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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
CONCORD EFS, INC.,
CEFT, INC.
AND
ELECTRONIC PAYMENT SERVICES, INC.
DATED AS OF NOVEMBER 20, 1998
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AGREEMENT OF PLAN AND MERGER
TABLE OF CONTENTS
ARTICLE I
Page
THE MERGER.......................................................................................2
Section 1.1 The Merger.............................................................................2
Section 1.2 Effective Time.........................................................................2
Section 1.3 Effects of the Merger..................................................................2
Section 1.4 Charter and Bylaws; Directors and Officers.............................................2
Section 1.5 Conversion of Securities...............................................................3
Section 1.6 Parent to Make Certificates Available..................................................3
Section 1.7 Dividends; Transfer Taxes; Withholding.................................................4
Section 1.8 No Fractional Securities...............................................................5
Section 1.9 Return of Exchange Fund................................................................5
Section 1.10 Adjustment of Exchange Ratio...........................................................5
Section 1.11 No Further Ownership Rights in Company Common Stock....................................6
Section 1.12 Closing of Company Transfer Books......................................................6
Section 1.13 Lost Certificates......................................................................6
Section 1.14 Further Assurances.....................................................................6
Section 1.15 Closing; Closing Deliveries............................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.................................................8
Section 2.1 Organization, Standing and Power.......................................................8
Section 2.2 Capital Structure......................................................................9
Section 2.3 Authority.............................................................................10
Section 2.4 Consents and Approvals; No Violation..................................................10
Section 2.5 SEC Documents and Other Reports.......................................................11
Section 2.6 Joint Proxy Statement.................................................................12
Section 2.7 Absence of Certain Changes or Events..................................................12
Section 2.8 Permits and Compliance; Defaults......................................................12
Section 2.9 Tax Matters...........................................................................13
Section 2.10 Actions and Proceedings...............................................................13
Section 2.11 Certain Agreements....................................................................14
Section 2.12 ERISA.................................................................................14
Section 2.13 Compliance with Worker Safety and Environmental Laws..................................15
Section 2.14 Labor Matters.........................................................................15
Section 2.15 Intellectual Property.................................................................16
Section 2.16 Opinion of Financial Advisor..........................................................16
Section 2.17 Required Vote of Parent Stockholders..................................................16
Section 2.18 Pooling of Interests; Reorganization..................................................16
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ARTICLE III
Section 2.19 Brokers...............................................................................16
Section 2.20 Operations of Sub.....................................................................16
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................17
Section 3.1 Organization, Standing and Power......................................................17
Section 3.2 Capital Structure.....................................................................17
Section 3.3 Authority.............................................................................18
Section 3.4 Consents and Approvals; No Violation..................................................18
Section 3.5 Financial Statements..................................................................19
Section 3.6 Joint Proxy Statement.................................................................19
Section 3.7 Absence of Certain Changes or Events..................................................20
Section 3.8 Permits and Compliance; Defaults......................................................20
Section 3.9 Tax Matters...........................................................................20
Section 3.10 Actions and Proceedings...............................................................21
Section 3.11 Certain Agreements....................................................................22
Section 3.12 ERISA.................................................................................22
Section 3.13 Compliance with Worker Safety and Environmental Laws..................................23
Section 3.14 Labor Matters.........................................................................23
Section 3.15 Intellectual Property.................................................................23
Section 3.16 Opinion of Financial Advisor..........................................................24
Section 3.17 Required Vote of Company Stockholders.................................................24
Section 3.18 Pooling of Interests; Reorganization..................................................24
Section 3.19 Brokers...............................................................................24
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS.......................................................24
Section 4.1 Conduct of Business Pending the Merger................................................24
Section 4.2 Pooling of Interests; Reorganization..................................................27
ARTICLE V
ADDITIONAL AGREEMENTS...........................................................................27
Section 5.1 Stockholder Meetings..................................................................27
Section 5.2 Preparation of the Joint Proxy Statement..............................................27
Section 5.3 Access to Information.................................................................28
Section 5.4 Compliance with the Securities Act....................................................28
Section 5.5 Listing of Parent Common Stock........................................................29
Section 5.6 Fees and Expenses.....................................................................29
Section 5.7 Company Stock Plan. .................................................................29
Section 5.8 Reasonable Best Efforts...............................................................30
Section 5.9 Public Announcements..................................................................31
Section 5.10 Real Estate Transfer and Gains Tax....................................................31
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Section 5.11 Indemnification; Directors and Officers Insurance.....................................31
Section 5.12 Notification of Certain Matters.......................................................32
Section 5.13 Employee Matters......................................................................32
Section 5.14 Registration Rights Agreement.........................................................33
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER..............................................................33
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger............................33
Section 6.2 Conditions to Obligation of the Company to Effect the Merger..........................34
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger......................35
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER...............................................................37
Section 7.1 Termination...........................................................................37
Section 7.2 Effect of Termination.................................................................40
Section 7.3 Amendment.............................................................................40
Section 7.4 Waiver................................................................................40
ARTICLE VIII
GENERAL PROVISIONS..............................................................................40
Section 8.1 Non-Survival of Representations and Warranties........................................40
Section 8.2 Notices...............................................................................40
Section 8.3 Interpretation........................................................................41
Section 8.4 Counterparts..........................................................................42
Section 8.5 Entire Agreement; No Third-Party Beneficiaries........................................42
Section 8.6 Governing Law.........................................................................42
Section 8.7 Assignment............................................................................42
Section 8.8 Severability..........................................................................42
Section 8.9 Enforcement of this Agreement.........................................................42
Exhibits
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Company Affiliate Letter
Exhibit D Form of Parent Affiliate Letter
Exhibit E Form of Registration Rights Agreement
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TABLE OF DEFINED TERMS
Defined Term Section
Agreement..................................................................................................Forepart
Bank Act........................................................................................................2.4
Blue Sky Laws...................................................................................................2.4
Certificate of Merger...........................................................................................1.2
Certificates.................................................................................................1.6(b)
Closing.....................................................................................................1.15(c)
Closing Date................................................................................................1.15(a)
Code.......................................................................................................Recitals
Company....................................................................................................Forepart
Company Affiliate Letter.....................................................................................5.4(a)
Company Business Personnel.....................................................................................3.14
Company Bylaws...............................................................................................1.4(a)
Company Charter..............................................................................................1.4(a)
Company Common Stock.......................................................................................Recitals
Company Contract...............................................................................................3.11
Company Diluted Share Amount.................................................................................1.5(c)
Company Letter...............................................................................................3.2(a)
Company Permits..............................................................................................3.8(a)
Company Plan................................................................................................3.12(c)
Company Preferred Stock......................................................................................3.2(a)
Company Stock Options........................................................................................3.2(a)
Company Stock Plan...........................................................................................3.2(a)
Company Stockholder Meeting.....................................................................................5.1
Company Voting Agreement...................................................................................Recitals
Confidentiality Agreement.......................................................................................5.3
Constituent Corporations...................................................................................Forepart
Coordination Agreement.....................................................................................Recitals
D&O Insurance..................................................................................................5.11
DGCL............................................................................................................1.1
Effective Time..................................................................................................1.2
Environmental Laws.............................................................................................2.13
ERISA.......................................................................................................2.12(a)
ERISA Affiliate.............................................................................................2.12(c)
Exchange Act....................................................................................................2.4
Exchange Agent...............................................................................................1.6(a)
Exchange Fund................................................................................................1.6(a)
Exchange Ratio...............................................................................................1.5(c)
Gains Taxes....................................................................................................5.10
Governmental Entity.............................................................................................2.4
HSR Act.........................................................................................................3.4
Intellectual Property Rights................................................................................2.15(a)
IRS.............................................................................................................2.9
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Joint Proxy Statement...........................................................................................2.6
Knowledge of Parent............................................................................................2.10
Knowledge of Company...........................................................................................3.10
Material Adverse Change.........................................................................................2.1
Material Adverse Effect.........................................................................................2.1
Merger.....................................................................................................Recitals
Parent.....................................................................................................Forepart
Parent Affiliate Letter......................................................................................5.4(b)
Parent Annual Report.........................................................................................2.2(c)
Parent Business Personnel......................................................................................2.14
Parent Bylaws...............................................................................................1.15(b)
Parent Charter..............................................................................................1.15(b)
Parent Common Stock........................................................................................Recitals
Parent Letter...................................................................................................2.2
Parent Multiemployer Plan...................................................................................2.12(c)
Parent Permits...............................................................................................2.8(a)
Parent Plan.................................................................................................2.12(c)
Parent Preferred Stock.......................................................................................2.2(a)
Parent SEC Documents............................................................................................2.5
Parent Stock Plans...........................................................................................2.2(a)
Parent Stockholder Meeting......................................................................................5.1
Parent Voting Agreement....................................................................................Recitals
Registration Rights Agreement..................................................................................5.14
Rule 145 Affiliates..........................................................................................5.4(a)
SEC..........................................................................................................2.2(c)
Securities Act..................................................................................................2.3
Share Issuance..................................................................................................2.3
Stay Bonuses...................................................................................................5.13
Stockholder Meetings............................................................................................5.1
Sub........................................................................................................Forepart
Subsidiary......................................................................................................2.1
Substitute Option...............................................................................................5.7
Surviving Corporation...........................................................................................1.1
Tax Return......................................................................................................2.9
Taxes...........................................................................................................2.9
Worker Safety Laws.............................................................................................2.13
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 20, 1998
(this "Agreement"), among Concord EFS, Inc., a Delaware corporation ("Parent"),
CEFT, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Electronic Payment Services, Inc., a Delaware corporation (the
"Company") (Sub and the Company being hereinafter collectively referred to as
the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved and declared advisable the merger of Sub and the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of common stock, par value
$.01 per share, of the Company ("Company Common Stock") not owned directly or
indirectly by the Company will be converted into shares of Common Stock, par
value $.33 1/3 per share, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is in the best interest of
their respective stockholders;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith certain of the stockholders of the Company and
Parent are entering into a Voting Agreement dated as of the date hereof (the
"Company Voting Agreement") in the form attached as Exhibit A;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement and to set forth in writing certain matters relating to the Merger,
certain of the stockholders of the Company, the Company and Parent are entering
into a Coordination Agreement dated as of the date hereof (the "Coordination
Agreement");
WHEREAS, in order to induce the Company to enter into this
Agreement, concurrently herewith certain of the stockholders of Parent and the
Company are entering into a Voting Agreement dated as of the date hereof (the
"Parent Voting Agreement") in the form attached as Exhibit B;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests.
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NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Delaware General Corporation Law
(the "DGCL"), Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined). Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL.
Section 1.2 Effective Time. The Merger shall become effective
when a Certificate of Merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL, is filed with the Secretary
of State of the State of Delaware; provided, however, that, upon mutual written
consent of the Constituent Corporations, the Certificate of Merger may provide
for a later date of effectiveness of the Merger not more than 30 days after the
date the Certificate of Merger is filed. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of Merger
is accepted for recording or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made on the date of the
Closing.
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 1.4 Charter and Bylaws; Directors and Officers. (a) At
the Effective Time, the Amended and Restated Certificate of Incorporation of the
Company (the "Company Charter"), as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law. At
the Effective Time, the Amended and Restated By-laws of the Company (the
"Company Bylaws"), as in effect immediately prior to the Effective Time, shall
be the Bylaws of the Surviving Corporation until thereafter changed or amended
as provided therein or by the Company Charter.
(b) The directors of Sub at the Effective Time of the Merger
shall be the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company at the Effective Time
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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Section 1.5 Conversion of Securities. As of the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the
Company or the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par
value $.01 per share, of Sub shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) All shares of Company Common Stock that are held in the
treasury of the Company or by any wholly owned Subsidiary of the Company shall
be canceled and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Subject to the provisions of Sections 1.8, 1.10 and 7.1(i)
hereof, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be canceled in accordance with
Section 1.5(b)) shall be converted into 7.9111 (such number being the "Exchange
Ratio") validly issued, fully paid and nonassessable shares of Parent Common
Stock (the Exchange Ratio being determined by dividing (i) 32,310,000 by (ii)
the aggregate number of shares of Company Common Stock outstanding as of the
date hereof determined on a fully diluted basis assuming all options obligating
the Company to issue, sell, deliver or cause to be issued, delivered or sold any
additional shares of Company Common Stock or any other capital stock (or other
voting securities or equity equivalents) of the Company had been fully exercised
as of the date hereof (the "Company Diluted Share Amount")). In the event the
Company Diluted Share Amount immediately prior to the Effective Time shall
exceed 4,084,127, the Exchange Ratio shall be appropriately adjusted. All shares
of Company Common Stock outstanding immediately prior to the Effective Time,
when so converted, shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive any dividends and other distributions in accordance with Section 1.7,
certificates representing the shares of Parent Common Stock into which such
shares are converted and any cash, without interest, in lieu of fractional
shares to be issued or paid in consideration therefor upon the surrender of such
certificate in accordance with Section 1.6. At the Effective Time, each Company
Stock Option (as defined herein) shall become and represent a Substitute Option
(as defined herein) in accordance with Section 5.7.
(d) Each issued and outstanding share of Company Preferred
Stock (as defined herein) shall remain issued and outstanding as a share of
capital stock of the Surviving Corporation.
Section 1.6 Parent to Make Certificates Available. (a)
Exchange of Certificates. Parent shall authorize such person or persons as shall
be reasonably acceptable to Parent and the Company to act as Exchange Agent
hereunder (the "Exchange Agent"). Prior to the Effective Time, Parent shall
deposit with the Exchange Agent certificates representing the shares of Parent
Common Stock issuable pursuant to Section 1.5(c) for exchange with outstanding
shares of Company Common Stock, and cash as required to make payments in lieu of
any fractional shares pursuant to Section 1.8 (such cash and shares of Parent
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as
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the "Exchange Fund"). The Exchange Agent shall deliver the Parent Common Stock
contemplated to be issued pursuant to Section 1.5(c) out of the Exchange Fund.
(b) Exchange Procedures. Parent shall instruct the Exchange
Agent, as soon as practicable after the Effective Time, to mail to each record
holder of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock converted in the
Merger (the "Certificates") a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the Exchange Agent, and
shall contain instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock and cash in lieu of fractional shares). If requested by the Company prior
to the Closing Date, Parent shall instruct the Exchange Agent to make such
letters of transmittal available at the location of the Closing, and shall cause
the Exchange Agent to be available at such location to receive, from record
holders of Certificates wishing to surrender them, such letters of transmittal
along with the related Certificates. Upon surrender for cancellation to the
Exchange Agent of all Certificates held by any record holder of a Certificate,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock into which the
shares represented by the surrendered Certificate shall have been converted at
the Effective Time pursuant to this Article I, cash in lieu of any fractional
share in accordance with Section 1.8 and certain dividends and other
distributions in accordance with Section 1.7, and any Certificate so surrendered
shall forthwith be canceled.
Section 1.7 Dividends; Transfer Taxes; Withholding. No
dividends or other distributions that are declared on or after the Effective
Time on Parent Common Stock, or are payable to the holders of record thereof on
or after the Effective Time, will be paid to any person entitled by reason of
the Merger to receive a certificate representing Parent Common Stock until such
person surrenders the related Certificate or Certificates, as provided in
Section 1.6, and no cash payment in lieu of fractional shares will be paid to
any such person pursuant to Section 1.8 until such person shall so surrender the
related Certificate or Certificates. Subject to the effect of applicable law,
there shall be paid to each record holder of a new certificate representing such
Parent Common Stock: (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of any dividends or other distributions
theretofore paid with respect to the shares of Parent Common Stock represented
by such new certificate and having a record date on or after the Effective Time
and a payment date prior to such surrender; (ii) at the appropriate payment date
or as promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Parent Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender; and (iii) at the time of
such surrender or as promptly as practicable thereafter, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.8. In no event shall the person
entitled to receive such dividends or other distributions or cash in lieu of
fractional shares be entitled to receive interest on such dividends or other
distributions or cash in lieu of fractional shares. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and
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otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of certificates for such shares of Parent Common Stock in
a name other than that of the registered holder of the Certificate surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent or the
Exchange Agent.
