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EXHIBIT A
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AGREEMENT AND PLAN OF MERGER
AMONG
APPLIED GRAPHICS TECHNOLOGIES, INC.,
AGT ACQUISITION CORP.
AND
DEVON GROUP, INC.
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TABLE OF CONTENTS
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ARTICLE 1
THE MERGER................................................................... A-2
Section 1.1. The Merger.................................................. A-2
Section 1.2. Effective Time.............................................. A-2
Section 1.3. Closing of the Merger....................................... A-2
Section 1.4. Effects of the Merger....................................... A-2
Section 1.5. Certificate of Incorporation and Bylaws..................... A-2
Section 1.6. Directors................................................... A-2
Section 1.7. Officers.................................................... A-2
ARTICLE 2
CONVERSION OF SHARES; MERGER CONSIDERATION................................... A-3
Section 2.1. Conversion of Shares........................................ A-3
Section 2.2. Exchange of Certificates and Cash........................... A-4
Section 2.3. Stock Options............................................... A-5
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................ A-5
Section 3.1. Organization and Qualification.............................. A-5
Section 3.2. Capitalization of the Company and its Subsidiaries.......... A-6
Section 3.3. Authority Relative to this Agreement........................ A-6
Section 3.4. SEC Reports; Financial Statements........................... A-7
Section 3.5. Information Supplied........................................ A-7
Section 3.6. Consents and Approvals; No Violations....................... A-8
Section 3.7. No Default.................................................. A-8
Section 3.8. No Undisclosed Liabilities; Absence of Changes.............. A-8
Section 3.9. Litigation.................................................. A-9
Section 3.10. Compliance with Applicable Law.............................. A-9
Section 3.11. Employee Plans.............................................. A-9
Section 3.12. Environmental Matters....................................... A-10
Section 3.13. Tax Matters................................................. A-12
Section 3.14. Intellectual Property....................................... A-14
Section 3.15. Opinion of Financial Advisor................................ A-14
Section 3.16. Brokers..................................................... A-14
Section 3.17. Material Contracts.......................................... A-14
Section 3.18. Labor Matters............................................... A-15
Section 3.19. Insurance................................................... A-15
Section 3.20. Customers................................................... X-00
XXXXXXX 0
XXXXXXXXXXXXXXX XXX XXXXXXXXXX XX XXX AND ACQUISITION........................ A-16
Section 4.1. Organization and Qualification.............................. A-16
Section 4.2. Capitalization of AGT and its Subsidiaries.................. A-16
Section 4.3. Authority Relative to this Agreement........................ A-17
Section 4.4. SEC Reports; Financial Statements........................... A-17
Section 4.5. Information Supplied........................................ A-18
Section 4.6. Consents and Approvals; No Violations....................... A-18
Section 4.7. No Default.................................................. A-18
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Section 4.8. No Undisclosed Liabilities; Absence of Changes.............. A-18
Section 4.9. Litigation.................................................. A-19
Section 4.10. Compliance with Applicable Law.............................. A-19
Section 4.11. Employee Plans.............................................. A-19
Section 4.12. Environmental Matters....................................... A-20
Section 4.13. Tax Matters................................................. A-21
Section 4.14. Intellectual Property....................................... A-22
Section 4.15. Material Contracts.......................................... A-23
Section 4.16. Labor Matters............................................... A-23
Section 4.17. Insurance................................................... A-23
Section 4.18. Customers................................................... A-23
Section 4.19. No Prior Activities......................................... A-24
Section 4.20. Opinion of Financial Advisor................................ A-24
Section 4.21. Brokers..................................................... A-24
Section 4.22. Ownership of Company Common Stock........................... A-24
ARTICLE 5
COVENANTS.................................................................... A-24
Section 5.1. Conduct of Business......................................... A-24
Section 5.2. Preparation of S-4 and the Joint Proxy Statement............ A-27
Section 5.3. No Solicitation............................................. A-27
Section 5.4. Letters of the Company's and AGT's Accountants.............. A-28
Section 5.5. Meetings.................................................... A-29
Section 5.6. Access to Information....................................... A-29
Section 5.7. Additional Agreements; Reasonable Best Efforts.............. A-29
Section 5.8. Antitrust Reviews........................................... A-30
Section 5.9. Public Announcements........................................ A-30
Section 5.10. Indemnification; Directors' and Officers' Insurance ........ A-30
Section 5.11. Notification of Certain Matters............................. A-31
Section 5.12. Tax-Free Reorganization Treatment........................... A-31
Section 5.13. Company Employee Benefits................................... A-31
Section 5.14. Certain Payment of Deferred Compensation and Bonuses........ A-32
Section 5.15. Stock Options............................................... A-32
Section 5.16. SEC Filings................................................. A-32
Section 5.17. Guarantee of Performance.................................... A-32
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER..................................... A-32
Section 6.1. Conditions to Each Party's Obligations to Effect the A-32
Merger......................................................
Section 6.2. Conditions to the Obligations of the Company................ A-32
Section 6.3. Conditions to the Obligations of AGT and Acquisition........ A-33
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER............................................... A-34
Section 7.1. Termination................................................. A-34
Section 7.2. Effect of Termination....................................... A-34
Section 7.3. Fees and Expenses........................................... A-34
Section 7.4. Amendment................................................... A-35
Section 7.5. Extension; Waiver........................................... A-35
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ARTICLE 8
MISCELLANEOUS................................................................ A-35
Section 8.1. Nonsurvival of Representations and Warranties............... A-35
Section 8.2. Entire Agreement; Assignment................................ A-36
Section 8.3. Notices..................................................... A-36
Section 8.4. Governing Law............................................... A-36
Section 8.5. Descriptive Headings........................................ A-36
Section 8.6. Interpretive Provisions; Certain Definitions................ A-36
Section 8.7 Parties in Interest......................................... A-37
Section 8.8. Severability................................................ A-37
Section 8.9. Specific Performance........................................ A-37
Section 8.10. Brokers..................................................... A-37
Section 8.11. Counterparts................................................ A-37
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 13, 1998 (the
"Agreement"), is among APPLIED GRAPHICS TECHNOLOGIES, INC., a Delaware
corporation ("AGT"), AGT ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of AGT ("Acquisition"), and DEVON GROUP, INC., a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of AGT, Acquisition and the
Company have determined that the Merger (as defined in Section 1.1) is fair to
and in the best interests of their respective stockholders and have approved the
Merger in accordance with this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the execution hereof, certain holders of Shares
(as defined in Section 2.1) are entering into an agreement (the "Stockholders
Agreement") providing for certain matters with respect to their Shares, a copy
of which is attached hereto as Exhibit A;
WHEREAS, the Company has delivered to AGT a letter identifying all persons
(each, a "Company Affiliate") who are, at the date hereof, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), and each Company Affiliate has delivered to AGT a letter
(each, an "Affiliate Letter") relating to (i) the transfer, prior to the
Effective Time (as defined in Section 1.2), of the Shares beneficially owned by
such Company Affiliate on the date hereof and (ii) the transfer of the shares of
AGT Common Stock (as defined in Section 2.1(d)) to be received by such Company
Affiliate in the Merger; and
WHEREAS, AGT, Acquisition and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
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NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, AGT,
Acquisition and the Company hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the Delaware
General Corporation Law (the "DGCL"), the Company shall be merged with and into
Acquisition (the "Merger"). Following the Merger, Acquisition shall continue as
the surviving corporation (the "Surviving Corporation") and the separate
corporate existence of the Company shall cease.
