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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXX & CO., INC.,
DESI ACQUISITION, INC.
AND
DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED
DATED AS OF MAY 27, 1998
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TABLE OF CONTENTS
PAGE
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RECITALS............................................................................................... 1
AGREEMENT.............................................................................................. 1
1. The Offer..................................................................................... 1
1.1 The Offer............................................................................ 1
1.2 Company Action....................................................................... 3
1.3 Directors............................................................................ 5
1.4 Confidentiality...................................................................... 6
2. The Merger.................................................................................... 6
2.1 The Merger........................................................................... 6
2.2 Effect of the Merger................................................................. 6
2.3 Effective Time....................................................................... 6
2.4 Certificate of Incorporation and By-laws of the Surviving Corporation................ 7
2.5 Directors and Officers of the Surviving Corporation.................................. 7
2.6 Conversion of Shares................................................................. 7
2.7 Appraisal Rights..................................................................... 7
2.8 Employee Stock Options............................................................... 8
2.9 Surrender of Certificates............................................................ 9
3. Representations and Warranties of the Company................................................. 10
3.1 Organization and Qualifications; Subsidiaries........................................ 10
3.2 Capitalization....................................................................... 10
3.3 Authority and Absence of Conflict.................................................... 11
3.4 Reports.............................................................................. 12
3.5 Absence of Certain Changes........................................................... 13
3.6 Employee Benefit Plans............................................................... 13
3.7 Litigation; Violation of Law......................................................... 15
3.8 Labor................................................................................ 15
3.9 Taxes................................................................................ 15
3.10 Environmental Matters................................................................ 16
3.11 Brokers.............................................................................. 16
3.12 Offer Documents, Proxy Statement, Etc................................................ 16
3.13 No Undisclosed Liabilities........................................................... 17
4. Representations and Warranties of Parent and Purchaser........................................ 17
4.1 Organization and Qualification....................................................... 17
4.2 Capital Stock of Purchaser........................................................... 18
4.3 Authority and Absence of Conflict.................................................... 18
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TABLE OF CONTENTS
(CONTINUED)
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4.4 Financing............................................................................ 19
4.5 Brokers.............................................................................. 19
4.6 Proxy Statement, Etc................................................................. 19
4.7 Ownership of Shares.................................................................. 20
4.8 No Litigation........................................................................ 20
5. Conduct of Business........................................................................... 20
6. Additional Agreements......................................................................... 22
6.1 Proxy Statement...................................................................... 22
6.2 Stockholders' Meeting................................................................ 23
6.3 Access to Information................................................................ 23
6.4 Filings; Reasonable Efforts.......................................................... 24
6.5 Public Announcements................................................................. 24
6.6 Notification of Certain Matters...................................................... 24
6.7 Employees............................................................................ 24
6.8 Indemnification and Insurance........................................................ 26
6.9 Solicitation......................................................................... 27
7. Conditions.................................................................................... 29
7.1 Consummation of Offer................................................................ 29
7.2 Stockholder Approval................................................................. 29
7.3 Violation of Law..................................................................... 29
7.4 Litigation........................................................................... 29
8. Termination................................................................................... 29
8.1 Termination by Mutual Consent........................................................ 29
8.2 Termination by either Parent or the Company.......................................... 29
8.3 Termination by Parent................................................................ 30
8.4 Termination by the Company........................................................... 30
8.5 Effect of Termination and Abandonment................................................ 31
8.6 Certain Fees and Expenses............................................................ 31
9. General Provisions............................................................................ 32
9.1 Closing.............................................................................. 32
9.2 Notices.............................................................................. 32
9.3 Interpretation....................................................................... 33
9.4 Representations and Warranties; Etc.................................................. 33
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TABLE OF CONTENTS
(CONTINUED)
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9.5 Payment of Expenses.................................................................. 33
9.6 Entire Agreement..................................................................... 33
9.7 Counterparts......................................................................... 34
9.8 Severability......................................................................... 34
9.9 Captions............................................................................. 34
9.10 Amendment............................................................................ 34
9.11 Waiver............................................................................... 34
9.12 No Third-Party Beneficiaries; Assignability.......................................... 34
9.13 Knowledge............................................................................ 35
9.14 Person............................................................................... 35
9.15 Affiliate............................................................................ 35
9.16 Governing Law........................................................................ 35
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), dated as of May
27, 1998, is made among Xxxxx & Co., Inc., a New York corporation ("Parent"),
DESI Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of
Parent ("Purchaser"), and Donnelley Enterprise Solutions Incorporated, a
Delaware corporation (the "Company").
RECITALS
A. The respective Boards of Directors of Parent, Purchaser and the
Company have approved the acquisition of the Company pursuant to the terms of
this Agreement.
B. In furtherance of such acquisition, and subject to the conditions
set forth in Annex I hereto, it is proposed that Purchaser will make a tender
offer (the "Offer") to purchase all of the issued and outstanding shares of
common stock, par value $.01 per share, of the Company (the "Shares") at a price
of $21.00 per Share in cash (such amount or such higher price per Share as may
be paid pursuant to the Offer being hereinafter referred to as the "Per Share
Amount").
C. The Board of Directors of the Company has duly approved the Offer,
has resolved to recommend its acceptance by the holders of Shares, and has duly
approved the merger of Purchaser with and into the Company upon the terms and
subject to the conditions set forth in this Agreement (the "Merger") following
consummation of the Offer.
D. The respective Board of Directors of Parent and Purchaser and
Parent, as sole stockholder of Purchaser, have each duly approved the Offer and
the Merger.
E. Purchaser and X. X. Xxxxxxxxx & Sons Company ("Donnelley") are
entering into a Stockholders' Agreement, dated as of the date hereof (the
"Stockholders' Agreement"), pursuant to which Donnelley will, among other
things, agree to sell Shares to Purchaser under certain circumstances.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Parent, Purchaser and the
Company hereby agree as follows:
1. The Offer.
1.1 The Offer. Parent shall cause Purchaser to, and Purchaser
shall, as soon as practicable after the date hereof, but in any event within
five business days after the public announcement of the execution hereof,
commence (within the meaning of Rule 14d-2(a) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") the Offer for all of the outstanding
Shares at a price equal to the Per Share Amount, net to the sellers thereof in
cash,
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subject to the conditions set forth in Annex I hereto (the "Offer Conditions")
including the Minimum Condition (as defined therein) and the termination
provisions of Section 8 hereof. Purchaser shall consummate the Offer on the
terms and subject to the conditions provided in this Section 1.1. Subject to
the terms and conditions of this Agreement, the obligation of Purchaser to
accept for payment Shares tendered pursuant to the Offer shall be subject to
the satisfaction or waiver by Purchaser of the Offer Conditions.
The Offer shall be made by means of an offer to purchase which shall
contain as conditions only the Minimum Condition and the other conditions set
forth in Annex I hereto, and, subject to the succeeding sentence, shall
otherwise contain, and be entirely consistent with, the terms and conditions of
the Offer as described in this Agreement. Each of Purchaser and Parent expressly
reserves the right, in its sole discretion, to waive any such condition and make
any other changes to the terms of the Offer, provided that, without the consent
of the Company, neither Parent nor Purchaser shall (i) amend or waive the
Minimum Condition or the HSR Condition (as defined herein), (ii) amend any other
condition of the Offer as set forth herein or in Annex I hereto, (iii) reduce
the Per Share Amount, (iv) change the form of consideration to be paid in the
Offer (other than by adding cash consideration), (v) reduce the maximum number
of Shares to be purchased in the Offer, or (vi) amend any other term of the
Offer in a manner which, in the reasonable judgment of the Company, is adverse
to the holders of Shares. The Per Share Amount shall be net to the sellers in
cash, without interest, subject to reduction only for any applicable federal
back-up withholding taxes. Notwithstanding the foregoing, Purchaser may, without
the consent of the Company, subject to the Company's right to terminate this
Agreement pursuant to Article 8, (i) extend the Offer on one or more occasions
for up to ten business days for each such extension beyond the then-scheduled
expiration date (the initial scheduled expiration date being 20 business days
following commencement of the Offer), if at the then-scheduled expiration date
of the Offer any of the conditions to Purchaser's obligation to accept for
payment and pay for the Shares shall not be satisfied or waived, until such time
as such conditions are satisfied or waived, and, at the request of the Company,
Purchaser shall, subject to Parent's right to terminate this Agreement pursuant
to Article 8, extend the Offer for additional periods up to but not later than
September 30, 1998, unless the conditions not satisfied or earlier waived on the
then-scheduled expiration date are one or more of the Minimum Condition or the
conditions set forth in paragraphs (a), (c), (d) or (f) of Annex I hereto,
provided that (x) if the only condition not satisfied is the Minimum Condition,
the satisfaction or waiver of all other conditions shall have been publicly
disclosed at least five business days before termination of the Offer and (y) if
paragraph (a) or (f) of Annex I hereto has not been satisfied and the failure to
so satisfy can be remedied, the Offer shall not be terminated unless the failure
is not remedied within 30 calendar days after Parent has furnished the Company
with written notice of such failure), (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer, and (iii) extend the Offer for an aggregate period of not more than
five business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence if there shall not have been
tendered sufficient Shares so that the Merger could be effected without a
meeting of the Company's stockholders in accordance with Section 253 of the
Delaware General Corporation
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Law (the "DGCL"). In addition, the Per Share Amount may be increased without
the consent of the Company. Subject to the terms of the Offer, including the
Offer Conditions, Purchaser shall accept for payment and pay for all Shares
duly tendered at the earliest time at which it is permitted to do so under
applicable provisions of the Exchange Act; provided that, as set forth above,
Purchaser shall have the right, in its sole discretion, to extend the
Offer for up to five business days notwithstanding the prior satisfaction of
the Offer Conditions, in order to attempt to satisfy the requirements of
Section 253 of the DGCL. It is agreed that the Offer Conditions other than the
Minimum Condition and the condition relating to the termination or expiration
of applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") (the "HSR Condition") are
solely for the benefit of Purchaser and may be asserted by Purchaser regardless
of the circumstances resulting in a condition not being satisfied (except for
any action or inaction by Purchaser or Parent constituting a breach of this
Agreement) or, except with respect to the Minimum Condition and the HSR
Condition, may be waived by Purchaser, in whole or in part at any time and from
time to time, in its sole discretion.
On the date of commencement of the Offer, Parent and Purchaser, with
the cooperation of, and prior review thereof by, the Company, shall file with
the Commission a Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer
that will contain or will incorporate by reference the Offer (or portions
thereof) and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). The
Schedule 14D-1, and all amendments and supplements thereto, shall comply as to
form in all material respects with the provisions of all applicable federal
securities laws. Purchaser, and the Company with respect to information supplied
by it for use in the Schedule 14D-1 or the Offer Documents, agree promptly to
correct the Schedule 14D-1 or the Offer Documents if and to the extent that any
of them shall have become false or misleading in any material respect or any
event occurs which should be set forth in an amendment or supplement to the
Schedule 14D-1, and Purchaser shall take all steps necessary to cause the
Schedule 14D-1 as so corrected or supplemented to be filed with the Commission
and such Offer Documents as so corrected to be disseminated to holders of Shares
and any other holders of securities of the Company (if any), in each case as and
to the extent required by applicable federal securities laws. In addition,
Parent and Purchaser agree to promptly provide the Company and its counsel in
writing with any comments Parent, Purchaser or their counsel may receive from
time to time from the SEC or its staff.