Section 1.8 No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates pursuant to this Article I, and no
Parent dividend or other distribution or stock split shall relate to any
fractional share, and no fractional share shall entitle the owner thereof to
vote or to any other rights of a security holder of Parent. In lieu of any such
fractional share, each holder of shares of Company Common Stock who would
otherwise have been entitled to a fraction of a share of Parent Common Stock
upon surrender of Certificates for exchange pursuant to this Article I will be
paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (i) the last reported sale price per share of Parent
Common Stock on the Nasdaq National Market System ("Nasdaq") on the Closing Date
(or, if the shares of Parent Common Stock do not trade on Nasdaq on such date,
the trading day immediately preceding the Closing Date) by (ii) the fractional
interest to which such holder would otherwise be entitled. As promptly as
practicable after the determination of the amount of cash, if any, to be paid to
holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Section 1.7 and this
Section 1.8.
Section 1.9 Return of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former stockholders of the
Company for 60 days after the Effective Time shall be delivered to Parent, upon
demand of Parent, and any such former stockholders who have not theretofore
complied with this Article I shall thereafter look only to Parent for payment of
their claim for Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock. Neither Parent nor the Surviving Corporation shall be liable to
any former holder of shares of Company Common Stock for any such shares of
Parent Common Stock, cash and dividends and distributions held in the Exchange
Fund which is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.10 Adjustment of Exchange Ratio. In the event of any
reclassification, stock split or stock dividend with respect to Parent Common
Stock or any change or conversion of Parent Common Stock into other securities
(or if a record date with
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respect to any of the foregoing should occur) prior to the Effective Time,
appropriate and proportionate adjustments, if any, shall be made to the Exchange
Ratio, and all references to the Exchange Ratio in this Agreement shall be
deemed to be to the Exchange Ratio, as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 1.8) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates.
Section 1.12 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made on the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, the Exchange Agent or Parent, such Certificates
shall be canceled and exchanged as provided in this Article I.
Section 1.13 Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 1.8 and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 1.7.
Section 1.14 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.15 Closing; Closing Deliveries. (a) The closing of
the transactions contemplated by this Agreement (the "Closing") and all actions
specified in this Agreement to occur at the Closing shall take place at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois, at
10:00 a.m., local time, no later than the fifth business day following the day
on which the last of the conditions set forth in Article VI shall have been
fulfilled or waived (if permissible) or at such other time and place as Parent
and the Company shall agree (the date of the Closing is referred to herein as
the "Closing Date").
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(b) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing Parent shall deliver to the Company all of
the following:
(i) a copy of the Certificate of Incorporation of Parent
(the "Parent Charter"), certified as of a recent date by the Secretary
of State of the State of Delaware;
(ii) a certificate of good standing of Parent, issued as of a
recent date by the Secretary of State of the State of Delaware;
(iii) a certificate of the Secretary or an Assistant Secretary
of Parent, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company, as to (A) no amendments to the
Parent Charter since a specified date; (B) the Bylaws of Parent (the
"Parent Bylaws"); (C) the resolutions of the Board of Directors of
Parent; authorizing the execution and performance of this Agreement and
the transactions contemplated herein; (D) the resolutions of the
stockholders of Parent approving the Share Issuance (as hereinafter
defined); and (E) the incumbency and signatures of the officers of
Parent executing this Agreement;
(iv) the certificates contemplated by Section 6.2(a), duly
executed by the Chief Executive Officer and the Chief Financial Officer
of Parent;
(v) all consents, waivers or approvals obtained by Parent
with respect to the consummation of the transactions contemplated by
this Agreement; and
(vi) the Registration Rights Agreement (as hereinafter
defined), duly executed by Parent.
(c) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing Sub shall deliver to the Company all of the
following:
(i) a copy of the Certificate of Incorporation of Sub
certified as of a recent date by the Secretary of State of the State of
Delaware;
(ii) a certificate of good standing of Sub, issued as of a
recent date by the Secretary of State of the State of Delaware; and
(iii) a certificate of the Secretary or an Assistant Secretary
of Sub, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Company, as to (A) no amendments to the Certificate
of Incorporation of Sub since a specified date; (B) the Bylaws of Sub;
(C) the resolutions of the Board of Directors of Sub authorizing the
execution and performance of this Agreement and the transactions
contemplated herein and the written consent of Parent in its capacity
as sole stockholder of Sub adopting this Agreement in accordance with
Section 251 of the DGCL; and (D) the incumbency and signatures of the
officers of Sub executing this Agreement.
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(d) Subject to fulfillment or waiver of the conditions set
forth in Article VI, at the Closing the Company shall deliver to parent all of
the following:
(i) a copy of the Company Charter, certified as of a recent
date by the Secretary of State of the State of Delaware;
(ii) a certificate of good standing of the Company, issued as
of a recent date by the Secretary of State of the State of Delaware;
(iii) a certificate of the Secretary or an Assistant Secretary
of the Company, dated as of the Closing Date, in form and substance
reasonably satisfactory to Parent, as to (A) no amendments to the
Company Charter since a specified date; (B) the Company Bylaws; (C) the
resolutions of the Board of Directors of the Company authorizing the
execution and performance of this Agreement and the transactions
contemplated herein and the resolutions of the stockholders of the
Company adopting this Agreement in accordance with Section 251 of the
DGCL; and (D) the incumbency and signatures of the officers of the
Company executing this Agreement;
(iv) all consents, waivers or approvals obtained by the
Company with respect to the consummation of the transactions
contemplated by this Agreement; and
(v) the certificates contemplated by Section 6.3(a) duly
executed by the Chief Executive Officer and the Chief Financial Officer
of the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
Section 2.1 Organization, Standing and Power. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Sub has the requisite corporate power and authority to carry on its
business as now being conducted. Each Subsidiary (as hereinafter defined) of
Parent is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite corporate
power and authority to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect (as hereinafter defined) on Parent. Parent and each of
its Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on Parent. For purposes of this
Agreement (a)
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"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to Parent or the Company, as the case may be, any event, change or
effect that is materially adverse to the business, financial condition or
results of operations of Parent and its Subsidiaries, taken as a whole, or the
Company and its Subsidiaries, taken as a whole, as the case may be; provided,
however, that in determining whether a Material Adverse Change or Material
Adverse Effect has occurred with respect to either referenced party, any change
or effect, to the extent it is attributable to (A) any change in general
economic conditions, (B) matters affecting companies in the same or similar
industries to the industries in which the Company and its Subsidiaries or Parent
and its Subsidiaries, as the case may be, operate or (C) the execution, public
announcement or existence of this Agreement, shall not be considered when
determining whether a Material Adverse Change or Material Adverse Effect has
occurred; and (b) "Subsidiary" means any corporation, partnership, limited
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
partnership, limited liability company, joint venture or other legal entity.
Section 2.2 Capital Structure. (a) As of the date hereof, the
authorized capital stock of Parent consists of 200,000,000 shares of Parent
Common Stock. At the close of business on November 11, 1998, (i) 97,815,178
shares of Parent Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights, (ii)
no shares of Parent Common Stock were held in treasury of Parent or by
Subsidiaries of Parent, and (iii) 9,388,319 shares of Parent Common Stock were
reserved for issuance pursuant to outstanding options ("Parent Stock Options")
to purchase or otherwise acquire shares of Parent Common Stock under Parent's
benefit plans or arrangements or pursuant to any plans assumed by Parent in
connection with any acquisition, business combination or similar transaction,
other than the Merger (collectively, the "Parent Stock Plans"), except as set
forth in Section 2.2 of the letter dated as of the date hereof from Parent to
the Company, which letter relates to this Agreement and is designated therein as
the Parent Letter (the "Parent Letter"). As of the date of this Agreement,
except as set forth in Section 2.2 of the Parent Letter, except as set forth
above and except for the issuance of shares of Parent Common Stock pursuant to
the Parent Stock Plans, no shares of capital stock or other voting securities of
Parent were issued, reserved for issuance or outstanding. All of the shares of
Parent Common Stock issuable in exchange for Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights. As of the date of this Agreement, except for (i) this Agreement and (ii)
as set forth above, there are no options, warrants, calls, rights, puts or
agreements to which Parent or any of its Subsidiaries is a party or by which any
of them is bound obligating Parent or any of its Subsidiaries to issue, deliver,
sell or redeem, or cause to be issued, delivered, sold or redeemed, any
additional shares of capital stock (or other voting securities or equity
equivalents) of Parent or any of its Subsidiaries or obligating Parent or any of
its Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, put or agreement.
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(b) As of the date of this Agreement, each outstanding share
of capital stock (or other voting security or equity equivalent) of each
Subsidiary of Parent is duly authorized, validly issued, fully paid and
nonassessable and each such share (or other voting security or equity
equivalent) is owned by Parent or another Subsidiary of Parent, free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever.
(c) Except as set forth in Section 2.2 of the Parent Letter,
Exhibit 21 to Parent's Annual Report on Form 10-K for the year ended December
31, 1997 (the "Parent Annual Report", as filed with the Securities and Exchange
Commission (the "SEC"), is a true, accurate and correct statement in all
material respects of all of the information required to be set forth therein by
the regulations of the SEC.
Section 2.3 Authority. On or prior to the date of this
Agreement, the Boards of Directors of Parent and Sub declared the Merger
advisable and fair to and in the best interest of Parent and Sub, respectively,
and their respective stockholders, and approved and adopted this Agreement in
accordance with the DGCL, and the Board of Directors of Parent has resolved to
recommend the approval by Parent's stockholders of the issuance of Parent Common
Stock in connection with the Merger (the "Share Issuance"). Each of Parent and
Sub has all requisite corporate power and authority to enter into this
Agreement, and, subject to approval by the stockholders of Parent of the Share
Issuance, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, subject to (x)
approval by the stockholders of Parent of the Share Issuance and (y) the filing
of appropriate Merger documents as required by the DGCL. This Agreement and the
consummation of the transactions contemplated hereby have been approved by the
sole stockholder of Sub. This Agreement has been duly executed and delivered by
Parent and Sub, and (assuming the valid authorization, execution and delivery of
this Agreement by the Company and the validity and binding effect hereof on the
Company) this Agreement constitutes the valid and binding obligation of Parent
and Sub enforceable against each of them in accordance with its terms. The Share
Issuance has been duly authorized by Parent's Board of Directors.
Section 2.4 Consents and Approvals; No Violation. Except as
set forth in Section 2.4 of the Parent Letter, the execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under, any provision
of (i) the Parent Charter or the Parent Bylaws or the Certificate of
Incorporation or Bylaws of Sub, (ii) any provision of the comparable charter or
organization documents of any of Parent's Subsidiaries, (iii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or any
of its Subsidiaries or (iv) any judgment, order, decree, statute,
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law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform their respective obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby. No
filing or registration with, or authorization, consent or approval of, any
domestic (federal and state), foreign or supranational court, commission,
governmental body, regulatory agency, authority or tribunal (a "Governmental
Entity") is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or Sub or
is necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except for (i) in connection, or in compliance,
with the provisions of the Bank Holding Company Act of 1956, as amended (the
"Bank Act"), the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder the "Securities Act"), and the Securities
Exchange Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, (iii) such filings as may
be required in connection with the taxes described in Section 5.10, (iv)
applicable requirements, if any, of state securities or "blue sky" laws ("Blue
Sky Laws") and Nasdaq, and (v) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, materially impair the ability of Parent or Sub to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 2.5 SEC Documents and Other Reports. Parent has filed
all required documents with the SEC since January 1, 1996 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of Parent included in the Parent
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position of Parent
and its consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
Except as disclosed in the Parent SEC Documents or as required by generally
accepted accounting principles, Parent has not, since December 31, 1997, made
any change in the accounting practices or policies applied in the preparation of
financial statements.
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Section 2.6 Joint Proxy Statement. None of the information to
be supplied by Parent or Sub for inclusion or incorporation by reference in the
joint proxy statement relating to the Stockholder Meetings (as hereinafter
defined) (together with any amendments or supplements thereto, the "Joint Proxy
Statement") will, at the time of the mailing of the Joint Proxy Statement and at
the time of each of the Stockholder Meetings, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Stockholder Meetings any event with respect to Parent, its officers and
directors or any of its Subsidiaries shall occur which is required to be
described in the Joint Proxy Statement, such event shall be so described, and an
appropriate amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of Parent and the Company. The
Joint Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act.
Section 2.7 Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Documents filed with the SEC prior to the date of this
Agreement or as disclosed in Section 2.7 of the Parent Letter, since December
31, 1997 Parent and its Subsidiaries have not incurred any liability or
obligation (indirect, direct or contingent) that would result in a Material
Adverse Effect on Parent. Since December 31, 1997, there has been no Material
Adverse Effect on Parent.
Section 2.8 Permits and Compliance; Defaults. (a) Each of
Parent and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, charters, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for Parent or any of its Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted (the "Parent
Permits"), and all such Parent Permits are valid and in full force and effect,
except where the failure to be in possession of any of the Parent Permits or the
failure of any such Parent Permit to be in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Parent and its Subsidiaries are in compliance in all material respects with
their respective obligations under the Parent Permits, with only such exceptions
as, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent.
(b) Neither Parent nor any of its Subsidiaries is in violation
of (A) its charter, by-laws or other organizational documents, (B) any
applicable law, ordinance, administrative or governmental rule or regulation or
(C) any order, decree or judgment of any Governmental Entity having jurisdiction
over Parent or any of its Subsidiaries, except, in the case of clauses (A), (B)
and (C), for any violations that, individually or in the aggregate, would not
have a Material Adverse Effect on Parent. Except as set forth in the Parent SEC
Documents filed prior to the date of this Agreement or Section 2.8 of the Parent
Letter, no event of default or event that, but for the giving of notice or the
lapse of time or both, would constitute an event of default exists or, upon the
consummation by Parent or Sub of the transactions contemplated by this
Agreement, will exist under any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, any guarantee of any agreement
or instrument for borrowed money or any lease, contractual license or other
agreement or instrument to which Parent or any of its
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Subsidiaries is a party or by which Parent or any such Subsidiary is bound or to
which any of the properties, assets or operations of Parent or any such
Subsidiary is subject, other than any defaults that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
Section 2.9 Tax Matters. Except as otherwise set forth in
Section 2.9 of the Parent Letter, (i) Parent and each of its Subsidiaries have
filed all federal, and all material state, local and foreign, Tax Returns (as
hereinafter defined) required to have been filed or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to so file or any failure to be
correct and complete would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (ii) all Taxes (as hereinafter defined) shown
to be due on such Tax Returns have been timely paid or extensions for payment
have been properly obtained, except to the extent that any failure to so pay or
so obtain such an extension would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, (iii) Parent and each of its Subsidiaries
have complied in all material respects with all rules and regulations relating
to the withholding of Taxes except to the extent that any failure to comply with
such rules and regulations would not, individually or in the aggregate, have a
Material Adverse Effect on Parent; (iv) any Tax Returns referred to in clause
(i) relating to federal income Taxes have been examined by the Internal Revenue
Service (the "IRS") or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired; (v) no material
issues that have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in clause (i) are
currently pending; and (vi) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have been
paid in full or are being timely and properly contested. For purposes of this
Agreement: (i) "Taxes" means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, value-added, transfer or
excise tax, or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules) required
to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 2.10 Actions and Proceedings. Except as set forth in
the Parent SEC Documents filed prior to the date of this Agreement and except as
set forth in Section 2.10 of the Parent Letter, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against
Parent or any of its Subsidiaries, or, to the Knowledge of Parent, against any
of the present or former directors or officers of Parent or any of its
Subsidiaries, as such, or any of its or their properties, assets or business
that, individually or in the aggregate, would have a Material Adverse Effect on
Parent. Except as set forth in Section 2.10 of the Parent Letter, there are no
actions, suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the Knowledge of Parent, threatened against Parent
or any of its Subsidiaries or, to the Knowledge of Parent, any of its or their
present or former directors or officers, as such, or any of its or their
properties, assets or business or any Parent
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Plan that, individually or in the aggregate, would have a Material Adverse
Effect on Parent or materially impair the ability of Parent to perform its
obligations hereunder. As of the date hereof, there are no actions, suits, labor
disputes or other litigation, legal or administrative proceedings or
governmental investigations pending or, to the Knowledge of Parent, threatened
against or affecting Parent or any of its Subsidiaries or, to the Knowledge of
Parent, any of its or their present or former officers or directors, as such, or
any of its or their properties, assets or business or any Parent Plan relating
to the transactions contemplated by this Agreement. For purposes of this
Agreement, "Knowledge of Parent" means the actual knowledge of the individuals
identified in Section 2.10 of the Parent Letter.