Section 1.2. Effective Time. Subject to the provisions of this Agreement,
AGT, Acquisition and the Company shall cause the Merger to be consummated by
filing an appropriate Certificate of Merger or other appropriate, documents (the
"Certificate of Merger") with the Secretary of State of the State of Delaware in
such form as required by, and executed in accordance with, the relevant
provisions of the DGCL, as soon as practicable on or after the Closing Date (as
defined in Section 1.3). The Merger shall become effective upon such filing or
at such time thereafter as is provided in the Certificate of Merger (the
"Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be the third business day after satisfaction or waiver of
the conditions set forth in Article 6 (the "Closing Date"), at the offices of
Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless
another time, date or place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Acquisition in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with applicable law. The Bylaws of Acquisition in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 1.6. Directors. The directors of Acquisition at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified. On or prior to the Closing Date, the number of
directors of AGT shall be increased by two and the vacancies created thereby
shall be initially filled by Maine Obernauer, Jr. and a designee to be
determined jointly by the Company and AGT.
Section 1.7. Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
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ARTICLE 2
CONVERSION OF SHARES; MERGER CONSIDERATION
Section 2.1. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
any holder of shares of the Company's common stock, par value $.01 per share
(the "Company Common Stock"):
(a) Common Stock of Acquisition. Each issued and outstanding share of
common stock, par value $0.01 per share, of Acquisition shall be converted into
one share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Shares and AGT-Owned Shares. Each Share (as
defined in Section 2.1(c)) that is owned by the Company, or by AGT, Acquisition
or any other subsidiary of AGT shall automatically be cancelled and retired and
shall cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Common Stock of the Company. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (each, a "Share"), other
than Shares to be cancelled in accordance with Section 2.1(b) and any Dissenting
Shares (as defined in Section 2.1(e)), shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
certificate evidencing any such Shares shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance with the
provisions of Section 2.2, the Merger Consideration (as defined in Section
2.1(d)) multiplied by the number of Shares evidenced by the cancelled
certificate. The holders of such certificates previously evidencing such Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by
law.
(d) Merger Consideration. The term "Merger Consideration" means (i) a cash
payment in an amount equal to $30.00 (the "Per Share Cash Amount") and (ii) .6
fully paid and nonassessable shares of common stock, par value $.01 per share of
AGT ("AGT Common Stock").
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares issued and outstanding immediately prior to the Effective Time
held by a holder (if any) who has the right to demand, and who properly demands,
an appraisal of such Shares in accordance with Section 262 of the DGCL (or any
successor provision) ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration, unless such holder fails to perfect or
otherwise loses such holder's right to such appraisal, if any. If, after the
Effective Time, such holder fails to perfect or loses any such right to
appraisal, each such Share of such holder shall be treated as a Share that had
been converted as of the Effective Time into the right to receive the Merger
Consideration. At the Effective Time, any holder of Dissenting Shares shall
cease to have any rights with respect thereto, except the rights provided in
Section 262 of the DGCL (or any successor provision) and as provided in the
immediately preceding sentence. The Company shall give prompt notice to AGT of
any demands received by the Company for appraisal of Shares, and AGT shall have
the right to participate in and direct all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of AGT, make any payment with respect to, or settle or offer to settle,
any such demands.
(f) Adjustment. If, based on the Merger Consideration payable pursuant to
Section 2.1(d), the tax opinions referred to in Sections 6.2(c) and 6.3(f)
hereof cannot be delivered as a result of the Merger potentially failing to
satisfy continuity of interest requirements under applicable federal income tax
principles relating to reorganizations under Section 368(a) of the Code (as
reasonably determined by Weil, Gotshal & Xxxxxx LLP and X'Xxxxxxxx Graev &
Karabell, LLP, such determination to be made (x) taking into account Dissenting
Shares and cash issued in lieu of fractional shares, if any, (y) using the
Closing Date Price as the measure of value of the shares of AGT Common Stock
issued as Merger Consideration and (z) requiring that the total value of such
AGT Common Stock issued as Merger Consideration represent no less than 45% of
the total consideration issued and to be issued in the Merger to all holders of
Shares), then the Merger Consideration shall be adjusted by reducing, to the
extent necessary to enable the tax opinions to be rendered, the amount of cash
to be delivered to the holders of Shares, for each Share converted, and in lieu
thereof
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delivering to such holders such number of shares of AGT Common Stock equal to
(x) the amount by which the cash component of the Merger Consideration is
reduced, pursuant to this clause, in order to enable the rendering of the tax
opinions, divided by (y) the Closing Date Price.
For purposes hereof, the "Closing Date Price" of a share of AGT Common
Stock shall be the closing sales price of AGT Common Stock as reported on the
Nasdaq National Market ("NASDAQ") as of the close of the trading day immediately
prior to the Closing Date.
Section 2.2. Exchange of Certificates and Cash.
(a) Exchange Agent. On the Effective Date, AGT shall deposit, or shall
cause to be deposited, with or for the account of a bank or trust company
designated by AGT, which shall be reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of Shares (other than
Dissenting Shares), for exchange in accordance with this Article 2, through the
Exchange Agent, (i) certificates evidencing the whole shares of AGT Common Stock
issuable pursuant to Sections 2.1(d) and 2.1(f), to the extent applicable, in
exchange for outstanding Shares, (ii) cash in the aggregate amount required to
be exchanged for Shares pursuant to Sections 2.1(d) and 2.1(f), to the extent
applicable, and (iii) cash in an amount sufficient to permit payment of cash
payable in lieu of fractional shares pursuant to Section 2.2(d) (the cash
described in (ii) and (iii) is hereafter collectively referred to as the
"Exchange Cash Consideration" and such certificates for shares of AGT Common
Stock, together with any dividends or distributions with respect thereto, and
the Exchange Cash Consideration are hereafter collectively referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration to holders of Shares. Except as
contemplated by Section 2.2(d) hereof, the Exchange Fund shall not be used for
any other purpose. Any interest, dividends or other income earned on the
investment of cash or other property held in the Exchange Fund (except for
dividends on shares of AGT Common Stock) shall be for the account of AGT.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, AGT will instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time evidenced outstanding Shares (the "Certificates"), other than Dissenting
Shares, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as AGT may reasonably specify) and (ii)
instructions to effect the surrender of the Certificates in exchange for the
certificates evidencing shares of AGT Common Stock and cash. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration, multiplied by
the number of Shares evidenced by such Certificate, and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Shares which is not registered in the transfer records of the
Company, shares of AGT Common Stock and cash may be issued and paid in
accordance with this Article 2 to a transferee if the Certificate evidencing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive upon such
surrender the Merger Consideration, multiplied by the number of Shares
previously evidenced by such Certificate.
(c) Distributions With Respect to Unexchanged Shares of AGT Common
Stock. No dividends or other distributions with respect to shares of AGT Common
Stock, with a record date after the Effective Time, shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of AGT Common Stock
they are entitled to receive until the holder of such Certificate shall
surrender such Certificate.
