUENT PERIOD")
pursuant to Rule 14d-11 of the Exchange Act. Purchaser shall immediately accept
and promptly pay for all Shares as they are tendered during the Subsequent
Period. In addition, the Offer Price may be increased and the Offer may be
extended to the extent required by law in connection with such increase in each
case without the consent of the Company.
(b) On the date of commencement of the Offer, Parent and
Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement
on Schedule TO (together with all amendments and supplements thereto, the
"SCHEDULE TO") with respect to the Offer which will comply in all material
respects with the provisions of, and satisfy in all material respects the
requirements of, such Schedule TO and all applicable Federal securities laws and
shall contain the offer to purchase and related letter of transmittal and other
ancillary Offer documents and instruments pursuant to which the Offer will be
made (collectively with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). The Company and its counsel shall be given a reasonable opportunity
to review and comment on the Offer Documents prior to their filing with the SEC.
Parent and Purchaser agree to provide the Company with, and to consult with the
Company regarding, any comments that may be received from the SEC or its staff
with respect to the Offer Documents promptly after receipt thereof. Parent,
Purchaser 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 it shall
have become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause the Offer Documents as so
corrected
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to be filed with the SEC and be disseminated to holders of Shares, in each case,
as and to the extent required by applicable law.
SECTION 1.02 COMPANY ACTIONS. (a) The Company hereby consents
to the Offer and represents and warrants that (i) its Board of Directors (at a
meeting or meetings duly called and held prior to the date hereof) has (A)
determined that the terms of each of the Offer and the Merger (as hereinafter
defined) are advisable and fair to, and in the best interests of, the
shareholders of the Company, (B) approved and adopted this Agreement and the
transactions contemplated hereby (including the Offer and the Merger) (C)
resolved to recommend acceptance of the Offer and approval and adoption of the
plan of merger (as such term is used in Section 14A:10-1 of the Corporation Law
and attached as Exhibit B hereto (the "PLAN OF MERGER")) contained in this
Agreement by the shareholders of the Company and directed that the Plan of
Merger be submitted to the shareholders of the Company for approval, (D) taken
all necessary steps to render the New Jersey Shareholders Protection Act
(Sections 14A:10A-1 to 14A:10A-9 of the Corporation Law) inapplicable to Parent
and Purchaser and to the Merger and the acquisition of Shares pursuant to the
Offer and (E) resolved to elect, to the extent permitted by law, not to be
subject to any "moratorium", "control share acquisition", "business
combination", "fair price" or other form of anti-takeover laws and regulations
(collectively, "TAKEOVER LAWS") of any jurisdiction that may purport to be
applicable to this Agreement (PROVIDED, HOWEVER, that prior to the purchase of
any Shares pursuant to the Offer, such consent, determination, recommendation,
rendering and election by the Company's Board of Directors specified in Section
1.02(a)(i) above may be withdrawn, modified, rescinded or amended if the
Company's Board of Directors determines to accept a Superior Proposal (as
defined in Section 6.02(f) below)), and (ii) Prudential Securities Incorporated
("PRUDENTIAL"), the Company's financial advisor, has delivered to the Company's
Board of Directors an opinion to the effect that the consideration to be paid in
the Offer and the Merger to the Company's shareholders is fair, from a financial
point of view, to such shareholders. The Company hereby represents that it has
obtained all necessary consents to permit the inclusion of the fairness opinion
of Prudential in the Offer Documents and the Proxy Statement (as defined below).
(b) Upon commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-9") containing
the recommendations of its Board of Directors described in Section 1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer Documents
and shall disseminate the Schedule 14D-9 to shareholders of the Company as
required by Rule 14D-9 promulgated under the Exchange Act. The Company shall
cooperate with Parent and Purchaser to include a copy of the Schedule 14D-9 with
the Offer Documents mailed or furnished to the Company's shareholders. Parent
and Purchaser shall provide the Company all information reasonably requested by
the Company for inclusion in the Schedule 14D-9. Parent, Purchaser and their
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
Parent and Purchaser with, and to consult with Parent and Purchaser regarding,
any comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon receipt thereof. Parent, Purchaser and the Company
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agree to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed
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with the SEC and be disseminated to holders of Shares, in each case, as and to
the extent required by applicable law.
SECTION 1.03 SHAREHOLDER LISTS. In connection with the Offer,
upon Parent's or Purchaser's request, the Company shall cause Continental Stock
Transfer & Trust Company, the Company's transfer agent (the "TRANSFER AGENT"),
to furnish Parent and Purchaser promptly with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and shall
cause the Transfer Agent to furnish Parent and Purchaser with such information
and assistance (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) as Parent or Purchaser or
their agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. Subject to the requirements of applicable law,
Parent and Purchaser, except only as is necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, 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 is terminated, will promptly deliver or cause to be delivered
to the Company all copies of such information then in their possession or under
their control.
SECTION 1.04 DIRECTORS. (a) Subject to applicable law and to
the extent permitted by the National Association of Securities Dealers, promptly
upon the purchase by Purchaser pursuant to the Offer of such number of Shares as
represents at least a majority of the outstanding Shares, and from time to time
thereafter, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, to serve on the Board of Directors of the
Company as will give Purchaser representation on the Board of Directors of the
Company equal to the product of (i) the number of directors on the Board of
Directors of the Company (giving effect to the election of any additional
directors pursuant to this section) and (ii) the percentage that such number of
Shares beneficially owned by Parent and/or Purchaser (including Shares accepted
for payment) so purchased bears to the number of Shares outstanding. The Company
shall, upon request by Purchaser, promptly take all actions necessary to cause
Purchaser's designees to be elected or appointed to the Board of Directors of
the Company, including without limitation, increasing the size of the Board of
Directors of the Company or securing the resignations of such number of
directors as is necessary to provide Purchaser with such level of
representation, or both; PROVIDED, HOWEVER, that the Board of Directors of the
Company shall continue to include no fewer than two Continuing Directors (as
defined below) until the Effective Time (as defined in Section 2.02). The
Company will cause persons designated by Purchaser to constitute the same
percentage as is on the entire Board of Directors of the Company (giving effect
to this Section 1.04) to be on (i) each committee of the Board of Directors of
the Company and (ii) each Board of Directors and each committee thereof of each
Subsidiary of the Company. The Company's obligations to appoint designees to its
Board of Directors shall be subject to compliance with Section 14(f) of the
Exchange Act. At the request of Purchaser, the Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 under the Exchange Act
in order to fulfill its obligations under this Section 1.04 and shall include in
the Schedule 14D-9 or otherwise timely mail to its shareholders all necessary
information to comply therewith. Parent and Purchaser will supply to the
Company, and be solely responsible for, all information with respect to
themselves and their respective officers, directors and affiliates required by
such Section and Rule.
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(b) Following the election or appointment of Purchaser's
designees pursuant to Section 1.04(a) and prior to the Effective Time, and so
long as there shall be at least one Continuing Director (as defined below), any
amendment or termination of this Agreement requiring action by the Company, any
extension of time for the performance of any of the obligations or other acts of
Parent or Purchaser under this Agreement and any exercise or waiver of any of
the Company's rights or remedies under this Agreement will require the
affirmative vote of a majority of the directors of the Company then in office
who are directors of the Company on the date hereof (the "CONTINUING
DIRECTORS"), which action shall be deemed to constitute the action of the full
Board of Directors even if such majority of Continuing Directors does not
constitute a majority of all directors then in office.
ARTICLE II
THE MERGER
SECTION 2.01 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the
Corporation Law, Purchaser shall be merged with and into the Company (the
"MERGER") as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VII hereof. The Company
shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION")
under the name "Xxxxxxxxxx Graphics International, Inc." and shall continue its
existence under the laws of New Jersey. In connection with the Merger, the
separate corporate existence of Purchaser shall cease. At the election of
Parent, any direct or indirect wholly-owned subsidiary of Parent may be
substituted for Purchaser as a constituent corporation in the Merger. In such
event, this Agreement shall be deemed modified to reflect the foregoing, and if
requested by Parent, the Company agrees to execute an appropriate amendment to
this Agreement in order to reflect the foregoing.
SECTION 2.02 CONSUMMATION OF THE MERGER. Subject to the
provisions of this Agreement, as soon as practicable following the satisfaction
or waiver of the conditions set forth in Article VII, Purchaser and the Company
shall cause the Merger to be consummated by filing with the office of the
Department of Treasury of the State of New Jersey the executed original and a
copy of the certificate of merger, as required by Section 14A:10-4.1 of the
Corporation Law, and shall take all such other and further actions as may be
required by law to make the Merger effective. Prior to the filing referred to in
this Section, a closing (the "CLOSING") will be held at 10 AM at the offices of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx (or
such other time and place as the parties may agree) for the purpose of
confirming all the matters contained herein. The time the Merger becomes
effective in accordance with applicable law is referred to as the "EFFECTIVE
TIME."
SECTION 2.03 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth herein and in the applicable provisions of the Corporation
Law.
SECTION 2.04 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Certificate of Incorporation and the Bylaws of Purchaser, in each case as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, in each case until
amended in accordance with applicable law; PROVIDED, HOWEVER,
5
that Article I of the Certificate of Incorporation of the Surviving Corporation
shall be amended to read in its entirety as follows: "ARTICLE I. The name of the
Corporation is Xxxxxxxxxx Graphics International, Inc. (the "CORPORATION")."
SECTION 2.05 DIRECTORS AND OFFICERS. The directors of
Purchaser immediately prior to the Effective Time and the officers of the
Company immediately prior to the Effective Time shall be the directors and
officers, respectively, of the Surviving Corporation until their respective
death, permanent disability, resignation or removal or until their respective
successors are duly elected and qualified all in accordance with applicable law.
SECTION 2.06 CONVERSION OF SHARES. Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
Parent, Purchaser or by any Subsidiary or affiliate of Parent, Purchaser or by
the Company, all of which shall be canceled without any consideration being
exchanged therefor) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted at the Effective Time into the right to
receive in cash an amount per Share (subject to any applicable withholding tax
specified in Section 2.10 hereof) equal to the Offer Price, without interest
(the "MERGER CONSIDERATION"), upon the surrender of the certificate representing
such Shares as provided in Section 3.01. At the Effective Time, each Existing
Stock Option (as defined in Section 3.03) shall be converted into the right to
receive the Option Consideration (as defined in Section 3.03) pursuant to
Section 3.03 hereof.
SECTION 2.07 CONVERSION OF COMMON STOCK OF PURCHASER. Each
share of common stock, no par value, of Purchaser issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one share of common stock of the Surviving Corporation.
SECTION 2.08 SHAREHOLDERS' MEETING. Unless the Merger is
consummated in accordance with Section 14A:10-5.1 of the Corporation Law as
contemplated by Section 2.09 and subject to applicable law, the Company acting
through its Board of Directors shall in accordance with applicable law duly
call, give notice of, convene and hold a special meeting (the "SPECIAL MEETING")
of its shareholders as soon as practicable following the consummation of the
Offer for the purpose of approving the Plan of Merger set forth in this
Agreement and include in the Proxy Statement (as defined in Section 4.07(b)) the
recommendation of its Board of Directors that shareholders of the Company vote
in favor of the adoption of the Plan of Merger set forth in this Agreement.
Parent and Purchaser each agree that, at the Special Meeting, all of the Shares
acquired pursuant to the Offer or otherwise owned or acquired by Parent or
Purchaser or any of their affiliates shall be voted in favor of the Merger.
SECTION 2.09 MERGER WITHOUT MEETING OF SHAREHOLDERS. If
Purchaser, in combination with Parent or any other direct or indirect Subsidiary
of Parent, shall hold at least 90 percent of the outstanding shares of each
class of capital stock of the Company, each of Parent, Purchaser and the Company
shall take all necessary and appropriate action to cause the Merger to become
effective, as soon as practicable after the consummation of the Offer, without a
meeting of shareholders of the Company, in accordance with Section 14A:10-5.1 of
the Corporation Law.