Section 2.11 Certain Agreements. Neither Parent nor any of its
Subsidiaries is a party to any contract, agreement or arrangement which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K under the Securities Act) to be performed after the date of this Agreement
that has not been filed or incorporated by reference in the Parent SEC
Documents. Each contract, agreement or arrangement of Parent or its Subsidiaries
which is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K under the Securities Act) is valid and binding on Parent or its
respective Subsidiary, as applicable, and in full force and effect and Parent
and each Subsidiary has performed all obligations required to be performed by it
to the date hereof under each such contract, agreement or arrangement in all
material respects, except where the failure of such contracts to be valid and
binding or the failure of any such obligation to have been performed would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Section 2.12 ERISA. (a) Except as would not have a Material
Adverse Effect on Parent, (i) each Parent Plan complies in all respects with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Code
and all other applicable statutes and governmental rules and regulations, and
(ii) no "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred with respect to any Parent Plan. Neither Parent nor any of its ERISA
Affiliates (as hereinafter defined) has withdrawn from any Parent Multiemployer
Plan (as hereinafter defined) or instituted, or is currently considering taking,
any action to do so. Except as would not have a Material Adverse Effect on
Parent, no Parent Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived.
(b) With respect to the Parent Plans, no event has occurred
and, to the Knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any ERISA Affiliate or Parent
Plan fiduciary could be subject to any liability under the terms of such Parent
Plans, ERISA, the Code or any other applicable law, other than liabilities for
benefits payable in the normal course, and other than any liability which would
not have a Material Adverse Effect on Parent. Neither Parent nor any of its
ERISA Affiliates has been notified by any Parent Multiemployer Plan that such
Parent Multiemployer Plan is currently in reorganization or insolvency under and
within the meaning of Section 4241 or 4245 of ERISA or that such Parent
Multiemployer Plan intends to terminate or has been terminated under Section
4041A of ERISA. Except as disclosed in Section 2.12 of the Parent Letter,
neither the Parent nor any of its ERISA Affiliates has any material liability or
obligation under any welfare plan to
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provide benefits after termination of employment to any employee or dependent
other than as required by Section 4980B of the Code.
(c) As used herein, (i) "Parent Plan" means a "pension plan"
(as defined in Section 3(2) of ERISA (other than a Parent Multiemployer Plan)),
a "welfare plan" (as defined in Section 3(1) of ERISA), or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, holiday pay, vacation, severance, death
benefit, sick leave, fringe benefit, insurance or other plan, arrangement or
understanding, in each case established or maintained by Parent or any of its
ERISA Affiliates or as to which Parent or any of its ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Parent Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which Parent or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability, and (iii) with respect to any
person, "ERISA Affiliate" means any trade or business (whether or not
incorporated) which is under common control or would be considered a single
employer with such person pursuant to Section 414(b), (c), (m) or (o) of the
Code and the regulations promulgated under those sections or pursuant to Section
4001(b) of ERISA and the regulations promulgated thereunder.
Section 2.13 Compliance with Worker Safety and Environmental
Laws. To the Knowledge of Parent, the properties, assets and operations of
Parent and its Subsidiaries are in compliance with all applicable federal,
state, local and foreign laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and the protection and clean-up of the
environment and activities or conditions related thereto, including, without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous materials (collectively, "Environmental Laws"), except
for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on Parent. With respect to such properties, assets and
operations, including any previously owned, leased or operated properties,
assets or operations, there are no events, conditions, circumstances,
activities, practices, incidents, actions or plans of Parent or any of its
Subsidiaries that interfere with or prevent compliance or continued compliance
with applicable Worker Safety Laws and Environmental Laws, other than any such
interference or prevention as would not, individually or in the aggregate, have
a Material Adverse Effect on Parent.
Section 2.14 Labor Matters. Neither Parent nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. To the Knowledge of Parent, neither Parent nor any of its Subsidiaries
has engaged in any unfair labor practice with respect to any persons employed by
or otherwise performing services primarily for Parent or any of its Subsidiaries
(the "Parent Business Personnel"), and there is no unfair labor practice
complaint or grievance against Parent or any of its Subsidiaries by the National
Labor Relations Board or any comparable state agency pending or, to the
Knowledge of Parent, threatened in writing with respect to Parent Business
Personnel, except where such unfair labor practice, complaint or grievance would
not have a Material Adverse Effect on Parent. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of Parent, threatened against
or affecting Parent or any of its Subsidiaries which may interfere with the
respective business activities of
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Parent or any of its Subsidiaries, except where such dispute, strike or work
stoppage would not have a Material Adverse Effect on Parent.
Section 2.15 Intellectual Property. (a) Parent and its
Subsidiaries have, through ownership or licensing, all patents, trademarks,
trade names, service marks, trade secrets, copyrights and other proprietary
intellectual property rights (collectively, "Intellectual Property Rights") as
are necessary to conduct the business of Parent and its Subsidiaries as
currently conducted by Parent and its Subsidiaries, taken as a whole, except
where the failure to have such Intellectual Property Rights would not have a
Material Adverse Effect on Parent. To the Knowledge of Parent, neither Parent
nor any of its Subsidiaries has infringed any Intellectual Property Rights of
any third party other than any infringements that, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
(b) Except as set forth in the Parent SEC Documents filed
prior to the date of this Agreement or in Section 2.15 of the Parent Letter,
there are no actions, suits or claims or administrative proceedings or
investigations pending or, to the Knowledge of Parent, threatened that challenge
or question Parent's Intellectual Property Rights and that, individually or in
the aggregate, would have a Material Adverse Effect on Parent.
Section 2.16 Opinion of Financial Advisor. Parent has received
the written opinion of Xxxxxxx Xxxxx & Company L.L.C., dated the date hereof, to
the effect that, as of the date hereof, the Exchange Ratio is fair to Parent
from a financial point of view.
Section 2.17 Required Vote of Parent Stockholders. The
affirmative vote of a majority of the shares present in person or by proxy at
the Parent Stockholder Meeting (as hereinafter defined) and entitled to vote on
the Share Issuance is required to approve the Share Issuance. No other vote of
the securityholders of Parent is required by law, the Parent Charter or the
Parent Bylaws or otherwise in order for Parent to consummate the Merger and the
transactions contemplated hereby.
Section 2.18 Pooling of Interests; Reorganization. To the
Knowledge of Parent, neither Parent nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would jeopardize
the treatment of the Merger as a pooling of interests for accounting purposes or
(ii) taken any action or failed to take any action which action or failure would
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
Section 2.19 Brokers. No broker, investment banker or other
person, other than Xxxxxxx Xxxxx & Company L.L.C., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent.
Section 2.20 Operations of Sub. Sub is a direct, wholly owned
subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated hereby,
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has engaged in no other business activities and has conducted its operations
only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
or authority would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries are duly
qualified to do business, and are in good standing, in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their activities makes such qualification necessary, except where the failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
Section 3.2 Capital Structure. (a) As of the date hereof, the
authorized capital stock of the Company consists of 10,000,000 shares of Company
Common Stock and 1,500,000 shares of preferred stock, par value $163.60 per
share ("Company Preferred Stock"). As of the close of business on November 18,
1998, (i) 3,752,375 shares of Company Common Stock were issued and outstanding,
all of which were validly issued, fully paid and nonassessable and free of
preemptive rights except as set forth in Section 3.2 of the letter dated the
date hereof from the Company to Parent which relates to this Agreement and is
designated therein as the Company Letter (the "Company Letter"), (ii) 4,600
shares of Company Preferred Stock were issued and outstanding, all of which were
validly issued, fully paid, nonassessable and free of preemptive rights, (iii)
no shares of Company Common Stock or Company Preferred Stock were held in the
treasury of the Company or by Subsidiaries of the Company, and (iv) 331,752
shares of Company Common Stock were reserved for issuance pursuant to
outstanding options (the "Company Stock Options") to purchase shares of Company
Common Stock pursuant to the Company's Amended and Restated 1995 Stock Option
Plan (the "Company Stock Plan"). As of the date of this Agreement, except as set
forth above and except for the issuance of shares of Company Common Stock
pursuant to the Company Stock Plan in accordance with the terms thereof, no
shares of capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. Section 3.2 of the Company Letter sets
forth a list of each holder of Company Common Stock or Company Preferred Stock
as of the close of business on November 18, 1998 and the number of shares of
Company Common Stock and Company Preferred Stock held by each such holder as of
such date. Except as set forth in Section 3.2 of the Company Letter and except
as set forth above, as of the date of this Agreement, there are no options,
warrants, calls,
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rights, puts or agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver, sell or redeem, or cause to be issued,
delivered, sold or redeemed, any additional shares of capital stock (or other
voting securities or equity equivalents) of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, put or agreement. As
of the date hereof, there are no dividends on the Company Preferred Stock that
are past due.
(b) Each outstanding share of capital stock (or other voting
security or equity equivalent, as the case may be) of each Subsidiary of the
Company is duly authorized, validly issued, fully paid and nonassessable, and
each such share (or other voting security or equity equivalent, as the case may
be) is owned by the Company or another Subsidiary of the Company, free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever.
(c) Section 3.2 of the Company Letter sets forth a list of all
Subsidiaries of the Company and the jurisdiction in which each such Subsidiary
is organized.
Section 3.3 Authority. On or prior to the date of this
Agreement, the Board of Directors of the Company declared the Merger advisable
and fair to and in the best interest of the Company and its stockholders,
approved and adopted this Agreement in accordance with the DGCL, resolved to
recommend the approval and adoption of this Agreement by the Company's
stockholders and directed that this Agreement be submitted to the Company's
stockholders for approval and adoption. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to approval by the
stockholders of the Company of 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 authorized by all necessary corporate action on the part of
the Company, subject, in the case of this Agreement, to (x) approval of this
Agreement by the stockholders of the Company and (y) the filing of appropriate
Merger documents as required by the DGCL. This Agreement has been duly executed
and delivered by the Company and (assuming the valid authorization, execution
and delivery of this Agreement by Parent and Sub and the validity and binding
effect of the Agreement on Parent and Sub) constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
Section 3.4 Consents and Approvals; No Violation. Except as
set forth in Section 3.4 of the Company Letter, the execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any
provision of (i) the Company Charter or the Company Bylaws, (ii) any
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provision of the comparable charter or organization documents of any of the
Company's Subsidiaries, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its Subsidiaries or
(iv) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets, other than, in the case of clauses (ii), (iii) or (iv),
any such violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or is necessary for the consummation of
the Merger and the other transactions contemplated by this Agreement, except for
(i) in connection, or in compliance, with the provisions of the Xxxx Xxxxx
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or the
Bank Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (iii) such filings as may be required in connection
with the taxes described in Section 5.10, (iv) applicable requirements, if any,
of Blue Sky Laws, and (v) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse Effect
on the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
Section 3.5 Financial Statements. Section 3.5 of the Company
Letter contains (i) the audited consolidated balance sheets of the Company as of
December 31, 1997 and 1996 and the audited consolidated statements of income,
changes in stockholders' equity and cash flows of the Company for the years
ended December 31, 1997 and 1996 and (ii) the unaudited consolidated balance
sheet of the Company as of September 30, 1998 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
nine months then ended. Except as set forth therein, such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved (except that the
unaudited financial statements do not contain footnotes and are subject to
normal year-end adjustments), and such financial statements present fairly, in
all material respects, in accordance with generally accepted accounting
principles the consolidated financial position and results of operations of the
Company, as of their respective dates and for the respective periods covered
thereby. Except as disclosed in such financial statements or as required by
generally accepted accounting principles, the Company has not, since December
31, 1997, made any change in the accounting practices or policies applied in the
preparation of financial statements.
Section 3.6 Joint Proxy Statement. None of the information to
be supplied by the Company for inclusion or incorporation by reference in the
Joint Proxy Statement will, at the time of the mailing of the Joint Proxy
Statement and at the time of each of the Stockholder Meetings, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the
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circumstances under which they are made, not misleading. If at any time prior to
the Stockholder Meetings any event with respect to the Company, its officers and
directors or any of its Subsidiaries shall occur which is required at that time
to be described in the Joint Proxy Statement, the Company will provide to Parent
the needed information so that Parent may describe such event.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed in Section 3.7 of the Company Letter, since December 31, 1997, the
Company and its Subsidiaries have not incurred any liability or obligation
(indirect, direct or contingent), that would result in a Material Adverse Effect
on the Company. Since December 31, 1997 there has been no Material Adverse
Effect on the Company.
Section 3.8 Permits and Compliance; Defaults. (a) Each of the
Company and its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any of its Subsidiaries to own, lease and operate its properties or
to carry on its business as it is now being conducted (the "Company Permits"),
and all such Company Permits are valid and in full force and effect, except
where the failure to be in possession of any of the Company Permits or the
failure of any such Company Permits to be in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company and its Subsidiaries are in compliance in all material respects with
their respective obligations under the Company Permits, with only such
exceptions, as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.8 of the Company Letter,
neither the Company nor any of its Subsidiaries is in violation of (A) its
charter, bylaws or other organizational documents, (B) any applicable law,
ordinance, administrative or governmental rule or regulation or (C) any order,
decree or judgment of any Governmental Entity having jurisdiction over the
Company or any of its Subsidiaries, except in the case of clauses (A), (B) and
(C), for any violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. Except as set forth in Section 3.8 of
the Company Letter, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default exists
or, upon the consummation by the Company of the transactions contemplated by
this Agreement, will exist under any indenture, mortgage, loan agreement, note
or other agreement or instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease, contractual license or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any such Subsidiary is bound or to which any
of the properties, assets or operations of the Company or any such Subsidiary is
subject, other than any defaults that, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
Section 3.9 Tax Matters. Except as otherwise set forth in
Section 3.9 of the Company Letter, (i) the Company and each of its Subsidiaries
have filed all federal, and all material state, local and foreign, Tax Returns
required to have been filed or appropriate extensions therefor have been
properly obtained, and such Tax Returns are correct and complete, except to the
extent that any failure to so file or any failure to be correct and complete
would not,
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individually or in the aggregate, have a Material Adverse Effect on the Company;
(ii) all Taxes shown to be due on such Tax Returns have been timely paid or
extensions for payment have been properly obtained, except to the extent that
any failure to so pay or so obtain such an extension would not, individually or
in the aggregate, have a Material Adverse Effect on the Company; (iii) the
Company and each of its Subsidiaries have complied in all material respects with
all rules and regulations relating to the withholding of Taxes except to the
extent that any failure to comply with such rules and regulations would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
(iv) any Tax Returns referred to in clause (i) relating to federal income Taxes
have been examined by the IRS or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (v) no
material issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; (vi) all deficiencies asserted or assessments
made as a result of any examination of such Tax Returns by any taxing authority
have been paid in full or are being timely and properly contested; (vii) no
withholding is required under Section 1445 of the Code in connection with the
Merger; (viii) neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract or
agreement, whether written or oral, that could obligate it to make any payments
that would be disallowed as a deduction under Section 280G or Section 162(m) of
the Code; (ix) there has not been an ownership change, as defined in Section
382(g) of the Code, of the Company or any of its Subsidiaries that occurred
during or after any taxable period in which the Company or any of its
Subsidiaries incurred a net operating loss that carries over to any taxable
period ending after December 31, 1997, except in connection with the
transactions contemplated pursuant to this Agreement; and (x) neither the
Company nor any of its Subsidiaries is a party to any tax allocation or sharing
agreement and neither the Company nor any of its Subsidiaries has been a member
of an affiliated group filing a consolidated federal income tax return (other
than a group the common parent of which was the Company) or has any material
liability for taxes of any person (other than the Company and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law) as a transferee or successor or by contract or otherwise.