(d) Fractional Shares. No fraction of a share of AGT Common Stock shall be
issued in the Merger. In lieu of any such fractional shares, each holder of
Shares entitled to receive shares of AGT Common Stock in the Merger, upon
surrender of a Certificate for exchange pursuant to this Section 2.2, shall be
paid an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying (x) the per share closing
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price of a share of AGT Common Stock on the NASDAQ on the date of the Effective
Time (or the last bid price in the absence of a trade) by (y) the fractional
interest in AGT Common Stock to which such holder would otherwise be entitled
(after taking into account all Shares then held of record by such holder).
(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Shares for six months after the
Effective Time shall be delivered to AGT, upon demand, and any holders of Shares
who have not theretofore complied with this Article 2 shall thereafter look only
to AGT for the Merger Consideration to which they are entitled pursuant to this
Article 2.
(f) No Liability. Neither AGT nor the Company shall be liable to any
holder of Shares for any such shares of AGT Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Withholding Rights. AGT or the Exchange Agent shall be entitled to
deduct and withhold, from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares, such amounts as AGT or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by AGT or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by AGT or the Exchange Agent.
Section 2.3. Stock Options. At the Effective Time, each holder of a then
outstanding option to purchase Shares (collectively, "Options") under the
Company's Non-Qualified Stock Option Plan, 1993 Non-Qualified Stock Option Plan
or 1995 Non-Qualified Stock Option Plan (collectively, the "Stock Option
Plans"), whether or not then exercisable or fully vested, in settlement thereof,
shall be entitled to receive from the Company for each Share subject to such
Option (whether or not then exercisable) an amount in cash equal to the
difference between $60.00 and the per share exercise price of such Option, to
the extent $60.00 is greater than the per share exercise price of such Option
and all such Options under the Stock Option Plans shall be cancelled and cease
to exist and the Stock Option Plans shall be terminated.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of AGT and Acquisition
as follows:
Section 3.1. Organization and Qualification.
(a) The Company and each of its subsidiaries (as defined in Section 3.1(b))
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power and
authority would not have or constitute a Material Adverse Effect (as defined
below) on the Company.
When used in any clause of this Agreement in connection with any party
hereto, the term "Material Adverse Effect" means (i) a material adverse effect,
or any development that is reasonably likely to result in a material adverse
effect, on the business, financial condition or results of operations of such
party and its subsidiaries, taken as whole, or (ii) an event, change, effect or
development that is reasonably likely to materially impair or materially delay
the ability of such party to consummate the transactions contemplated hereby.
(b) Except as set forth in Section 3.1(b) of the Disclosure Schedule
previously delivered by the Company to AGT (the "Company Disclosure Schedule"),
the Company has no subsidiaries and does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity. The term "subsidiary"
shall mean, when used with reference to any party to this Agreement, any entity
more than fifty percent (50%) of either the outstanding voting
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securities or the value of the outstanding equity securities or interests
(including membership interests) of which are owned directly or indirectly by
such party.
(c) The Company and each of its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have or constitute a Material Adverse Effect on the Company.
(d) The Company has heretofore delivered to AGT accurate and complete
copies of the certificate of incorporation and by-laws, as currently in effect,
of the Company and each of its subsidiaries.
Section 3.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of: (i) 30,000,000
shares of Company Common Stock, of which, as of December 31, 1997, 7,358,817
shares were issued and outstanding and 1,099,500 shares were held in treasury
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, 24,060
shares of Redeemable Preferred Stock -- Series A, par value $1.00 per share and
21,940 shares of Redeemable Preferred Stock -- Series B, par value $1.00 per
share, no shares of which were issued and outstanding. All of the issued and
outstanding shares of Company Common Stock have been validly issued, and are
fully paid, nonassessable and free of preemptive rights. As of December 31,
1997, 842,500 shares of Company Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding Options issued pursuant to the Stock Option Plans. Since December
31, 1997, no shares of the Company's capital stock have been issued other than
pursuant to the exercise of Options already in existence on such date and, since
December 31, 1997, no stock options have been granted. Except as set forth above
in this Section 3.2(a), as of the date hereof, there are outstanding (i) no
shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of the Company, (iii) no
options or other rights to acquire from the Company or its subsidiaries, and no
obligations of the Company or its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company, and (iv) no equity equivalents,
interests in the ownership or earnings of the Company or its subsidiaries or
other similar rights (including stock appreciation rights) (collectively,
"Company Securities"). There are no outstanding obligations of the Company or
its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. Except as set forth in Section 3.2(a) of the Company Disclosure
Schedule and except as contemplated by this Agreement, there are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or to which it is bound relating to the voting of any shares
of capital stock of the Company.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien (as
defined below) or any other limitation or restriction (including any restriction
on the right to vote or sell the same, except as may be provided as a matter of
law). There are no securities of the Company or its subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly of, any capital stock or other ownership interests in, or
any other securities of, any subsidiary of the Company. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
Section 3.3. Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
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Board of Directors of the Company (the "Company Board") and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval and adoption of this Agreement by the holders of a
majority of the then outstanding shares of Company Common Stock). This Agreement
has been duly and validly executed and delivered by the Company and constitutes
a valid, legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The Company Board has, by unanimous vote of those present, duly and
validly approved, and taken all corporate actions required to be taken by the
Company Board for the consummation of, the transactions contemplated hereby,
including the Merger, and resolved to recommend that the stockholders of the
Company approve and adopt this Agreement. The action of the Company Board in
approving this Agreement and the transactions contemplated hereby, including the
Merger, is sufficient to render inapplicable to the Merger and this Agreement
the provisions of Section 203 of the DGCL and, to the knowledge of the Company,
no Delaware or other State takeover statute or similar statute or regulation
applies to the Merger, this Agreement or any of the transactions contemplated
hereby.
Section 3.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents with
the Securities and Exchange Commission (the "SEC") since April 1, 1995, each of
which has complied in all material respects with all applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), each as in effect on the dates such forms, reports and
documents were filed. The Company has heretofore delivered to AGT, in the form
filed with the SEC (including any amendments thereto), (i) its Annual Reports on
Form 10-K for each of the fiscal years ended March 31, 1997 and Xxxxx 00, 0000,
(xx) all definitive proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since April 1, 1995 and (iii) all
other reports or registration statements filed by the Company with the SEC since
April 1, 1995 (the "Company SEC Reports"). None of such forms, reports or
documents, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly presented, in conformity with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments). Since
April 1, 1997, except as set forth in the Company SEC Reports, there has not
been any change, or any application or request for any change, by the Company or
any of its subsidiaries in accounting principles, methods or policies for
financial accounting or tax purposes (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
(b) The Company has heretofore made available to AGT a complete and correct
copy of any material amendments or modifications, which have not yet been filed
with the SEC, to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or to
be supplied by the Company in writing for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by AGT in connection with the issuance of shares of AGT Common Stock in the
Merger (the "S-4") will, at the time the S-4 is filed with the SEC and at the
time it becomes effective under
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the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the proxy statement relating to the
meetings of the Company's stockholders and AGT's stockholders to be held in
connection with the Merger (the "Joint Proxy Statement") will, at the date
mailed to stockholders of the Company and AGT and at the times of the meetings
of stockholders of the Company and AGT to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time, any event with respect
to the Company, its officers and directors or any of its subsidiaries should
occur which is required to be described in an amendment of, or a supplement to,
the S-4 or the Joint Proxy Statement, the Company shall promptly so advise AGT
and such event shall be so described, and such amendment or supplement (which
AGT and the Company shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Joint Proxy Statement, insofar as it relates to
the meeting of the Company's stockholders to vote on the Merger, will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
Section 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the filing and recordation of the Certificate
of Merger as required by the DGCL and as otherwise set forth in Section 3.6 to
the Company Disclosure Schedule, no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or administrative,
governmental or regulatory body, agency or authority (a "Governmental Entity")
is necessary for the execution and delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby, except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings or give such notice would not have a Material Adverse
Effect on the Company. Except as set forth in Section 3.6 to the Company
Disclosure Schedule, neither the execution, delivery and performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective certificate or articles of incorporation or bylaws
(or similar governing documents) of the Company or any of its subsidiaries, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or Lien) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets,
except in the case of (ii) for violations, breaches or defaults which would not
have a Material Adverse Effect on the Company.