1.2 Company Action. The Board of Directors of the Company has
received the opinion of Xxxxxxx Xxxxx & Company, L.L.C. that as of the date of
such opinion the consideration to be received by holders of Shares pursuant to
the Offer and the Merger is fair to the holders of Shares from a financial point
of view, based on certain stated assumptions. The Company has been authorized by
Xxxxxxx Xxxxx & Company, L.L.C. to permit, subject to prior review and consent
by them (such consent not to be unreasonably withheld), the inclusion of such
fairness opinion (or a reference thereto) in the Offer Documents and in the
Schedule 14D-9 referred to below and the Proxy Statement referred to in Section
3.12. The Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the
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Company's Board of Directors described in this Section 1.2 (subject to
the proviso at the end of the first paragraph of this Section 1.2). The Company
hereby approves of and consents to the Offer and represents that, at a meeting
duly called and held, the Board of Directors of the Company has: (i) determined
that this Agreement and the transactions contemplated hereby, including,
without limitation, the Offer and the Merger, are advisable and fair to and
in the best interest of the Company's stockholders, (ii) approved this
Agreement and the transactions contemplated hereby, including, without
limitation, the Offer and Merger, and (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
Purchaser and adopt this Agreement (if such approval and adoption are required
by the DGCL by the holders of the Shares), provided that such recommendation
may be withdrawn, modified or amended if, the Board of Directors of the Company
by majority vote determines in good faith, based on the advice of outside legal
counsel, that the failure to withdraw, modify or amend such recommendation
would constitute a breach of fiduciary duty to the Company's stockholders under
applicable law.
The Company agrees to file with the Commission and mail to its
stockholders contemporaneously with the commencement of the Offer a
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall reflect the actions of the Board of Directors referred to above and
shall comply in all material respects with the provisions of applicable federal
securities laws. The Company, and Parent and Purchaser with respect to
information supplied by either of them for use in the Schedule 14D-9, agree
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the Commission and mailed to holders of Shares and any other holders of
securities of the Company (if any) to the extent required by applicable federal
securities laws. The Offer Documents and the Schedule 14D-9 shall contain the
recommendation of the Board of Directors of the Company that the holders of
Shares accept the Offer unless the Board of Directors of the Company by majority
vote determines in good faith, based on the advice of outside legal counsel,
that providing such recommendation would constitute a breach of fiduciary duty
to the Company's stockholders under applicable law. In addition, the Company
agrees to promptly provide Parent, Purchaser and their counsel in writing with
any comments the Company or its counsel may receive from time to time from the
SEC or its staff.
The Company shall promptly furnish Parent or Purchaser with a list of
the record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of the record holders of Shares and lists of
securities positions of Shares held in stock depositories, each as of the most
recent practicable date, and shall furnish Parent or Purchaser with such
additional information, including updated lists of holders of Shares, mailing
labels and lists of securities positions, and other assistance as Purchaser or
its agents may reasonably request for the purpose of disseminating the Offer
Documents and communicating with the record and beneficial holders of Shares
with respect thereto. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Company's Board of Directors as
described in this Section 1.2.
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1.3 Directors.
(a) Promptly upon the payment by Purchaser for the
Shares tendered pursuant to the Offer in accordance with the terms of this
Agreement, Parent shall be entitled to designate such number of directors on the
Board of Directors of the Company, rounded to the nearest whole number, as will
give Purchaser representation on such Board equal to at least the
number of directors which equals the product of the total number of the
directors on such Board (after giving effect to the directors elected pursuant
to this sentence) multiplied by the percentage that such number of Shares owned
and paid for by the Purchaser or an Affiliate of Purchaser bears to the number
of Shares outstanding. Promptly after consummation of the Offer, the Company
shall, upon request of Parent, use its best efforts promptly either to increase
the size of the Board of Directors of the Company or, at the Company's
election, secure the resignations of such number of its incumbent directors as
is necessary to enable Parent's designees to be so elected or appointed to the
Company's Board, and shall cause Parent's designees to be so elected or
appointed (the date of such election or appointment being the "Appointment
Date"). Notwithstanding the foregoing, until the Effective Time (as defined in
Section 2.3 hereof), the Company and Parent shall use all reasonable best
efforts to retain as members of the Company's Board of Directors at least three
directors who are directors of the Company on the date hereof and who are not
representatives of Parent (the "Independent Directors"); provided that
subsequent to the purchase of and payment for not less than a majority of the
outstanding Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. As
used in this Agreement, the term "Independent Directors" shall initially mean
each of Xx. Xxxxxx X. Xxxxxxxx and Messrs. Xxxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxxxxx; provided that in the event that any such initial directors resigns or
otherwise ceases to be a director for any reason, then the other Independent
Directors shall have the right, by majority vote, to designate a replacement
for such directors (and such replacement shall be an "Independent Director").
If for any reason at any time prior to the Effective Time no Independent
Directors then remain, the other directors shall use reasonable best efforts to
designate three persons to be the Independent Directors, none of whom shall be
directors, officers, employees or Affiliates (as defined in Section 9.15
hereof) of Parent or Purchaser or employees of the Company.
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 or separate Rule
14f-1 information statement mailed to stockholders promptly after the
commencement of the Offer such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill its obligations under this Section 1.3. Parent or Purchaser will supply
to the Company and be solely responsible for any information with respect to
itself and its nominees, officers, directors and Affiliates required by Section
14(f) and Rule 14f-1.
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(c) Notwithstanding anything in this Agreement to the contrary,
in the event that Parent's designees are appointed or elected
pursuant to this Section 1.3, after the payment for the Shares pursuant to the
Offer and prior to the Effective Time, the affirmative vote of a majority
of the Independent Directors (who shall act as an independent committee of
the Board of Directors for this purpose) shall be required, and alone shall
be sufficient, to take action by the Company to (i) amend or terminate this
Agreement, (ii) exercise or waive any of the Company's rights or remedies
hereunder, (iii) extend the time for performance of Parent's and Purchaser's
respective obligations hereunder, or (iv) approve any other action by the
Company that could adversely affect the interests of the stockholders of the
Company (other than Parent, Purchaser and their Affiliates) with respect to the
transactions contemplated hereby.
1.4 Confidentiality. Subject to the requirements of law, and
except for such steps as are necessary to such dissemination of, and
communication with respect to, the Offer Documents and any other documents
necessary to consummate the Offer and the Merger, Purchaser shall hold in
confidence the information contained in any such labels and lists and the
additional information referred to in the last sentence of Section 1.2 hereof,
will use such information only in connection with the Offer and the Merger, and,
if this Agreement is terminated, will, upon request, deliver to the Company all
such written information then in its possession.
2. The Merger.
2.1 The Merger. At the Effective Time (as defined in Section
2.3 hereof), and subject to the terms and conditions hereof and the provisions
of the DGCL, Purchaser shall be merged with and into the Company in accordance
with the DGCL and substantially in the manner described in the Offer, the
separate existence of Purchaser shall thereupon cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). Purchaser
and the Company are sometimes hereinafter referred to collectively as the
"Constituent Corporations."
2.2 Effect of the Merger. The separate corporate existence of
the Company, as the Surviving Corporation, with all its purposes, objects,
rights, privileges, powers, certificates and franchises, shall continue
unimpaired by the Merger. The Surviving Corporation shall succeed to all of the
properties and assets of the Constituent Corporations and to all of the debts,
choses in action and other interests due or belonging to the Constituent
Corporations and shall be subject to, and responsible for, all of the debts,
liabilities, obligations and duties of the Constituent Corporations with the
effect set forth in the DGCL.
2.3 Effective Time. Subject to the terms and conditions
hereof, the Merger shall be consummated as promptly as practicable after the
later of consummation of the Offer or, if required under the DGCL, the approval
of this Agreement by the stockholders of the Company, by Parent duly filing, or
causing the Company and/or Purchaser to duly file, the appropriate Certificate
of Merger in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL. The Merger shall be effective at such time as
the
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Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware in accordance with the DGCL or at such later time as is specified in
the Certificate of Merger (the "Effective Time").
2.4 Certificate of Incorporation and By-laws of the
Surviving Corporation.
(a) At the Effective Time and without any further
action on the part of the Company or Purchaser, the Certificate of Incorporation
of the Company, as in effect at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
(b) At the Effective Time and without further
action on the part of the Company or Purchaser, the By-laws of the Company, as
in effect at the Effective Time, shall be the By-laws of the Surviving
Corporation.
2.5 Directors and Officers of the Surviving Corporation. At
the Effective Time, the directors of Purchaser immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each
of such directors to hold office, subject to the applicable provisions of the
Certificate of Incorporation and By-laws of the Surviving Corporation, until the
next annual stockholders' meeting of the Surviving Corporation and until their
successors shall be duly elected or appointed and shall duly qualify. At the
Effective Time, the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
2.6 Conversion of Shares. At the Effective Time and by virtue
of the Merger, and without any action on the part of the holders thereof:
(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled pursuant to
Subsection 2.6(b) below and Dissenting Shares (as defined in Section 2.7
hereof)) shall be converted into the right to receive the Per Share Amount in
cash, without interest, less any withholding taxes required under applicable
law.
(b) Each Share held in the treasury of the
Company, if any, and each Share owned by Parent, Purchaser or the Company, or by
any direct or indirect subsidiary of any of them, shall be cancelled and retired
without payment of any consideration therefor.
(c) Each share of common stock, par value $.01
per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
non-assessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
2.7 Appraisal Rights. Notwithstanding the provisions of
Section 2.6 or any other provision of this Agreement to the contrary, Shares
that are issued and outstanding
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immediately prior to the Effective Time and that are held by stockholders who
shall have properly demanded appraisal of their Shares in accordance with
Section 262 of the DGCL (the "Dissenting Shares"), shall not be converted into
the right to receive the Per Share Amount applicable to such Shares at or after
the Effective Time unless and until the holder of such Dissenting Shares shall
have failed to perfect or shall have effectively withdrawn or lost such right
to appraisal and payment under the DGCL. If a holder of Dissenting Shares shall
have so failed to perfect or shall have effectively withdrawn or lost such
right to appraisal and payment, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Dissenting
Shares shall be converted into and shall represent solely the right to receive
the Per Share Amount applicable to such Shares, without any interest thereon,
as provided in Section 2.6 hereof. The Company shall give prompt notice of any
demands for appraisal received by the Company and provide Parent the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal rights under the DGCL. The Company shall not, without the prior
written consent of Parent, make any payment with respect to any such demands or
offer to settle such demands.
2.8 Employee Stock Options. The Company shall (i) terminate
each outstanding stock option plan for its employees and non-employee directors,
including the 1996 Stock Incentive Plan, the 1996 Broad-Based Employee Stock
Plan, the 1997 Non-Employee Director Plan (the "Option Plans") and each employee
stock purchase plan for its employees and non-employee directors, including the
1997 Employee Stock Purchase Plan (the "ESPP") (collectively the "Stock Plans"),
immediately prior to the consummation of the Offer without prejudice to the
rights of the holders of options awarded pursuant thereto and (ii) grant no
additional options or similar rights under the Stock Plans or otherwise on or
after the date hereof.