Section 3.10 Actions and Proceedings. Except as set forth in
Section 3.10 of the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against the Company or
any of its Subsidiaries, or, to the Knowledge of the Company, against any of the
present or former directors or officers of the Company or any of its
Subsidiaries, as such, or any of its or their properties, assets or business or
any Company Plan (as hereinafter defined) that, individually or in the
aggregate, would have a Material Adverse Effect on the Company. Except as set
forth in Section 3.10 of the Company Letter, there are no actions, suits or
claims or legal, administrative or arbitration proceedings or investigations
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the Knowledge of the Company, any of its or their
present or former directors or officers, as such, or any of its or their
properties, assets or business or any Company Plan that, individually or in the
aggregate, would have a Material Adverse Effect on the Company or materially
impair the ability of the Company to perform its obligations hereunder. As of
the date hereof, there are no actions, suits, labor disputes or other
litigation, legal or administrative proceedings or governmental investigations
pending or, to the Knowledge of the Company,
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threatened against the Company or any of its Subsidiaries or, to the Knowledge
of the Company, any of its or their present or former officers or directors, as
such, or any of its or their properties, assets or business or any Company Plan
relating to the transactions contemplated by this Agreement. For purposes of
this Agreement, "Knowledge of the Company" means the actual knowledge of the
individuals identified on Section 3.10 of the Company Letter.
Section 3.11 Certain Agreements. Except as set forth in
Section 3.11 of the Company Letter, neither the Company nor any of its
Subsidiaries is a party to or bound by (i) any oral or written agreement or
plan, including any employment agreement, severance agreement, stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or (ii) as of the date of this
Agreement, any contract, agreement or arrangement that is material to the
business, properties, assets, liabilities, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole ("Company
Contract"). Each Company Contract is valid and binding on the Company or its
Subsidiary, as applicable, and in full force and effect and the Company and each
Subsidiary has performed the obligations required to be performed by it to the
date hereof under each Company Contract in all material respects, except where
the failure of such contracts to be valid and binding or the failure of such
obligations to have been performed would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
Section 3.12 ERISA. (a) Each Company Plan is listed in Section
3.12 of the Company Letter, and true and complete copies of each Company Plan
have heretofore been made available to Parent. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with ERISA, the Code and all other applicable statutes and governmental
rules and regulations. Neither the Company nor any of its ERISA Affiliates has
maintained, contributed to, or had any liability under, any pension plan subject
to Title IV of ERISA or Section 302 of the Code.
(b) With respect to the Company Plans, no event has occurred
and, to the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any ERISA Affiliate or
Company Plan fiduciary could be subject to any liability under the terms of such
Company Plans, ERISA, the Code or any other applicable law, other than
liabilities for benefits payable in the normal course, and other than any
liability which would not have a Material Adverse Effect on the Company. Except
as disclosed in Section 3.12 of the Company Letter, neither the Company nor any
of its ERISA Affiliates has any material liability or obligation under any
welfare plan to provide benefits after termination of employment to any employee
or dependent other than as required by Section 4980B of the Code.
(c) As used herein, "Company Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA), a "welfare plan" (as defined in Section 3(1)
of ERISA), or any bonus, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
holiday pay, vacation, severance, death benefit, sick leave, fringe benefit,
insurance or other plan, arrangement or understanding, in each case established
or
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maintained by the Company or any of its ERISA Affiliates or as to which the
Company or any of its ERISA Affiliates has contributed or otherwise may have any
liability.
(d) Section 3.12 of the Company Letter contains a list, and
the Company has heretofore made available to Parent a true and complete copy, of
all employment agreements with employees of the Company and each of its
Subsidiaries.
Section 3.13 Compliance with Worker Safety and Environmental
Laws. To the Knowledge of the Company, the properties, assets and operations of
the Company and its Subsidiaries are in compliance with all applicable Worker
Safety Laws and Environmental Laws, except for any violations that, individually
or in the aggregate, would not have a Material Adverse Effect on the Company.
With respect to such properties, assets and operations, including any previously
owned, leased or operated properties, assets or operations, there are no events,
conditions, circumstances, activities, practices, incidents, actions or plans of
the Company or any of its Subsidiaries that interfere with or prevent compliance
or continued compliance with applicable Worker Safety Laws and Environmental
Laws, other than any such interference or prevention as would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.14 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or labor
contract. To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practice with respect to any
persons employed by or otherwise performing services primarily for the Company
or any of its Subsidiaries (the "Company Business Personnel"), and there is no
unfair labor practice complaint or grievance against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable state
agency pending or, to the Knowledge of the Company, threatened in writing with
respect to the Company Business Personnel, except where such unfair labor
practice, complaint or grievance would not have a Material Adverse Effect on the
Company. There is no labor strike, dispute, slowdown or stoppage pending or, to
the Knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries which may interfere with the respective business activities
of the Company or any of its Subsidiaries, except where such dispute, strike or
work stoppage would not have a Material Adverse Effect on the Company.
Section 3.15 Intellectual Property. (a) The Company and its
Subsidiaries have, through ownership or licensing, all Intellectual Property
Rights as are necessary to conduct the business of the Company and its
Subsidiaries as currently conducted by the Company and its Subsidiaries, taken
as a whole, except where the failure to have such Intellectual Property Rights
would not have a Material Adverse Effect on the Company. To the Knowledge of the
Company, neither the Company nor any of its Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually and in the aggregate, would not have a Material Adverse
Effect on the Company.
(b) Except as set forth in Section 3.15 of the Company Letter,
there are no actions, suits or claims or administrative proceedings or
investigations pending or, to the
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Knowledge of the Company, threatened that challenge or question the Company's
Intellectual Property Rights and that, individually or in the aggregate, would
have a Material Adverse Effect on the Company.
Section 3.16 Opinion of Financial Advisor. The Company has
received the written opinion of Xxxxxxx Xxxxx Xxxxxx Inc., dated the date
hereof, to the effect that, as of the date hereof, the Exchange Ratio is fair to
the Company's stockholders from a financial point of view, a copy of which
opinion has been delivered to Parent.
Section 3.17 Required Vote of Company Stockholders. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock and Company Preferred Stock voting together as a single
class is required to adopt this Agreement. No other vote of the securityholders
of the Company is required by law, the Company Charter or the Company Bylaws or
otherwise in order for the Company to consummate the Merger and the transactions
contemplated hereby.
Section 3.18 Pooling of Interests; Reorganization. To the
Knowledge of the Company, neither it nor any of its Subsidiaries has (i) taken
any action or failed to take any action which action or failure would jeopardize
the treatment of the Merger as a pooling of interests for accounting purposes or
(ii) taken any action or failed to take any action which action or failure would
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
Section 3.19 Brokers. No broker, investment banker or other
person, other than Xxxxxxx Xxxxx Barney Inc., the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. (a) Except
as expressly permitted by clauses (i) through (x) of this Section 4.1(a), during
the period from the date of this Agreement through the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement or as set forth in Section 4.1 of the Company Letter, the
Company shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of Parent, which shall not be unreasonably withheld:
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(i) (A) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
stockholders in their capacity as such, other than (1) quarterly
dividends by the Company on its outstanding Company Preferred Stock in
accordance with the terms thereof or (2) dividends by the Company's
Subsidiaries to the Company or another Subsidiary of the Company, (B)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (C) purchase,
redeem or otherwise acquire any shares of capital stock of the Company
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any rights,
warrants or options to acquire any such shares, voting securities,
equity equivalent or convertible securities, other than the issuance of
shares of Company Common Stock pursuant to the Company Stock Plan in
accordance with its current terms;
(iii) amend its charter or by-laws or other comparable charter
or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity
in, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets, other than asset acquisitions that are in the
ordinary course of business consistent with past practice and not
material to the Company and its Subsidiaries taken as a whole;
(v) sell, lease, license, mortgage, encumber or otherwise
dispose of any of its properties or assets, other than sales, leases or
licenses in the ordinary course of business consistent with past
practice;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or other investments in, any other person, other than (A)
indebtedness for borrowed money not exceeding $75,000,000 in aggregate
principal amount outstanding at any one time, (B) indebtedness,
guarantees, loans, advances, capital contributions and investments
between the Company and any of its Subsidiaries or between any of such
Subsidiaries, and (C) cash management activities carried on in the
ordinary course of business consistent with past practice;
(vii) increase the compensation payable or to become payable
to its, officers or employees (except for increases in the ordinary
course of business
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consistent with past practice) or, grant any severance or termination
pay (other than in the ordinary course of business consistent with past
practice) to, or enter into or amend any employment agreement with, any
current or former director or officer of the Company or any of its
Subsidiaries, or establish, adopt, enter into, or, except as may be
required to comply with applicable law, amend or take action to enhance
or accelerate any rights or benefits under, any 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 or employee, other
than payment of bonuses for the year ended December 31, 1998 in the
aggregate amount accrued prior to the date of this Agreement pursuant
to the Company's 1998 Incentive Compensation Plan;
(viii) make any change to accounting policies or procedures
(other than actions required to be taken by generally accepted
accounting principles);
(ix) make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $2,000,000 or, in the
aggregate, are in excess of $25,000,000; or
(x) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(b) Except as expressly permitted by clauses (i) through
(iv) of this Section 4.1(b), during the period from the date of this Agreement
through the Effective Time, Parent shall, and shall cause each of its
Subsidiaries to, in all material respects carry on its business in the ordinary
course of its business as currently conducted and, to the extent consistent
therewith, use reasonable best efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement or as set forth in Section
4.1 of the Parent Letter, Parent shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Company, which shall
not be unreasonably withheld:
(i) (A) combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (B)
purchase, redeem or otherwise acquire any shares of capital stock of
Parent or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, other than
pursuant to any Parent Plan or in connection with the cashless exercise
of options by employees to purchase shares of Parent Common Stock;
(ii) amend its charter or by-laws or other comparable charter
or organizational documents;
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(iii) make any acquisition, by means of merger or otherwise, of
assets or securities, or any sale, lease, encumbrance or other disposition
of assets or securities, or enter into any other transaction of any kind,
in each case, which could reasonably be expected to adversely effect the
ability of Parent to consummate the Merger or the other transactions
contemplated by this Agreement or delay or impede obtaining any consents or
approvals of any Governmental Entity required under this Agreement or
otherwise delay or impede the Closing; or
(iv) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 4.2 Pooling of Interests; Reorganization. Unless the other
party shall otherwise agree in writing, none of Parent, the Company or any of
their respective Subsidiaries shall (a) knowingly take or fail to take any
action, which action or failure would jeopardize the treatment of the Merger as
a pooling of interests for accounting purposes or (b) knowingly take or fail to
take any action, which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. Parent will, as soon as
practicable following the date of this Agreement, and the Company will, duly
call, give notice of, convene and hold a meeting of stockholders (respectively,
the "Parent Stockholder Meeting" and the "Company Stockholder Meeting" and,
collectively, the "Stockholder Meetings") for the purpose of considering the
approval of this Agreement (in the case of the Company) and the Share Issuance
(in the case of Parent). Parent will, through its Board of Directors, recommend
to its stockholders approval of the Share Issuance and shall solicit such
approval by its stockholders and such Board of Directors shall not withdraw or
modify, or propose to withdraw or modify in a manner adverse to the Company,
such recommendation. The Company will, through its Board of Directors,
recommend to its stockholders approval of this Agreement and shall solicit such
approval by its stockholders and such Board of Directors shall not withdraw or
modify, or propose to withdraw or modify in a manner adverse to Parent, such
recommendation.
Section 5.2 Preparation of the Joint Proxy Statement. The Company
and Parent shall promptly prepare and Parent shall file with the SEC the Joint
Proxy Statement. Parent shall also take any action reasonably required to be
taken under any applicable state securities laws in connection with the
issuance of Parent Common Stock in the Merger, and the Company shall furnish
all information concerning the Company and the holders of Company Common Stock
as may be reasonably requested in connection with any such action.
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Section 5.3 Access to Information. (a) Subject to contractual
and legal restrictions applicable to the Company or any of its Subsidiaries, the
Company shall, and shall cause each of its Subsidiaries to, afford to the
accountants, counsel, financial advisors and other representatives of Parent
reasonable access to, and permit them to make such inspections as they may
reasonably require of, during normal business hours during the period from the
date of this Agreement through the Effective Time, its properties, books,
contracts, commitments and records (including, without limitation, the work
papers of independent accountants, if available and subject to the consent of
such independent accountants) and, during such period, the Company shall, and
shall cause each of its Subsidiaries to, furnish promptly to Parent (i) a copy
of each report, schedule, statement and other document filed by it during such
period pursuant to the requirements of federal or state banking laws and (ii)
all other information concerning its business, properties and personnel as
Parent may reasonably request; provided, that the Company may provide
information which is of a sensitive competitive nature in a form which minimizes
the potential detriment to the Company from such disclosure while addressing the
legitimate business objectives of Parent in seeking such information.
(b) Subject to contractual and legal restrictions applicable
to Parent or any of its Subsidiaries, Parent shall, and shall cause each of its
Subsidiaries to, afford to the accountants, counsel, financial advisors and
other representatives of the Company reasonable access to, and permit them to
make such inspections as they may reasonably require of, during normal business
hours during the period from the date of this Agreement through the Effective
Time, its properties, books, contracts, commitments and records (including,
without limitation, the work papers of independent accountants, if available and
subject to the consent of such independent accountants) and, during such period,
Parent shall, and shall cause each of its Subsidiaries to, furnish promptly to
Parent (i) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities or banking laws and (ii) all other information concerning
its business, properties and personnel as the Company may reasonably request;
provided, that Parent may provide information which is of a sensitive
competitive nature in a form which minimizes the potential detriment to Parent
from such disclosure while addressing the legitimate business objectives of the
Company in seeking such information.
(c) No investigation pursuant to this Section 5.3 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. All information obtained
pursuant to this Section 5.3 shall be kept confidential in accordance with the
Confidentiality Agreement, dated August 26, 1998 between Parent and the Company
(the "Confidentiality Agreement"), all of the terms of which shall remain in
full force and effect after the date hereof.
Section 5.4 Compliance with the Securities Act. (a) Section
5.4 of the Company Letter contains a list identifying all persons who, at the
time of the Company Stockholder Meeting, may be deemed to be "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Rule 145 Affiliates"). The Company shall use its reasonable
best efforts to cause each person who is identified as a Rule 145 Affiliate in
such list to deliver to Parent within 30 days of the date hereof a written
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agreement in substantially the form of Exhibit C hereto (the "Company Affiliate
Letter"), executed by each of such persons identified in the foregoing list.