Section 3.7. No Default. None of the Company or its subsidiaries is in
default or violation (and no event has occurred which with or without due notice
or the lapse of time or both would constitute a default or violation) of any
term, condition or provision of (i) its certificate or articles of incorporation
or bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound or (iii)
any order, writ, injunction, decree, law, statute, rule or regulation applicable
to the Company, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have or constitute a Material Adverse Effect on the Company.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent publicly disclosed by the Company in the Company SEC Reports
filed prior to the date of this Agreement or disclosed in Section 3.8 of the
Company Disclosure Schedule, since April 1, 1997, (a) neither the Company nor
its subsidiaries has incurred any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and whether due or to become
due or asserted or unasserted, which in the aggregate would have a
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Material Adverse Effect on the Company, (b) the business of the Company and its
subsidiaries has been carried on only in the ordinary course consistent with
past practices, (c) the Company has not paid any dividend or distribution in
respect of, or redeemed or repurchased any Company Securities, (d) other than
consistent with past practices, the Company has not entered into or consummated
any transaction with any officer, director or affiliate of the Company or any
person known by the Company to be an affiliate of any of them and (e) the
Company has not changed its methods of accounting.
Section 3.9. Litigation. Except as publicly disclosed by the Company in
the Company SEC Reports or disclosed in Section 3.9 of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or any of their respective properties or assets which (a)
individually or in the aggregate, would have a Material Adverse Effect on the
Company or (b) questions the validity of this Agreement or any action to be
taken by the Company in connection with the consummation of the transactions
contemplated hereby or could otherwise prevent or materially delay the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by the Company in the Company SEC Reports, none of the
Company or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which would have a Material Adverse Effect on the Company.
Section 3.10. Compliance with Applicable Law. Except as publicly
disclosed by the Company in the Company SEC Reports, the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not
have a Material Adverse Effect on the Company. Except as publicly disclosed by
the Company in the Company SEC Reports, the Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so to
comply would not have a Material Adverse Effect on the Company. Except as
publicly disclosed by the Company in the Company SEC Reports, the businesses of
the Company and its subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined and addressed in Section 3.12(a)) and except for
violations or possible violations which would not have a Material Adverse Effect
on the Company. Except as publicly disclosed by the Company in the Company SEC
Reports or as disclosed in Section 3.10 of the Company Disclosure Schedule, no
investigation or review by any Governmental Entity with respect to the Company
or its subsidiaries is pending or, to the knowledge of the Company, threatened,
nor, to the knowledge of the Company, has any Governmental Entity indicated an
intention to conduct the same, other than, in each case, those the outcome of
which would not have a Material Adverse Effect on the Company.
Section 3.11. Employee Plans.
(a) Section 3.11(a) of the Company Disclosure Schedule lists all "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other employee benefit plans
or other benefit arrangements, including executive compensation, directors'
benefit, bonus or other incentive compensation, severance and deferred
compensation plans and practices which the Company or any of its subsidiaries
maintains, is a party to, contributes to or has any obligation to or liability
for (each a "Company Benefit Plan" and collectively, the "Company Benefit
Plans").
(b) True, correct and complete copies or descriptions of each Company
Benefit Plan (and, where applicable, the most recent summary plan description,
actuarial report, determination letter, most recent Form 5500 and trust
agreement) have been delivered to AGT for review prior to the date hereof.
(c) As of the date hereof, except as disclosed on Section 3.11(c) of the
Company Disclosure Schedule, (i) all material payments required to be made by or
under any Company Benefit Plan, any related trusts, or any collective bargaining
agreement have been made; (ii) the Company and its subsidiaries have performed
all material obligations required to be performed by them under any Company
Benefit Plan; (iii) the Company Benefit Plans have been administered in material
compliance with their terms and the requirements of ERISA, the Code and other
applicable laws; (iv) there are no actions, suits, arbitrations or claims (other
than routine claims for benefit) pending or, to the knowledge of the Company,
threatened with respect to any
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Company Benefit Plan; and (v) the Company and its subsidiaries have no liability
as a result of any "prohibited transaction" (as defined in Section 406 of ERISA
and Section 4975 of the Code) for any excise tax or civil penalty.
(d) Except as disclosed on Section 3.11(d) of the Company Disclosure
Schedule, none of the Company Benefit Plans is subject to Title IV of ERISA.
(e) Except as set forth on Section 3.11(e) of the Company Disclosure
Schedule, the Company and its subsidiaries have not incurred any unsatisfied
withdrawal liability with respect to any multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
(f) Section 3.11(f) of the Company Disclosure Schedule sets forth a list of
all "employee pension plans," as defined on Section 3(2) of ERISA, maintained by
the Company or any of its subsidiaries on any trade or business (whether or not
incorporated) which are under control, or which are treated as a single
employer, with the Company under Section 414(b), (c), (m) or (o) of the Code (an
"ERISA Affiliate"), or to which the Company, its Subsidiaries or any ERISA
Affiliate contributed or is obligated to contribute thereunder ("Company Pension
Plans"). Except as set forth on Section 3.11(f) of the Company Disclosure
Schedule, each of the Pension Plans which is intended to be "qualified" within
the meaning of Section 401(a) and 401(k), if applicable, and 501(a) of the Code
has been determined by the Internal Revenue Service to be so "qualified" and, to
the knowledge of the Company, there is no fact which would adversely affect the
qualified status of any such Company Pension Plan.
(g) Except as set forth on Section 3.11(g) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due, or increase the amount of compensation due, to any current
or former employee of the Company or any of its subsidiaries; (ii) increase any
benefits otherwise payable under any Company Benefit Plan; or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
(h) If and to the extent applicable, no Company Benefit Plan has or has
incurred an accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, nor has any waiver of the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code been requested of
or granted by the IRS with respect to any Company Benefit Plan, nor has any lien
in favor of any such plan arisen under Section 412(n) of the Code or Section
302(f) of ERISA. Except as indicated on Schedule 3.11(h) of the Company
Disclosure Schedule, no Company Benefit Plan is self funded by the Company.
Except as disclosed on Schedule 3.11(h) of the Company Disclosure Schedule, with
respect to any insurance policy providing funding for benefits under any Company
Benefit Plan, there is no liability of the Company in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent liability, and there will be no such liability arising wholly or
partially out of events occurring prior to the execution of this Agreement, nor
would there be any such liability if the Company cancelled such policy as of the
date hereof.