With respect to options outstanding under the Option Plans
(whether or not then exercisable) immediately prior to consummation of the
Offer, the Company shall (a) cancel immediately prior to consummation of the
Offer each such option it has the right to cancel, and (b) with respect to
options it does not have the right to cancel, use its reasonable best efforts to
obtain the consent of the holder of such option to its cancellation and, subject
to such consent, cancel such option immediately prior to consummation of the
Offer. In consideration, the Company shall agree to and shall pay to the holder
of each cancelled option under the Option Plans, upon cancellation of such
option and consummation of the Offer (whether or not such option was exercisable
immediately prior to its cancellation), an amount equal to the excess, if any,
of the Per Share Amount over the per-share exercise price for such option,
multiplied by the number of Shares subject to such option (such payment to be
net of applicable withholding taxes). The Company shall cancel immediately prior
to consummation of the Offer each option outstanding under the ESPP or any other
Stock Plan and shall pay to the holder thereof (a) a refund of any amount
withheld from the holder's compensation to pay the exercise price thereof, and
(b) an amount equal to the excess, if any, of the Per Share Amount over the
per-share exercise price for such option, multiplied by the number of Shares
subject to such option (such payment to be net of applicable withholding taxes).
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2.9 Surrender of Certificates.
(a) From and after the Effective Time, a bank
or trust company to be designated by Parent, with the prior approval
of the Company (the "Paying Agent"), shall act as exchange agent in effecting
the exchange, for the Per Share Amount multiplied by the number of Shares
formerly represented thereby, of certificates (the "Certificates") that, prior
to the Effective Time, represented Shares, which Shares have become entitled
to payment pursuant to Section 2.6. Upon the surrender of each Certificate
and the delivery by the Paying Agent of the Per Share Amount in exchange
therefor, such Certificate shall forthwith be cancelled. Until so
surrendered and exchanged, each such Certificate (other than Certificates
representing Shares held by Parent, Purchaser or the Company or any
direct or indirect subsidiary of Parent, Purchaser or the Company and
Dissenting Shares) shall represent solely the right to receive the
Per Share Amount applicable to the Shares represented by such Certificate
multiplied by the number of Shares represented by such Certificate. No interest
shall be paid or shall accrue on any amount payable on and after the Effective
Time by reason of the Merger upon the surrender of any such Certificate. Upon
the surrender and exchange of such an outstanding Certificate accompanied by a
properly executed letter of transmittal (referred to in Section 2.9(c)), the
holder shall receive the Per Share Amount applicable to the Shares represented
thereby, without any interest thereon. If the Per Share Amount is to be paid to
a person other than the person in whose name the Certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition to such
payment or exchange that such Certificate so surrendered be properly endorsed or
otherwise be in proper form for transfer, and that the person requesting such
payment or exchange shall pay to the Paying Agent any transfer or other taxes
required by reason of the payment of such Per Share Amount to a person other
than the registered holder of the Certificate surrendered, or such person shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable. Notwithstanding the foregoing, neither the Paying Agent nor
any party hereto shall be liable to a holder of Shares for any Per Share Amount
or interest delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(b) Promptly following the date six months
after the Effective Time, the Paying Agent shall return to the
Surviving Corporation all cash in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties
shall terminate. Thereafter, each holder of a Certificate formerly
representing Shares may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat or
similar laws) receive in exchange therefor the Per Share Amount applicable
to the Shares represented thereby, without any interest thereon, but shall
have no greater rights against the Surviving Corporation than may be accorded
to general creditors of the Surviving Corporation under applicable law.
(c) Promptly after the Effective Time, the
Paying Agent shall mail to each record holder of Certificates that immediately
prior to the Effective Time represented Shares a form of letter of transmittal
and instructions, approved by Parent, for use in surrendering such Certificates
and receiving the Per Share Amount therefor.
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14
(d) At and after the Effective Time, holders of
Certificates shall cease to have any rights as stockholders of the Company
except for the right to surrender such Certificates in exchange for the Per
Share Amount or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL and Section 2.7 hereof, and there shall be no transfers
on the stock transfer books of the Company or the Surviving Corporation of any
Shares that were outstanding immediately prior to the Merger. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Paying Agent, they shall be cancelled and exchanged for the Per Share Amount, as
provided in Section 2.6 hereof, subject to applicable law in the case of
Dissenting Shares.
3. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Purchaser that,
except as disclosed or reflected (including, in the case of financial
statements, provided for) in the Disclosure Schedule delivered herewith to
Parent and Purchaser, or in the Company's Form 10-K for the fiscal year ended
December 31, 1997 ("Form 10-K") as filed with the Commission, any subsequently
filed Forms 10-Q and Forms 8-K, the annual report to stockholders for the fiscal
year ended December 31, 1997 delivered to Parent and Purchaser (the "Annual
Report"), and the proxy statement for the 1998 Annual Meeting (such Forms, the
Annual Report and such proxy statements, including any financial statements and
related notes or schedules included in such documents and all exhibits and
schedules included or incorporated by reference therein, are herein collectively
referred to as the "SEC Reports"):
3.1 Organization and Qualifications; Subsidiaries. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated
by it, or the businesses conducted by it, requires such qualification and where
failure to so qualify or be in good standing would have a material adverse
effect on the financial condition or businesses of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect") or prevent or delay
the consummation of the Offer or the Merger in any material respect. The Company
does not have any material subsidiaries. The Company has the corporate power to
carry on its businesses as they are now being conducted. Copies of the charter
and by-laws of the Company, and all amendments thereto as presently in effect,
have been delivered to Parent, and such copies are complete and correct as of
the date hereof. Such charter and by-laws are in full force and effect and no
other organizational documents are applicable to or binding upon the Company.
The Company is not in violation of any of the provisions of its Charter or
by-laws.
3.2 Capitalization. The authorized capital stock of the
Company on the date hereof is as set forth in the Disclosure Schedule. The
issued and outstanding capital stock of the Company as of May 27, 1998 is as set
forth in the Disclosure Schedule. Except as set forth in the Disclosure
Schedule, no equity securities of the Company are authorized on the date hereof,
and except for options granted pursuant to the Stock Plans, there are no
outstanding
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options, warrants, agreements, contracts, calls, commitments or
demands of any character, preemptive or otherwise, other than this Agreement,
relating to any of the capital stock of the Company. Since May 27, 1998, no
options to purchase Shares have been granted, and no shares of the Company's
capital stock have been issued except Shares issued upon exercise of options
granted pursuant to the Stock Plans. At December 31, 1997, the Company did not
hold any of its capital stock as treasury stock. As of the commencement of the
Offer, all of the outstanding Shares shall be duly authorized, validly issued,
fully paid and non-assessable.
3.3 Authority and Absence of Conflict.
(a) The Company has the requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by the
Board of Directors of the Company, and, except for the approval of the holders
of outstanding Shares (if required under the DGCL) as set forth in Section 6.2
of this Agreement, no other corporate proceedings on the part of the Company
are necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and (assuming due authorization,
execution and delivery by Parent and Purchaser) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
The only vote required to authorize the Merger is the affirmative vote of a
majority of the outstanding Shares. The Company has elected, pursuant to its
charter, not to be subject to Section 203 of the DGCL.
(b) The execution, delivery and performance of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby, and the compliance by the Company with any of
the provisions hereof, will not (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the charter or by-laws of the Company or any of
its subsidiaries, or (y) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or any of its subsidiaries is a party or to which any of them or any of their
respective properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next subsection, violate
any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or its subsidiaries or any of their
respective properties or assets; except, in the case of each of clauses (i)(y)
and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances (A) which, in the aggregate,
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would not have a Material Adverse Effect or prevent or delay the
consummation of the Merger or the Offer in any material respect; or (B)
which are cured, waived or terminated prior to the acceptance for payment of
Shares by Purchaser under the Offer.
(c) Other than in connection with or in
compliance with the provisions of the DGCL, the Xxxx-Xxxxx-Xxxxxx Anti-trust
Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act and the
"takeover" laws of various states, no notice to, filing with, or authorization,
consent or approval of, any domestic or foreign public body or authority is
necessary for the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement, except where the failure to give such notices, make such filings
or obtain such authorizations, consents or approvals would, in the aggregate,
not have a Material Adverse Effect or prevent or delay in any material respect
consummation of the Merger or Offer or otherwise prevent or delay the Company
from performing its obligations under this Agreement in any material respect.
3.4 Reports. The Company has filed all forms, reports and
documents required under Section 13(a) under the Exchange Act with the
Commission since December 31, 1996, and none of such forms, reports or
documents, including any financial statements or schedules included therein,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. The balance sheets (including the
related notes) included in the Form 10-Ks fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of the
respective dates thereof, and the other related statements (including the
related notes) included therein fairly present the consolidated results of
operations and the changes in consolidated financial position of the Company and
its consolidated subsidiaries for the fiscal periods set forth therein. Each of
the financial statements (including the related notes) included or incorporated
by reference in the Form 10-Ks have been prepared in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as otherwise noted therein and except that the quarterly financial
statements do not contain all the footnote disclosures required by generally
accepted accounting principles. The representations and warranties set forth in
this Section 3.4 shall not apply to any noncompliance, non-filings,
misstatements, omissions or failures to present fairly or conform to generally
accepted accounting principles which either (i) were corrected in a subsequent
form, report or document filed with the Commission prior to the date of this
Agreement, or (ii) are not, in the aggregate, material to the financial
condition or business of the Company and its subsidiaries taken as a whole and
will not prevent or delay in any material respect the consummation of the
transactions contemplated hereby. The Company has heretofore furnished to Parent
a complete and correct copy of any amendments or modifications which have not
yet been filed with the Commission to agreements, documents or other instruments
which previously had been filed by the Company with the Commission pursuant to
the Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
-12-
17
3.5 Absence of Certain Changes. Since December 31, 1997,
except for actions taken in connection with the potential sale of the Company or
certain of its divisions, the Company and its subsidiaries have conducted their
respective businesses and operations consistent with past practice only in the
ordinary and usual course and, since December 31, 1997, to the Company's
knowledge, neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations (secured or unsecured and whether accrued, absolute,
contingent, direct, indirect or otherwise) material to the business and
financial condition of the Company and its subsidiaries taken as a whole (the
"Liabilities") except (i) Liabilities incurred in the ordinary course of
business, (ii) Liabilities incurred in connection with or as a result of the
Offer, and (iii) expenditures for professional services in connection with the
solicitation of expressions of interest in the Company.
3.6 Employee Benefit Plans.
The Disclosure Schedule sets forth a true and complete list of
each "employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including, without
limitation, each bonus, incentive compensation, profit sharing, retirement,
pension, group insurance, death benefit, cafeteria, flexible spending account,
medical, dependent care, stock option, stock purchase, stock appreciation
rights, savings, deferred compensation, incentive, consulting, severance or
termination pay, change of control, vacation, welfare and all other material
employee benefit or fringe benefit plans, programs, policies, agreements or
arrangements whether or not subject to ERISA, whether formal or informal, oral
or written, legally binding or not, which the Company or any of its subsidiaries
maintains or contributes to or has any present or future liability under with
respect to any employee or former employee of the Company. All such plans,
programs, agreements and arrangements shall be collectively referred to herein
as the "Employee Benefit Plans."