Prior to the Effective Time, the Company shall amend and supplement Section 5.4
of the Company Letter and use its reasonable best efforts to cause each
additional person who is identified as a Rule 145 Affiliate of the Company to
execute the Company Affiliate Letter.
(b) Section 5.4 of the Parent Letter contains a list
identifying those persons who may be, at the time of the Parent Stockholder
Meeting, affiliates of Parent under applicable SEC accounting releases with
respect to pooling of interests accounting treatment. Parent shall use its
reasonable best efforts to enter into a written agreement in substantially the
form of Exhibit D hereto (the "Parent Affiliate Letter") within 30 days of the
date hereof with each of such persons identified in the foregoing list, copies
of which shall be delivered to the Company. Prior to the Effective Time, Parent
shall amend and supplement Section 5.4 of the Parent Letter and use its
reasonable best efforts to cause each additional person who is identified as an
affiliate of Parent to execute the Parent Affiliate Letter.
Section 5.5 Listing of Parent Common Stock. Parent shall use
its best efforts to continue the listing of the Parent Common Stock on Nasdaq
during the term of this Agreement. Parent shall use its best efforts to list on
Nasdaq, upon official notice of issuance, the shares of Parent Common Stock to
be issued in connection with the Merger or pursuant to the Company Stock
Options.
Section 5.6 Fees and Expenses. (a) Except as provided in this
Section 5.6 and Section 5.10, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby including, without limitation, the fees and
disbursements of counsel, financial advisors and accountants, shall be paid by
the party incurring such costs and expenses.
(b) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement is terminated by the Company pursuant to Section
7.1(f), then and only then Parent shall (without prejudice to any other rights
the Company may have against Parent for breach of this Agreement) promptly pay
to the Company a fee of $5,000,000.
Section 5.7 Company Stock Plan. At the Effective Time, each
Company Stock Option which is outstanding immediately prior to the Effective
Time pursuant to the Company Stock Plan shall become and represent an option to
purchase the number of shares of Parent Common Stock (a "Substitute Option")
(decreased to the nearest full share) determined by multiplying (i) the number
of shares of Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time by (ii) the Exchange Ratio, at an
exercise price per share of Parent Common Stock (rounded up to the nearest tenth
of a cent) equal to the exercise price per share of Company Common Stock
immediately prior to the Effective Time divided by the Exchange Ratio. Parent
shall pay cash to holders of Company Stock Options in lieu of issuing fractional
shares of Parent Common Stock upon the exercise of Substitute Options for shares
of Parent Common Stock, unless in the reasonable judgment of Parent, based upon
the advice of its independent public accountants, such payment would adversely
affect the ability to
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account for the Merger under the pooling of interests method. After the
Effective Time, except as provided above in this Section 5.7, each Substitute
Option shall be exercisable upon the same terms and conditions as were
applicable under the related Company Stock Option immediately prior to or at the
Effective Time. Within 15 days after the Effective Time, Parent shall file a
registration statement on Form S-8 with respect to the shares of Parent Common
Stock to be issued upon exercise of the Substitute Options and shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Substitute Options remain outstanding.
Section 5.8 Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including but not limited
to: (i) obtaining all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and making all necessary registrations
and filings (including filings with Governmental Entities) and taking all steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity (including those in connection with
the HSR Act and the Bank Act), (ii) defending any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered into by any court or other
Governmental Entity vacated or reversed, (iii) in the case of Parent, promptly,
if required by any Governmental Entity in order to consummate Merger, taking all
steps and making all undertakings to secure antitrust and bank regulatory
clearance (including steps to effect the sale or other disposition of particular
properties of Parent, its Subsidiaries and/or the Company and its Subsidiaries
and to hold separate such properties pending such sale or other disposition),
(iv) keeping the other party informed in all material respects of any material
communication received by such party from, or given by such party to, any
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case relating to the
Merger or the transactions contemplated by this Agreement, (v) permitting the
other party to review any material communication delivered to, and consulting
with the other party in advance of any meeting or conference with, any
Governmental Entity relating to the Merger or the transactions contemplated by
this Agreement or in connection with any proceeding by a private party, and
giving the other party the opportunity to attend and participate in such
meetings and conferences (to the extent permitted by such Governmental Entity or
private party), (vi) obtaining of all necessary consents, approvals or waivers
from third parties, and (vii) executing and delivering any additional
instruments necessary to consummate the transactions contemplated by this
Agreement. No party to this Agreement shall consent to any voluntary delay of
the consummation of the Merger at the behest of any Governmental Entity without
the consent of the other parties to this Agreement, which consent shall not be
unreasonably withheld.
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(b) Each party shall use all reasonable best efforts to not
take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
Section 5.9 Public Announcements. Parent and the Company will
not issue any press release with respect to the transactions contemplated by
this Agreement or otherwise issue any written public statements with respect to
such transactions without prior consultation with and the approval of the other
party, except as may be required by applicable law or by obligations pursuant to
any listing agreement with any national securities exchange.
Section 5.10 Real Estate Transfer and Gains Tax. Parent and
the Company agree that either the Company or the Surviving Corporation will pay
any state or local tax which is attributable to the transfer of the beneficial
ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), and any penalties or interest with respect to
the Gains Taxes, payable in connection with the consummation of the Merger. The
Company and Parent agree to cooperate with the other in the filing of any
returns with respect to the Gains Taxes, including supplying in a timely manner
a complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such property that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real property of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion.
Section 5.11 Indemnification; Directors and Officers
Insurance. For six years from and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify and hold harmless all past
and present directors, officers, employees or agents of the Company and of its
Subsidiaries to the full extent permitted by law, any outstanding
indemnification agreements, the Company Charter or the Company Bylaws, in each
case for all acts or omissions occurring at or prior to the Effective Time, and
shall periodically advance litigation expenses incurred by each such person in
connection with defending any claim, action or investigation arising out of such
acts or omissions (including the cost of any investigation and preparation
incurred in connection therewith). Parent shall provide, or shall cause the
Surviving Corporation to provide, for an aggregate period of not less than six
years from the Effective Time, the Company's current and former directors and
officers an insurance and indemnification policy that provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance") that is no
less favorable than the Company's existing policy or, if substantially
equivalent insurance coverage is unavailable, the best available coverage;
provided, however, that the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of 150% of the last annual
premium paid by the Company prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(b) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and is not the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
conveys all or substantially all of its properties and assets to any
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person then, and in each case, proper provision shall be made so that the
successors and assigns of Parent assume the obligations set forth in this
Section 5.11.
Section 5.12 Notification of Certain Matters. Parent shall
use its reasonable best efforts to give prompt notice to the Company, and the
Company shall use its reasonable best efforts to give prompt notice to Parent,
of: (i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied in
all material respects, (ii) any failure of Parent or the Company, as the case
may be, to comply in a timely manner with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or (iii) any change
or event which would be reasonably likely to have a Material Adverse Effect on
Parent or the Company, as the case may be; provided, however, that the delivery
of any notice pursuant to this Section 5.12 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.13 Employee Matters. (a) Parent shall cause the
Surviving Corporation to honor all employment, severance and indemnification
agreements to which the Company or its Subsidiaries is a party as of the
Effective Time.
(b) Immediately prior to the Effective Time, the Company shall
use its reasonable best efforts to take all action required to terminate its
Retirement Savings Plan such that all employees of the Company shall be entitled
to receive a distribution therefrom without violating the terms of Section
401(k)(2)(B) of the Code and be eligible to roll over that distribution (or the
otherwise eligible portion thereof), at their election, to an individual
retirement account or to a comparable plan of the Parent or the Surviving
Corporation which meets all of the requirements for qualification under Sections
401(a) and (k) of the Code. To the extent any Parent Plan (or any plan of the
Surviving Corporation) shall be made applicable to any employee or former
employee of the Company, Parent shall, or shall cause the Surviving Corporation
to, grant to employees and former employees of the Company credit for service
with the Company and its Subsidiaries (or service credited by the Company and
its Subsidiaries) for the purposes of determining eligibility to participate in
such plan and the employee's nonforfeitable interest in benefits thereunder and
for purposes of calculating benefits thereunder (but subject to offset, if
necessary, to avoid duplication of benefits). Parent shall (i) waive (or cause
to be waived) any pre-existing condition limitations that might otherwise apply
to employees or former employees of the Company and its Subsidiaries unless not
waived under the Company's equivalent plan and (ii) recognize (or cause to be
recognized) the dollar amount of all expenses incurred by employees or former
employees of the Company and its Subsidiaries during the calendar year in which
the Effective Time occurs for purposes of satisfying the calendar year
deductions and co-payment limitations for such year, under the relevant welfare
benefit plans of Parent or the Surviving Corporation. Nothing in this Agreement
shall be interpreted as limiting the power of the Surviving Corporation to amend
or terminate any Company Plan or any other employee benefit plan, program,
agreement or policy in accordance with its terms or as requiring the
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Surviving Corporation or Parent to offer to continue (other than as required by
its terms) any written employment contract.
Section 5.14 Registration Rights Agreement. At or prior to the
Effective Time, Parent shall enter into the Registration Rights Agreement,
substantially in the form of Exhibit E (the "Registration Rights Agreement"),
with each of the stockholders of the Company who or which elects to become a
party thereto.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by the requisite vote of stockholders of the Company in accordance with
applicable law and the Company Charter and the Company Bylaws, and the Share
Issuance shall have been approved by the requisite vote of the stockholders of
Parent in accordance with applicable rules of Nasdaq, applicable law and the
Parent Charter and the Parent Bylaws.
(b) Other Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act and the
Bank Act shall have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or
approvals of, or filings with, or terminations or expirations of waiting periods
imposed by, any Governmental Entity, which the failure to obtain, make or occur
would have the effect of making the Merger or any of the transactions
contemplated hereby illegal shall have been obtained, shall have been made or
shall have occurred.
(c) No Order. No court or other Governmental Entity having
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
(d) Litigation. There shall not be instituted or pending any
suit, action or proceeding by any Governmental Entity relating to this Agreement
or any of the transactions contemplated hereby which would have a Material
Adverse Effect on the Company or Parent.
(e) Pooling. The Company shall have received the written
opinion, dated as of the Effective Time, of the Philadelphia, Pennsylvania
office of Ernst & Young LLP that Xxxxx
00
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& Xxxxx XXX concurs with management's conclusion that the Company is eligible to
be a party to a business combination accounted for as a pooling of interests in
accordance with generally accepted accounting principles and applicable
published rules and regulations of the SEC. Parent shall have received the
written opinion, dated as of the Effective Time, of the Memphis, Tennessee
office of Ernst & Young LLP that Ernst & Young LLP concurs with management's
conclusion that Parent is eligible to be a party to a business combination
accounted for as a pooling of interests in accordance with generally accepted
accounting principles and applicable published rules and regulations of the SEC,
and that the Merger will qualify for pooling of interests accounting. Each of
such written opinions shall be in form and substance reasonably satisfactory to
the Company and Parent.
Section 6.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and
Warranties. Each of Parent and Sub shall have performed in all material respects
each of its covenants and agreements contained in this Agreement required to be
performed on or prior to the Effective Time, each of the representations and
warranties of Parent and Sub contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Effective Time as if made
on and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of such
certain date) and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and the Company shall
have received a certificate signed on behalf of Parent by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion
of Sidley & Austin in form and substance reasonably satisfactory to the Company,
dated the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for
federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the conversion of their shares of Company Common
Stock into shares of Parent Common
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Stock pursuant to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received in exchange for shares of Company Common Stock pursuant
to the Merger (including a fractional share of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
such shares of Company Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger will include the holder's holding period for such shares of
Company Common Stock, provided such shares of Company Common Stock were
held as capital assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or
loss equal to the difference, if any, between such stockholder's basis
in the fractional share (determined under clause (iv) above) and the
amount of cash received.
In rendering such opinion, Sidley & Austin may rely upon the representations
contained herein and may receive and rely upon representations from Parent, the
Company, and others, including representations from Parent substantially similar
to the representations in the Parent Tax Certificate attached to the Parent
Letter and representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company Letter.
(c) Registration Rights Agreement. The Registration Rights
Agreement shall have been duly executed and delivered by Parent.
Section 6.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects each of
its covenants and agreements contained in this Agreement required to be
performed on or prior to the Effective Time, each of the representations and
warranties of the Company contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Effective Time as if made
on and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct as of such
certain date) and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects on and as of the
Effective Time as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer to such effect.
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(b) Tax Opinion. Parent shall have received an opinion of
Xxxxx, Xxxxxxx & Xxxxx, in form and substance reasonably satisfactory to Parent,
dated the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time, for
federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company, Sub and Parent
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the conversion of their shares of Company Common
Stock into shares of Parent Common Stock pursuant to the Merger, except
with respect to cash, if any, received in lieu of fractional shares of
Parent Common Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received in exchange for shares of Company Common Stock pursuant
to the Merger (including a fractional share of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
such shares of Company Common Stock;
(v) the holding period for shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger will include the holder's holding period for such shares of
Company Common Stock, provided such shares of Company Common Stock were
held as capital assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or
loss equal to the difference, if any, between such stockholder's basis
in the fractional share (determined under clause (iv) above) and the
amount of cash received.
In rendering such opinion, Xxxxx, Tarrant & Xxxxx may rely upon representations
contained herein and may receive and rely upon representations from Parent, the
Company, and others, including representations from Parent substantially similar
to the representations in the Parent Tax Certificate attached to the Parent
Letter and representations from the Company substantially similar to the
representations in the Company Tax Certificate attached to the Company Letter.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after any approval of
the matters presented in connection with the Merger by the stockholders of the
Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall
have failed to comply in any material respect with any of its material covenants
or agreements contained in this Agreement required to be complied with prior to
the date of such termination, which failure to comply has not been cured within
30 business days following receipt by such other party of written notice from
the non-breaching party of such failure to comply;
(c) by either Parent or the Company if there has been (i) a
breach by the other party (in the case of Parent, including any breach by Sub)
of any representation or warranty that is not qualified as to materiality which
has the effect of making such representation or warranty not true and correct in
all material respects or (ii) a breach by the other party (in the case of
Parent, including any breach by Sub) of any representation or warranty that is
qualified as to materiality, in each case which breach has not been cured within
30 business days following receipt by the breaching party from the non-breaching
party of written notice of the breach;
(d) by Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on August 30, 1999; provided,
however, that either party may by written notice to the other party delivered on
or prior to August 30, 1999 extend such date until the day immediately preceding
the first anniversary hereof if the failure of the Merger to be effected on or
prior to August 30, 1999 shall have resulted from the failure of the conditions
set forth in Section 6.1(b) to be satisfied; and provided, further, that the
right to terminate this Agreement pursuant to this Section 7.1(d)(i) shall not
be available to any party whose failure to fulfill any of its obligations
contained in this Agreement has been the cause of, or resulted in, the failure
of the Merger to have occurred on or prior to the aforesaid date; or (ii) any
court or other Governmental Entity having jurisdiction over a party hereto shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and nonappealable;
(e) by Parent if the stockholders of the Company do not
approve this Agreement at the Company Stockholder Meeting or at any adjournment
or postponement thereof;
(f) by Parent or the Company if the stockholders of Parent do
not approve the Share Issuance at the Parent Stockholder Meeting or at any
adjournment or postponement thereof; provided, however, that Parent may not
terminate this Agreement pursuant to this Section 7.1(f) if Parent has not
complied with its obligations under Sections 5.1 and 5.2;
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(g) by Parent if the Board of Directors of the Company shall
not have recommended, or shall have resolved not to recommend, or shall have
qualified or modified or withdrawn its recommendation of the Merger or
declaration that the Merger is advisable and fair to and in the best interest of
the Company and its stockholders, or shall have resolved to do so;
(h) by the Company if the Board of Directors of Parent shall
not have recommended, or shall have resolved not to recommend, or shall have
qualified or modified or withdrawn its recommendation of the Share Issuance or
declaration that the Share Issuance is advisable and fair to and in the best
interest of Parent and its stockholders, or shall have resolved to do so; or
(i) by the Company, upon written notice to Parent, at any time
during the 10-day period after the Determination Date, if both of the following
conditions are satisfied:
(1) the Average Closing Price shall be less than the
product of (A) 0.80 and (B) the Starting Price; and
(2)(i) the number obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein as
the "Parent Ratio") shall be less than (ii) the number obtained by
dividing the Index Price on the Determination Date by the Index Price
on the Starting Date and subtracting 0.15 from the quotient in this
clause (2)(ii) (such number being referred to herein as the "Index
Ratio");
subject, however, to the following provisions. The Company may withdraw such
notice of termination at any time within the aforementioned 10-day period.