Section 3.12. Environmental Matters. (a) As used in this Agreement:
(1) "Environmental Law" means any applicable federal, state or local
law, statute, code, ordinance, policy, rule, regulation or other
governmental requirement from any U.S. or foreign jurisdiction concerning
the Release (as defined herein), handling, storage, processing,
transportation or other use of any solid waste, industrial waste or
Hazardous Substance (as defined herein) including, by way of example but
not limitation, the Comprehensive Environmental Response, Compensation and
liability Act (43 U.S.C. ss.9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. ss.6901 et seq.), the Clean Water Act (33
U.S.C. ss.1251 et seq.), the Clean Air Act (33 U.S.C. ss.2601 et seq.), the
Toxic Substances Control Act (15 U.S.C. ss.2601 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136 et seq.) and
the Occupational Safety and Health Act (29 U.S.C. ss.651 et seq.), as such
laws have been amended, and the regulations promulgated pursuant thereto,
and any applicable and analogous state or local statutes, codes, policies
or related requirements of governmental entities of foreign jurisdictions.
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(2) "Environmental Claim" means any allegation, notice of violation,
action, claim, lien, demand, order, injunction, judgment, decree, ruling,
assessment or arbitration award or directive (conditional or otherwise) by
any court, arbitrator or governmental entity or any person for personal
injury (including sickness, disease or death), tangible or intangible
property damage, diminution in value, damage to the environment or natural
resources, nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions resulting from or
based upon (a) the existence, or the continuation of the existence, of a
Release (including, without limitation, sudden or non-sudden accidental or
non-accidental Release) of, or exposure to, any Hazardous Substance, odor,
audible noise or any solid or industrial waste; (b) the transportation,
storage, treatment or disposal of solid waste, industrial waste or
Hazardous Substances, in connection with the past or present operations of
the Company, any of its subsidiaries or any of their respective
predecessors or assigns; or (c) the violation, or alleged violation, of any
Environmental Laws, orders, injunctions, judgments, decrees, rulings,
assessments, arbitration awards, Environmental Permits or rulings, orders
or decisions of any court arbitrator or Government Entity relating to
environmental matters.
(3) "Environmental Permit" means any permit, approval, authorization,
license, variance, registration, permit application, notification, program
development and implementation, or permission required under any applicable
Environmental Law.
(4) "Hazardous Substance" means any substance, material or waste which
is regulated under any Environmental Law or by any applicable governmental
entity, governmental entity in the jurisdictions in which the Company or
any subsidiary or any of their respective predecessors or assigns conducts
or has conducted business, or the United States, including, without
limitation, any material or substance which is defined as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste" or "restricted hazardous waste," "subject waste," "contaminant,"
"toxic waste," "toxic substance" or "residual waste"' under any
Environmental Law, including, but not limited to, radioactive materials,
petroleum products, asbestos and polychlorinated biphenyls.
(5) "Property" means any land, facility or operations currently or
previously owned, leased, subleased or otherwise used by the Company, any
of its subsidiaries or any of their respective predecessors or assigns.
(6) "Release" means any intentional or unintentional, continuous or
intermittent release, spill, emission, seepage, leaking, pumping,
uncontrolled loss, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the environment, or any building surface, or
onto or from any Property of any Hazardous Substance, including the
movement of any Hazardous Substance through or in the air, soil, surface
water, ground water or otherwise.
(7) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required or voluntarily undertaken to
(i) clean up, remove, treat, or in any other way address any Hazardous
Substance or any other material required pursuant to applicable
Environmental Law; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Substance or any other
material required pursuant to applicable Environmental Law, (iii) perform
pre-remedial studies and investigations or post-remedial monitoring and
care including the conduct of risk assessments and negotiation with
applicable governmental entities regarding Hazardous Substance or any other
material required pursuant to applicable Environmental Law; or (iv) bring
the Properties into compliance with all applicable Environmental Laws and
Environmental Permits.
(b) Except as disclosed in Section 3.12(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, with respect to its use of
and operations at each Property, is in compliance in all respects with all
applicable Environmental Laws, except where the failure to so be in compliance
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(c) Except as disclosed in Section 3.12(c) of the Company Disclosure
Schedule or as disclosed in any Company SEC document filed with the SEC prior to
the date hereof, as of the date hereof, neither the Company nor any of its
subsidiaries or any of their respective predecessors has received any written
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communication form a court, arbitrator or governmental entity or any other
person that alleges that the Company or any such subsidiary or predecessor is
not in compliance, in any respect, with any Environmental Law or has liability
thereunder, except, in each case it is reasonably unlikely, individually or in
the aggregate, to have a Material Adverse Effect on the Company.
(d) Except as disclosed in Section 3.12(d) of the Company Disclosure
Schedule, none of the operations or Properties of the Company or any of its
subsidiaries or any of their respective predecessors or assigns is the subject
of investigation by any governmental entity whether U.S., State, local or
foreign, respecting (A) Environmental Laws, (B) Remedial Action or (C) any
Environmental Claim arising from a Release or otherwise of any Hazardous
Substance or any other substance regulated under any Environmental Law, which in
each case would, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(e) Except as disclosed in Section 3.12(e) of the Company Disclosure
Schedule, the Company, each of its subsidiaries and any of their respective
predecessors have filed all notices required to be filed under all Environmental
Laws reporting any Release, except where failure to file such notices would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(f) Except as disclosed in Section 3.12(f) of the Company Disclosure
Schedule, or as disclosed in any Company SEC Report, neither the Company nor any
of its subsidiaries has any contingent liabilities with respect to its business
or that of its predecessors in connection with any Hazardous Substance or
Environmental Law that would, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(g) Except as disclosed in Section 3.12(g) of the Company Disclosure
Schedule, or as disclosed in any Company SEC Report, as of the date hereof,
underground storage tanks are not located on or under any Property and there
have been no Releases of Hazardous Substances on, in or under any Property or
other real property for which the Company or any of its subsidiaries would be
responsible or potentially responsible and that would have a Material Adverse
Effect on the Company.
(h) Except as disclosed in Section 3.12(h) of the Company Disclosure
Schedule, or as disclosed in any Company SEC Report filed with the SEC prior to
the date hereof, neither the Company nor any of its subsidiaries or any of their
respective predecessors is subject to any judicial, administrative or arbitral
actions, suits, proceedings (public or private), written claims or governmental
proceedings alleging the violation of any Environmental Law or Environmental
Permit that is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company.