6
SECTION 2.10 WITHHOLDING TAXES. Parent, Purchaser and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to a holder of Shares or Existing Stock Options
pursuant to the Offer or the Merger any stock transfer taxes and such amounts as
are required to be withheld under the Internal Revenue Code of 1986, as amended
(the "CODE"), or any applicable provision of state, local or foreign tax law. To
the extent that amounts are so withheld, such withheld amounts shall be treated
for all purposes of this Agreement and the Offer as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made.
ARTICLE III
PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Parent will cause Purchaser
to make available to a bank or trust company designated by Parent (the "PAYING
AGENT") sufficient funds to make the payments pursuant to Section 2.06 hereof on
a timely basis to holders (other than Parent or Purchaser or any of their
respective Subsidiaries) of Shares that are issued and outstanding immediately
prior to the Effective Time (such amounts being hereinafter referred to as the
"PAYMENT FUND"). The Paying Agent shall make the payments provided for in the
preceding sentence out of the Payment Fund. The Payment Fund shall not be used
for any other purpose, except as provided in this Agreement.
(b) As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall cause the Paying Agent to mail to each
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificate and receiving
payment therefor. Following surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed and such other documents
as may be reasonably required by the Paying Agent the holder of such Certificate
shall be paid in exchange therefor cash in an amount (subject to any applicable
withholding tax as specified in Section 2.10 hereof) equal to the product of the
number of Shares represented by such Certificate multiplied by the Merger
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a Person (as defined in Section 9.09)
other than the Person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. From and after the
Effective Time and until surrendered in accordance with the provisions of this
Section 3.01, each Certificate (other than Certificates representing Shares
owned by Parent or Purchaser or any of their respective Subsidiaries) shall
represent for all purposes solely the right to receive, in accordance with the
terms hereof, the Merger
7
Consideration in cash multiplied by the number of Shares evidenced by such
Certificate, without any interest thereon.
(c) If any Certificate shall have been lost, stolen or
destroyed, upon the making on an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will deliver in exchange for such affidavit claiming such Certificate is lost,
stolen or destroyed, the applicable Merger Consideration with respect to the
Shares formerly represented thereby.
(d) Any portion of the Payment Fund (including the proceeds of
any investments thereof) that remains unclaimed by the former shareholders of
the Company for six months after the Effective Time shall be repaid to the
Surviving Corporation. Any former shareholders of the Company who have not
complied with Section 3.01 hereof prior to the end of such six-month period
shall thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) but only as general creditors thereof
for payment of their claim for the Merger Consideration, without any interest
thereon, upon due surrender of the Certificates held by them. Neither Parent,
the Surviving Corporation nor the Paying Agent, shall be liable to any holder of
Shares for any monies delivered from the Payment Fund or otherwise to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to two years after the
Effective Time (or such earlier date as shall be immediately prior to the date
that such unclaimed funds would otherwise become subject to any abandoned
property, escheat or similar law) unclaimed funds payable with respect to such
certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
SECTION 3.02 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the
close of business on the day of the Effective Time, the stock transfer books of
the Company shall be closed. At and after the Effective Time, there shall be no
registration of transfers of Shares which were outstanding immediately prior to
the Effective Time on the stock transfer books of the Surviving Corporation.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided in this Agreement or by applicable law. 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 previously represented by such Certificates. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged for cash as
provided in this Article III.
SECTION 3.03 EXISTING STOCK OPTIONS. (a) Each option or right
to acquire Shares (the "EXISTING STOCK OPTIONS") granted under any stock option
or similar plan of the Company or under any agreement to which the Company or
any Subsidiary is a party (other than stock purchase rights under the Company's
Employee Stock Purchase Plan) (the "STOCK OPTION PLANS") which is outstanding on
the date that the amendment to Schedule TO reporting the initial acceptance by
Purchaser of the Shares tendered in the Offer is filed with the SEC (the
8
"ACCEPTANCE DATE"), whether or not then exercisable or vested, shall by virtue
of the Merger and without any action on the part of the Company or the holder
thereof, be converted into and shall become a right to receive an amount in
cash, without interest, with respect to each Share subject thereto equal to the
excess, if any, of the Merger Consideration over the per share exercise or
purchase price of such Existing Stock Option. On and after the date hereof, the
Company shall grant no additional options or rights to acquire Shares under the
Stock Option Plans. On the Acceptance Date, each holder of an Existing Stock
Option shall be entitled to receive, in full satisfaction of such Existing Stock
Option, an amount in cash without interest in respect thereof equal to the
product of (i) the excess, if any, of the Merger Consideration over the per
share exercise or purchase price of such Existing Stock Option and (ii) the
number of Shares subject to such Existing Stock Option (such amount being
hereinafter referred to as the "OPTION CONSIDERATION") and each Existing Stock
Option shall be canceled on the Acceptance Date. Such payment shall be reduced
by any income or employment tax withholding required under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of such Existing Stock Option. The
Stock Option Plans shall terminate as of the Acceptance Date. In addition, the
Company shall take such actions as are reasonably necessary so that (1) no
offering period under the Company's Employee Stock Purchase Plan (the "STOCK
PURCHASE PLAN") commences after the date hereof, (2) any offering period under
the Stock Purchase Plan which commenced on or prior to the date hereof is
terminated prior to the Acceptance Date and (3) all funds contributed by
employees of the Company or its Subsidiaries under the Stock Purchase Plan that
are not applied on or prior to the Acceptance Date to the purchase of Shares are
returned to such employees as soon as practicable after the Acceptance Date. All
administrative and other rights and authorities granted under any Stock Option
Plan and under the Stock Purchase Plan to the Company, the Board of Directors of
the Company or any Committee or designee thereof, shall, following the
Acceptance Date, reside with the Surviving Corporation.
(b) The Company shall take all reasonable actions required to
exempt under SEC Rule 16(b)-3 the treatment of the Existing Stock Options
contemplated hereby, including, if necessary or appropriate, obtaining the
approval of the Company's Board of Directors, of the type described in a
pertinent SEC no-action letter dated January 12, 1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in appropriately corresponding sections of
the disclosure letter previously delivered by the Company to Parent with respect
to this Agreement (the "DISCLOSURE LETTER"), the Company represents and warrants
to Parent and Purchaser as follows:
SECTION 4.01 ORGANIZATION AND QUALIFICATION. The Company and
each of its Subsidiaries is a duly organized and validly existing corporation in
good standing under the laws of its jurisdiction of incorporation, with all
corporate power and authority to own its properties and conduct its business as
currently conducted on the date hereof; except where the failure to be so
organized, existing and in good standing or to have such power and authority has
not had or
9
would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect; and is duly qualified and in good standing as a foreign
corporation authorized to do business in each of the jurisdictions in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing, has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect. Section 4.01 of the Disclosure Letter sets forth a true and
complete list of each of the Company's Subsidiaries. Neither the Company nor any
of its Subsidiaries, directly or indirectly, owns any interest in any Person
other than in the Company's Subsidiaries.
SECTION 4.02 CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 30,000,000 Shares and 10,000,000 shares of Preferred
Stock, without par value (the "PREFERRED STOCK"). As of the close of business on
April 28, 2000, 5,757,606 Shares were issued and outstanding and no shares of
Preferred Stock were issued and outstanding. Section 4.02(a) of the Disclosure
Letter contains a list, as of April 28, 2000, of the name of each Existing Stock
Option holder, the number of outstanding Existing Stock Options held by such
holder, the number of Shares such holder is entitled to receive upon the
exercise of each Existing Stock Option and the corresponding exercise price.
Section 4.02(a) of the Disclosure Letter also contains a list, as of the close
of business on the day immediately preceding the date hereof, of any Shares
issued subsequent to April 28, 2000 upon the exercise of Existing Stock Options
and stock purchase rights under the Stock Purchase Plan, other than the Shares
to be issued subsequent to the date hereof pursuant to the Stock Purchase Plan.
Except as disclosed pursuant to the immediately preceding sentence, since April
28, 2000, the Company has not issued any Shares, has not granted any options,
warrants or rights or entered into other agreements or commitments to issue or
purchase Shares (under the Stock Option Plans or otherwise) and has not split,
combined or reclassified any of its shares of capital stock. All of the
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable and are free of preemptive rights. Except for the
Existing Stock Options and stock purchase rights under the Stock Purchase Plan,
there are no outstanding (i) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities or ownership
interests in the Company, (ii) options, warrants, rights or other agreements or
commitments to acquire from the Company, or obligations of the Company to issue,
any capital stock, voting securities or other ownership interests in (or
securities convertible into or exchangeable for capital stock or voting
securities or other ownership interests in) the Company, (iii) obligations of
the Company to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other ownership interests in
the Company (the items in clauses (i), (ii) and (iii), together with the capital
stock of the Company, being referred to collectively as "COMPANY SECURITIES") or
(iv) obligations by the Company or any of its Subsidiaries to make any payments
based on the price or value of the Shares. There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of capital stock of the Company or any of its
Subsidiaries.
(b) The Company is directly or indirectly the record and
beneficial owner of all the outstanding shares of capital stock of each Company
Subsidiary, except as set forth in
10
Section 4.02(b) of the Disclosure Letter, free and clear of any lien, mortgage,
pledge, charge, security interest or encumbrance of any kind, and there are no
irrevocable proxies with respect to any such shares. There are no outstanding
(i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or ownership
interests in any Subsidiary of the Company, (ii) options, warrants, rights or
other agreements or commitments to acquire from the Company or any of its
Subsidiaries (or obligations of the Company or any of its Subsidiaries to issue)
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any of its Subsidiaries, (iii) obligations
of the Company or any of its Subsidiaries to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in any of the Company's Subsidiaries (the items in
clauses (i), (ii) and (iii), together with the capital stock of such
Subsidiaries, being referred to collectively as "SUBSIDIARY SECURITIES") or (iv)
obligations of the Company or any of its Subsidiaries to make any payment based
on the value of any shares of any Subsidiary. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.03 AUTHORITY FOR THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and subject to obtaining any necessary shareholder approval of the Plan of
Merger contained in this Agreement, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors 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,
other than the approval of the Plan of Merger contained in this Agreement, by
the holders of a majority of the outstanding Shares prior to the consummation of
the Merger (unless the Merger is consummated pursuant to Section 14A:10-5.1 of
the Corporation Law). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and assuming the due
authorization, execution and delivery of this Agreement by Purchaser and Parent
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
SECTION 4.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
Subsidiaries, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any foreign, federal, state or local government
or subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"GOVERNMENTAL ENTITY") except as may be required under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the New Jersey
Industrial Site Recovery Act, N.J.S.A. 13:1K-6 ET SEQ. ("ISRA"), the Securities
Act, the Exchange Act, the Corporation Law and the "blue sky" or securities laws
of various states, (c) except as set forth in Section 4.04(c) of the Disclosure
Letter, require any consent, waiver or approval or result in a default (or give
rise to any right of termination, cancellation, modification or acceleration)
under any of the terms, conditions or provisions of any note,
11
license, agreement, contract, indenture or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets may be bound, (d)
result in the creation or imposition of any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind on any asset of the Company or any
of its Subsidiaries or (e) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries or by
which any of their respective assets are bound, except in the case of clauses
(b), (c), (d) and (e) for any of the foregoing that has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
SECTION 4.05 REPORTS; FINANCIAL STATEMENTS.