During the five-day period commencing with its receipt of such notice, Parent
shall have the option to elect to increase the Exchange Ratio to equal the
lesser of (i) the number obtained by dividing (1) the product of 0.80, the
Starting Price, and the Exchange Ratio (as then in effect) by (2) the Average
Closing Price, and (ii) the number obtained by dividing (1) the product of the
Index Ratio and the Exchange Ratio (as then in effect) by (2) the Parent Ratio;
provided, however, that Parent shall not have such option and may not make such
election if the Exchange Ratio as adjusted pursuant to clause (i) or (ii) above
would cause the total number of shares of Parent Common Stock (i) into which the
shares of Company Common Stock are converted by virtue of the Merger and (ii)
issuable upon exercise of all substitute Options, to be greater than or equal to
38,772,000. Any election by Parent pursuant to the preceding sentence shall be
made by delivery of a written notice to the Company within such five-day period
and shall specify the revised Exchange Ratio. Upon delivery of such notice by
Parent, no termination shall be deemed to have occurred pursuant to this Section
7.1(i) and this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any references
in this Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 7.1(i). Promptly after
Parent gives notice of its election to adjust the Exchange Ratio hereunder,
Parent and Company shall agree on a date to be the Closing Date under this
Agreement, which date shall be not more than five business days after the date
of delivery of such notice by Parent.
38
45
For purposes of this Section 7.1(i), the following terms shall
have the meanings indicated:
"Average Closing Price" shall mean the average of the daily
last sales price of Parent Common Stock as reported on the Nasdaq (as reported
by The Wall Street Journal or, if not reported thereby, another authoritative
source as reasonably selected by Parent and the Company) for the 10 consecutive
full trading days in which such shares are traded on the Nasdaq ending at the
close of trading on the Determination Date.
"Determination Date" shall mean the third trading day prior to
the Closing Date.
"Index Group" shall mean the six companies listed in Section
7.1 of the Parent Letter, the common stocks of all of which shall be publicly
traded and as to which there shall not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date. In the event that any such company or
companies are removed from the Index Group as a result of any of the events
described in the preceding sentence, the weights (which shall be determined
based upon the number of outstanding shares of common stock) listed opposite
such Company in Section 7.1 of the Parent Letter shall be redistributed
proportionately for purposes of determining the Index Price.
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed in Section 7.1 of the Parent
Letter) of the average closing prices of the common stock of the companies
composing the Index Group as reported in the consolidated transaction reporting
system for the market or exchange on which such common stock is principally
traded during the period of 10 consecutive full trading days immediately
preceding the date in question.
"Starting Date" shall mean the date of this Agreement.
"Starting Price" shall mean the average of the daily last
sales price of Parent Common Stock as reported on the Nasdaq (as reported by The
Wall Street Journal or, if not reported thereby, another authoritative source as
reasonably selected by Parent and the Company) for the 10 consecutive full
trading days ending at the close of trading on the date hereof.
If Parent or any company belonging to the Index Group declares
or effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the date of this
Agreement and the Determination Date, the prices for the common stock of such
company or Parent shall be appropriately adjusted for the purposes of applying
this Section 7.1(i).
The right of any party hereto to terminate this Agreement
pursuant to this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or
39
46
on behalf of any party hereto, any person controlling any such party or any of
their respective officers or directors, whether prior to or after the execution
of this Agreement.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either Parent or the Company, as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the last sentence of Section 5.3(c) and the entirety of
Section 5.6, which shall survive the termination); provided, however, that
nothing contained in this Section 7.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement. The
Confidentiality Agreement shall remain in full force and effect notwithstanding
the termination of this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Parent and the Company, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time,
the parties hereto 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 or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to an overnight courier or when
telecopied (with a confirmatory copy sent by overnight courier) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
40
47
(a) if to Parent or Sub, to
Concord EFS, Inc.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, III, President
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx, Tarrant & Xxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: X. Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to
Electronic Payment Services, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Sidley & Austin
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
and:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Section 8.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, table of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
41
48
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Confidentiality Agreement and the Coordination Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement, except for the provisions of Article I
and Sections 5.7, 5.11 and 5.13, is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
Section 8.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 8.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Any attempted assignment in violation of
this Section 8.7 shall be deemed to be void and of no force or effect.
Section 8.8 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent
possible.
Section 8.9 Enforcement of this Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Confidentiality Agreement were not performed
in accordance with their specific wording or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or the Confidentiality
Agreement and to enforce specifically the terms and provisions hereof and
thereof in any court of the United States or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party is entitled at
law or in equity.
42
49
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
CONCORD EFS, INC.
By: /s/ Xxxxxx X. Xxxxx III
-----------------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: President
CEFT, INC.
By: /s/ Xxxxxx X. Xxxxx III
-----------------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Vice President and Treasurer
ELECTRONIC PAYMENT SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
50
EXHIBIT A
VOTING AGREEMENT
VOTING AGREEMENT, dated as of November 20, 1998 (this
"Agreement") by the undersigned stockholder (the "Stockholder") of Electronic
Payment Services, Inc., a Delaware corporation (the "Company"), for the benefit
of Concord EFS, Inc., a Delaware corporation ("Parent").
WHEREAS, Parent, CEFT, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company are entering into an
Agreement and Plan of Merger, dated as of November 20, 1998 (the "Merger
Agreement"), whereby, upon the terms and subject to the conditions set forth in
the Merger Agreement, each issued and outstanding share of Common Stock, par
value $.01 per share, of the Company ("Company Common Stock"), not owned
directly or indirectly by Parent or the Company, will be converted into shares
of Common Stock, par value $.33 1/3 per share, of Parent ("Parent Common
Stock");
WHEREAS, stockholder owns 750,000 shares of Company Common
Stock (such shares of Company Common Stock, together with any other shares of
capital stock of the Company acquired by such Stockholder after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement the Stockholder has agreed,
to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants and agreements set forth herein, the Stockholder agrees as
follows:
1. Capitalized Terms. Capitalized terms used in this Agreement
that are not defined herein shall have such meanings as set forth in the Merger
Agreement.
2. Covenants of Stockholder. Until the termination of this
Agreement in accordance with Section 5, the Stockholder agrees as follows:
(a) At the Company Stockholders Meeting (or at any
adjournment thereof) or in any other circumstances upon which a vote,
consent or other approval with respect to the
51
Merger or the Merger Agreement is sought, the Stockholder shall vote
(or cause to be voted) the Subject Shares in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof.
(b) At any meeting of stockholders of the Company or
at any adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against any amendment of the Company Charter or the Company Bylaws or
other proposal or transaction involving the Company or any of its
Subsidiaries, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement.
(c) The Stockholder agrees not to (i) sell, transfer,
pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or enter into any contract, option or other
arrangement with respect to the Transfer of the Subject Shares to any
person or (ii) enter into any voting arrangement, whether by proxy,
voting agreement or otherwise, in relation to the Subject Shares, and
agrees not to commit or agree to take any of the foregoing actions.
3. Representations and Warranties. The Stockholder represents
and warrants to Parent that (i) the Stockholder is the record and beneficial
owner of, and has good and marketable title to, the Subject Shares, (ii) except
as set forth on Schedule A, the Stockholder does not own, of record or
beneficially, any shares of capital stock of the Company other than the Subject
Shares, (iii) the Stockholder has the sole right to vote, and the sole power of
disposition with respect to, the Subject Shares, and none of the Subject Shares
is subject to any voting trust, proxy or other agreement, arrangement or
restriction with respect to the voting or disposition of such Subject Shares, in
each case except as contemplated by this Agreement and except for the
Participants' Agreement dated as of March 1, 1995 by and among the Company and
Bank One Corporation, KeyCorp, National City Corporation, PNC Bank Corp. and
First Union Corporation (as successor to CoreStates Financial Corp.), as
amended, and the Coordination Agreement dated as of the date hereof among
Parent, the Company, Bank One Corporation, KeyCorp, National City Corporation,
PNC Bank Corp. and First Union Corporation (as successor to CoreStates Financial
Corp.), (iv) the execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of the Stockholder
and neither the execution, delivery and performance
52
hereof by the Stockholder nor the compliance by the Stockholder with the
agreements contained herein does or will (A) violate any law, statute, order,
rule or regulation of any Governmental Entity applicable to or binding on the
Stockholder or any of its properties or (B) contravene or result in any breach
of or constitute any default under, or result in the creation of any lien,
charge or encumbrance upon any of the Stockholder's properties under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, loan or credit agreement, charter, bylaw, or other agreement or
document to which it is a party or by which it or any of its properties are
bound or affected, and (v) this Agreement is the legal, valid and binding
agreement of the Stockholder, enforceable against the Stockholder in accordance
with its terms.
4. Affiliates Letter. The Stockholder agrees to execute and
deliver to Parent and the Company an Affiliate Letter in the form of Exhibit C
to the Merger Agreement no later than 30 days following the date hereof.
5. Termination. The obligations of the Stockholder hereunder
shall terminate upon the earlier of the termination of the Merger Agreement
pursuant to Section 7.1 thereof or the Effective Time; provided, that
termination of this Agreement shall not relieve a party of its willful breach
hereof.
6. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns.
7. Remedies. The Stockholder acknowledges that money damages
would be an insufficient remedy for any breach of this Agreement by it, and that
any such breach would cause Parent irreparable harm. Accordingly, the
Stockholder agrees that in the event of any breach or threatened breach of this
Agreement, Parent, in addition to any other remedies at law or in equity it may
have, shall be entitled, without the requirement of posting a bond or other
security, to seek equitable relief, including injunctive relief and specific
performance.
8. Severability. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction. If in the opinion of Parent's independent accountants, any
provision hereof would cause the Merger to be ineligible for "pooling of
interest" accounting treatment, it shall be deemed to be ineffective and
inapplicable.
53
9. Amendment. This Agreement may be amended only by means of a
written instrument executed and delivered by the Stockholder and Parent.
10. Governing Law. This Agreement shall be governed by, and
construed in accordance in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
11. Counterparts. For the convenience of the parties, this
Agreement may be executed in two counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12. Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
13. Stockholder Capacity. Neither the Stockholder nor any
designee of the Stockholder who is or becomes during the term hereof a director
or officer of the Company makes any agreement or understanding herein in its
capacity as such director or officer. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of such Stockholder's Subject
Shares and nothing herein shall limit or affect any actions taken by the
Stockholder or any designee of the Stockholder in his or her capacity as an
officer or director of the Company.
------------------------------
By:
---------------------------------------
Name:
Title:
Accepted and Agreed to as of the Date Noted Above:
--------------------
By:
----------------------------------
Name:
Title:
54
Schedule A
55
Exhibit B
VOTING AGREEMENT
VOTING AGREEMENT, dated as of November 20, 1998 (this
"Agreement") by the undersigned stockholder (the "Stockholder") of Concord EFS,
Inc., a Delaware corporation ("Parent"), for the benefit of Electronic Payment
Services, Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, CEFT, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company are entering into an
Agreement and Plan of Merger, dated as of November 20, 1998 (the "Merger
Agreement"), whereby, upon the terms and subject to the conditions set forth in
the Merger Agreement, each issued and outstanding share of Common Stock, par
value $.01 per share, of the Company ("Company Common Stock"), not owned
directly or indirectly by Parent or the Company, will be converted into shares
of Common Stock, par value $.33 1/3 per share, of Parent ("Parent Common
Stock");
WHEREAS, stockholder owns __________ shares of Parent Common
Stock (such shares of Parent Common Stock, together with any other shares of
capital stock of Parent acquired by such Stockholder after the date hereof and
during the term of this Agreement, being collectively referred to herein as the
"Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, the Company has required that the Stockholder agree, and in
order to induce the Company to enter into the Merger Agreement the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants and agreements set forth herein, the Stockholder agrees as
follows:
1. Capitalized Terms. Capitalized terms used in this
Agreement that are not defined herein shall have such meanings as set forth in
the Merger Agreement.
2. Covenants of Stockholder. Until the termination of this
Agreement in accordance with Section 5, the Stockholder agrees as follows:
(a) At the Parent Stockholders Meeting (or at any
adjournment thereof) or in any other circumstances upon which a vote,
consent or other approval with respect to the
56
Merger or the Merger Agreement is sought, the Stockholder shall vote
(or cause to be voted) the Subject Shares in favor of the Merger, the
adoption of the Merger Agreement and the approval of the terms thereof.
(b) At any meeting of stockholders of Parent or at
any adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against any amendment of the Parent Charter or the Parent Bylaws or
other proposal or transaction involving Parent or any of its
Subsidiaries, which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement.
3. Representations and Warranties. The Stockholder represents
and warrants to the Company that (i) the Stockholder is the record and
beneficial owner of, and has good and marketable title to, the Subject Shares,
(ii) the Stockholder does not own, of record or beneficially, any shares of
capital stock of Parent other than the Subject Shares, (iii) the Stockholder has
the sole right to vote, and the sole power of disposition with respect to, the
Subject Shares, and none of the Subject Shares is subject to any voting trust,
proxy or other agreement, arrangement or restriction with respect to the voting
or disposition of such Subject Shares, (iv) the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of the Stockholder and neither the execution,
delivery and performance hereof by the Stockholder nor the compliance by the
Stockholder with the agreements contained herein does or will (A) violate any
law, statute, order, rule or regulation of any Governmental Entity applicable to
or binding on the Stockholder or any of its properties or (B) contravene or
result in any breach of or constitute any default under, or result in the
creation of any lien, charge or encumbrance upon any of the Stockholder's
properties under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, loan or credit agreement, charter, bylaw, or other
agreement or document to which it is a party or by which it or any of its
properties are bound or affected, and (v) this Agreement is the legal, valid and
binding agreement of the Stockholder, enforceable against the Stockholder in
accordance with its terms.
Affiliates Letter. The Stockholder agrees to execute and
deliver to Parent and the Company an Affiliate Letter in the form of Exhibit D
to the Merger Agreement no later than 30 days following the date hereof.
57
4. Termination. The obligations of the Stockholder hereunder
shall terminate upon the earlier of the termination of the Merger Agreement
pursuant to Section 7.1 thereof or the Effective Time; provided, that
termination of this Agreement shall not relieve a party of its willful breach
hereof.
5. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns.
6. Remedies. The Stockholder acknowledges that money damages
would be an insufficient remedy for any breach of this Agreement by it, and that
any such breach would cause the Company irreparable harm. Accordingly, the
Stockholder agrees that in the event of any breach or threatened breach of this
Agreement, the Company, in addition to any other remedies at law or in equity it
may have, shall be entitled, without the requirement of posting a bond or other
security, to seek equitable relief, including injunctive relief and specific
performance.
7. Severability. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
8. Amendment. This Agreement may be amended only by means of
a written instrument executed and delivered by the Stockholder and the Company.