(i) Except as disclosed in Section 3.12(i) of the Company Disclosure
Schedule, or as disclosed in any Company SEC Document filed with the SEC prior
to the date hereof, neither the Company nor any of its subsidiaries or any of
their respective predecessors or assigns, as a result of their respective past
and current operations, has caused or permitted any Hazardous Substances to
remain or be disposed of, either on or under any Property or on any real
property not permitted to accept, store or dispose of such Hazardous Substances,
that would, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.13. Tax Matters. Except as disclosed on Section 3.13 of the
Company Disclosure Schedule:
(a) The Company and each of its subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which the Company or any of
its subsidiaries is or has ever been a member, has (or, by the Closing Date,
will have) timely filed with the appropriate taxing authorities all federal
income tax returns and all other material tax returns and reports required to be
filed by it through the Closing Date. All such tax returns are (or will be)
complete and correct in all material respects. Except to the extent adequately
reserved for in accordance with GAAP, the Company and each of its subsidiaries
has (or, by the Closing Date, will have) paid (or the Company has paid on its
subsidiaries' behalf) all taxes due in respect of the taxable periods covered by
such tax returns. The most recent consolidated financial statements contained in
the Company SEC Reports reflect an adequate reserve in accordance with GAAP for
all taxes payable by the Company and its subsidiaries for all taxable periods
and portions thereof through the date of such financial statements. The Company
has previously made available or delivered to AGT copies of all income and
franchise tax returns filed by the Company and each of its subsidiaries for
their taxable years ended in 1995, 1996 and 1997. For purposes of this
Agreement, "tax" or "taxes" shall mean all taxes, charges, fees, imposts,
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levies, gaming or other assessments, including, without limitation, all net
income, gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, together with any interest and any penalties, fines,
additions to tax or additional amounts imposed by any taxing authority (domestic
or foreign) and shall include any joint and/or transferee liability in respect
of taxes or any liability in respect of taxes imposed by contract, tax sharing
agreement, tax indemnity agreement or any similar agreement. "Tax returns" shall
mean any report, return, document, declaration or any other information or
filing required to be supplied to any taxing authority or jurisdiction (foreign
or domestic) with respect to taxes, including, without limitation, information
returns, any document with respect to or accompanying payments or estimated
taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return document, declaration or other
information.
(b) No material deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any of its subsidiaries that have not been fully
paid or adequately provided for in the appropriate financial statements of the
Company and its subsidiaries, no State where the Company or one of its
subsidiaries does not file an income or franchise tax return has asserted in
writing during the preceding five years that such corporation should be so
filing, no requests for waivers of the time to assess any taxes are pending, and
no power of attorney with respect to any taxes has been executed or filed with
any taxing authority. No material issues relating to taxes have been raised in
writing by the relevant taxing authority during any presently pending audit or
examination. The federal income tax returns of the Company and each of its
subsidiaries consolidated in such tax returns have been reviewed or passed upon
by the Internal Revenue Service for all years through March 31, 1994.
(c) No material Liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory liens
for taxes not yet due.
(d) None of the Company or any of its subsidiaries is a party to or is
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority) (other than any such tax sharing agreement among the
Company and its subsidiaries as set forth in Section 3.13(d) of the Company
Disclosure Schedule).
(e) None of the Company or any of its subsidiaries has taken, agreed to
take or will take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(f) Neither the Company nor any of its subsidiaries has made, will make, is
obligated to make or is party to any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently in
effect which provides for the making of any payment (whether in cash or property
or the vesting of property) that would not be deductible by reason of Sections
280G or 162(m) of the Code.
(g) The Company and its subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of taxes.
(h) No federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending or threatened in writing
with regard to any federal income or material state, local or foreign taxes or
tax returns of the Company or its subsidiaries and neither the Company nor any
of its subsidiaries has received a written notice of any pending audit or
proceeding.
(i) Neither the Company nor any of its subsidiaries has agreed to or is
required to make any adjustment under Section 481(a) of the Code.
(j) Neither the Company nor any of its subsidiaries has (i) with regard to
any assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
subsidiaries, (ii) executed or entered
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into a closing agreement pursuant to Section 7121 of the Code or any similar
provision of state, local or foreign law or (iii) received or filed any requests
for rulings or determinations in respect of any taxes within the last five
years.
(k) No property owned by the Company or any of its subsidiaries (i) is
property required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is "tax exempt bond financed property" within
the meaning of Section 168(g) of the Code.
(l) The Company and each of its subsidiaries are not currently, have not
been within the last five years and do not anticipate becoming a "United States
real property holding company" within the meaning of Section 897(c) of the Code.
(m) The Company is not a foreign person within the meaning of Section
1445(b)(2) of the Code.
(n) No subsidiary of the Company owns any Shares.
Section 3.14. Intellectual Property.
(a) Except as set forth in Section 3.14 of the Company Disclosure Schedule,
the Company or one of its subsidiaries owns or possesses (and will own or
possess as of the Effective Time) all right, title and interest in and to, or a
valid and enforceable license or other right to use all of the Intellectual
Property (as defined below), and all of the right, benefits and privileges
associated therewith, that is material to the conduct of the business of the
Company and its subsidiaries as currently conducted (and as conducted as of the
Effective Time). To the knowledge of the Company, neither the Company nor any of
its subsidiaries has infringed, misappropriated or otherwise violated any
Intellectual Property of any other person. To the knowledge of the Company, no
person is materially infringing upon any Intellectual Property right of the
Company or any of its subsidiaries.
(b) The term "Intellectual Property" means all patents, patent applications
and patent disclosures; all inventions (whether or not patentable and whether or
not reduced to practice); all trademarks, service marks, trade dress, trade
names and corporate names and all the goodwill associated therewith; all mask
works; all registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the compositions, know-how,
manufacturing and production processes and techniques, research information,
drawings, specifications, design plans, improvements, proposals, technical and
computer data, documentation and software, financial proposals, technical and
computer data, documentation and software, financial business and marketing
plans, customer and supplier lists and related proprietary information,
marketing materials and all other proprietary rights.
Section 3.15. Opinion of Financial Advisor. Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corp. (the "Company Financial Advisor") has delivered to the Company
Board its opinion, dated the date of this Agreement, to the effect that, as of
such date, the Merger Consideration is fair to the holders of Shares from a
financial point of view, and such opinion has not been withdrawn or modified.
Section 3.16. Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to AGT) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
Section 3.17. Material Contracts.
(a) The Company has delivered or otherwise made available to AGT true,
correct and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which the Company
is a party affecting the obligations of any party thereunder) to which the
Company or any of its subsidiaries is a party or by which any of its properties
or assets are bound that are material to the business, properties or assets of
the Company and its subsidiaries taken as a whole, including,
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without limitation, (I) contracts or agreements with any supplier or customer,
in each case which could result in the payment or receipt of monies in excess of
$2,500,000 in any calendar year period; (II) to the extent any of the following
are, individually or in the aggregate, material to the business, properties or
assets of the Company and its subsidiaries taken as a whole, all: (i)
employment, product design or development, personal services, consulting,
non-competition, severance or indemnification contracts (including, without
limitation, any contract to which the Company or any of its subsidiaries is a
party involving employees of the Company or any of its subsidiaries); (ii)
licensing, merchandising or distribution agreements; (iii) contracts granting a
right of first refusal or first negotiation; (iv) partnership or joint venture
agreements; (v) agreements for the acquisition, sale, lease or other disposition
of material properties or assets of the Company or its subsidiaries or
predecessors (by merger, purchase or sale of assets or stock or otherwise)
entered into since April 1, 1995 and (vi) contracts or agreements with any
Governmental Entity and (III) all commitments and agreements to enter into any
of the foregoing items in (I) or (II) above (collectively, together with any
such contracts entered into in accordance with Section 5.1 hereof, the
"Contracts").
(b) Each of the Contracts is valid and enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity), and there is no default under any Contract so listed either by the
Company or, to the knowledge of the Company, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by the Company or, to the knowledge of the
Company, any other party, in any such case in which such default or event would
have a Material Adverse Effect on the Company.