(a) Except as set forth in Section 4.05(a) of the Disclosure
Letter, since April 22, 1998, the Company has duly filed all forms, reports,
schedules, proxy statements and documents required to be filed by it with the
SEC. True and correct copies of all filings made by the Company with the SEC
since such date and prior to the date hereof (the "COMPANY SEC REPORTS"),
whether or not required under applicable laws, rules and regulations and
including any registration statement filed by the Company under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), have been either made available
or are publicly available to Parent and Purchaser. As of their respective dates,
the Company SEC Reports (other than preliminary material) complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports and none of the Company SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, at the time filed, contained any untrue statement of a
material fact or omitted 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.
(b) The audited consolidated financial statements of the
Company for the year ended December 31, 1999 (the "1999 FINANCIAL STATEMENTS")
and the audited and unaudited consolidated financial statements of the Company
included (or incorporated by reference) in the Company SEC Reports comply as to
form in all material respects with applicable accounting requirements and with
the rules and regulations of the SEC with respect thereto and were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of their
respective dates, and the consolidated income, shareholders equity, results of
operations and changes in consolidated financial position or cash flows for the
periods presented therein, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which have not been and are not reasonably likely to be materially adverse to
the Company and its Subsidiaries taken as a whole.
(c) Except (i) as reflected or reserved against or disclosed
in the 1999 Financial Statements, (ii) for liabilities that are not required to
be recorded or reflected on a balance sheet under United States generally
accepted accounting principles and (iii) as incurred in the ordinary course of
business since December 31, 1999, neither the Company nor any of its
Subsidiaries has
12
any liabilities of any nature, whether accrued, absolute, fixed, contingent or
otherwise, or whether due or to become due, other than liabilities that have not
had or would not reasonably be likely to have, individually or in the aggregate,
a Material Adverse Effect.
SECTION 4.06 ABSENCE OF CERTAIN CHANGES. Except as set forth
in Section 4.06 of the Disclosure Letter, since December 31, 1999, (a) the
Company and its Subsidiaries have not, to the knowledge of the Company, suffered
any change, condition, event or development that would, or could reasonably be
likely to have, a Material Adverse Effect, (b) the Company and its Subsidiaries
have conducted in all material respects their respective businesses only in the
ordinary course consistent with past practice, except for the negotiation and
execution and delivery of this Agreement and (c) there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the Shares or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of capital stock or
other securities in, or other ownership interests in, the Company or any of its
Subsidiaries; (ii) any change by the Company in accounting methods, principles
or practices except as required by changes in United States generally accepted
accounting principles; or (iii) any action by the Company or any of its
Subsidiaries which, if taken after the date hereof, would constitute a breach of
clauses (a)-(l) of Section 6.01.
SECTION 4.07 SCHEDULE 14D-9; OFFER DOCUMENTS AND PROXY
STATEMENT.
(a) None of the information supplied or to be supplied by or,
to the knowledge of the Company, on behalf of the Company or any affiliate of
the Company expressly for inclusion in the Offer Documents will, at the times
such documents are filed with the SEC and are mailed to shareholders of the
Company, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and any supplement or amendment thereto will not,
at the time they are filed with the SEC and at the time of any distribution or
dissemination thereof, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by the Company
with respect to information supplied in writing by Parent, Purchaser or an
affiliate of Parent or Purchaser for inclusion therein.
(b) The Proxy Statement, and any other schedule or document
required to be filed by the Company in connection with the Merger, will not, at
the time the Proxy Statement is first mailed and at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to information supplied in writing by Parent, Purchaser or an
affiliate of Parent or Purchaser for inclusion therein. The letter to
shareholders, notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, that may be provided to shareholders
of the Company in connection with the Merger (including any amendments or
supplements), and any schedules required to be filed with the SEC in connection
therewith, as from time to time amended or supplemented, are collectively
referred to as the "PROXY STATEMENT." The 14D-9 and the Proxy
13
Statement, and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the Exchange Act.
SECTION 4.08 BROKERS. Except for Prudential, no Person or
entity is entitled to receive any brokerage, finder's or other fee or commission
in connection with this Agreement or the transactions contemplated hereby based
upon agreements made by or on behalf of the Company or any of its Subsidiaries.
SECTION 4.09 EMPLOYEE BENEFIT MATTERS.
(a) Section 4.09(a) of the Disclosure Letter lists all
material pension, retirement, savings, disability, medical, dental, health, life
(including all individual life insurance policies as to which the Company or any
of its Subsidiaries is the owner, beneficiary or both), death benefit, group
insurance, profit sharing, deferred compensation, stock option or other
equity-based compensation, bonus, incentive, vacation pay, severance pay, Code
Section 125 "cafeteria" or "flexible benefit" plan, or other employee benefit
plan, trust, arrangement, contract, agreement, policy or commitment (including
without limitation, all employee pension benefit plans as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all employee welfare benefit plans as defined in Section 3(1) of
ERISA), (A) under which current or former employees of the Company or any of its
Subsidiaries or their respective ERISA Affiliates (as defined below) are
entitled to participate by reason of their employment with the Company or any of
its Subsidiaries or their respective ERISA Affiliates, whether or not any of the
foregoing is funded, whether insured or self-funded and whether written or oral
and with respect to which the Company or any of its Subsidiaries or their
respective ERISA Affiliates are a party or a sponsor or a fiduciary thereof or
by which the Company or any of its Subsidiaries or their respective ERISA
Affiliates (or any of their rights, properties or assets) are bound or (B) with
respect to which the Company or any of its Subsidiaries otherwise may have any
material liability as described in Section 4.09(a) of the Disclosure Letter (the
"EMPLOYEE BENEFIT PLANS"). For each Employee Benefit Plan, the Company has
provided true and correct copies of all plan documents, summary plan
descriptions, determination letters, all material communications with any
government entity or agency (including the Internal Revenue Service and the
PBGC) given or received with respect to any Employee Benefit Plan within the
past five years, and the three most recent Forms 5500, including all financial
or actuarial reports, if applicable, and all other attached schedules.
(b) The Company, its Subsidiaries and their respective ERISA
Affiliates and, to their knowledge, any "administrator(s)" (as described in
Section 3(16)(A) of ERISA) of the Employee Benefit Plans have complied in all
material respects with such Plans' terms and with the applicable requirements of
ERISA, the Code and all other statutes, orders, rules or regulations,
specifically including the reporting and disclosure requirements of Part 1 of
Title I, and Title IV of ERISA and the Code, in a timely and accurate manner,
such that no material penalties are reasonably expected to be imposed on the
Company or its Subsidiaries or their respective ERISA Affiliates, and no
material penalties may be imposed on the Parent or the Purchaser under ERISA,
the Code or otherwise with respect to the Employee Benefit Plans or any related
trusts.
14
(c) For purposes of this Agreement, "ERISA AFFILIATES" shall
mean any trade or business (whether or not incorporated) that is part of the
same controlled group, or under common control with, or part of an affiliated
service group that includes, the Company or any of its Subsidiaries within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
(d) With respect to the Employee Benefit Plans:
(i) No Employee Benefit Plan is subject to Title IV
or ERISA or Section 412 of the Code, and no Employee Benefit Plan is a
"multiemployer" plan within the meaning of Section 3(37) of ERISA. No
Employee Benefit Plan is a "multiple employer plan" within the meaning
of the Code or ERISA. Each of the Employee Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter that the plan complies with
the Tax Reform Act of 1986, as amended, pursuant to a request which
accurately described such plan, and has been administered and operated
in all material respects in accordance with all laws so as to maintain
such qualification.
(ii) All contributions or other amounts payable by
the Company or any of its Subsidiaries or their ERISA Affiliates
through the date hereof with respect to each Employee Benefit Plan in
respect of current or prior plan years have been either paid or accrued
on the Company's regularly prepared financial statements to the extent
required under the terms of such plan or in accordance with US GAAP.
(iii) There are no pending, or to the Company's
knowledge, threatened or anticipated material claims (other than
routine claims for benefits) by, on behalf of or against any of the
Employee Benefit Plans or any trust related thereto or, to the
reasonable knowledge of the Company, by, on behalf of or against any
fiduciary of such plans.
(e) Neither the Company nor any of its Subsidiaries has any
material liability, whether absolute or contingent, direct or indirect,
including any obligations under any Employee Benefit Plan, with respect to any
misclassification of a person as an independent contractor rather than as an
employee or with respect to any employees "leased" from another employer.
(f) Except as provided in Section 3.03 hereof, the
consummation of the transactions contemplated by this Agreement will not, with
respect to employees or former employees of the Company or any of its
Subsidiaries: (A) entitle any individual to severance pay; (B) accelerate the
time of payment or vesting of, increase the amount of, or satisfy a condition to
the compensation due to any individual under any Employee Benefit Plan; or (C)
result in the payment of an amount that could, individually or in combination
with any other such payment, constitute an "excess parachute payment" under Code
section 280G(b)(1).
(g) Except as set forth in Section 4.09(g) of the Disclosure
Letter, each Employee Benefit Plan may be amended or terminated in accordance
with its terms and applicable law after the Effective Time.
15
(h) Except as set forth in Section 4.09(h) of the Disclosure
Letter (A) neither the Company nor any of its Subsidiaries has or will have any
material liability or obligation under any Employee Benefit Plan which provides
medical or death benefits with respect to current or former employees of the
Company or any of its Subsidiaries beyond their termination of employment (other
than coverage mandated by law); and (B) each of the Company, its Subsidiaries
and their respective ERISA Affiliates which maintains a "group health plan,"
within the meaning of Section 607(1) of ERISA has materially complied with the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, the
Health Insurance Portability and Accountability Act of 1996 and any other
applicable federal, state or local law.
(i) No "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to
any Employee Benefit Plan subject to ERISA, other than such a transaction
subject to an administrative or statutory exemption, with respect to which a
material tax, penalty or other amount may reasonably be expected to be imposed
on the Company or any of its Subsidiaries or their respective ERISA Affiliates.
(j) None of the Company or any of its Subsidiaries, or any of
their respective ERISA Affiliates, or any organization with respect to which any
such entity is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction described in Section 4069 of
ERISA which has had or would reasonably be likely to have, a Material Adverse
Effect.
(k) No liability under any Employee Benefit Plan has been
funded or satisfied with the purchase of a contract from an insurance company
that is not rated AA by Standard & Poor's Corporation or the equivalent by any
other nationally recognized rating agency.
(l) To the Company's knowledge, there has been no "mass
layoff" or "plant closing," as each such term is defined in the Worker
Adjustment and Retraining Notification Act of 1986 ("WARN"), with respect to the
employees of the Company or any of its Subsidiaries, with respect to which there
could be any future material liability to such employees under WARN.
(m) Other than as required by law, there is no announced plan
or legally binding commitment to create any additional material Employee Benefit
Plans or to amend or modify in any material respects any Existing Employee
Benefit Plan
(n) Except as set forth in Section 4.09(n) of the Disclosure
Letter, none of the Company or any of its Subsidiaries is a party to any
collective bargaining or other labor union contract. To the Company's reasonable
knowledge, there are no union organization attempts underway with respect to any
employees of the Company or, any of its Subsidiaries. There is no pending or, to
the knowledge of the Company, threatened material labor dispute, strike or work
stoppage involving such employees. To the reasonable knowledge of the Company,
neither the Company nor any of its Subsidiaries has committed any material
unfair labor practices (as defined in the National Labor Relations Acts of 1947,
as amended) in connection with the operation of its business and except as set
forth in Section 4.09(n) of the Disclosure Letter, there
16
is no pending or, to the reasonable knowledge of the Company, threatened
material charge or complaint against the Company or any of its Subsidiaries by
the National Labor Relations Board or any comparable state or local agency.
SECTION 4.10 LITIGATION, ETC. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries that if
adversely determined would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect or would, individually or in the aggregate,
with any other such claims, suits, actions or proceedings or governmental
investigations, reasonably be likely to have a Material Adverse Effect or, as of
the date hereof, that in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer and the Merger or seeks an award of damages.