(a) Neither the existence of nor the failure of
the Company or any of its subsidiaries to comply with the terms of or to satisfy
any liability under any Employee Benefit Plan would have a Material Adverse
Effect.
(b) Each Employee Benefit Plan which is intended to
comply with the provisions of Section 401(a) of the Internal Revenue Code (the
"Code") has been determined by the Internal Revenue Service to be so qualified
and has received a favorable determination letter as to its qualification from
the Internal Revenue Service and there have been no amendments to such Employee
Benefit Plan or any other facts or conditions that would reasonably be expected
to cause a loss of such qualified status.
(c) With respect to each Employee Benefit Plan, each
such Plan has been administered and is in compliance with the terms of such Plan
and (i) neither the Company nor any of its subsidiaries has failed to comply
with any material applicable reporting, disclosure or other requirements of
ERISA, the Code, or other applicable laws, rules and regulations, except for
such failures to comply which would not have a Material Adverse Effect, (ii) to
the
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knowledge of the Company, there has been no "prohibited transaction" as
described in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
the failure to correct which would have a Material Adverse Effect; and (iii) no
event has occurred and no condition exists that would subject the Company or any
of its subsidiaries, either directly or by reason of their affiliation with any
member of their "Controlled Group" (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
Sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules or
regulations; and (iv) for each Employee Benefit Plan with respect to which a
Form 5500 has been filed, no material change has occurred with respect to the
matters covered by the most recent Form since the date thereof.
(d) Neither the Company nor any subsidiary
maintains any Employee Benefit Plans subject to the minimum funding standards
of ERISA and the Internal Revenue Code.
(e) Neither the Company nor any of its subsidiaries
presently maintains, contributes to or has any liability (including current or
potential withdrawal liability) with respect to any "multiemployer plan" as such
term is defined in Section 3(37) of ERISA.
(f) Neither the Company nor any of its subsidiaries
has ever maintained an employee pension benefit plan subject to Title IV of
ERISA.
(g) There is no pending or, to the knowledge of the
Company, threatened legal action, proceeding or investigation against or
involving any Employee Benefit Plan maintained by the Company or any of its
subsidiaries (other than routine claims for benefits), the adverse resolution of
which would have a Material Adverse Effect.
(h) With respect to any employee or former employee
of the Company, neither the Company nor any of its subsidiaries presently
maintains, contributes to or has any liability under any funded or unfunded
medical, health or life insurance plan or arrangement for present or future
retirees or present or future terminated employees except as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
the existence of which or the failure to satisfy which would have a Material
Adverse Effect. Neither the Company nor any subsidiary of the Company maintains
or contributes to a trust, organization or association described in any of
Sections 501(c)(9), 501(c)(17) or 501(c)(20) of the Code.
(i) With respect to each of the Employee Benefit
Plans, the Company has delivered or made available to Purchaser true and
complete copies of: (i) the plan documents, including any related trust
agreements, insurance contracts or other funding arrangements, or a written
summary of the terms and conditions of the plan if there is no written plan
document; (ii) any summary plan description and other written communications by
the Company or any of its subsidiaries to their employees concerning the extent
of the benefits provided under an Employee Benefit Plan; and (iii) for the three
most recent years or such shorter period as such Employee Benefit Plan has been
in effect, (A) Internal Revenue Service Form 5500 and attached
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schedules required to be filed prior to the date hereof, (B) actuarial valuation
reports (if any), (C) attorney's response to an auditor's request for
information (if any), and (D) financial statement.
(j) Except as set forth in the Disclosure Schedule,
no Employee Benefit Plan exists that could result in the payment to any present
or former employee of the Company or any of its subsidiaries of any money or
other property or accelerate or provide any other rights or benefits to any
present or former employee of the Company or any of its subsidiaries as a result
of the transaction contemplated by this Agreement, whether or nor such payment
would constitute a parachute payment within the meaning of Code Section 280G.
3.7 Litigation; Violation of Law.
(a) There are no claims, actions, suits or
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, nor is the Company or
any of its subsidiaries subject to any order, judgment, writ, injunction,
decree, determination or award, except in either case for matters which, in the
aggregate, do not have a Material Adverse Effect or would not prevent or delay
the Company's ability to consummate the transactions contemplated hereby.
(b) To the knowledge of the Company, the
businesses of the Company and its subsidiaries are not being conducted in
violation of any applicable law, ordinance, rule, regulation, decree or order of
any court or governmental entity, except for violations which, in the aggregate,
do not have a Material Adverse Effect.
3.8 Labor.
(a) The Company is not a party to or otherwise
bound by any collective bargaining agreements, contracts or other agreements or
understandings with a labor union or labor organization with respect to any
employee, nor, as of the date hereof, is there any material dispute, grievance,
controversy, strike or request for union representation pending, or, to the
knowledge of the Company, threatened, against either the Company or any of its
subsidiaries.
3.9 Taxes. All material federal, state, local and
foreign tax returns, reports and statements required to be duly and timely
filed by the Company and its subsidiaries have been, or will be, duly and timely
filed with the appropriate governmental authority in all jurisdictions in which
such returns, reports and statements are required to be filed, except where the
failure to do so would not have a Material Adverse Effect. The Company has paid
or, to the extent required by generally accepted accounting principles, made
provisions for (by a tax reserve on its books and records) all taxes,
assessments, fees and other governmental charges and impositions due and payable
or that, to the knowledge of the Company, will become due and payable, in
respect of all taxable periods or portions thereof ending on or before the
Closing Date, the failure of which payment would have a Material Adverse Effect.
Except as set forth in the Disclosure Schedule, no audit of any federal, state,
local or foreign tax return of the
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Company of any of its subsidiaries is in progress or pending or, to the
knowledge of the Company, threatened, and no waiver of any statute of
limitations has been given and is in effect with respect to the assessment of
any taxes, assessments, fees and other governmental charges or impositions
against the Company or any of its subsidiaries or any of their respective
properties or assets. Except as set forth in the Disclosure Schedule, no taxing
authority has assessed or to the knowledge of the Company, proposed an
assessment against of any taxes, fees or other governmental charges or
impositions against the Company or any of its subsidiaries of any federal,
state, local or foreign tax, which would have a Material Adverse Effect.
3.10 Environmental Matters.
(a) There are no Environmental Liabilities (as
defined below) of the Company or its subsidiaries or any conditions or events
that could reasonably be expected to result in such Environmental Liabilities
which would have, individually or in the aggregate, a Material Adverse Effect.
(b) As used in this Agreement, "Environmental
Laws" means federal, state and local laws, rules, orders, judgments, decrees and
regulations in effect prior to or as of the date of this Agreement which are
applicable to the real property owned or leased by the Company and relating to
environmental matters or the protection of human health, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976, the Federal
Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Safe Drinking Water
Act, the Occupational Safety and Health Act, and any other federal environmental
laws, as such environmental laws have been amended from time to time, and
similar state and local laws, and regulations in effect as of the date of this
Agreement which implement such laws. "Environmental Liabilities" with respect to
any Person means any and all liabilities of or relating to such Person or any of
its subsidiaries which (i) arise under or relate to matters covered by
Environmental Laws, and (ii) relate to actions occurring or conditions existing
on or prior to the date of this Agreement.
3.11 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Company in such
manner as not to give rise to any valid claim against the Company or Purchaser
for a brokerage commission, finder's fee or like payment to any person or
entity, except that the Company has retained Xxxxxxx Xxxxx & Company, L.L.C.,
whose fees and expenses as its financial adviser in connection herewith shall be
paid by the Company pursuant to the engagement letter between the Company and
Xxxxxxx Xxxxx & Company, L.L.C. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Xxxxxxx
Xxxxx & Company, L.L.C. pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereby.
3.12 Offer Documents, Proxy Statement, Etc. Neither the
Schedule 14D-9, or any amendments thereof or supplements thereto, nor any of the
information supplied in writing
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by the Company specifically for inclusion in the Offer Documents or in any
amendments thereof or supplements thereto, will, at the respective times the
Schedule 14D-9, the Offer Documents or any such amendments or supplements are
filed with the Commission or distributed to the holders of Shares, contain any
statement which, at such time and in light of the circumstances under which
made, will be false or misleading with respect to any material fact, or will
omit to state any material fact required to be stated therein, necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not false or misleading or necessary to correct any statement in
any earlier filing with the Commission or communication with the holders of
Shares in connection with the Offer, the Merger or the Company Stockholders'
Meeting (if any, and as defined below) that has become false or misleading.
Neither the proxy statement ("Proxy Statement") to be sent to the stockholders
of the Company in connection with the meeting of the Company's stockholders, if
such meeting is necessary to effect the Merger (the "Company Stockholders'
Meeting"), nor the Proxy Statement, as amended or supplemented from time to
time, will, on the date first mailed to stockholders, or at the time of the
Company Stockholders' Meeting contain any statement which, at such time and in
light of the circumstances under which made, will be false or misleading with
respect to any material fact, or will omit to state any material fact required
to be stated therein, necessary in order to make the statements therein, in
light of the circumstances under which they were made, not false or misleading
or necessary to correct any statement in any earlier filing with the Commission
or communication with the holders of Shares in connection with the Offer, the
Merger or the Company Stockholders' Meeting (if any) that has become false or
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information that has been supplied by Parent or
Purchaser or any of their accountants, counsel or other authorized
representatives in writing specifically for use in any of the foregoing
documents (collectively, "Parent Information"). The Schedule 14D-9 and the Proxy
Statement, and any amendments or supplements thereto, will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
3.13 No Undisclosed Liabilities. Except to the extent
specifically reflected or reserved against in the consolidated balance sheet of
the Company as of March 31, 1998 or for liabilities arising thereafter in the
ordinary course of business, or as otherwise set forth in the Disclosure
Schedule, the Company does not have any liabilities or obligations required by
generally accepted accounting principles to be reflected on the Company's
balance sheet of any nature, whether absolute, accrued, contingent or otherwise
which would result in a Material Adverse Effect.
4. Representations and Warranties of Parent and Purchaser.
Parent and Purchaser each represent and warrant, jointly and severally,
to the Company that, except as disclosed in the Disclosure Schedule delivered
herewith to the Company:
4.1 Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and is in good standing as a
foreign corporation in each jurisdiction
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22
where the properties owned, leased or operated by it, or the business conducted
by it, requires such qualification and where failure to so qualify or be in good
standing would have a material adverse effect on the financial condition or
business of Parent and its subsidiaries taken as a whole or prevent or delay the
consummation of the Offer or the Merger in any material respect. Each of Parent
and Purchaser has the corporate power to carry on their respective businesses as
they are now being conducted. Copies of the charter documents and by-laws of
Parent and Purchaser have heretofore been delivered to the Company, and such
copies are complete and correct as of the date hereof.
4.2 Capital Stock of Purchaser. As of the commencement of the
Offer, and at all times thereafter up to and including the Effective Time, all
of the outstanding capital stock of Purchaser shall be owned directly by Parent.