(c) No party to any such Contract has given notice to the Company of or
made a claim against the Company with respect to any breach or default
thereunder, in any such case in which such breach or default would have a
Material Adverse Effect on the Company.
Section 3.18. Labor Matters. Except as set forth in Section 3.18 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
a party to or bound by any employment, severance compensation, labor or
collective bargaining agreement pertaining to any current or former directors,
officers, employees or consultants of the Company or any of its subsidiaries. No
labor organization or group of employees of the Company or any of its
subsidiaries has made a pending written demand for recognition or certification.
Section 3.19. Insurance. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, each of the Company and its subsidiaries is, and
has been continuously since April 1, 1996, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary for
companies conducting the business as conducted by the Company and its
subsidiaries during such time period. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, since April 1, 1996, neither the Company nor any of
its subsidiaries has received notice of cancellation or termination (or a denial
of coverage) with respect to any material insurance policy of the Company or its
subsidiaries. The insurance policies of the Company and its subsidiaries are
valid and enforceable policies.
Section 3.20. Customers. Except as set forth in Section 3.20 of the
Company Disclosure Schedule, no customer from which the Company has received
revenues of at least $2,500,000 in any of the past three fiscal years has: (a)
threatened within the last twelve months to terminate, or to the knowledge of
the Company, intends to cancel or otherwise terminate, the relationship of such
person with the Company or any of its subsidiaries or (b) has during the last
twelve months decreased materially or threatened in writing to decrease or limit
materially its usage or purchase of the services or products of the Company or
any of its subsidiaries, or, to the knowledge of the Company, intends to modify
materially its relationship with the Company or any of its subsidiaries.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF AGT AND ACQUISITION
AGT and Acquisition hereby represent and warrant to the Company as follows:
Section 4.1. Organization and Qualification.
(a) AGT is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not have a Material Adverse Effect on AGT.
(b) Except as set forth in Section 4.1(b) of the Disclosure Schedule
previously delivered by AGT to the Company (the "AGT Disclosure Schedule"), AGT
has no subsidiaries and does not own, directly or indirectly, beneficially or of
record, any shares of capital stock or other security of any other entity or any
other investment in any other entity.
(c) AGT is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have or constitute a
Material Adverse Effect on AGT.
(d) AGT has heretofore made available to the Company accurate and complete
copies of the Certificates of Incorporation and Bylaws, as currently in effect,
of AGT and Acquisition.
Section 4.2. Capitalization of AGT and its Subsidiaries.
(a) The authorized capital stock of AGT consists of (i) 40,000,000 shares
of AGT Common Stock, of which, as of December 31, 1997, 17,836,383 shares were
issued and outstanding, and (ii) 10,000,000 shares of preferred stock, no par
value, no shares of which were issued and outstanding. All of the issued and
outstanding shares of AGT Common Stock have been validly issued, and are fully
paid, nonassessable and free of preemptive rights. As of December 31, 1997,
2,209,200 shares of AGT Common Stock were reserved for issuance and issuable
upon or otherwise deliverable in connection with the exercise of outstanding
options. Except as described in the AGT SEC Reports (as defined in Section
4.4(a)) and except as set forth in Section 4.2(a) of the AGT Disclosure Schedule
since December 31, 1997, no shares of AGT's capital stock have been issued other
than pursuant to stock options already in existence on such date, and no stock
options have been granted. Except (i) as described in the AGT SEC Reports and
(ii) as set forth above, as of the date hereof, there are outstanding (A) no
shares of capital stock or other voting securities of AGT, (B) no securities of
AGT or its subsidiaries convertible into or exchangeable for shares of capital
stock or voting securities of AGT, (C) no options or other rights to acquire
from AGT or its subsidiaries, and no obligations of AGT or its subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of AGT, and (D) no equity
equivalents, interests in the ownership or earnings of AGT or its subsidiaries
or other similar rights (including stock appreciation rights) (collectively,
"AGT Securities"). There are no outstanding obligations of AGT or any of its
subsidiaries to repurchase, redeem or otherwise acquire any AGT Securities.
Except as set forth in the AGT SEC Reports, there are no stockholder agreements,
voting trusts or other agreements or understandings to which AGT is a party or
to which it is bound relating to the voting of any shares of capital stock of
AGT.
(b) All of the outstanding capital stock of AGT's subsidiaries (including
Acquisition) is owned by AGT, directly or indirectly, free and clear of any Lien
or any other limitation or restriction (including any restriction on the right
to vote or sell the same, except as may be provided as a matter of law). There
are no securities of AGT or its subsidiaries convertible into or exchangeable
for, no options or other rights to acquire from AGT or its subsidiaries, and no
other contract, understanding, arrangement or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly, of any
capital stock or other ownership interests in, or any other securities of, any
subsidiary of AGT. There are no outstanding contractual obligations of AGT or
its
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subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of AGT.
Section 4.3. Authority Relative to this Agreement.
(a) Each of AGT and Acquisition has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Boards of Directors of AGT (the "AGT Board") and
Acquisition and by AGT as the sole stockholder of Acquisition, and no other
corporate proceedings on the part of AGT or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the issuance of AGT Common Stock as required by the
terms of this Agreement (the "Share Issuance"), the approval and adoption of the
Share Issuance by the holders of a majority of the total votes cast on the
approval and adoption of the Share Issuance at the meeting of AGT's stockholders
called for such purpose). This Agreement has been duly and validly executed and
delivered by each of AGT and Acquisition and constitutes a valid, legal and
binding agreement of each of AGT and Acquisition, enforceable against each of
AGT and Acquisition in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The AGT Board has, by unanimous vote of those present, duly and validly
approved, and taken all corporate actions required to be taken by the AGT Board
for the consummation of, the transactions contemplated hereby, including the
Merger, and resolved to recommend that the stockholders of AGT approve and adopt
the Share Issuance. The action of the AGT Board in approving this Agreement and
the transactions contemplated hereby, including the Merger, is sufficient to
render inapplicable to the Merger and this Agreement the provisions of Section
203 of the DGCL and, to the knowledge of AGT, no Delaware or other State
takeover statute or similar statute or regulation applies to the Merger, this
Agreement or any of the transactions contemplated hereby.
Section 4.4. SEC Reports; Financial Statements.
(a) AGT has filed all required forms, reports and documents with the SEC
since April 16, 1996, each of which has complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act, each as
in effect on the dates such forms, reports and documents were filed. AGT has
heretofore made available to the Company, in the form filed with the SEC
(including any amendments thereto), (i) its Annual Reports on Form 10-K for the
fiscal year ended December 31, 1996, (ii) all definitive proxy statements
relating to AGT's meetings of stockholders (whether annual or special) held
since April 16, 1996 and (iii) all other reports or registration statements
filed by AGT with the SEC since April 16, 1996 (the "AGT SEC Reports"). None of
such forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of AGT included in the AGT SEC Reports complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto and fairly
presented, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of AGT
and its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended (subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments). Since January 1, 1997, except as set forth in the
AGT SEC Reports, there has not been any change, or any application or request
for any change, by AGT or any of its subsidiaries in accounting principles,
methods or policies for financial accounting or tax purposes (subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments).