Neither the Company nor any of its Subsidiaries is subject to any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company that has had or
would reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 4.11 TAX MATTERS.
(a) Except as set forth in Section 4.11(a) of the Disclosure
Letter, the Company and its Subsidiaries have duly filed all Tax Returns
required to be filed by applicable law, regulations and administrative
pronouncements with respect to the Company and its Subsidiaries (or any of them)
or any of their income, properties or operations as of the date hereof in a
timely manner (taking into account applicable filing extensions listed in
Section 4.11(a) of the Disclosure Letter, except to the extent that failure to
make such filing has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect. All such returns
are accurate and complete in all material respects. All Tax Returns required to
be filed by or with respect to the Company and its Subsidiaries (or any of them)
after the date hereof and on or before the Effective Time shall be prepared and
timely filed (taking into account applicable filing extensions) in a manner
consistent with prior years and applicable law, regulations and administrative
pronouncements, except where a failure to make such filing has not had or would
not reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect. Except as set forth in Section 4.11(a) of the Disclosure Letter,
no penalties or other charges in a material amount are or will become due with
respect to the late filing of any Tax Return of the Company and its Subsidiaries
(or any of them) or payment of any Tax of the Company and its Subsidiaries (or
any of them), required to be filed or paid on or before the Effective Time.
(b) Except as set forth in Section 4.11(b) of the Disclosure
Letter and except where a failure of a statement contained in (i)-(iv) below to
be true or complete has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect with respect to all
Tax Returns filed by or with respect to the Company and its Subsidiaries (or any
of them):
(i) to the knowledge of the Company, the statute
of limitations for the assessment of corporate income taxes has expired
for all years prior to 1996;
17
(ii) no audit is in progress;
(iii) no waiver or agreement has been executed for
the extension of time for the assessment or payment of any Tax; and
(iv) there is no deficiency proposed by a taxing
authority or threatened in writing by a taxing authority against the
Company or any of its Subsidiaries.
(c) Except as set forth in Section 4.11(c) of the Disclosure
Letter:
(i) all material amounts required to be paid on or
before the date hereof by or with respect to the Company and its
Subsidiaries (or any of them) with respect to Taxes have been timely
paid; and
(ii) any material amounts required to be paid by or
with respect to the Company and its Subsidiaries (or any of them) with
respect to Taxes after the date hereof and on or before the Effective
Time shall be timely paid.
(d) Except as set forth in Section 4.11(d) of the Disclosure
Letter, neither the Company nor any of its Subsidiaries has been or is
a party to any tax sharing agreement or similar arrangement.
(e) Section 4.11(e) of the Disclosure Letter identifies:
(i) with respect to Subsidiaries of the Company
acquired from a common parent of an affiliated group of corporations
that filed a consolidated federal income tax return, the common parent
of such group, and the period to which such returns related, that
included the Company or any of its Subsidiaries;
(ii) all claims with respect to Taxes in a material
amount that have been asserted against the Company and its Subsidiaries
(or any of them) under any tax sharing agreement to which any of them
is a party.
(f) The Company and its Subsidiaries have made adequate
provisions in accordance with United States generally accepted accounting
principles appropriately and consistently applied to each of the Company and its
Subsidiaries in the consolidated financial statements included in the SEC
Reports for the payment of all Taxes for which each of the Company and its
Subsidiaries may be liable for the periods covered thereby that were not yet due
and payable as of the dates thereof, except for inadequate provision for tax
liabilities that has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.12 COMPLIANCE WITH LAW. Neither the Company nor any
of its Subsidiaries is in conflict in any material respect with, in default in
any material respect with respect to or in violation in any material respect of,
any material statute, law, ordinance, rule, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected. The
18
Company and its Subsidiaries have all permits, licenses, authorizations,
consents, approvals and franchises from Governmental Entities required to
conduct their businesses as currently conducted (the "COMPANY PERMITS"), except
for such permits, licenses, authorizations, consents, approvals and franchises
the absence of which has not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect or a material
adverse effect on the ability of the parties to consummate the Offer or the
Merger. The Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except where the failure so to comply has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect or a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
SECTION 4.13 ENVIRONMENTAL MATTERS. (a) (i) The Company and
each of its Subsidiaries have been and are in compliance with all applicable
Environmental Laws (as defined in Section 4.13(b)) except for such instances of
non-compliance that have not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect, (ii) the Company
and each of its Subsidiaries have all material permits, licenses, consents,
approvals, waivers, variances and other authorizations ("AUTHORIZATIONS") that
are required with respect to the operation of its business, property and assets
under the Environmental Laws and are in compliance with such Authorizations and
all such Authorizations are in full force and effect except for such
non-compliance or failures to be in full force and effect that have not had and
would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect, (iii) except as set forth in Section 4.13 of the
Disclosure Letter, none of the Company or its Subsidiaries are subject to any
material claims, actions, suits, proceedings, investigations, decrees, judgments
or orders pursuant to Environmental Law or principles of common law relating to
pollution of the environment or health and safety which have had or would
reasonably be likely to have a Material Adverse Effect.
(b) For purposes of this Agreement, "ENVIRONMENTAL LAW" means
any statute, law, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries relating to (i) pollution
or the protection or preservation of the environment or natural resources, (ii)
Releases or threatened Releases, and (iii) the management (including use,
treatment, handling, storage, disposal, transportation, recycling or
remediation) of any Hazardous Substance.
(c) For purposes of this Agreement, "HAZARDOUS SUBSTANCE"
means any substance, pollutant, contaminant, chemical or other material
(including petroleum or any fraction thereof, asbestos or
asbestos-containing-material, polychlorinated biphenyls, urea formaldehyde foam
insulation) or waste that is identified or regulated under any Environmental
Law.
(d) For purposes of this Agreement, "RELEASE" means any spill,
discharge, leak, emission, disposal, injection, escape, dumping, leaching,
dispersal, emanation, migration or release of any kind whatsoever of any
Hazardous Substance in, on, into, through or onto the environment.
19
SECTION 4.14 INTELLECTUAL PROPERTY.
(a) Section 4.14(a) of the Disclosure Letter lists the
Company's Intellectual Property Rights on the date hereof falling within the
following categories that are material to the Company and its Subsidiaries taken
as a whole: (i) Trademarks, (ii) Copyrights, (iii) Patents, (iv) Software (other
than commercially available software used under a shrink-wrap license), (v)
agreements under which the Company or any of its Subsidiaries are licensed to
use Intellectual Property owned by a third party (including all amendments or
supplements thereto or continuing thereunder) (other than commercially available
software licenses having annual fee obligations of less than $10,000) and (vi)
agreements under which the Company or any of its Subsidiaries has granted a
license to a third party to use any of the Company Intellectual Property Rights
(including all amendments or supplements thereto or continuing thereunder).
(b) (i) with respect to each of the Company Intellectual
Property Rights, the Company and its Subsidiaries at the Effective Time will
either (A) be the sole and exclusive owners of the Company Intellectual Property
Rights free and clear of any royalty or other payment obligation, lien or charge
or (B) have sufficient rights to use such Company Intellectual Property Rights
under a valid and enforceable license from a third party, (ii) the Company
Intellectual Property Rights are fully assignable, without material conditions,
limitations or restrictions and (iii) there are no agreements which materially
restrict or limit the use by the Company or its Subsidiaries of the Company
Intellectual Property Rights.
(c) (i) to the Knowledge of the Company, (A) the Company
Intellectual Property Rights and the products and services of the Company and
its Subsidiaries do not infringe on Intellectual Property Rights of any person
or entity in any country and (B) there exists no material impediment which would
impair the Company's rights to conduct its business or the business of its
Subsidiaries after the Effective Time pursuant to the Company Intellectual
Property Rights; and (ii) the Company and its Subsidiaries have taken all
reasonable and appropriate steps to protect the Company Intellectual Property
Rights and, where applicable, to preserve the confidentiality of the Company
Intellectual Property Rights.
(d) The term "INTELLECTUAL PROPERTY RIGHTS" means all
proprietary and other rights, including rights granted under license, in and to
the following:
(i) trademarks, service marks, trademark registrations,
service xxxx registrations, trade names and applications for
registration of trademarks and service marks ("TRADEMARKS");
(ii) copyrights, copyright registrations and applications for
registration of copyrights ("COPYRIGHTS");
(iii) patents, design patents and utility patents, all
applications for grant of any such patents pending as of the date
hereof or as of the Effective Time or filed within five years prior to
the date hereof, and all reissues, divisions, continuations-in-part and
extensions thereof ("PATENTS");
(iv) computer software, including source code, object code,
algorithms, databases, and all related documentation ("SOFTWARE");
20
(v) technical documentation, trade secrets, designs,
inventions, processes, formulae, know-how, operating manuals and
guides, plans, new product development, technical and marketing
surveys, material specifications, product specifications, invention
records, research records, labor routings, inspection processes,
equipment lists, engineering reports and drawing, architectural or
engineering plans, know-how agreements and other know-how; marketing
and licensing records, sales literature, customer lists, trade lists,
sales forces and distributor networks lists, advertising and
promotional materials, service and parts records, warranty records,
maintenance records and similar records; and
(vi) all rights and incidents of interest in and to all
noncompetition or confidentiality agreements;
in each case including any all applications therefor or registrations, renewals,
modifications and extensions thereof.
(e) The term "COMPANY INTELLECTUAL PROPERTY RIGHTS" shall mean
all material Intellectual Property Rights owned or used under license by the
Company or any of its Subsidiaries.
SECTION 4.15 REAL PROPERTY.
(a) Section 4.15(a) of the Disclosure Letter lists all of the
real property owned in fee by the Company and its Subsidiaries during the last
five years. Each of the Company and its Subsidiaries has good and marketable
title to each parcel of real property owned by it free and clear of all
mortgages, pledges, liens, encumbrances and security interests, except (i) those
reflected or reserved against in the balance sheet of the Company dated as of
December 31, 1999 and included in the SEC Reports, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest and
(iii) other liens, mortgages, pledges, encumbrances and security interests that
do not materially interfere with the Company's or such Subsidiary's use and
enjoyment of such real property or materially detract from or diminish the value
thereof or that, have had or would reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect.
(b) Section 4.15(b) of the Disclosure Letter sets forth a list
of all material leases, subleases and other agreements under which the Company
or any of its Subsidiaries uses or occupies or has the right to use or occupy,
now or in the future, any material real property (the "REAL PROPERTY LEASES").
Section 4.15(b) of the Disclosure Letter also sets forth a list of all material
leases, subleases and other agreements under which the Company or any of its
Subsidiaries has used or occupied any material real property during the last
five years. Each Real Property Lease is valid, binding and in full force and
effect, and no termination event or condition or uncured default of a material
nature on the part of the Company or any such Subsidiary exists under any Real
Property Lease. Each of the Company and its Subsidiaries has a good and valid
leasehold interest in each parcel of real property leased by it free and clear
of all mortgages, pledges, liens, encumbrances and security interests, except
(i) those reflected or reserved against in the balance sheet of the Company
dated as of December 31, 1999, (ii) Taxes and general and special assessments
not in default and payable without penalty and interest and
21
(iii) other liens, mortgages, pledges, encumbrances and security interests that
do not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof or that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16 MATERIAL CONTRACTS. (a) The Company has made
available to Parent and Purchaser copies of all contracts, agreements,
commitments, arrangements, leases (including with respect to personal property)
and other instruments to which the Company or any of its Subsidiaries is a party
or by which the Company, any of its Subsidiaries or any of their respective
assets is bound that (a) involves or could involve aggregate payments of more
than $500,000 or (b) is with any of the Company's officers, directors or
affiliates (each of (a) and (b), a "MATERIAL CONTRACT").