4.3 Authority and Absence of Conflict.
(a) Each of Parent and Purchaser has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary corporate action,
and no other corporate proceedings on the part of Parent or Purchaser are
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Parent and Purchaser and (assuming due authorization, execution
and delivery by the Company) constitutes a valid and binding obligation of each
of them, enforceable against each of them in accordance with its terms except to
the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
(b) The execution, delivery and performance of
this Agreement by Parent or Purchaser, the consummation by them of the
transactions contemplated hereby, and the compliance by Parent or Purchaser with
any of the provisions hereof, will not (i) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or Purchaser or any other direct or indirect subsidiary of
Parent under any of the terms, conditions or provisions of (x) the charter
documents or by-laws of Parent or Purchaser, or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or Purchaser or any other direct or indirect
subsidiary of Parent is a party, or to which any of them, or any of their
respective properties or assets, may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next subsection, violate
any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or Purchaser or any of
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their respective properties or assets; except, in the case of each of clauses
(i)(y) and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances which, in the aggregate, would not have a material adverse
effect upon the business or financial condition of Parent and its subsidiaries
taken as a whole or prevent or delay in any material respect the consummation of
the Merger or the Offer.
(c) Other than in connection with or in
compliance with the provisions of the DGCL, the HSR Act, the Exchange Act and
the "takeover" laws of various states, no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary for the execution, delivery and performance of this
Agreement by each of Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated by this Agreement, except where the
failure to give such notices, make such filings, or obtain authorizations,
consents or approvals would, in the aggregate, not materially impair the ability
of Parent and Purchaser to perform their obligations hereunder or have a
material adverse effect upon the business or financial condition of Parent and
its subsidiaries taken as a whole or prevent or delay in any material respect
the consummation of the Merger or Offer in any material respect.
4.4 Financing. Parent has and will have all funds necessary to
consummate the Offer and the Merger and shall make such funds available to
Purchaser for such purposes.
4.5 Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Parent and
Purchaser or any of their respective subsidiaries in such manner as not to give
rise to any valid claim against the Company, Parent or Purchaser for a brokerage
commission, finder's fee or other like payment to any person or entity, except
that Parent has retained Xxxxxxx, Sachs & Co., whose fees and expenses as its
financial adviser in connection herewith shall be paid by Parent pursuant to the
engagement letter between Parent and Xxxxxxx, Xxxxx & Co.
4.6 Proxy Statement, Etc. None of the Parent Information
supplied in writing by Parent or Purchaser specifically for inclusion in the
Schedule 14D-9, as amended or supplemented from time to time, or in the Proxy
Statement (if any), as amended or supplemented from time to time, will, on the
date filed with the Commission or mailed to the Company stockholders, or, in the
case of the Proxy Statement, at the time of the Company Stockholders' Meeting
(if any), contain any statement which, at such time and in light of the
circumstances under which made, will be false or misleading with respect to any
material fact, or will omit to state any material fact required to be stated
therein, necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier filing with the
Commission or communication with the holders of Shares with respect to the
Offer, the Merger or the Company Stockholders' Meeting (if any) that has become
false or misleading. Neither the Schedule 14D-1, the Offer Documents nor any
amendments thereof or supplements thereto will, at the respective times that the
Schedule 14D-1, the Offer Documents or any such amendments or supplements are
first filed with the Commission or distributed to holders of Shares, or at the
consummation of the Offer, contain any statement which, at such time and in
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light of the circumstances under which made, will be false or misleading with
respect to any material fact, or will omit to state any material fact required
to be stated therein, or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not false or misleading
or necessary to correct any statement in any earlier filing with the Commission
or communication with the holders of Shares with respect to the Offer, the
Merger or the Company Stockholders' Meeting (if any) that has become false or
misleading. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to any information that has been
supplied by the Company or its accountants, counsel or other authorized
representatives in writing specifically for use in any of the foregoing
documents. The Schedule 14D-1, the Offer Documents and any amendments or
supplements thereto shall comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
4.7 Ownership of Shares. Neither Parent nor Purchaser owns
beneficially or of record any Shares. Without limiting the generality of the
foregoing, neither Parent nor Purchaser is an "interested stockholder," as
defined in Section 203 of the DGCL, of the Company and neither Parent nor
Purchaser is an affiliate, as defined in Section 203 of the DGCL, of an
interested stockholder of the Company.
4.8 No Litigation. There are no claims, actions, suits or
proceedings or investigations pending or, to the best knowledge of the Company,
threatened against Parent, Purchaser or any of their respective Affiliates, nor
is Parent, Purchaser or any of their respective Affiliates subject to any order,
judgment, writ, injunction or decree, in either case which would materially
impair the ability of Parent or Purchaser to consummate the Offer or the Merger.
5. Conduct of Business.
Except as otherwise contemplated hereby or as set forth in Schedule 5
of the Disclosure Schedule, the Company covenants and agrees that, unless Parent
shall otherwise agree in writing (which consent shall not unreasonably be
withheld), prior to the Effective Time:
(a) The business of the Company and its subsidiaries shall be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary and usual course of business and in a manner
consistent with past practice, and the Company shall use its reasonable best
efforts to maintain and preserve intact its and its subsidiaries' business
organization, assets, employees, officers and consultants and advantageous
business relationships.
(b) Neither the Company nor any of its subsidiaries shall
directly or indirectly do any of the following: (i) except in the ordinary
course of business, sell, pledge, dispose of or encumber any assets of the
Company or of any of its subsidiaries; (ii) amend its charter or by-laws or
similar organizational documents; (iii) split, combine or reclassify any shares
of its capital stock or declare, set aside, make or pay any dividend or
distribution payable in cash, stock, property or otherwise with respect to any
of its capital stock; (iv) redeem, purchase or
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otherwise acquire or offer to redeem, purchase or otherwise acquire any capital
stock of the Company or its subsidiaries; (v) adopt a plan of liquidation or
resolutions providing for the liquidation, dissolution, merger, consolidation or
other reorganization of the Company; or (vi) authorize or propose any of the
foregoing, or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
(c) Neither the Company nor any of its subsidiaries shall,
directly or indirectly, (i) except for Shares issuable upon exercise of options
outstanding under the Stock Plans on the date hereof, issue, deliver, sell,
pledge, dispose of or encumber, or authorize, propose or agree to the issuance,
sale, pledge, disposition or encumbrance of, any shares of, or any options,
warrants or rights of any kind to acquire any shares of or any securities
convertible into or exchangeable or exercisable for any shares of, its capital
stock of any class or any other securities in respect of, in lieu of, or in
substitution for Shares outstanding on the date hereof; (ii) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (iii) except in an amount not
in excess of $12,000,000, and other than drawdowns on the Company's line of
credit that do not result in its indebtedness increasing by more than
$12,000,000 over the amount thereof on the date of this Agreement, incur any
indebtedness or issue any debt securities or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for, the obligations of any other individual or entity, or make any
loans or advances, or capital contributions to, or investment in, any other
person or modify any indebtedness or other liability; (iv) change the
capitalization of the Company; (v) except in the ordinary course, change any
assumption underlying, or method of calculating, any bad debt, contingency or
other reserve; (vi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business consistent
with past practice or as required by applicable law; (vii) waive, release, grant
or transfer any rights of value or modify or change in any material respect any
existing license, lease, contract or other document, other than in the ordinary
course of business consistent with past practice; (viii) enter into any contract
or agreement other than in the ordinary course of business consistent with past
practice; or (ix) authorize any capital expenditures which are, in the
aggregate, in excess of $2.0 million for the Company and its subsidiaries taken
as a whole.
(d) Subject to Section 2.8, neither the Company nor any of its
subsidiaries shall (A) establish, adopt, amend or terminate (except as may be
required by law) any Employee Benefit Plan or any other bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment, collective bargaining, fringe benefit, change of control, incentive,
stock purchase, severance, termination or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
employee or any officer or director or former employee; (B) increase the
compensation or benefits of any of its directors, officers or employees, except
for increases in compensation for officers and employees of the Company, in the
ordinary course of business and in a manner consistent with past practice; or
(C) grant any severance, termination pay or fringe benefits not required to be
paid under existing
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agreements or policies, including, without limitation, amounts available in the
three sale incentive bonus pools described in the Disclosure Schedule.
(e) Except as contemplated in connection with this Agreement,
neither the Company nor any of its subsidiaries shall make any tax election,
change any method of tax accounting, enter into or amend any tax sharing,
allocation or indemnity agreement (whether written or unwritten) or, except in
the ordinary course of business, settle or compromise any federal, state, local
or foreign income tax liability.
(f) Neither the Company nor any of its subsidiaries shall
permit any insurance policy naming it as beneficiary or a loss payee to be
cancelled or terminated without notice to Parent.
(g) Neither the Company nor any of its subsidiaries shall,
except as may be required as a result of a change in law or in generally
accepted accounting principles, change any of the accounting practices or
principles used by it.
(h) Neither the Company nor any of its subsidiaries shall
agree, in writing or otherwise, to take any of the foregoing actions or any
action which would make any representation or warranty in Article 3 hereof
untrue or incorrect so as to result in a Material Adverse Effect or would result
in any of the conditions set forth in Annex I not being satisfied.
(i) Neither the Company nor any of its subsidiaries shall
authorize any of the foregoing, or enter into or modify any contract, agreement,
commitment or arrangement to do any of the foregoing.
6. Additional Agreements.
6.1 Proxy Statement. If a Company stockholder vote is required
under the DGCL or any other applicable law in order to effect the Merger, then
promptly after consummation of the Offer the Company shall file with the
Commission under the Exchange Act, and shall use all reasonable efforts to have
cleared by the Commission, and promptly thereafter shall mail to its
stockholders, the Proxy Statement. Parent, Purchaser and the Company each agree
promptly to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading. The Proxy Statement shall
contain the recommendation of the Board of Directors of the Company in favor of
the Merger and, if a Company Stockholders' Meeting is required, the Board of
Directors of the Company shall recommend that the stockholders of the Company
vote for approval and adoption of this Agreement and the Merger; provided,
however, that prior to the Stockholders' Meeting such recommendation may be
withdrawn, modified or amended to the extent the Board of Directors deems it
necessary to do so in the exercise of its fiduciary obligations after being so
advised by outside counsel.
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6.2 Stockholders' Meeting. (a) If a Company stockholder vote
is required under the DGCL in order to effect the Merger, then promptly after
consummation of the Offer the Company shall take all actions in accordance with
the DGCL and its Restated Certificate of Incorporation and by-laws to convene
the Company Stockholders' Meeting for purposes of adopting this Agreement.
Unless the Board of Directors by majority vote determines in good faith, based
on the advice of outside legal counsel that to do so would constitute a breach
of fiduciary duty to the stockholders of the Company under applicable law, the
Company shall (A) include in the Proxy Statement the recommendation of the Board
that stockholders of the Company vote in favor of adoption and approval of this
Agreement and the Merger and the written opinion of Xxxxxxx Xxxxx & Company,
L.L.C. that the consideration to be received by the holders of Shares of the
Company pursuant to the Offer and the Merger is fair from a financial point of
view to such stockholders and (B) use its reasonable best efforts to obtain the
necessary approval of this Agreement and the Merger by its stockholders. Parent
agrees that it will vote, or cause to be voted, at the Company Stockholders'
Meeting all Shares then owned by it or Purchaser or any of Parent's other
subsidiaries and Affiliates in favor of the Merger and the adoption of this
Agreement.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then-outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article 7, to take all necessary
and appropriate action to cause the Merger to become effective, in accordance
with Section 253 of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.