9. Governing Law. This Agreement shall be governed by, and
construed in accordance in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
10. Counterparts. For the convenience of the parties, this
Agreement may be executed in two counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
58
12. Stockholder Capacity. Neither the Stockholder nor any
designee of the Stockholder who is or becomes during the term hereof a director
or officer of Parent makes any agreement or understanding herein in its capacity
as such director or officer. The Stockholder signs solely in its capacity as the
record holder and beneficial owner of such Stockholder's Subject Shares and
nothing herein shall limit or affect any actions taken by the Stockholder or any
designee of the Stockholder in his or her capacity as an officer or director of
Parent.
-------------------------------------------
By:
---------------------------------------
Name:
Title:
Accepted and Agreed to as of the Date Noted Above:
ELECTRONIC PAYMENT SERVICES, INC.
--------------------
By:
----------------------------------
Name:
Title:
59
Exhibit C
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
Electronic Payment Services, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this
letter the undersigned may be deemed to be an "affiliate" of Electronic Payment
Services, Inc., a Delaware corporation (the "Company"), as the term "affiliate"
is (i) defined in paragraph (a) of Rule 144 of the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and/or
(ii) used in and for purposes of Accounting Series Releases 130 and 135, as
amended, of the Commission. Pursuant to the terms of the Agreement and Plan of
Merger dated as of November 20, 1998 (the "Merger Agreement") among Concord EFS,
Inc., a Delaware corporation ("Parent"), CEFT, Inc., a Delaware corporation
("Sub"), and the Company, Sub will be merged with and into the Company (the
"Merger"). Capitalized terms used in this letter without definition shall have
the meanings assigned to them in the Merger Agreement.
As a result of the Merger, the undersigned will receive shares
of Common Stock, $.33 1/3 par value per share, of Parent (the "Parent Shares")
in exchange for shares of common stock, par value $.01 per share, of the Company
(the "Company Shares") owned by the undersigned or purchasable upon exercise of
stock options.
1. The undersigned represents, warrants and covenants to Parent that in
the event the undersigned receives any Parent Shares as a result of the Merger:
A. The undersigned shall not make any sale, transfer or other
disposition of the Parent Shares in violation of the Act or the Rules and
Regulations.
B. The undersigned has carefully read this letter and the
Merger Agreement and discussed the requirements of such documents and other
applicable limitations upon the undersigned's ability to sell, transfer or
otherwise dispose of the Parent
60
Shares, to the extent the undersigned felt necessary, with the undersigned's
counsel.
C. The undersigned has been advised that, because the sale,
transfer or other disposition by the undersigned of the Parent Shares will not
have been registered under the Act, the undersigned may not sell, transfer or
otherwise dispose of the Parent Shares issued to the undersigned in the Merger
unless (i) such sale, transfer or other disposition is made in conformity with
the volume and other limitations of Rule 144 promulgated by the Commission under
the Act, (ii) such sale, transfer or other disposition has been registered under
the Act or (iii) in the opinion of counsel reasonably acceptable to Parent, such
sale, transfer or other disposition is otherwise exempt from registration under
the Act.
D. The undersigned understands that, unless the undersigned is
a party to the Registration Rights Agreement, Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Shares by the
undersigned or on the undersigned's behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from such
registration available.
E. The undersigned also understands that there will be placed
on the certificates for the Parent Shares issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND CONCORD EFS, INC.
(THE "COMPANY"), A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY LOCATED AT 0000 XXXXXXX XXXX XXXXX, XXXXX 000,
XXXXXXX, XX 00000."
F. The undersigned also understands that unless a sale or
transfer is made in conformity with the provisions of Rule 144, or pursuant to a
registration statement, Parent reserves the right to put the following legend on
the certificates issued to the undersigned's transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW
TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
61
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
G. The undersigned further represents to, and covenants with,
Parent that the undersigned will not, during the 30 days prior to the Effective
Time (as defined in the Merger Agreement), sell, transfer or otherwise dispose
of or reduce the undersigned's risk (as contemplated by SEC Accounting Series
Release No. 135) with respect to any shares of capital stock of the Company or
shares of the capital stock of Parent that the undersigned may hold and,
furthermore, that the undersigned will not sell, transfer or otherwise dispose
of or reduce the undersigned's risk (as contemplated by SEC Accounting Series
Release No. 135) with respect to the Parent Shares received by the undersigned
in the Merger or any other shares of the capital stock of Parent until after
such time as results covering at least 30 days of combined operations of the
Company and Parent have been published by Parent, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes the combined results of operations.
Notwithstanding the foregoing provisions of this paragraph 1(G), but subject to
the other provisions of this letter, the undersigned understands that during the
aforementioned period, subject to providing written notice to and obtaining the
consent of Parent, which consent shall not be unreasonably withheld, the
undersigned will not be prohibited from de minimis dispositions and charitable
contributions or bona fide gifts of the Parent Shares which, in each case, will
not disqualify the accounting for the Merger as a pooling of interests.
H. Execution of this letter should not be considered an
admission on the undersigned's part that the undersigned is an "affiliate" of
the Company as described in the first paragraph of this letter, nor as a waiver
of any rights the undersigned may have to object to any claim that the
undersigned is such an affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with the
undersigned that certificates with the legends set forth in paragraphs 1(E) and
(F) above will be substituted by delivery of certificates without such legend if
(i) two years shall have elapsed from the date the undersigned acquired the
Parent Shares received in the Merger and the provisions of Rule 144(k) are then
applicable to the undersigned, or (ii) the Parent has received an opinion of
counsel, which opinion and counsel
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shall be reasonably satisfactory to Parent to the effect that the restrictions
imposed by Rule 144 under the Act no longer apply to the undersigned.
Very truly yours,
------------------------------
By:
---------------------------------------
Name:
Its:
Agreed and accepted this ________ day
of November, 1998, by
CONCORD EFS, INC.
By:
----------------------------------
Name:
Title:
63
Exhibit D
FORM OF AFFILIATE LETTER FOR AFFILIATES OF PARENT
Concord EFS, Inc.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Concord EFS, Inc., a Delaware corporation
("Parent"), as the term "affiliate" is defined for purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange Commission
("Commission"). Pursuant to the terms of the Agreement and Plan of Merger dated
as of November 20, 1998 (the "Merger Agreement") among Parent, CEFT, Inc., a
Delaware corporation ("Sub"), and Electronic Payment Services, Inc., a Delaware
corporation (the "Company"), Sub will be merged with and into the Company (the
"Merger").
I represent to, and covenant with, Parent that I will not,
during the period beginning 30 days prior to the Effective Time (as defined in
the Merger Agreement) until after such time as results covering at least 30 days
of combined operations of the Company and Parent have been published by Parent,
in the form of a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form 10-K, 10-Q, or
8-K, or any other public filing or announcement which includes the combined
results of operations, sell, transfer or otherwise dispose of or reduce my risk
with respect to any shares of the capital stock of Parent ("Parent Stock") or
the Company that I may hold. Notwithstanding the foregoing, I understand that
during the aforementioned period, subject to providing written notice to and
obtaining the consent of Parent, which consent shall not be unreasonably
withheld, I will not be prohibited from de minimis dispositions and charitable
contributions or bona fide gifts of the Parent Stock which, in each case, will
not disqualify the accounting for the Merger as a pooling of interests.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
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Very truly yours,
-------------------------------------------
By:
---------------------------------------
Name:
Its:
Accepted this _________ day of
November, 1998, by
CONCORD EFS, INC.
By:
----------------------------------
Name:
Its:
65
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of __________, 199_
among Concord EFS, Inc., a Delaware corporation (the "Issuer"), and the
Investors (as defined herein).
WHEREAS, execution of this Agreement is a condition to the
consummation of the merger of CEFT, Inc., a Delaware corporation ("Sub"), with
and into Electronic Payment Services, Inc., a Delaware corporation (the
"Company"), pursuant to the Agreement and Plan of Merger dated as of November
20, 1998 (the "Merger Agreement") among the Issuer, Sub and the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. Terms used herein and not defined
shall have the meaning given to such terms in the Merger Agreement. In addition,
the following terms, as used herein, shall have the following respective
meanings:
"Commission" means the Securities and Exchange Commission or
any successor governmental body or agency.
"Common Stock" means the common stock, par value $.33 1/3 per
share, of the Issuer.
"Demand Registration" has the meaning ascribed thereto in
Section 2.1(a).
"Demand Request" has the meaning ascribed thereto in Section
2.1(a).
"Disadvantageous Condition" has the meaning ascribed thereto
in Section 2.4.
"Holder" means a person who owns Registrable Securities and
is either (i) an Investor or (ii) a person that (A) is a transferee of an
Investor's Registrable Securities or a successor or assignee of an Investor and
(B) agrees in writing to be bound by the terms of this Agreement as if such
person were an Investor.
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"Investors" means the parties listed as "Investors" on the
signature pages hereto.
"Registrable Securities" means Common Stock acquired by the
Holders pursuant to the Merger (and any shares of stock or other securities into
which or for which such Common Stock may hereafter be changed, converted or
exchanged and any other shares or securities issued to Holders of such Common
Stock (or such shares of stock or other securities into which or for which such
shares are so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, share exchange, merger,
consolidation or similar transaction or event) or otherwise. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities as soon as (i) such Registrable Securities have been sold
or otherwise disposed of pursuant to a registration statement that was filed
with the Commission in accordance with this Agreement and declared effective
under the Securities Act, (ii) the Issuer delivers to the Holders of such shares
of Common Stock requesting registration pursuant to Section 2.1 or Section 2.2
hereof an opinion of counsel in form and substance reasonably satisfactory to
such Holders and their counsel to the effect that the proposed sale or
disposition of all Registrable Securities for which registration was requested
does not require registration under the Securities Act for a sale or disposition
in a single public sale, (iii) they shall have been otherwise sold, transferred
or disposed of by a Holder to any Person that is not a Holder, or (iv) they
shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident
to performance of or compliance with any registration of securities pursuant to
Article II, including, without limitation, (i) the fees, disbursements and
expenses of the Issuer's counsel and accountants (including in connection with
the delivery of opinions and/or comfort letters) in connection with this
Agreement and the performance of the Issuer's obligations hereunder; (ii) all
expenses, including filing fees, in connection with the preparation, printing
and filing of one or more registration statements hereunder; (iii) the cost of
printing or producing any agreements among underwriters, underwriting
agreements, and blue sky or legal investment memoranda; (iv) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the securities to be
disposed of; (v) transfer agents' and registrars' fees and expenses in
connection with such offering; (vi) all security engraving and security printing
expenses; (vii) all fees and expenses payable in connection with the listing of
the Registrable Securities on any securities exchange or automated interdealer
quotation system on which the Common Stock is then listed; and (viii) all
reasonable fees and expenses of one legal counsel for the Holders in connection
with each Demand Registration and each Piggyback Registration, which legal
counsel shall be selected by Holders owning a majority of the Registrable
Securities then being registered; provided, that Registration Expenses shall
exclude (x) all underwriting discounts and commissions, selling or placement
agent or broker fees and commissions, and transfer taxes, if any, in connection
with the sale of any securities, and (y) the fees and expenses of counsel for
any Holder (other than pursuant to clause (viii)).
"Rule 144" means Rule 144 (or any successor rule to similar
effect) promulgated under the Securities Act.
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67
"Rule 415 Offering" means an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule to similar effect)
promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"Selling Holder" means any Holder who sells Registrable
Securities pursuant to a public offering registered hereunder.
Section 1.2. Internal References. Unless the context
indicates otherwise, references to Articles, Sections and paragraphs shall refer
to the corresponding articles, sections and paragraphs in this Agreement, and
references to the parties shall mean the parties to this Agreement.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1. Demand Registration. (a) Subject to Section
2.1(b), upon written notice to the Issuer from a Holder or Holders holding a
majority in interest of the Registrable Securities (the "Demand Request")
requesting, pursuant to this Section 2.1, that the Issuer effect the
registration under the Securities Act of any or all of the Registrable
Securities held by such requesting Holders, which notice shall specify the
intended method or methods of disposition of such Registrable Securities (each
such registration being referred to herein, individually as a "Demand
Registration" and collectively as the "Demand Registrations"), the Issuer shall
prepare as soon as practicable and, within 15 days after such request, file with
the Commission a registration statement with respect to such Registrable
Securities and thereafter use its reasonable best efforts to cause such
registration statement to be declared effective under the Securities Act for
purposes of dispositions in accordance with the intended method or methods of
disposition stated in such request within the later to occur of the first public
release by the Issuer of 30 days of combined financial results of the Issuer and
the Company and 30 days after the filing of such registration statement.
(b) The Holders shall collectively have the right to request
two Demand Registrations after the date hereof; provided, however, that (i) the
Holders may not make a Demand Request for 180 days following the earlier of (x)
the sale of Registrable Securities having a market value at the time of the
filing of the related registration statement of at least $200,000,000 pursuant
to a Piggyback Registration, or (y) the termination of such offering prior to
such sale; (ii) the Holders may not make a Demand Request before the later of
(x) April 30, 1999 or (y) 15 days following the first full calender month of
combined operations by the Issuer and the Company; and (iii) the Holders may not
make a Demand Request for 180 days following the earlier of (x) the sale of any
Registrable Securities pursuant to a Demand Registration or (y) the termination
of such offering prior to such sale. The method of disposition requested by
Holders in connection with any Demand Registration may not, without the Issuer's
written consent, be a Rule 415 Offering.
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(c) Notwithstanding any other provision of this Agreement to
the contrary, a Demand Registration requested by Holders pursuant to this
Section 2.1 shall not be deemed to have been effected, and, therefore, not
requested and the rights of each Holder shall be deemed not to have been
exercised for purposes of paragraph (a) above, (i) if such Demand Registration
has not become effective under the Securities Act or (ii) if such Demand
Registration, after it became effective under the Securities Act, was not
maintained effective under the Securities Act (other than as a result of any
stop order, injunction or other order or requirement of the Commission or other
government agency or court solely on the account of a material misrepresentation
or omission of a Holder) for at least 30 days (or such shorter period ending
when all the Registrable Securities covered thereby have been disposed of
pursuant thereto) and, as a result thereof, the Registrable Securities requested
to be registered cannot be distributed in accordance with the plan of
distribution set forth in the related registration statement. The Holders shall
not lose their right to a Demand Registration under Section 2.1 if the Demand
Registration related to such Demand Request is delayed or not effected in the
circumstances set forth in this clause (c).
(d) The Issuer shall have the right to cause the registration
of additional equity securities for sale for the account of the Issuer (but not
any other person) in the registration of Registrable Securities requested by the
Holders pursuant to Section 2.1(a) above, provided, that if such Holders are
advised in writing (with a copy to the Issuer) by the lead or managing
underwriter referred to in Section 2.3 that, in such underwriters' good faith
view, all or a part of such Registrable Securities and additional equity
securities cannot be sold and the inclusion of such Registrable Securities and
additional equity securities in such registration would be likely to have an
adverse effect on the price, timing or distribution of the offering and sale of
the Registrable Securities and additional equity securities then contemplated,
then the number of securities that can, in the good faith view of such
underwriter, be sold in such offering without so adversely affecting such
offering shall be allocated first, to the Registrable Securities proposed to be
included in the Demand Registration by the Holders and second, to the securities
of the Issuer proposed to be included in such registration by the Issuer for
sale for its own account. The Holders of the Registrable Securities to be
offered pursuant to paragraph (a) above may require that any such additional
equity securities be included by the Issuer in the offering proposed by such
Holders on the same conditions as the Registrable Securities that are included
therein.