(b) There is no contract, agreement or understanding that was
required to be described in or filed as an exhibit to any Company SEC Report
that was not described in or filed as required by the Securities Act or the
Exchange Act, as the case may be. Except as has not had or would not reasonably
be likely to have, individually or in the aggregate, a Material Adverse Effect,
all such contracts, agreements and understandings are valid and binding and are
in full force and effect and enforceable in accordance with their respective
terms other than contracts, agreements or understandings which are by their
terms no longer in force or effect. Except to the extent any of the following
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, the Company is not in violation or breach of or default
under any such contract, agreement or understanding, nor to the Company's
knowledge is any other party to any such contract, agreement or understanding.
Except as set forth in Section 4.16 of the Disclosure Letter and the Company SEC
Reports, neither the Company nor any of its Subsidiaries is a party to or bound
by any contract, agreement or arrangement (including any lease of real property)
(i) restricting the ability of the Company or any of its Subsidiaries (or after
the Merger, Parent or any of its Subsidiaries) to compete in or conduct any line
of business or to engage in business in any geographic area, (ii) containing
covenants of any other Person not to compete in any material respect with the
Company or any of its Subsidiaries or (iii) containing any so-called "most
favored nation" provisions or any similar provision requiring the Company or any
Subsidiary (or after the Merger, Parent or any of its Subsidiaries) to offer a
third party terms or concessions at least as favorable as offered to one or more
other parties.
SECTION 4.17. OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company has received the opinion of Prudential, a copy of which
has been provided to Parent, to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger, by the
holders of Shares (other than Parent or its affiliates) is fair to such holders
from a financial point of view.
SECTION 4.18. VOTE REQUIRED. The only vote of the holders of
any class or series of Company capital stock necessary to approve the Merger is
the affirmative vote of the holders of a majority of the outstanding Shares.
SECTION 4.19. ANTI-TAKEOVER PLAN; STATE TAKEOVER STATUTES.
Neither the Company nor any Subsidiary has in effect any shareholder rights plan
or similar device or arrangement, commonly or colloquially known as a "poison
pill" or "anti-takeover" plan or any
22
similar plan, device or arrangement and the Board of Directors of the Company
has not adopted or authorized the adoption of such a plan, device or
arrangement. The Board of Directors of the Company has taken all necessary
actions to exempt the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement from the New Jersey Shareholders Protection Act
(Sections 14A:10A-1 to 14A:1A-9 of the Corporation Law). To the best of the
Company's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger, this
Agreement, or any of the transactions contemplated by this Agreement.
SECTION 4.20. INSURANCE. Except as has not had or would not
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect, (i) the Company maintains, and has maintained, without
interruption, during its existence, policies or binders of insurance covering
such risk, and events, including personal injury, property damage and general
liability in amounts the Company reasonably believes adequate for its business
and operations and (ii) such policies shall not terminate as a result of the
consummation of the transactions contemplated hereby.
SECTION 4.21 ACCOUNTS RECEIVABLE. Except as has not had or
would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect, the accounts receivable of the Company and its
Subsidiaries as reflected in the 1999 Financial Statements, to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of the Company and its Subsidiaries (i) have arisen in the ordinary course
of business of the Company and its Subsidiaries and (ii) subject only to
reserves for bad debts computed in a manner consistent with past practice and
reasonably estimated to reflect the probable results of collection, have been
collected or are collectible in the ordinary course of business of the Company
and its Subsidiaries in the aggregate recorded amounts shown in the Company
Financial Statements in accordance with their terms.
SECTION 4.22. CUSTOMERS. Section 4.22 of the Company
Disclosure Letter sets forth a list of (i) the top fifty (50) customers of the
Company and its Subsidiaries (based on revenue for the last completed fiscal
year), (ii) for each such customer, the amount of the dollar volume for calendar
year 1999 and (iii) confirmation of whether a written agreement (other than
periodic purchase orders) exists between the Company or any of its Subsidiaries
and each such customer and the effective date of each such written agreement.
Except as has not had or would not reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect, the relationships of the Company
and its Subsidiaries with such customers are good commercial working
relationships and, (ii) except as set forth in Section 4.22 of the Disclosure
Letter, no Person listed on Section 4.22 of the Disclosure Letter within the
last twelve months has canceled or otherwise terminated the relationship of such
Person with the Company or any of its Subsidiaries.
23
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company as follows:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Each of Parent
and Purchaser is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its organization. All of the
issued and outstanding capital stock of Purchaser is owned directly or
indirectly by Parent.
SECTION 5.02 AUTHORITY FOR THIS AGREEMENT. Each of Parent and
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate proceedings on the part of Parent and
Purchaser. This Agreement has been duly and validly executed and delivered by
Parent and Purchaser and assuming the due authorization, execution and delivery
of this Agreement by the Company, constitutes a legal, valid and binding
agreement of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.
SECTION 5.03 OFFER DOCUMENTS; PROXY STATEMENT.
(a) None of the Offer Documents will, at the times such
documents are filed with the SEC and are mailed to the shareholders of the
Company, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied in writing by the Company or an affiliate of the
Company for inclusion therein. The Offer Documents will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC thereunder.
(b) None of the information supplied by Parent, Purchaser or
any affiliate of Parent or Purchaser for inclusion in the Proxy Statement or the
Schedule 14D-9 will, at the date of filing with the SEC, and, in the case of the
Proxy Statement, at the time the Proxy Statement is mailed and at the time of
the Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 5.04 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by Parent or Purchaser nor the
consummation of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or Bylaws (or other similar governing documents) of Parent or
Purchaser, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) as may be
required under the HSR Act, any non-United States competition, antitrust and
investment laws, the Securities Act, the
24
Exchange Act, the Corporation Law and the "takeover", "blue sky" or securities
laws of various states or (ii) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not, individually or in the aggregate, have a material adverse effect on the
ability of the parties hereto to consummate the transactions contemplated
hereby, (c) require any consent, waiver or approval or result in a default (or
give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture or other instrument or obligation to
which Parent or Purchaser or any of their respective Subsidiaries is a party or
by which Parent or any of its Subsidiaries or any of their respective assets may
be bound, except for such defaults (or rights of termination, cancellation,
modification or acceleration) as to which requisite waivers or consents have
been obtained or which would not individually or in the aggregate have a
material adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, Purchaser or any of
their respective Subsidiaries or by which any of their respective assets are
bound, except for violations which would not, individually or in the aggregate,
have a material adverse effect on the ability of the parties hereto to
consummate the transactions contemplated hereby.
SECTION 5.05 OPERATIONS OF PURCHASER. Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted and will conduct its
operations only as contemplated hereby.
SECTION 5.06 BROKERS. No Person or entity is entitled to
receive any brokerage, finder's or other fee or commission in connection with
this Agreement or the transactions contemplated hereby based upon the agreements
made by or on behalf of the Company or any of its Subsidiaries.
SECTION 5.07 LITIGATION. There is no claim, action, suit,
proceeding or governmental investigation pending or, to the knowledge of Parent
or Purchaser, threatened against either Parent or Purchaser or any of their
Subsidiaries that seeks to or could reasonably be expected to have a material
adverse effect on the ability of the parties hereto to consummate the
transactions contemplated hereby.
SECTION 5.08 SUFFICIENT FUNDS. Parent has, and at the time of
acceptance for payment of Shares pursuant to the Offer and at the Effective Time
will have and will make available to Purchaser, sufficient and immediately
available funds to purchase all of the Shares and to pay the Merger
Consideration and to pay all amounts that may be due in respect of consummating
the Offer, the Merger and the transactions contemplated hereby.
ARTICLE VI
COVENANTS
SECTION 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as set
forth in Section 6.01 of the Disclosure Letter and expressly contemplated by
this Agreement, during the period from the date of this Agreement to the earlier
of the Effective Time and the date on which a majority of the Company's
directors are designees of Parent or Purchaser, or until the earlier
25
termination of this Agreement, the Company will conduct and will cause each of
its Subsidiaries to conduct its operations according to its ordinary and usual
course of business and consistent with past practice. Without limiting the
generality of the foregoing and except as otherwise expressly provided in or
contemplated by this Agreement, during the period specified in the preceding
sentence, without the prior written consent of Parent, the Company will not and
will not permit any of its Subsidiaries to:
(a) issue, sell, grant options or rights to purchase, pledge, or
authorize or propose the issuance, sale, grant of options or rights to
purchase or pledge of (i) any Company Securities (including any
Existing Stock Option) or Subsidiary Securities, or grant or accelerate
any right to convert or exchange any Company Securities or Subsidiary
Securities, other than Shares issuable upon exercise of the Existing
Stock Options and other than as may be provided under the Stock
Purchase Plan or (ii) any other securities in respect of, in lieu of or
in substitution for Shares outstanding on the date hereof;
(b) acquire or redeem, directly or indirectly, or amend any
Company Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or declare,
set aside, make or pay any dividend or distribution (whether in cash,
stock or property) on any shares of its capital stock (other than cash
dividends paid to the Company by its wholly-owned Subsidiaries with
regard to their capital stock);
(d) propose or adopt any amendment to its Certificate of
Incorporation or Bylaws (or similar documents);
(e) other than in the ordinary course of business and consistent
with past practice, grant any stock related performance or similar
awards or bonuses;
(f) (i) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
or (ii) acquire or agree to acquire, lease or manage any assets, other
than in the ordinary course of business and consistent with past
practice and other than assets that are immaterial to the Company and
its Subsidiaries taken as a whole;
(g) other than in the ordinary course of business and consistent
with past practice, sell, lease, license, mortgage or otherwise
encumber or subject to any lien or otherwise dispose of any of its
properties or assets, or stock or other ownership interest in any of
its properties or subsidiaries other than (i) any liens for taxes not
yet due and payable or being contested in good faith by appropriate
proceedings for which adequate reserves have been provided in the
consolidated balance sheet of the Company at December 31, 1999 and (ii)
such mechanics and similar liens, if any, as do not materially detract
from the value of any of such properties, assets, stock or ownership
interests or materially interfere with the present use of any of such
properties or assets;
26
(h) make any commitment or enter into, or amend, modify, or
terminate any contract or agreement material to the Company and its
Subsidiaries taken as a whole;
(i) (1) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any of its Subsidiaries, guarantee any debt
securities of another person, 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 borrowings under its line of credit for
working capital purposes and the endorsement of checks in the normal
course of business or (2) make any loans, advances or capital
contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned Subsidiary of the
Company and other than travel and entertainment advances to employees
in the ordinary course of business consistent with past practice;
(j) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation stock option,
restricted stock, pension, retirement, deferred compensation,
employment termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any current or former
director, officer and employee;
(k) except as disclosed in the Company SEC Reports and except as
may be required as a result of a change in law or in GAAP or a change
in order to comply with SEC requirements, change any of its accounting
policies or its procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of
accounts receivable);
(l) ensure that it and each of its Subsidiaries shall, use its
reasonable best efforts to keep or cause to be kept its material
existing insurance policies (or substantial equivalents) in such
amounts duly in force until the Effective Time and shall give Parent
notice of any material change in its insurance policies;
(m) (i) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any material respect
at, or as of any time prior to, the Effective Time or (ii) omit to take
any action necessary to prevent any such representation or warranty
from being inaccurate in any material respect at such time;
(n) enter into any new, or amend any existing, employment,
severance, consulting or salary continuation agreements with or for the
benefit of any officers, directors or employees, or grant any increases
in the compensation or benefits to officers, directors and employees
(other than normal increases to persons who are not officers or
directors in the ordinary course of business consistent with past
practices and that, in the aggregate, do not result in a material
increase in benefits or compensation expense of the Company); or
(o) agree in writing or otherwise to take any of the foregoing
actions.