6.3 Access to Information.
(a) From and after the date of this Agreement
and until the earlier of the Effective Time or termination of this Agreement,
the Company shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford to Parent, Purchaser and their officers,
employees and agents, complete access at all reasonable times to the officers,
employees, agents, properties, books, records and contracts of the Company and
its subsidiaries, and shall furnish Parent and Purchaser and their respective
officers, employees and agents, all financial, operating and other data and
information as Parent and Purchaser may reasonably request.
(b) Parent hereby confirms to the Company that
the confidentiality and standstill agreement dated as of March 19, 1998 between
Parent and the Company (the "Confidentiality Agreement") is in full force and
effect. Parent shall cause Purchaser, and Purchaser hereby agrees, to be bound
by and to comply with the Confidentiality Agreement to the same extent as Parent
is bound thereby and Parent shall cause Purchaser's officers, employees, agents
and representatives, including attorneys, accountants, consultants, financial
advisers and lenders and their respective counsel (collectively, the "Parent
Representatives") to comply therewith as though they were parties thereto.
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6.4 Filings; Reasonable Efforts. Subject to the terms and
conditions herein provided, the Company, Parent and Purchaser shall (a) promptly
after the date hereof make their respective filings and thereafter make any
other required submissions under the HSR Act with respect to the Offer and the
Merger; and (b) use their reasonable efforts promptly to take, or cause to be
taken, and to cooperate with each other with respect to, all other actions and
do, or cause to be done, all things necessary, proper or appropriate under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Notwithstanding the foregoing, the
Company shall not be obligated to use its reasonable efforts or take any action
pursuant to this Section 6.4 if the Board of Directors of the Company by
majority vote determines in good faith, based on the advice of outside legal
counsel to the Company, that such actions would constitute a breach of the Board
of Directors' fiduciary duties to the stockholders of the Company under
applicable law.
6.5 Public Announcements. Parent, Purchaser and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange.
6.6 Notification of Certain Matters. The Company, Parent and
Purchaser each agree to give prompt notice to each other at any time from the
date hereof to the Effective Time of the obtaining by it of actual knowledge as
to the occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause a breach of any representation or warranty contained in
this Agreement or result in any failure of the Company, Parent or Purchaser, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder, if such breach or failure
would result in a Material Adverse Effect or in a material adverse effect upon
Parent or any of its Affiliates or prevent or delay the consummation of the
Merger in any material respect.
6.7 Employees.
(a) Prior to the Effective Time, the Company
shall pay all compensation and benefits earned through or prior to the Effective
Time as provided pursuant to the terms of any compensation arrangements,
employment agreements and employee or director benefit plans, programs and
policies in existence as of the date hereof for all employees (and former
employees) and directors (and former directors) of the Company and its
subsidiaries, as well as all compensation and benefits earned and required to be
paid prior to the Effective Time pursuant to the terms of an individual
agreement with any employee, former employee, director or former director in
effect as of the date hereof, it being understood that the amounts payable in
the three sale incentive bonus pools shall not exceed the amounts set forth in
Schedule 5 of the Disclosure Schedule.
(b) During the period from the Effective Time
until the first anniversary thereof (the "Employment Continuation Period"),
Parent shall provide for each
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employee of the Surviving Corporation or its subsidiaries (each, an "Employee"),
so long as he or she is actively employed by the Surviving Corporation (or as
required by law), and for each former employee of the Company or one of its
subsidiaries, to the extent such person has rights thereto immediately prior to
the Effective Time (collectively, "Company Employees") (i)(A) to continue to
participate in the Company's welfare benefit plans and the Company's
compensation plans, employee incentive programs and bonus plans (including,
without limitation, hospitalization, medical, prescription, dental, disability,
salary continuation, vacation, accidental death, travel accident, and individual
or group life or other insurance) (each, a "Company Plan"), as each such Company
Plan is in effect on the date of this Agreement (without modification or
amendment) during the period commencing at the Effective Time through December
31, 1998, and (B) during the period commencing January 1, 1999 through the first
anniversary of the Effective Time, the Surviving Corporation shall provide the
Company Employees with benefits that are at least as valuable in the aggregate
to such Company Employee as the benefits provided to employees of Parent and its
Affiliates in comparable positions of employment, to waive any pre-existing
condition clause or waiting period requirement in such welfare benefit plans or
programs and to give credit for deductible amounts and co-payments paid by a
Company Employee during the current deductible year prior to the Effective Time;
(ii) participation in such tax-qualified retirement plans of Parent (or an
Affiliate of Parent), which shall provide in the aggregate benefits that are at
least as valuable as the benefits provided to employees of Parent and its
Affiliates in comparable positions of employment, and to grant each Company
Employee credit under such plans, for eligibility and vesting purposes, for such
Company Employee's service with the Company and its Affiliates prior to the
Effective Time, except to the extent it would result in a duplication of
benefits with respect to the same period of service; and (iii) participation in
such other benefit plans and programs of Parent and its Affiliates (including
without limitation, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, excess and supplemental retirement, severance or
termination pay, and fringe benefits) which, in the aggregate will provide
benefits to Company Employees which are no less favorable in the aggregate under
those provided to employees of Parent and its Affiliates in comparable positions
of employment; provided, however, that except as set forth in clause (i)(A)
above nothing herein shall prevent the amendment or termination of any specific
plan, program or amendment or interfere with the Surviving Corporation's right
or obligation to make such changes as are necessary to conform with applicable
law. Notwithstanding anything in this Agreement to the contrary, Parent shall
cause the Surviving Corporation to honor (without modification) and assume (i)
the written employment agreements, severance agreements, indemnification
agreements with existing directors and officers of the Company and (ii)
incentive arrangements and other agreements listed in Schedule 5 of the
Disclosure Schedule, all as in effect on the date of this Agreement. Nothing in
this Section 6.7 shall require the continued employment of any person, or,
except as set forth in this Section 6.7, prevent the Company and/or the
Surviving Corporation and their subsidiaries from taking any action or
refraining from taking any action which the Company and its subsidiaries prior
to the Effective Time could have taken or refrained from taking. The parties
agree that Company severance plans and policies in effect as of the date hereof
shall remain in effect for at least the one-year period commencing at the
Effective Time. During such one-year period, any Company Employee whose
employment is terminated by the Surviving
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Corporation or any of its subsidiaries (other than a Company Employee terminated
for cause or a Company Employee who is a "site" Employee terminated upon the
cancellation of an outsourcing agreement, which employees shall only be entitled
to severance benefits, if any, provided to employees of Parent (or an Affiliate
of Parent ) in comparable positions of employment under similar circumstances)
shall be deemed to have been terminated as a result of a change of control of
the Company. For purposes of this Section 6.7 a termination for "cause" shall
include a termination for deficient performance or for material violations of
any Company policy. The provisions of this Section 6.7 are intended for the
benefit of, and shall be enforceable by, current and former employees, officers
and directors of the Company and their respective heirs and legal
representatives and shall be binding on all successors and assigns of Parent.
6.8 Indemnification and Insurance. Parent agrees that at all
times after consummation of the Offer, it shall indemnify, or shall cause the
Company (or the Surviving Corporation if after the Effective Time) and its
subsidiaries to indemnify, each person who is now, or has been at any time prior
to the date hereof, an employee, agent, director or officer of the Company or of
any of the Company's subsidiaries, together with each such person's heirs,
representatives, successors and assigns (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), to the same extent and in the same
manner as is now provided in the respective charters or by-laws of the Company
and such subsidiaries or otherwise in effect on the date hereof, with respect to
any claim, liability, loss, damage, cost or expense (whenever asserted or
claimed) ("Indemnified Liability") based in whole or in part on, or arising in
whole or in part out of, any matter existing or occurring at or prior to the
Effective Time. Parent shall, and shall cause the Company (or the Surviving
Corporation if after the Effective Time) to, maintain in effect for not less
than six years after consummation of the Offer the current policies of
directors' and officers' liability insurance maintained by the Company and the
Company's subsidiaries on the date hereof (provided that Parent may substitute
therefor policies having at least the same coverage and containing terms and
conditions which are no less advantageous to the persons currently covered by
such policies as insureds) with respect to matters existing or occurring at or
prior to the Effective Time); provided, however, that if the aggregate annual
premiums for such insurance at any time during such period shall exceed 300% of
the per annum rate of premium currently paid by the Company and its subsidiaries
for such insurance on the date of this Agreement (which the Company represents
and warrants is $788,000 as of the date hereof), then Parent shall cause the
Company (or the Surviving Corporation if after the Effective Time) to, and the
Company (or the Surviving Corporation if after the Effective Time) shall,
provide the maximum coverage that shall then be available at an annual premium
equal to 300% of such rate. Without limiting the foregoing, in the event any
Indemnified Party becomes involved in any capacity in any action, proceeding or
investigation based in whole or in part on, or arising in whole or in part out
of, any matter, including the transactions contemplated hereby, existing or
occurring at or prior to the Effective Time, then to the extent permitted by
law, Parent shall, or shall cause the Company (or the Surviving Corporation if
after the Effective Time) to, periodically advance to such Indemnified Party its
legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by such
Indemnified Party of an undertaking to
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reimburse the amounts so advanced in the event of a final determination by a
court of competent jurisdiction that such Indemnified Party is not entitled
thereto. The provisions of this Section 6.8 are intended for the benefit of, and
shall be enforceable by, the respective Indemnified Parties.