(e) Within seven days after delivery of a Demand Request by a
Holder, the Issuer shall provide a written notice to each Holder, advising such
Holder of its right to include any or all of the Registrable Securities held by
such Holder for sale pursuant to the Demand Registration and advising such
Holder of procedures to enable such Holder to elect to so include Registrable
Securities for sale in such Demand Registration. Any Holder may, within seven
days of delivery to such Holder of a notice pursuant to this Section 2.1(e),
elect to so include Registrable Securities in such Demand Registration by
written notice to such effect to the Issuer specifying the number of Registrable
Securities desired to be so included by such Holder. Any Holder who elects to
include Registrable Securities in a Demand Registration may elect not to sell
its Registrable Securities in such Demand Registration.
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(f) If, in connection with a Demand Registration, the Holders
who have requested to include their Registrable Securities in such Demand
Registration are advised in writing by the lead or managing underwriter referred
to in Section 2.3 that, in such underwriter's good faith view, all or a part of
such Registrable Securities cannot be sold and the inclusion of such Registrable
Securities would be likely to have an adverse effect on the price, timing or
distribution of the offering and sale of the Registrable Securities then
contemplated, then the number of securities that can, in the good faith view of
such underwriter, be sold in such offering without so adversely affecting such
offering shall be allocated among the Holders who have requested to include
their Registrable Securities in such Demand Registration, pro-rata, based on the
number of Registrable Securities requested to be included in such Demand
Registration by Holders. Any securities so excluded shall be withdrawn from and
shall not be included in such Demand Registration.
Section 2.2. Piggyback Registrations. (a) Notwithstanding any
limitation contained in Section 2.1, if the Issuer at any time after the date
hereof and prior to the third anniversary of the date hereof proposes to effect
any registration of Common Stock under the Securities Act (other than a
registration on Form S-4 or Form S-8 promulgated by the Commission), whether for
sale for the account of the Issuer or for the account of any holder of
securities of the Issuer (other than Registrable Securities) (a "Piggyback
Registration"), it will each such time give prompt written notice (a "Notice of
Piggyback Registration") to all Holders of its intention to do so and of such
Holders' rights under this Section 2.2, which Notice of Piggyback Registration
shall include a description of the intended method of disposition of such
securities. If any Holder delivers a written request for registration of
Registrable Securities specifying the Registrable Securities intended to be
disposed of to the Issuer within 15 days after such Holder receives a Notice of
Piggyback Registration, the Issuer will include in the registration statement
relating to such Piggyback Registration all Registrable Securities which the
Issuer has been so requested to register. Notwithstanding the foregoing, if, at
any time after giving a Notice of Piggyback Registration and prior to the
effective date of the registration statement filed in connection with such
registration, the Issuer shall determine for any reason not to register or to
delay registration of such securities, the Issuer may, at its election, give
written notice of such determination to each Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Holder entitled to
do so to demand that such registration be effected as a Demand Registration
under Section 2.1 (without the applicability of the waiting period referred to
in Section 2.1(b)(i)), and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities. No
registration effected under this Section 2.2 shall relieve the Issuer of its
obligations to effect Demand Registrations under Section 2.1.
(b) If, in connection with a Piggyback Registration, the
Holders who have requested to include their Registrable Securities in such
Piggyback Registration, are advised in writing (with a copy to the Issuer) by
the lead or managing underwriter referred to in Section 2.3 that, in such
underwriter's good faith view, all or a part of such Registrable
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70
Securities and additional shares of Common Stock cannot be sold and the
inclusion of such Registrable Securities and additional shares of Common Stock
would be likely to have an adverse effect on the price, timing or distribution
of the offering and sale of the Registrable Securities and additional shares of
Common Stock then contemplated, then the number of securities that can, in the
good faith view of such underwriter, be sold in such offering without so
adversely affecting such offering shall be allocated first, to the securities
proposed by the Issuer to be sold for its own account, and second, to the
Registrable Securities requested to be included in such Piggyback Registration
by Holders. Any securities so excluded shall be withdrawn from and shall not be
included in such Piggyback Registration.
Section 2.3. Other Matters In Connection With Registrations.
In the event that any public offering pursuant to this Agreement shall involve,
in whole or in part, an underwritten offering, the Issuer shall have the right
to designate an underwriter or underwriters as the lead or managing underwriters
of such underwritten offering; provided, that in the case of a Demand
Registration, such lead or managing underwriters must be reasonably acceptable
to Holders holding a majority in interest of the Registrable Securities being
registered in such offering.
Section 2.4. Certain Delay Rights. Notwithstanding anything
else contained in this Agreement, with respect to any registration statement
filed, or to be filed, pursuant to Section 2.1, if the Issuer provides written
notice to each Holder that in the Issuer's good faith and reasonable judgment it
would be materially disadvantageous to the Issuer (because the sale of
Registrable Securities covered by such registration statement or the disclosure
of information therein or in any related prospectus would materially interfere
with any acquisition, financing or other material event or transaction in
connection with which a registration of securities under the Securities Act for
the account of the Issuer is then intended or the public disclosure of which at
the time would be materially prejudicial to the Issuer (a "Disadvantageous
Condition")) for such a registration statement to be maintained effective, or to
be filed and become effective, and setting forth the general reasons for such
judgment, the Issuer shall be entitled to cause such registration statement to
be withdrawn or the effectiveness of such registration statement terminated, or,
in the event no registration statement has yet been filed, shall be entitled not
to file any such registration statement, until such Disadvantageous Condition no
longer exists (notice of which the Issuer shall promptly deliver to each
Holder). With respect to each Holder, upon the receipt by such Holder of any
such notice of a Disadvantageous Condition in connection with a Demand
Registration if so directed by the Issuer by notice as aforesaid, such Holder
will deliver to the Issuer all copies, other than permanent filed copies then in
such Holder's possession, of the prospectus then covering such Registrable
Securities at the time of receipt of such notice as aforesaid. Notwithstanding
anything else contained in this Agreement, neither the filing nor the
effectiveness of any registration statement under Section 2.1 may be delayed for
more than a total of 60 days pursuant to this Section 2.4.
Section 2.5. Expenses. Except as provided herein, the Issuer
shall pay all Registration Expenses with respect to each registration hereunder.
Notwithstanding the foregoing, (i) each Holder and the Issuer shall be
responsible for its own internal administrative and similar costs, which shall
not constitute Registration Expenses, (ii) each Holder shall be responsible for
the legal fees and expenses of its own counsel (except as provided in clause
(viii) of the definition of Registration Expenses), and (iii) each Holder shall
be responsible for all
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underwriting discounts and commissions, selling or placement agent or broker
fees and commissions, and transfer taxes, if any, in connection with the sale of
securities by such Holder.
Section 2.6. Registration and Qualification. If and whenever
the Issuer is required to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 or 2.2, the Issuer shall as
promptly as practicable (but subject to the provisions of Sections 2.1 and 2.2):
(a) prepare, file and cause to become effective a
registration statement under the Securities Act relating to the Registrable
Securities to be offered in accordance with the Holders' intended methods of
disposition thereof;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities until the earlier of (A) such time as
all Registrable Securities proposed to be sold therein have been disposed of in
accordance with the intended methods of disposition set forth in such
registration statement and (B) the expiration of 30 days after such registration
statement becomes effective, provided, that such 30-day period shall be extended
for such number of days that equals the number of days elapsing from (x) the
date the written notice contemplated by paragraph (e) below is given by the
Issuer to (y) the date on which the Issuer delivers to the Holders of
Registrable Securities the supplement or amendment contemplated by paragraph (e)
below;
(c) furnish to the Holders of Registrable Securities and to
any underwriter of such Registrable Securities such number of conformed copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus),
in conformity with the requirements of the Securities Act, and such documents
incorporated by reference in such registration statement or prospectus, as the
Holders of Registrable Securities or such underwriter may reasonably request;
(d) furnish to any underwriter of such Registrable Securities
an opinion of counsel for the Issuer and a "cold comfort" letter signed by the
independent public accountants who have audited the financial statements of the
Issuer included in the applicable registration statement, in each such case
covering substantially such matters with respect to such registration statement
(and the prospectus included therein) and the related offering as are
customarily covered in opinions of issuer's counsel with respect thereto and in
accountants' letters delivered to underwriters in underwritten public offerings
of securities and such other matters as such underwriters may reasonably
request;
(e) promptly notify the Selling Holders in writing (i) at any
time when a prospectus relating to a registration pursuant to Section 2.1 or 2.2
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
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72
material fact or omits 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, and (ii) of any request by the Commission
or any other regulatory body or other body having jurisdiction for any amendment
or supplement to any registration statement or other document relating to such
offering, and in either such case, at the request of the Selling Holders prepare
and furnish to the Selling Holders a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(f) use its reasonable best efforts to list all such
Registrable Securities covered by such registration on each securities exchange
and automated interdealer quotation system on which the Common Stock is then
listed;
(g) use reasonable efforts to assist the Holders in the
marketing of Common Stock in connection with underwritten offerings hereunder
(including using reasonable best efforts to have officers of the Issuer attend
"road shows" and analyst or investor presentations scheduled in connection with
such registration); and
(h) furnish for delivery in connection with the closing of
any offering of Registrable Securities pursuant to a registration effected
pursuant to Section 2.1 or 2.2 unlegended certificates representing ownership of
the Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters.
Section 2.7. Underwriting; Due Diligence. (a) If requested by
the underwriters for any underwritten offering of Registrable Securities
pursuant to a registration requested under this Article II, the Issuer shall
enter into an underwriting agreement with such underwriters for such offering,
which agreement will contain such representations and warranties by the Issuer
and such other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnification and contribution provisions substantially to the
effect and to the extent provided in Section 2.8, and agreements as to the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 2.6(d). Such underwriting agreement shall also
contain such representations and warranties by such Selling Holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnification and contribution provisions substantially to the
effect and to the extent provided in Section 2.8.
(b) In connection with the preparation and filing of each
registration statement registering Registrable Securities under the Securities
Act pursuant to this Article II, the Issuer shall give the Holders of such
Registrable Securities and the underwriters, if any, and their respective
counsel and accountants (the identity and number of whom shall be reasonably
acceptable to the Issuer), such reasonable and customary access to its books,
records and
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properties and such opportunities to discuss the business and affairs of the
Issuer with its officers and the independent public accountants who have
certified the financial statements of the Issuer as shall be necessary, in the
opinion of such Holders and such underwriters or their respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
Section 2.8. Indemnification and Contribution. (a) The Issuer
agrees to indemnify and hold harmless each Selling Holder and each person, if
any, who controls each Selling Holder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or any amendment
thereof, any preliminary prospectus or prospectus (as amended or supplemented if
the Issuer shall have furnished any amendments or supplements thereto) relating
to the Registrable Securities, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished to the
Issuer in writing by a Selling Holder expressly for use therein. The Issuer also
agrees to indemnify any underwriter of the Registrable Securities so offered and
each person, if any, who controls such underwriter on substantially the same
basis as that of the indemnification by the Issuer of the Selling Holder
provided in this Section 2.8(a).
(b) Each Selling Holder agrees to indemnify and hold harmless
the Issuer, its directors, the officers who sign the registration statement and
each person, if any who controls the Issuer within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or any amendment
thereof, any preliminary prospectus or prospectus (as amended or supplemented if
the Issuer shall have furnished any amendments or supplements thereto) relating
to the Registrable Securities, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with reference to information
furnished in writing by such Selling Holder (or any representative thereof)
expressly for use in a registration statement, any preliminary prospectus,
prospectus or any amendments or supplements thereto. Each Selling Holder also
agrees to indemnify any underwriter of the Registrable Securities so offered and
each person, if any, who controls such underwriter on substantially the same
basis as that of the indemnification by such Selling Holder of the Issuer
provided in this Section 2.8(b).
(c) Each party indemnified under paragraph (a) or (b) above
shall, promptly after receipt of notice of a claim or action against such
indemnified party in respect of which indemnity may be sought hereunder, notify
the indemnifying party in writing of the claim or action; provided that the
failure to notify the indemnifying party shall not relieve it from any
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liability that it may have to an indemnified party on account of the indemnity
agreement contained in paragraph (a) or (b) above except to the extent that the
indemnifying party was actually prejudiced by such failure, and in no event
shall such failure relieve the indemnifying party from any other liability that
it may have to such indemnified party. If any such claim or action shall be
brought against an indemnified party, and it shall have notified the
indemnifying party thereof, unless based on the written advice of counsel to
such indemnified party a conflict of interest between such indemnified party and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate therein, and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 2.8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof. Any indemnifying party
against whom indemnity may be sought under this Section 2.8 shall not be liable
to indemnify an indemnified party if such indemnified party settles such claim
or action without the consent of the indemnifying party. The indemnifying party
may not agree to any settlement of any such claim or action, other than solely
for monetary damages for which the indemnifying party shall be responsible
hereunder, the result of which any remedy or relief shall be applied to or
against the indemnified party, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof, the indemnified party shall continue to be entitled to participate in
the defense thereof, with counsel of its own choice, but the indemnifying party
shall not be obligated hereunder to reimburse the indemnified party for the
costs thereof.
(d) If the indemnification provided for in this Section 2.8
shall for any reason be unavailable (other than in accordance with its terms) to
an indemnified party in respect of any loss, liability, cost, claim or damage
referred to herein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, cost, claim or damage in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on the one hand and of the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Issuer on the one
hand and the Selling Holders on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer or a Selling Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by an
indemnified party as a result of the loss, cost, claim, damage or liability, or
action in respect thereof, referred to above in this paragraph (d) shall be
deemed to include, for purposes of this paragraph (d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. The Issuer and the Selling
Holders agree that it would not be just and equitable if contribution pursuant
to this Section 2.8 were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding any other provision of this
Section 2.8, no Selling Holder shall
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be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Selling Holder were offered to
the public exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the parties under this Section 2.8
shall be in addition to any liability which any party may otherwise have to any
other party.
Section 2.9. Holdback Agreement. If a Demand Registration or
Piggyback Registration pursuant to this Article II shall be in connection with
an underwritten public offering of Registrable Securities, each Holder agrees
not to effect any sale or distribution, including any sale under Rule 144, of
any equity security of the Issuer (otherwise than through the registered public
offering then being made), within 7 days prior to or 90 days (or such lesser
period as the lead or managing underwriters may permit) after the effective date
of the applicable registration statement.
ARTICLE 3
MISCELLANEOUS
Section 3.1. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof.
Section 3.2. Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their successors and assigns.
Section 3.3. Amendments, Waivers, Etc. This Agreement may not
be amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
Issuer and Holders representing a majority of the Registrable Securities then
held by all Holders.
Section 3.4. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if given) by hand delivery or
telecopy, or by any courier service, such as Federal Express, providing proof of
delivery. All communications hereunder shall be delivered to the respective
parties at the address or telecopy number set forth on the signature pages
hereto or such other address as any party shall give the other parties hereto
notice of in writing.
Section 3.5. Severability. 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
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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 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 3.6. No Waiver. The failure of any party hereto to
exercise any right, 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.
Section 3.7. No Third Party Beneficiaries. This Agreement is
not intended to be for the benefit of, and shall not be enforceable by, any
Person who or which is not a party hereto, other than any Holder.
Section 3.8. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
Section 3.9. Jurisdiction. Each party hereby irrevocably
submits to the exclusive jurisdiction of any United States District Court
sitting in the State of Delaware or any state court sitting in the City of
Wilmington, Delaware in any action, suit or proceeding arising in connection
with this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 3.9 and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the State of Delaware other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
Section 3.10. Descriptive Headings. The descriptive headings
used 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 3.11. Counterparts. This Agreement may be executed in
counterpart, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, the Issuer and the Investors have caused
this Agreement to be duly executed as of the day and year first above written.
CONCORD EFS, INC.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
By:
--------------------------------------
Name:
Title:
[INVESTORS]
[Insert Names and Addresses of Investors]
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