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SECTION 6.02 NO SOLICITATION. (a) The Company shall not, and
shall cause its Subsidiaries and the officers, directors, employees,
representatives (including investment bankers, attorneys and accountants),
agents or affiliates of the Company and its Subsidiaries not to, directly or
indirectly, (i) encourage, solicit or initiate any Acquisition Proposal (as
defined in Section 6.02(f)(i)) or (ii) participate in negotiations with, or
provide any information to, or afford any access to the properties, books or
records of the Company or any of its Subsidiaries, or otherwise take any other
action to assist or facilitate (including granting any waiver or release under
any standstill or similar agreement with respect to any securities of the
Company) any Person or group (other than Parent or Purchaser or any affiliate or
associate of Parent or Purchaser) (a "POTENTIAL ACQUIROR") concerning any
Acquisition Proposal. In the event the Company receives any Acquisition
Proposal, the Company shall as promptly as reasonably practicable notify Parent
of such receipt and provide Parent with the identity of the Potential Acquiror
and a reasonable description of such Acquisition Proposal (or a copy thereof).
(b) Notwithstanding the provisions of Section 6.02(a), the
Company may take any of the actions referred to in Section 6.02(a)(ii) with
respect to a Potential Acquiror that has made an unsolicited written bona fide
Acquisition Proposal provided that all of the following conditions are
satisfied: (i) the Board of Directors of the Company (acting by a majority of
the entire board) determines in good faith, after consultation with its
independent financial advisor and independent legal counsel, that such
Acquisition Proposal is reasonably likely to result in the making of a Superior
Proposal (as defined in Section 6.02(f)(ii)); (ii) as promptly as reasonably
practicable (and in any event within 24 hours of receipt) the Company notifies
Parent of the receipt of such Acquisition Proposal and/or any request for
nonpublic information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by the Potential Acquiror that has made such Acquisition Proposal
and that the Company intends to engage in negotiations with, or to provide
information to such Potential Acquiror, (iii) the Company receives from such
Potential Acquiror an executed confidentiality or standstill agreement that is
no more favorable to such person than the Confidentiality Agreement dated
January 5, 2000, between ADP Financial Information Services, Inc. (a
wholly-owned subsidiary of Parent) and the Company (the "CONFIDENTIALITY
AGREEMENT"); and (iv) the Company furnishes or makes available to Parent the
same information provided to such person (to the extent not previously furnished
or made available). If the Company (or any of its Subsidiaries or its or their
respective officers, directors, employee, representatives, agents or affiliates)
participates in discussion or negotiations with , or provides information to a
Potential Acquiror, the Company will keep Parent advised on a current basis of
any material developments with respect thereto.
(c) The Company will, and will cause its Subsidiaries and the
respective officers, directors, employees, representatives, agents and
affiliates of the Company and its Subsidiaries to, immediately cease and cause
to be terminated any existing solicitation, activity, discussions or
negotiations with any Persons (other than Parent, Purchaser or any of their
respective affiliates or associates) conducted prior to the date hereof with
respect to any Acquisition Proposal.
(d) Unless the Company terminates this Agreement in accordance
with Section 8.01(e), the Company shall not (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Offer or the Merger as set forth in Section
1.02(a), (ii) approve or recommend, or propose
28
publicly to approve or recommend, any Acquisition Proposal, or (iii) enter into
any letter of intent, agreement in principle or acquisition agreement related to
any Acquisition Proposal.
(e) Nothing contained in this Section 6.02 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
shareholders a position with respect to an Acquisition Proposal by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
otherwise communicating with the Company's shareholders to the extent required
by law.
(f) For purposes of this Agreement,
(i) "ACQUISITION PROPOSAL" means any offer or proposal, or any
indication of interest in making an offer or proposal, made by a Person
or group at any time which is structured to permit such Person or group
to acquire beneficial ownership of at least 20% of the assets of the
Company and its Subsidiaries taken as a whole, or at least 20% of the
outstanding shares of capital stock of the Company pursuant to a
merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer or exchange offer or
similar transaction, including any single or multi-step transaction or
series of related transactions, in each case other than the Offer and
the Merger, and
(ii) "SUPERIOR PROPOSAL" means any unsolicited, bona fide written
Acquisition Proposal which the Board of Directors of the Company
(acting by a majority of the entire board) determines in its good faith
judgment (after consultation with its independent financial advisors
and independent legal counsel) taking into account applicable legal,
financial, regulatory and other relevant aspects of the Acquisition
Proposal, the identity of the Person making the proposal and other
relevant considerations, that (i) such Acquisition Proposal is more
favorable from a financial point of view to the Company's shareholders
than this Agreement, (ii) the conditions to the consummation of such
Acquisition Proposal are reasonably capable of being satisfied promptly
and (iii) financing for such transaction, to the extent required, is
then committed or reasonably available.
SECTION 6.03 ACCESS TO INFORMATION.
(a) From and after the date of this Agreement, the Company
will (i) give Parent and Purchaser and their authorized accountants, investment
bankers, counsel and other representatives access (during regular business hours
upon reasonable notice and in a manner so as not to interfere with the normal
operations of the Company and its Subsidiaries) to the facilities and books and
records of the Company and its Subsidiaries and (ii) cause its officers and
those of its Subsidiaries to furnish Parent and Purchaser with such financial
and operating data and other information with respect to the business,
properties and personnel of the Company and its Subsidiaries as Parent or
Purchaser may from time to time reasonably request.
(b) Information obtained by Parent or Purchaser pursuant to
Section 6.03(a) shall be subject to the provisions of the Confidentiality
Agreement as if Parent was a party thereto, the terms of which are incorporated
herein by reference.
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SECTION 6.04 REASONABLE EFFORTS; FURTHER ACTIONS.
(a) Subject to the terms and conditions herein provided for,
each of the parties hereto agrees to use its reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement. Without limiting the foregoing, (i)
each of the Company, Parent and Purchaser shall use its reasonable best efforts
to make promptly any required submissions under the HSR Act that the Company or
Parent determines should be made, in each case, with respect to the Offer, the
Merger and the transactions contemplated hereby and to respond as promptly as
practicable to all inquiries received from any Governmental Entity with respect
to such submissions for additional information or documentation, and (ii)
Parent, Purchaser and the Company shall cooperate with one another (A) in
promptly determining, in connection with the consummation of the transactions
contemplated by this Agreement, whether any filings are required to be or should
be made or consents, approvals, permits or authorizations are required to be or
should be obtained under any other federal, state or foreign law or regulation
or whether any consents, approvals or waivers are required to be or should be
obtained from other parties to loan agreements or other contracts or instruments
material to the Company's business and (B) in promptly making any such filings,
furnishing information required in connection therewith and seeking to obtain
timely any such consents, permits, authorizations, approvals or waivers.
(b) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
Parent shall cause the proper officers and directors of each party to this
Agreement to take all such necessary action.
(c) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated hereby is
commenced, whether before or after the Effective Time, the parties hereto agree
to cooperate and use all reasonable efforts to defend vigorously against it and
respond thereto.
SECTION 6.05 INDEMNIFICATION AND INSURANCE.
(a) Parent and Purchaser agree that all rights to
indemnification existing in favor of the present or former directors, officers
and employees (or any person who served at the Company's or any of its
Subsidiaries' request as an officer, director, or agent) of the Company or any
of its Subsidiaries (or any other entity or enterprise, such as, a partnership,
joint venture, trust or employee benefit plan) as provided in the Company's
Certificate of Incorporation or Bylaws, or the articles of organization, bylaws
or similar documents of any of the Company's Subsidiaries or other entity or
enterprise and the indemnification agreements, if any, with such person or
persons, as in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect without modification (other than modifications that would
enlarge the indemnification rights) for a period of not less than the statutes
of limitations applicable to such matters, and Parent shall, and after the
Effective Time shall cause the Surviving Corporation to, comply fully with its
obligations hereunder and thereunder. The Certificate of Incorporation and
By-Laws of the Surviving Corporation shall not be amended, repealed or otherwise
modified for the period set forth in the
30
preceding sentence in any manner that would adversely affect the rights
thereunder of individuals who as of the date hereof were directors, officers or
employees of the Company or otherwise entitled to indemnification under the
Certificate of Incorporation, By-Laws or indemnification agreements (the
"INDEMNIFIED PARTIES") and such Certificate of Incorporation of the Surviving
Corporation shall include provisions providing for the indemnification of and
the advancement of expenses to, such Indemnified Parties identical to those
contained in the Company's Certificate of Incorporation. It is understood and
agreed that the Company shall, to the fullest extent permitted under applicable
law and regardless of whether the Merger becomes effective, indemnify, defend
and hold harmless, and after the Effective Time, Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify, defend and hold harmless, each Indemnified Party against any costs or
expenses (including reasonable attorney's fees), judgments, fines, losses,
claims, damages, liabilities, and amounts paid in settlement entered into with
the consent of Parent (which consent shall not be unreasonably withheld) in
connection with any claim, action, suit, proceeding or investigation, including
without limitation, liabilities arising out of this Agreement and the
transactions contemplated hereby, to the extent that it was based on the fact
that such Indemnified Party is or was a director, officer or employee of the
Company and arising out of actions or omissions or alleged actions or omissions
occurring at or prior to the Effective Time, and in the event of any such claim,
action, suit proceeding or investigation (whether arising before or after the
Effective Time) (i) the Company or Parent, as applicable, shall pay the
reasonable fees and expenses of one counsel (provided that if different
Indemnified Parties are subject to different claims, actions, suits, proceedings
or investigations , each Indemnified Party may select his or her own counsel)
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly as statements therefor are received and (ii) the Company
and the Surviving Corporation will cooperate in the defense of any such matter.
(b) Parent shall or shall cause the Surviving Corporation to
maintain in effect for a period of six years after the Effective Time, in
respect of acts or omissions occurring prior to the Effective Time, policies of
directors' and officers' liability insurance and fiduciary liability insurance
and fiduciary insurance covering the persons described in Section 6.05(a) (which
may include including such persons under Parent's existing policies); and such
policies provided by Parent shall provide substantially similar coverage as is
provided for the persons who are covered by the Company's existing policies;
PROVIDED, HOWEVER, that Parent will not be required in order to maintain such
policies to pay an annual premium in excess of 200% of the aggregate annual
amounts currently paid by the Company to maintain its existing policies; and
PROVIDED FURTHER that, if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of 200% of such amount, the
Surviving Corporation shall only be required to obtain as much coverage as can
be obtained by paying an annual premium equal to 200% of such amount.
(c) This Section 6.05 shall survive the consummation of the
Merger and is intended to benefit, and shall be enforceable, by any Person or
entity entitled to be indemnified hereunder (whether or not parties to this
Agreement). Parent shall cause the Surviving Corporation to pay all reasonable
costs and expenses, including attorney's fees, that may be incurred by any
Indemnified Parties in enforcing the indemnity and other obligations provided
for in this Section 6.05.
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SECTION 6.06 EMPLOYEE MATTERS (a) Prior to the Effective Time,
except as set forth below, the Company will, and will cause its Subsidiaries to,
and from and after the Effective Time, Parent will, and will cause the Surviving
Corporation to, honor in accordance with their terms all existing employment,
severance, consulting and salary continuation agreements between the Company or
any of its Subsidiaries and any current or former officer, director, employee or
consultant of the Company or any of its Subsidiaries specified in Section
4.09(a) of the Disclosure Letter; PROVIDED, HOWEVER, that nothing herein shall
preclude the Parent or any of its affiliates from having the right to terminate
the employment of any employee, with or without cause, or to amend or to
terminate in accordance with its terms and applicable law any employee benefit
plan of Parent ("PARENT BENEFIT PLAN") established, maintained or contributed to
by the Parent or any of its affiliates after the Effective Time.