6.9 Solicitation. Neither the Company nor any of its
subsidiaries, nor any of their respective directors, officers, employees,
representatives or agents shall, directly or indirectly, solicit or initiate
offers or proposals from, or provide any confidential information to, or
participate in any discussions or negotiations (or if currently engaged in any
of the foregoing actions, the Company, its Affiliates and their respective
officers, directors, employees, representatives and agents shall immediately
cease such activities) with, any person or entity (other than Parent and its
subsidiaries and their respective directors, officers, employees,
representatives and agents) concerning (i) any merger, acquisition, exchange or
sale of all or any material portion of the assets not in the ordinary course of
business consistent with past practice, or other similar transaction involving
the Company or any subsidiary or division of the Company, or the sale of any
equity interest in the Company or any subsidiary, or (ii) except for Shares
issuable upon exercise of the 477,913 options outstanding under the Stock Plans
on the date hereof, any sale by the Company or its subsidiaries of authorized
but unissued Shares or of any shares (whether or not outstanding) of any of the
Company's subsidiaries (all such offers and proposals being referred to herein
as "Acquisition Proposals"), provided, however, that nothing contained in this
Section 6.9 shall prohibit the Company or its Board of Directors from (i)
subject to the provisions of Section 6.5, issuing a press release or otherwise
publicly disclosing the terms of this Agreement, including this Section 6.9 or
disclosing the terms of any Acquisition Proposal; (ii) proceeding with the
transactions contemplated by this Agreement; (iii) communicating to the
Company's stockholders a position as contemplated by Rule 14e-2 promulgated
under the Exchange Act; provided, however, that the Board of Directors shall not
recommend that the stockholders of the Company tender their Shares in connection
with any such tender offer unless the Board of Directors by majority vote
determines in good faith, based on the advice of outside legal counsel to the
Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty to the stockholders of the Company under applicable law;
(iv) making any disclosure to the Company's stockholders which, in the judgment
of the Board of Directors of the Company determines, based on the advice of
outside counsel, is required to be made under applicable law (including laws
relating to the fiduciary duties of directors); or (v) taking any
non-appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction; and, provided, further, that the Board of Directors of
the Company may, on behalf of the Company, furnish or cause to be furnished
information and may direct the Company, its directors, officers, employees,
representatives or agents to furnish information and to participate in
discussions or negotiations, in each case in response to an unsolicited oral or
written Acquisition Proposal or expression of intention to make an Acquisition
Proposal (except that discussion or negotiations cannot proceed prior to receipt
of such Acquisition Proposal) if the Board of Directors by majority vote
determines in good faith based on the advice of outside legal counsel that
failing to take such action would constitute a breach of the Board's fiduciary
duty under applicable law (an Acquisition Proposal which satisfies the above
requirement being referred to herein as a "Superior Proposal"). The Board
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of Directors shall provide a copy of any written Acquisition Proposal (or
describe the material terms of any oral Acquisition Proposal) to Parent promptly
after receipt thereof, shall notify Parent promptly if any such proposal is made
and shall keep Parent promptly advised of all developments which could
reasonably be expected to culminate in the Board of Directors withdrawing,
modifying or amending its recommendation of the Offer, the Merger and the other
transactions contemplated by this Agreement.
Except as set forth in this Section 6.9, neither the Company or any of
its Affiliates, nor any of its or their respective officers, directors,
employees, representatives or agents, shall, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent and Purchaser, any Affiliate or associate of Parent and
Purchaser or any designees of Parent or Purchaser) concerning any merger, sale
of assets, sale of shares of capital stock or similar transactions (including an
exchange of stock or assets) involving the Company or any subsidiary or division
of the Company. The Company agrees not to release any third-party from, or waive
any provisions of, any confidentiality or standstill agreement to which the
Company is a party unless the Board of Directors of the Company, by a majority
vote, determines in good faith, based on the advice of outside legal counsel
that the failure to provide such release or waiver would constitute a breach of
fiduciary duty to the stockholders of the Company under applicable law.
Notwithstanding the foregoing, the Board of Directors of the Company may
(subject to the terms of this and the following sentence) withdraw or modify its
approval or recommendation of this Agreement or the Merger, approve or recommend
a Superior Proposal or enter into an agreement with respect to a Superior
Proposal, in each case if the Board of Directors of the Company by a majority
vote determines in good faith based on the advice of outside legal counsel that
failing to take such action would constitute a breach of fiduciary duty to the
stockholders of the Company under applicable law; provided that the Company
shall not enter into an agreement with respect to a Superior Proposal unless the
Company shall have furnished Parent with written notice specifying the material
terms and conditions of such Superior Proposal and identifying the person making
such Superior Proposal not later 48 hours in advance of the time that it intends
to enter into such agreement and shall have caused its financial and legal
advisors to negotiate with Parent to make such amendments to the terms and
conditions of this Agreement as would make this Agreement as so amended at least
as favorable to the Company's stockholders from a financial point of view as the
Superior Proposal, unless the Board of Directors of the Company, by majority
vote, determines in good faith, based on the advice of outside legal counsel to
the Company, that failure to enter into an agreement with respect to a Superior
Proposal without regard to such notice or 48-hour period would constitute a
breach of fiduciary duty to the stockholders of the Company under applicable
law. In addition, if the Company proposes to enter into an agreement with
respect to any Superior Proposal, it shall concurrently with entering into such
agreement pay, or cause to be paid, to Parent the amount required to be paid
pursuant to Section 8.6(a) of this Agreement.
6.10 Disposition of Certain Litigation. (a) The Company agrees
that it will not settle any litigation currently pending, or commenced after the
date hereof, against the Company or any of its directors by any stockholder of
the Company relating to the Offer or this
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Agreement, without the prior written consent of Parent (which consent shall not
unreasonably be withheld).
(b) The Company will not voluntarily cooperate with any
third-party which has sought or may hereafter seek to restrain or prohibit or
otherwise oppose the Offer or the Merger and will cooperate with Parent and
Purchaser to resist any such effort to restrain or prohibit or otherwise oppose
the Offer or the Merger, unless the Board of Directors of the Company, by a
majority vote, determines in good faith, based on the advice of outside legal
counsel, that compliance with such requirements would constitute a breach of
fiduciary duty to the stockholders of the Company under applicable law.
7. Conditions.
The respective obligations of Parent and Purchaser, on the one hand,
and the Company, on the other, to consummate the Merger are subject to the
fulfillment of each of the following conditions:
7.1 Consummation of Offer. Purchaser shall have purchased the
Shares pursuant to the Offer (provided that the purchase of Shares pursuant to
the Offer shall not be a condition to the obligations of Parent and Purchaser
hereunder if Purchaser shall fail to accept for payment and pay for Shares
pursuant to the Offer in violation of the terms thereof or of this Agreement).
7.2 Stockholder Approval. If necessary to effect the Merger,
this Agreement shall have been duly approved by the holders of Shares in
accordance with the DGCL and the Certificate of Incorporation and by-laws of the
Company (provided that stockholder approval shall not be a condition to the
obligations of Parent and Purchaser hereunder if Parent shall fail to comply
with the last sentence of Section 6.2(a)).
7.3 Violation of Law. Consummation of the Merger shall not
result in violation of any applicable United States federal or state law
providing for criminal penalties.
7.4 Litigation. No preliminary or permanent injunction or
other order issued by any federal or state court of competent jurisdiction in
the United States prohibiting the consummation of the Merger shall be in effect.
8. Termination.
8.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time (notwithstanding any approval thereof by the stockholders of the Company),
by the mutual consent of Parent and the Company.
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8.2 Termination by either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned by either Parent or
the Company at any time prior to the Effective Time (notwithstanding any
approval thereof by the stockholders of the Company), if (a) any court of
competent jurisdiction or other governmental body located or having jurisdiction
within the United States or any country in which the Company, directly or
indirectly, has material assets or operations, shall have issued a final order,
injunction, decree, judgment or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and such
order, injunction, decree, judgment, ruling or other action is or shall have
become final and nonappealable, (b) the Offer shall have expired or terminated
pursuant to the terms of this Agreement without the purchase of any Shares
pursuant thereto; provided that Purchaser shall not have the right to terminate
this Agreement pursuant to this clause if the termination or expiration of the
Offer without the purchase of Shares thereunder is in violation of the terms of
the Offer or of this Agreement, or (c) if Purchaser has not purchased Shares
pursuant to the Offer prior to September 30, 1998, provided that the right to
terminate this Agreement pursuant to clauses (b) or (c) shall not be available
to any party whose failure (or the failure of whose Affiliate) to fulfill any
obligation under this Agreement or whose breach of a representation or warranty
under this Agreement has resulted in the Offer not being consummated.
8.3 Termination by Parent. This Agreement may be terminated
and the Offer may be abandoned at any time prior to consummation of the Offer,
by Parent, (i) if the Company shall have breached any of its representations and
warranties or failed to comply with any of the covenants or agreements contained
in this Agreement to be complied with or performed by the Company at or prior to
consummation of the Offer and such breach or failure shall have resulted in a
Material Adverse Effect that is not curable or, if curable, is not cured within
30 calendar days after written notice of such breach is given by Parent to the
Company or (ii) (x) if the Company shall have received from a third party a bona
fide Acquisition Proposal, and the Board of Directors of the Company in
accordance with the terms of this Agreement, shall have accepted such a proposal
or (y) if the Board of Directors of the Company shall have withdrawn or modified
in a manner adverse to Parent or Purchaser its approval or recommendation with
respect to the Offer and the Merger, or shall have resolved to effect any of the
foregoing or (iii) the Minimum Condition shall not have been satisfied by the
expiration date of the Offer as it may have been extended pursuant hereto and on
or prior to such date any person other than Parent or Purchaser shall have made
a proposal or communication with respect to a Superior Proposal.
8.4 Termination by the Company. This Agreement may be
terminated at any time prior to the consummation of the Offer, by the Company,
if (i) Purchaser shall fail to commence the Offer as specified in Section 1.1
hereof, or (ii) Parent or Purchaser shall have breached any of its
representations and warranties or failed to comply with any of the covenants or
agreements contained in this Agreement (other than the obligation to commence
the Offer and to purchase Shares upon the terms and subject to the conditions
thereof) to be complied with or performed by Parent or Purchaser at or prior to
consummation of the Offer and such breach or failure has a Material Adverse
Effect on Parent's or Purchaser's ability to consummate the Offer
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and such breach, if curable, is not cured within 30 calendar days after written
notice of such breach is given by the Company to Parent and Purchaser, or (iii)
if the Company enters into a written agreement concerning a transaction that
constitutes a Superior Proposal, provided that the Company shall have complied
with the provisions of Section 6.9 hereof (including the requirement that the
Board of Directors of the Company by majority vote determines in good faith
based on the advice of outside legal counsel to the Company that failing to
accept the Superior Proposal would constitute a breach of fiduciary duty to the
stockholders of the Company under applicable law and the payment of any amounts
payable to Parent pursuant to Section 8.6 of this Agreement).
8.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment or rejection of the Offer pursuant
to Section 8.1, 8.2, 8.3 or 8.4, no party hereto (or any of its directors,
officers, employees, advisers or other representatives) shall have any liability
or further obligation to any other party to this Agreement, except as provided
in Sections 1.4, 6.3(b) and 8.6 of this Agreement, and except that nothing
herein shall relieve any party from liability for its fraud or wilful breach of
this Agreement.
8.6 Certain Fees and Expenses. (a) If: (i) Parent terminates
this Agreement pursuant to Section 8.3(i) hereof, and within 12 months
thereafter, the Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, involving any party (or any
affiliate or associate thereof) (x) with whom the Company (or its agents) had
any discussions with respect to a Third Party Acquisition, (y) to whom the
Company (or its agents) furnished information with respect to or with a view to
a Third Party Acquisition or (z) who had submitted a proposal or expressed any
interest publicly or to the Company in a Third Party Acquisition, in the case of
each of clauses (x), (y) and (z) prior to such termination, (ii) Parent
terminates this Agreement pursuant to Section 8.3(ii) or the Company terminates
this Agreement pursuant to 8.4(iii) or (iii) Parent terminates this Agreement
pursuant to Section 8.3(iii) and within 12 months thereafter the Company enters
into an agreement or consummates a transaction with respect to a Third Party
Acquisition that provides for consideration for Shares or value (on a per share
basis) in excess of the Per Share Amount; then the Company shall pay to Parent,
within three business days following the execution and delivery of such
agreement or such occurrence, as the case may be, or simultaneously with any
termination contemplated by Section 8.6(a)(ii) above, a fee, in cash, of $4.0
million (less any amounts previously paid pursuant to Section 8.6(b)), provided,
however, that the Company in no event shall be obligated to pay more than one
such fee with respect to all such agreements and occurrences and such
termination and that the Company in no event shall be obligated to pay more than
$4.0 million in fees and expenses pursuant to Section 8.6(a) and (b) of this
Agreement.
"Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, tender offer or
otherwise or similar business combination by any person other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by a
Third Party of more than 35.0% of the outstanding Shares or 35% or more of the
aggregate book or fair market value of the assets of the Company and its
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subsidiaries considered as a whole; or (iii) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend
of cash or assets.
(b) Upon the termination of this Agreement by Parent pursuant
to Section 8.3(i) hereof, the Company shall reimburse Parent (not later than
three business days after submission of statements therefor) for all documented
out-of-pocket fees and expenses actually and reasonably incurred by Parent,
Purchaser and their affiliates or on their behalf in connection with the Offer
and the Merger and the consummation of the transactions contemplated by this
Agreement (including, without limitation, fees and disbursements payable to
financing sources, investment bankers, counsel to Purchaser or Parent or any of
the foregoing, and accountants) up to a maximum amount of $2.0 million (subject
to the limitations set forth in the first paragraph of Section 8.6(a) of this
Agreement).
9. General Provisions.
9.1 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
the provisions of Article 8, and subject to the provisions of Article 7 hereof,
the closing of the Merger (the "Closing") shall take place at the offices of
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 as soon
as practicable following the consummation of the Offer or, if later, approval
and adoption of this Agreement by Company stockholders if required pursuant to
the DGCL, or at such other place, time and date as the parties may mutually
agree; provided, however, that if any of the conditions provided for in Article
7 hereof shall not have been met or waived by the date on which the Closing is
otherwise scheduled, then, subject to Article 8 hereof, the party to this
Agreement which is unable to meet such condition or conditions shall be entitled
to postpone the Closing by notice to the other parties until such condition or
conditions shall have been met (which such notifying party will use all
reasonable efforts to cause to happen at the earliest practicable date) or
waived. The date and time of such Closing are referred to herein as the "Closing
Date."
9.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by telecopy (followed by telephonic advice of such
transmission) or nationally-recognized overnight service to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:
(a) If to Parent or Purchaser:
Xxxxx & Co., Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax Number: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx
Fax Number: (000) 000-0000
(b) If to the Company:
Donnelley Enterprise Solutions Incorporated
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Fax Number: (000) 000-0000
9.3 Interpretation. When a reference is made in this Agreement
to subsidiaries of Parent, Purchaser or the Company, the word "subsidiaries"
means any corporation 50 percent or more of whose outstanding voting securities,
or any partnership, joint venture or other entity 50% or more of whose total
equity interest, is directly or indirectly owned by Parent, Purchaser or the
Company, as the case may be.
9.4 Representations and Warranties; Etc. The respective
representations and warranties of the Company, Parent and Purchaser contained
herein shall expire with, and be terminated and extinguished upon, consummation
of the Offer. This Section 9.4 shall have no effect upon any other obligation of
the parties hereto, whether to be performed before or after the consummation of
the Offer.
9.5 Payment of Expenses. Subject to Section 8.6 of this
Agreement, whether or not the Offer shall be consummated, each party hereto
shall pay its own expenses incident to preparing for, entering into and carrying
out this Agreement and the consummation of the Offer and the Merger.
9.6 Entire Agreement. This Agreement (including the Disclosure
Schedule and the Annexes hereto) contains the entire agreement between the
parties with respect to the transactions contemplated hereby, and supersedes all
written or oral negotiations,
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representations, warranties, commitments, offers, bids, bid solicitations and
other understandings prior to the date hereof, except to the extent expressly
confirmed or provided herein.
9.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8 Severability. If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof.
9.9 Captions. The captions of the various Articles and
Sections of this Agreement have been inserted only for convenience of reference
and shall not be deemed to modify, explain, enlarge or restrict any provision of
this Agreement or affect the construction hereof.
9.10 Amendment. Subject to applicable law, this Agreement may
be amended by an instrument in writing signed by the parties hereto at any time
before or after the purchase of Shares pursuant to the Offer or approval and
adoption of this Agreement and the Merger by the stockholders of the Company,
but after any such purchase of Shares or approval no amendment shall be made
that modifies the consideration to be given to the holders of Shares or in any
other way materially adversely affects the rights of such stockholders (other
than a termination of this Agreement pursuant to its terms).
9.11 Waiver. Subject to applicable law, at any time prior to
the Effective Time, any party hereto may (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, or (b)
waive compliance with any of the agreements or conditions contained herein. In
addition to the provisions contained in Section 6.6 hereof, at any time prior to
consummation of the Offer, any party hereto may waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto. 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 by such party.
9.12 No Third-Party Beneficiaries; Assignability. Except for
Sections 2.8, 2.9, 6.7 and 6.8 (which are intended for the benefit of, and may
be enforced by, the persons or entities specified therein), this Agreement is
not intended to confer or impose upon any person not a party hereto any rights,
remedies, obligations or liabilities hereunder. This Agreement shall not be
assigned by any party hereto, by operation of law or otherwise, except that
Parent and Purchaser may assign all or any of their respective rights and
obligations hereunder to any direct or indirect wholly owned subsidiary or
subsidiaries of Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations. Only Purchaser or Parent may commence the Offer and purchase
Shares pursuant thereto unless the Company otherwise consents.
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9.13 Knowledge. When used with respect to the Company in this
Agreement, the term "knowledge" shall mean the actual present knowledge of the
following individuals: the chief executive officer of the Company, the chief
financial officer of the Company, the controller of the Company and the
presidents of the Company's divisions.
9.14 Person. The term "Person" as used in this Agreement shall
mean any individual, partnership, corporation, company, limited liability
company, trust or other entity.
9.15 Affiliate. The term "Affiliate" as used in this Agreement
shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange
Act; provided, however, that for purposes of this Agreement, X.X. Xxxxxxxxx &
Sons Company shall not be deemed to be an affiliate of the Company.
9.16 Governing Law. The validity, interpretation and effect of
this Agreement shall be governed exclusively by the laws of the State of
Delaware, without giving effect to the principles of conflict of laws thereof.
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Each of Parent, Purchaser and the Company has caused this Agreement to
be executed as of the date first written above by their respective duly
authorized officers.
XXXXX & CO., INC.
By:/s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
DESI ACQUISITION, INC.
By:/s/ Xxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
DONNELLEY ENTERPRISE SOLUTIONS
INCORPORATED
By: /s/ Xxxxxx X. Kochlefi
---------------------------
Name: Xxxxxx X. Kochlefi
Title: Chairman, President and Chief
Executive Officer
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ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in addition to
the conditions that (i) at the expiration of the Offer there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares (including all Shares tendered pursuant to the Stockholders'
Agreement) which constitutes more than 50% of the voting power (determined on a
fully-diluted basis) on the date of purchase, of all the securities of the
Company entitled to vote generally in the election of directors or in a merger
(the "Minimum Condition") (for purposes of determining at any time whether the
Minimum Condition has been met, each outstanding Share legally or beneficially
owned by Parent or Purchaser or any of its Affiliates at the commencement of the
Offer shall be deemed validly tendered under the Offer and not withdrawn), and
(ii) any and all applicable waiting periods under the HSR Act shall have expired
or been terminated, Purchaser shall not be required to accept for payment, or
subject to applicable rules and regulations of the SEC, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), purchase
or pay for any Shares tendered pursuant to the Offer, may postpone the
acceptance for payment of Shares tendered, and subject to the terms and
conditions of the Merger Agreement may terminate the Offer if at any time on or
after May 27, 1998 and at or before the time of payment for any such Shares any
of the following conditions shall occur or has occurred:
(a) (x) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material
respect, except (i) those representations and warranties that address
matters only as of a particular date (which shall be true and correct
as of such date), and (ii) where the failure of such representations
and warranties to be true and correct is not likely to result in a
Material Adverse Effect, or (y) the Company shall have breached in any
material respect any covenants contained in the Merger Agreement
resulting in or likely to have a Material Adverse Effect;
(b) there shall have been any statute, rule, regulation, judgment,
injunction or other order promulgated, enacted, entered, enforced or
issued by any federal or state governmental authority or agency or
court of competent jurisdiction in the United States which would have
the effect of (i) making the purchase of, or payment for, some or all
of the Shares by Parent or Purchaser or their Affiliates pursuant to
the Offer or the Merger illegal, (ii) otherwise preventing consummation
of the Offer or Merger; (iii) prohibiting the ownership or operation by
the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, of all or any material portion of the business or
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assets of the Company or any of its subsidiaries, taken as a whole, or
Parent or its subsidiaries, taken as a whole; (iv) materially limiting
the ownership or operation by the Company or any of its subsidiaries,
or Parent or any of its subsidiaries, of all or any material portion of
the business or assets of the Company or any of its subsidiaries, taken
as a whole, or Parent or its subsidiaries, taken as a whole or
compelling Parent or any of its subsidiaries to dispose of or hold
separate all or any material portion of the businesses or assets of the
Company or any of its significant subsidiaries (as defined in
Regulation S-X) or Parent or any of its significant subsidiaries (as
defined in Regulation S-X), as a result of the transactions
contemplated by the Offer or the Merger; (v) imposing limitations on
the ability of Parent, Purchaser or any of Parent's Affiliates
effectively to acquire or hold or to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any
Shares acquired or owned by Parent or Purchaser or any of its
Affiliates on all matters properly presented to the stockholders of the
Company, including, without limitation, the adoption and approval of
the Agreement and the merger or the right to vote any shares of capital
stock of any significant subsidiary (as defined in Regulation S-X),
directly or indirectly owned by the Company; or (vi) requiring
divestiture by Parent or Purchaser or any of their Affiliates of any
Shares; and, in each case, no such action or proceeding seeking to do
any of the foregoing shall be instituted or pending by any governmental
administrative or regulatory authority;
(c) (i) the Board of Directors of the Company shall have withdrawn,
modified or amended in any manner adverse to Parent or Purchaser its
recommendation or approval of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal other than
the Offer and the Merger, (ii) any corporation, partnership, person or
entity shall have entered into a definitive agreement or an agreement
in principle with the Company with respect to an alternative
acquisition transaction involving the Company, or (iii) the Board of
Directors of the Company shall have resolved to do any of the foregoing
(except that the foregoing shall not apply to a change solely in the
reasons for such recommendation so long as the Board of Directors of
the Company continues to recommend acceptance of the Offer by all
holders of the Shares);
(d) the Agreement shall have been terminated by the Company, Parent or
Purchaser in accordance with its terms;
(e) there shall be instituted any action, proceeding or counterclaim by
a federal or state governmental authority or agency by or before any
court or governmental, administrative or regulatory agency or authority
which has or is likely to have any of the effects described in clause
(b) above;
(f) there shall have occurred any event that has had, or is likely to
have, a Material Adverse Effect;
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which, in the reasonable judgment of Purchaser, makes it inadvisable to proceed
with the Offer or with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser regardless of the circumstances giving rise to such
condition or may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion. The foregoing conditions (other than the
Minimum Condition and the HSR Condition) may be waived by Purchaser in whole or
in part at any time and from time to time in its sole discretion. The failure by
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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