(b) After the Effective Time, Parent shall either continue
existing Employee Benefit Plans (including without limitation any severance plan
or arrangement) and compensation practices or shall provide, or cause the
Surviving Corporation or its Subsidiaries to provide, benefits to employees of
the Company and its Subsidiaries, other than employees covered by collective
bargaining agreements, as hereinafter set forth, that are no less favorable in
the aggregate than the benefit plans and programs provided to similarly situated
employees of Parent or its Subsidiaries; PROVIDED, HOWEVER, that nothing herein
shall preclude the Parent or any of its affiliates from having the right to
terminate in accordance with its terms and applicable law any Parent Employee
Benefit Plan established, maintained or contributed to by the Parent or any of
its affiliates after the Effective Time. Employees covered by collective
bargaining arrangements shall have the benefits negotiated therein.
(c) Except as specifically provided herein, Parent will, and
will cause the Surviving Corporation to, cause service rendered by employees of
the Company and its Subsidiaries prior to the Effective Time to be taken into
account for vesting and eligibility purposes under all employee benefit plans,
programs, policies and arrangements of Parent, the Surviving Corporation and its
Subsidiaries, to the same extent as such service was taken into account under
the corresponding plans of the Company and its Subsidiaries for those purposes,
provided that nothing herein shall result in the duplication of any benefits.
Employees of the Company and its Subsidiaries will not be subject to any
pre-existing condition limitation under any health plan of Parent, the Surviving
Corporation or its Subsidiaries for any condition for which they would have been
entitled to coverage under the corresponding plan of the Company or its
Subsidiaries in which they participated prior to the Effective Time. Parent
will, and will cause the Surviving Corporation and its Subsidiaries, to give
such employees credit under such plans for co-payments made and deductibles
satisfied prior to the Effective Time.
SECTION 6.07 PROXY STATEMENT. Unless the Merger is consummated
as contemplated by Section 2.09, the Company shall prepare and file with the
SEC, subject to the prior review and approval of Parent and Purchaser (which
approval shall not be unreasonably withheld), as soon as practicable after the
consummation of the Offer, a preliminary proxy or information statement (the
"PRELIMINARY PROXY STATEMENT") relating to the Merger as required by the
Exchange Act and the rules and regulations thereunder, with respect to the
transactions contemplated hereby. The Company shall obtain and furnish the
information required to be included in the Preliminary Proxy Statement, shall
provide Parent and Purchaser with, and consult with Parent and Purchaser
regarding, any comments that may be received from the SEC
32
or its staff with respect thereto, shall, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), respond promptly to any such comments made by the SEC or its staff
with respect to the Preliminary Proxy Statement, shall cause the Proxy Statement
to be mailed to the Company's shareholders at the earliest practicable date and
shall use all reasonable efforts to obtain the necessary approval of the Merger
by its shareholders.
SECTION 6.08 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent and Purchaser, and Parent or Purchaser, as
the case may be, shall give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which is
likely (a) to cause any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate in any material respect if made as of
any time at or prior to the Effective Time and (b) to result in any material
failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied hereunder (including the conditions
set forth in Exhibit A); PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 6.08 shall not limit or otherwise affect the remedies
available hereunder to any of the parties sending or receiving such notice.
SECTION 6.09 PRESS RELEASES. Parent, Purchaser and the Company
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation (and affording the other party or parties
an opportunity to comment thereon), except as may be required by applicable law
or stock exchange rules.
SECTION 6.10 INDUSTRIAL SITE RECOVERY ACT COMPLIANCE. The
Company and Parent will take all necessary steps to apply for or seek to obtain
prior to the Effective Time, for each parcel of real property listed in (x)
Section 4.15(a) of the Disclosure Letter or (y) pursuant to the first sentence
of Section 4.15(b) of the Disclosure Letter, in each case located in New Jersey,
either: (i) a Letter of Non-Applicability issued pursuant to ISRA; (ii) a No
Further Action letter as defined at N.J.S.A. 58:10B-1; (iii) a de minimis
quantity exemption as defined in N.J.A.C. 7:26B-2.3, (iv) a Remediation in
Progress Waiver as defined at N.J.S.A. 13:1K-11.5 or (v) a Remediation Agreement
as defined at N.J.S.A. 13:1K-8, which shall, in each instance, allow the
transactions contemplated herein to proceed in compliance with ISRA (the "ISRA
APPROVAL"). If, in connection with the issuance or effectiveness of the ISRA
Approval, the New Jersey Department of Environmental Protection requires the
payment of any fees, the preparation or implementation of any studies or
remediation plans, the posting of any financial assurance or the establishment
of a remedial funding source, then the Company shall comply with all such
requirements.
SECTION 6.11 DESIGNATED BUSINESS. The Company has entered into
an Agreement and Plan of Merger on May 1, 2000, providing for the merger of one
of its Subsidiaries described in Section 6.11 of the Disclosure Letter (the
"DESIGNATED BUSINESS") with and into a corporation owned by the acquiror of the
Designated Business with such corporation continuing as the surviving entity, a
copy of which has been provided to Parent. On or prior to the Acceptance Date,
the Company will consummate the merger of the Designated Business on the terms
of such Agreement and Plan of Merger.
33
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the proposed
Effective Time, of the following conditions:
(a) unless the Merger is consummated as contemplated by
Section 2.09, the Plan of Merger contained in this Agreement shall have
been approved by the affirmative vote of the shareholders of the
Company required by and in accordance with applicable law;
(b) all necessary waiting periods under the HSR Act applicable
to the Merger shall have expired or been terminated;
(c) no statute, rule, regulation, executive order, judgment,
decree or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or Governmental Entity against
Parent, Purchaser or the Company and be in effect that prohibits or
restricts the consummation of the Merger or makes such consummation
illegal (each party agreeing to use all reasonable efforts to have such
prohibition lifted); and
(d) Purchaser shall have accepted for purchase and paid for
the Shares tendered pursuant to the Offer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time (notwithstanding approval thereof by the
shareholders of the Company) prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling (which order, decree or ruling the parties hereto
shall use reasonable efforts to lift), or taken any other action
restraining, enjoining or otherwise prohibiting the Merger or any of
the transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and non-appealable;
(c) by the Company if (i) Purchaser fails to commence the
Offer in violation of Section 1.01 hereof, (ii) Purchaser shall not
have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before the 90th
34
day after the date of this Agreement, (iii) Purchaser fails to
purchase validly tendered Shares in violation of the Offer or the
terms of this Agreement or (iv) Purchaser or Parent shall have
breached any of the representations, warranties or covenants of this
Agreement, which breach has had or is reasonably likely to have a
material adverse effect on the ability of Parent or Purchaser to
consummate the transactions contemplated hereby;
(d) by Parent if, due to an occurrence or circumstance which
would result in a failure to satisfy any of the Offer Conditions,
Purchaser shall have (i) terminated the Offer without purchasing any
Shares pursuant to the Offer or (ii) failed to accept for payment
Shares pursuant to the Offer prior to the 90th day after the date of
this Agreement;
(e) by the Company, prior to the purchase of Shares pursuant
to the Offer, if (i) the Company has received a Superior Proposal, (ii)
the Company has complied with the provisions of Section 6.02(a) and
(b), (iii) the Company has notified Parent in writing of its receipt
of, and its intention to accept, a Superior Proposal and the material
terms thereof and, during a three (3) day period following such notice,
has afforded Parent the reasonable opportunity to make one revised
proposal (including by negotiating the terms of such any such proposal
with Parent), (iv) the Board of Directors of the Company shall have
concluded, after considering the results of such negotiations and any
revised proposal made by Parent that the Superior Proposal giving rise
to the Company's notice continues to be a Superior Proposal, and (v)
the Company simultaneously with its termination of this Agreement make
the payment required by Section 8.03(b); and
(f) by Parent, prior to the purchase of Shares pursuant to the
Offer, if the Company shall have taken or the Board of Directors of the
Company shall have resolved to take any of the actions referred to in
Section 6.02(d) or the Company shall have breached any of its
obligations under Section 6.02.
SECTION 8.02 EFFECT OF TERMINATION. If this Agreement is
terminated and the Merger is abandoned pursuant to Section 8.01 hereof, this
Agreement, except for the provisions of Sections 6.03(b), 6.09, 8.02, 8.03 and
Article IX hereof, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or shareholders.
Nothing in this Section 8.02 shall relieve any party to this Agreement of
liability for any willful breach of this Agreement.
35
SECTION 8.03 FEES AND EXPENSES. (a) Whether or not the Merger
is consummated, except as otherwise specifically provided herein, all costs 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 expenses. Parent and Purchaser acknowledge and agree that the
Company shall be entitled to pay or cause to be paid, at or prior to the
Closing, all fees, costs, and expenses incurred by the Company in connection
with the Offer, this Agreement and the transactions contemplated by this
Agreement.
(b) In the event that this Agreement is terminated (i)
pursuant to Section 8.01(e) or Section 8.01(f) or (ii) pursuant to Section
8.01(d) following the initial expiration of the Offer and, with respect to this
clause (ii) only, at the time of such termination (A) either (x) the Minimum
Tender Condition has not been satisfied or (y) the condition set forth in clause
(iii)(e) of Exhibit A has not been satisfied due to the willful breach by the
Company and (B) either (x) at the time of such termination, an Acquisition
Proposal existed or has been previously announced or (y) within six months
thereafter an Acquisition Proposal shall have been consummated, then the Company
shall pay Parent a termination fee of Four Million U.S. Dollars ($4,000,000)
PLUS the reimbursement of all of the fees and expenses of Parent and Purchaser
related to the Offer, this Agreement and the transactions contemplated hereby
(including, without limitation, legal, accounting and investment banking fees
and expenses) actually incurred by Parent and Purchaser up to One Million U.S.
Dollars ($1,000,000) (the "TERMINATION FEE") in immediately available funds by
wire transfer to an account designated by Parent.
(c) Any amounts payable pursuant to Section 8.03(b) shall be
payable as promptly as practicable following termination of this Agreement and,
if the Company is the party seeking to terminate this Agreement, as a condition
thereto.
(d) The Company acknowledges that the agreements contained in
Section 8.03 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Purchaser would not
have entered into this Agreement. Accordingly, if the Company fails to pay
promptly any amounts due pursuant to Section 8.03, and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for the fee or expense reimbursement set forth in this Section 8.03, the Company
shall pay to Parent its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest from the date of
termination of this Agreement on the amounts so owed at the prime rate of Chase
Manhattan Bank in effect from time to time during such period plus four percent
(4%).
(e) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.04 AMENDMENT. To the extent permitted by applicable
law, this Agreement may be amended by action taken by or on behalf of the Boards
of Directors of the Company, Parent and Purchaser, subject in the case of the
Company to Section 1.04(b), at any time before or after approval of this
Agreement by the shareholders of the Company but, after any such shareholder
approval, no amendment shall be made which decreases the Merger Consideration or
which adversely affects the rights of the Company's shareholders hereunder
36
without the approval of the shareholders of the Company. This Agreement may not
be amended, changed, supplemented or otherwise modified except by an instrument
in writing signed on behalf of all of the parties.
SECTION 8.05 EXTENSION; WAIVER; REMEDIES. (a) At any time
prior to the Effective Time, the parties hereto, by action taken by or on behalf
of the respective Boards of Directors of the Company, Parent and Purchaser,
subject in the case of the Company to Section 1.04(b), may (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
(b) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any party
shall not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto that by its terms contemplates performance after
the Effective Time.
SECTION 9.02 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement,
together with the Disclosure Letter and the Confidentiality Agreement,
constitutes the entire agreement between the parties with respect to subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to subject matter hereof. The
Agreement shall not be assigned by any party by operation of law or otherwise
without the prior written consent of the other parties, PROVIDED, that Parent or
Purchaser may assign any of their respective rights and obligations to any
direct or indirect wholly-owned Subsidiary of Parent, but no such assignment
shall relieve Parent or Purchaser, as the case may be, of its obligations
hereunder.
SECTION 9.03 VALIDITY. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
37
jurisdiction such invalidity, illegality or unenforceability will not affect any
other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
SECTION 9.04 NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be given (and shall be deemed to have
been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
if to Parent or Purchaser:
Automatic Data Processing, Inc.
0 XXX Xxxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
38
if to the Company:
Xxxxxxxxxx Graphics International, Inc.
Xxxxxxx X. Xxxxxxxxxx, Inc.
000 Xxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: 212-225-3999
And with a copy to:
Xxxxxxx, Del Deo, Dolan, Griffinger & Xxxxxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxx
Facsimile: 000-000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 9.05 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey except
insofar as mandatory provisions of the Securities Act and the Exchange Act apply
to the Offer.
SECTION 9.06 DESCRIPTIVE HEADINGS. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except for Section 6.05 (which are intended to be for the benefit
of the Persons referred to therein, and may be enforced by any such Persons).
SECTION 9.08 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
39
SECTION 9.09 CERTAIN DEFINITIONS.
(a) The terms "AFFILIATE" and "ASSOCIATE" shall have the
meanings given to such terms in Rule 12b-2 under the Exchange Act.
(b) The term "BENEFICIAL OWNERSHIP" shall have the meaning
given to such term in Rule 13d-3 under the Exchange Act.
(c) The term "HEREBY" shall be deemed to refer to this
Agreement in its entirety, rather than to any Article, Section, or other portion
of this Agreement.
(d) The term "INCLUDING" shall be deemed to be followed by the
phrase "without limitation."
(e) "MATERIAL ADVERSE EFFECT" shall mean any material and
adverse effect on the financial condition, business, properties, assets,
liabilities or results of operations or prospects of the Company and its
Subsidiaries taken as a whole or the ability of the Company to consummate the
transactions contemplated by this Agreement in any material respect, PROVIDED,
HOWEVER, that no event or circumstance arising out of, or resulting from, the
entering into or the announcement of this Agreement or the identity of Parent
shall be deemed to constitute a Material Adverse Effect. For the avoidance of
doubt, a Material Adverse Effect shall not include the institution or pendency
of any action, suit or proceeding instituted by a non-Governmental Entity that
(i) seeks to, but does not actually, restrain, enjoin or otherwise prevent the
consummation of, or (ii) seeks damages with respect to, any transaction
contemplated by this Agreement.
(f) "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, estate or other entity or
organization.
(g) The term "SUBSIDIARY" shall mean, when used with reference
to an entity, any other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions, or a majority of the outstanding
voting securities of which, are owned directly or indirectly by such entity.
(h) "TAX" shall mean all taxes, charges, fees, levies,
imposts, duties, and other assessments, including without limitation any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, transactions, intangibles, ad valorem, value-added,
franchise, registration, title, license, capital, paid-up capital, profits,
withholding, employee withholding, payroll, worker's compensation, unemployment
insurance, social security, employment, excise (including the federal
communications excise tax under Section 4251 of the Code), severance, stamp,
transfer occupation, premium, recording, real property, personal property,
federal highway use, commercial rent, environmental (including taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other tax, fee
or other like assessment or charge of any kind whatsoever, together with any
interest, penalties, related liabilities, fines or additions to tax that may
become payable in respect thereof imposed by any country, any state, county,
provincial or local government or subdivision or agency thereof.
40
(i) "TAX RETURNS" shall mean all returns and reports required
to be filed by the Company and its Subsidiaries (or any of them) with respect to
Taxes.
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41
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all at or on the day and year first above written.
AUTOMATIC DATA PROCESSING, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Corporate Vice President
FIS ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Corporate Vice President
XXXXXXXXXX GRAPHICS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
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42
EXHIBIT A
CONDITIONS TO THE OFFER
Capitalized terms used in this Exhibit A and not otherwise
defined herein shall have the meanings assigned to them in the Agreement to
which it is attached (the "MERGER AGREEMENT").
Notwithstanding any other provision of the Offer, Parent and
Purchaser shall not be required to accept for payment, purchase or pay for any
Shares tendered in connection with the Offer and may terminate or, subject to
the terms of the Merger Agreement, amend the Offer, if (i) there shall not have
been validly tendered and not properly withdrawn as of the expiration of the
initial offering period for the Offer (the "EXPIRATION DATE") that number of
Shares which, together with any Shares then beneficially owned by Purchaser or
Parent, represents at least a majority of the total number of outstanding Shares
on a fully diluted basis on the date of purchase (the "MINIMUM TENDER
CONDITION"), (ii) any applicable waiting period under the HSR Act shall not, as
of such Expiration Date, have expired or been terminated, or (iii) at any time
on or after the date of the Merger Agreement and prior to the time of payment
for any Shares, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency (i)
challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for the Shares by
Parent or Purchaser or the consummation of the Merger, (ii) seeking to
restrain or prohibit Parent's ownership or operation (or that of its
respective Subsidiaries or Affiliates) of all or any material portion
of the business or assets of the Company and its Subsidiaries, taken as
a whole, or of Parent and its Subsidiaries, taken as a whole, or to
compel Parent or any of its Subsidiaries or Affiliates to dispose of or
hold separate all or any material portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, (iii) seeking to impose or confirm
material limitations on the ability of Parent, Purchaser or any of
Parent's other Subsidiaries or affiliates effectively to exercise full
rights of ownership of the Shares, including without limitation, the
right to vote any Shares acquired or owned by Parent, Purchaser or any
of Parent's other Subsidiaries or affiliates on all matters properly
presented to the Company's shareholders or (iv) seeking to require
divestiture by Parent, Purchaser or any of Parent's other Subsidiaries
or affiliates of any Shares; or
(b) there shall have been any action taken, or any statute,
rule, regulation, injunction, order or decree, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by
any court, government or governmental authority or agency, domestic or
foreign, other than the application of the waiting period provisions of
the HSR Act to the Offer or the Merger, that result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
A-1
(c) there shall have occurred (1) any general suspension of,
or limitation on prices for, trading in securities on any national
securities exchange or in the over-the-counter market in the United
States (other than any suspension or limitation on trading in any
particular security as a result of a computerized trading limit or any
intraday suspension due to "circuit breakers"), (2) any declaration of
any banking moratorium or any suspension of payments in respect of
banks or any limitation (whether or not mandatory) on the extension of
credit by lending institutions in the United States or (3) any
commencement of armed hostilities or other national or international
calamity involving the United States that has a material adverse effect
on bank syndication for financial markets in the United States or, in
the case of any of the foregoing occurrences existing on or at the time
of the commencement of the Offer, a material acceleration or worsening
thereof; or;
(d) any Person or "group" (as such term is used in Section
13(d)(3) of the Exchange Act)-other than Parent, Purchaser or another
Person (who on the date hereof alone or as part of a "group" (as such
term is used in Section 13(d)(3) of the Exchange Act) is the beneficial
owner of more than 5% of the outstanding Shares) or any of their
respective affiliates - shall have become the beneficial owner (as that
term is used in Rule 13d-3 under the Exchange Act) or shall have
commenced or publicly announced the intention to commence a tender or
exchange offer to acquire beneficial ownership or shall have been
granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership, of more than 15% of the outstanding
Shares;
(e) the Company shall have breached or failed to comply in any
material respect with any of its material obligations, covenants, or
agreements under the Merger Agreement; or (x) any representation or
warranty of the Company contained in the Merger Agreement that is
qualified by reference to a Material Adverse Effect or (y) any
representation or warranty contained in either Section 4.11 (Taxes) or
4.12 (Compliance With Law) that is qualified by reference to
"materiality" shall not be true and correct; or any other such
representation or warranty shall not be true and correct in any respect
that (when taken together with all such other representations and
warranties not true and correct) has had or would reasonably be likely
to have a Material Adverse Effect, in each case either as of when made
or at and as of any time thereafter (except in the case of any
representation or warranty that by its terms is made as of a date
specified therein which need be accurate only as of such date); or
(f) the Merger Agreement shall have been terminated pursuant
to its terms or shall have been amended pursuant to its terms to
provide for such termination or amendment of the Offer;
which, in the good faith judgment of Parent and regardless of the circumstances
giving rise to such condition, makes it inadvisable to proceed with the Offer or
with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Purchaser and
may be asserted or, other than the Minimum Tender Condition, waived by Parent or
Purchaser in whole or in part at any time or from time to time in their
discretion subject to the terms of the Merger Agreement.
A-2
The failure of Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right, which may be asserted at any time and from
time to time.
A-3
EXHIBIT B
PLAN OF MERGER
OF
FIS ACQUISITION CORP.
INTO
XXXXXXXXXX GRAPHICS INTERNATIONAL, INC.
FIRST: (a) The name of each constituent corporation is as follows:
1. FIS Acquisition Corp., a corporation organized under the laws
of the State of New Jersey ("Purchaser"); and
2. Xxxxxxxxxx Graphics International, Inc., a corporation
organized under the laws of the State of New Jersey (the
"Company").
The Company shall be the surviving corporation in the Merger
(the "Surviving Corporation") and shall continue its existence under the laws of
the State of New Jersey under the name "Xxxxxxxxxx Graphics International,
Inc.". In connection with the Merger, the separate corporate existence of
Purchaser shall cease.
SECOND: The terms and conditions of the Merger, including the manner
and basis of converting the shares of the Company and Purchaser are as follows:
1. EFFECTIVE TIME. The effective time of the Merger (the "Effective
Time") shall be the time of filing of the Certificate of Merger with the
Department of Treasury of the State of New Jersey.
2. CONVERSION OF SHARES. (a)At the Effective Time, by virtue of the
Merger and without any action on the part of any shareholder of the Company each
share to common stock, no par value of the Company ("Shares") issued and
outstanding immediately prior to the Effective Time (other than shares owned by
Parent, Purchaser or by any subsidiary or affiliate of Parent or Purchaser, all
of which shall be cancelled without any consideration being exchanged
therefore), shall be converted into the right to receive cash in an amount per
Share (subject to any applicable withholding tax) equal to $22, without interest
(the "Merger Consideration") upon the surrender of the certificate representing
such Shares.
(b) Each share of common stock no par value of Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on part of the holder thereof, be converted into
and become one share of common stock, no par value of the Surviving Corporation.
B-1
3. GOVERNING DOCUMENTS; DIRECTORS AND OFFICERS. (a) The Certificate of
Incorporation and By-Laws of Purchaser as in effect immediately prior to the
Effective Time shall, from and after the Effective Time, be the Certificate of
Incorporation and By-Laws of the Surviving Corporation, in each case until
amended in accordance with applicable law; PROVIDED, HOWEVER, that Article I of
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read in its entirety as follow:
"ARTICLE I". The name of the Corporation is Xxxxxxxxxx Graphics
International, Inc. (the "Corporation").
(b) All persons who were directors of Purchaser immediately prior to
the Effective Time shall be the directors of the Surviving Corporation and all
persons who were officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case to hold office
in accordance with the Certificate of Incorporation and the By-Laws of the
Surviving Corporation and until their respective death, resignation or removal
or until their respective successors are duly elected and qualified in
accordance with applicable law.
4. FURTHER ASSURANCES. At any time, or from time to time, after the
Effective Time, the last acting officers of the Company or Purchaser or the
officers of the Surviving Corporation may, in the name of the Company or
Purchaser, execute and deliver all such proper deeds, assignments and other
instruments and take or cause to be taken all such further or other action as
the Surviving Corporation may deem necessary or desirable in order to vest,
perfect or confirm the Surviving Corporation's title to and possession of all of
the property, rights, privileges, powers, and franchises of the Company or
Purchaser and otherwise to carry out the purposes of this Plan of Merger.
B-2