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(b) AGT has heretofore made available to the Company a complete and correct
copy of any material amendments or modifications, which have not yet been filed
with the SEC, to agreements, documents or other instruments which previously had
been filed by AGT with the SEC pursuant to the Exchange Act.
Section 4.5. Information Supplied. None of the information supplied or to
be supplied by AGT or Acquisition in writing for inclusion or incorporation by
reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Joint Proxy Statement will, at the date mailed to stockholders of the
Company and AGT and at the times of the meetings of stockholders of the Company
and AGT to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time, any event with respect to AGT, its officers and directors or
any of its subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the S-4 or the Joint Proxy Statement, AGT
shall promptly so advise the Company and such event shall be so described, and
such amendment or supplement (which the Company and AGT shall have a reasonable
opportunity to review) shall be promptly filed with the SEC. The S-4 will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations thereunder. The Joint Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
Section 4.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the filing and recordation of the
Certificate of Merger as required by the DGCL and as otherwise set forth in
Section 4.6 of the AGT Disclosure Schedule, no filing with or notice to, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by AGT or Acquisition of this Agreement
or the consummation by AGT or Acquisition of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not have
or constitute a Material Adverse Effect on AGT. Except as set forth in Section
4.6 of the AGT Disclosure Schedule, neither the execution, delivery and
performance of this Agreement by AGT or Acquisition nor the consummation by AGT
or Acquisition of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate or articles
of incorporation or bylaws (or similar governing documents) of AGT or
Acquisition or any of AGT's subsidiaries, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which AGT or Acquisition or any of AGT's
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to AGT or Acquisition or any
of AGT's subsidiaries or any of their respective properties or assets, except in
the case of (ii) for violations, breaches or defaults which would not have or
constitute a Material Adverse Effect on AGT.
Section 4.7. No Default. None of AGT or its subsidiaries is in default or
violation (and no event has occurred which with or without due notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its certificate or articles of incorporation or
bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which AGT or any of its subsidiaries is now a party or by which any of them
or any of their respective properties or assets may be bound or (iii) any order,
writ, injunction, decree, law, statute, rule or regulation applicable to AGT,
its subsidiaries or any of their respective properties or assets, except in the
case of (ii) or (iii) for violations, breaches or defaults which would not have
or constitute a Material Adverse Effect on AGT.
Section 4.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent publicly disclosed by AGT in the AGT SEC Reports filed prior
to the date of this Agreement, or as set forth in
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Section 4.8 of the AGT Disclosure Schedule, since January 1, 1997, (a) neither
AGT nor its subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, and whether due or to
become due or asserted or unasserted, which would have a Material Adverse Effect
on AGT, (b) AGT has conducted its business in the ordinary course consistent
with past practices, (c) AGT has not paid any dividend or distribution in
respect of, or redeemed or repurchased any AGT Securities, (d) other than
consistent with past practices, AGT has not entered into or consummated any
transaction with any officer, director or affiliate of AGT or any person known
by AGT to be an affiliate of any of them and (e) AGT has not changed its methods
of accounting.
Section 4.9. Litigation. Except as publicly disclosed by AGT in the AGT
SEC Reports or disclosed in Section 4.9 of the AGT Disclosure Schedule, there is
no suit, claim, action, proceeding or investigation pending or, to the knowledge
of AGT, threatened against AGT or any of its subsidiaries or any of their
respective properties or assets which (a) individually or in the aggregate,
would have or constitute a Material Adverse Effect on AGT or (b) questions the
validity of this Agreement or any action to be taken by AGT in connection with
the consummation of the transactions contemplated hereby or could otherwise
prevent or materially delay the consummation of the transactions contemplated by
this Agreement. Except as publicly disclosed by AGT in the AGT SEC Reports, none
of AGT or its subsidiaries is subject to any outstanding order, writ, injunction
or decree which would have a Material Adverse Effect on AGT.
Section 4.10. Compliance with Applicable Law. Except as publicly
disclosed by AGT in the AGT SEC Reports, AGT and its subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "AGT Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which would not have a
Material Adverse Effect on AGT. Except as publicly disclosed by AGT in the AGT
SEC Reports, AGT and its subsidiaries are in compliance with the terms of the
AGT Permits, except where the failure so to comply could not reasonably be
expected to have a Material Adverse Effect on AGT. Except as publicly disclosed
by AGT in the AGT SEC Reports, the businesses of AGT and its subsidiaries are
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity except that no representation or warranty is made in this
Section 4.10 with respect to Environmental Laws and except for violations or
possible violations which would not have a Material Adverse Effect on AGT.
Except as publicly disclosed by AGT in the AGT SEC Reports or as disclosed in
Section 4.10 of the AGT Disclosure Schedule, no investigation or review by any
Governmental Entity with respect to AGT or its subsidiaries is pending or, to
the knowledge of AGT, threatened, nor to the knowledge of AGT, has any
Governmental Entity indicated an intention to conduct the same, other than, in
each case, those the outcome of which would not have a Material Adverse Effect
on AGT.
Section 4.11. Employee Plans.
(a) Section 4.11(a) of the AGT Disclosure Schedule lists all "employee
benefit plans," as defined in Section 3(3) of the ERISA and all other employee
benefit plans or other benefit arrangements, including executive compensation,
directors' benefit, bonus or other incentive compensation, severance and
deferred compensation plans and practices which AGT or any of its subsidiaries
maintains, is a party to, contributes to or has any obligation to or liability
for (each an "AGT Benefit Plan" and collectively, the "AGT Benefit Plans").
(b) True, correct and complete copies or descriptions of each AGT Benefit
Plan (and, where applicable, the most recent summary plan description, actuarial
report, determination letter, most recent Form 5500 and trust agreement) have
been made available to the Company for review prior to the date hereof.
(c) As of the date hereof, except as disclosed on Section 4.11(c) of the
AGT Disclosure Schedule, (i) all material payments required to be made by or
under any AGT Benefit Plan, any related trusts, or any collective bargaining
agreement have been made; (ii) AGT and its subsidiaries have performed all
material obligations required to be performed by them under any AGT Benefit
Plan; (iii) the AGT Benefit Plans have been administered in material compliance
with their terms and the requirements of ERISA, the Code and other applicable
laws; (iv) there are no actions, suits, arbitrations or claims (other than
routine claims for benefit) pending or, to the knowledge of AGT, threatened with
respect to any AGT Benefit Plan; and
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(x) XXX and its subsidiaries have no liability as a result of any "prohibited
transaction" (as defined in Section 406 of ERISA and Section 4975 of the Code)
for any excise tax or civil penalty.
(d) Except as disclosed on Section 4.11(d) of the AGT Disclosure Schedule,
none of the AGT Benefit Plans is subject to Title IV of ERISA.
(e) Except as set forth on Section 4.11(e) of the AGT Disclosure Schedule,
AGT and its subsidiaries have not incurred any unsatisfied withdrawal liability
with respect to any multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
(f) Section 4.11(f) of the AGT Disclosure Schedule sets forth a list of all
"employee pension plans," as defined on Section 3(2) of ERISA, maintained by AGT
or any of its subsidiaries on any trade or business (whether or not
incorporated) which are under control, or which are treated as a single
employer, with AGT under Section 414(b), (c), (m) or (o) of the Code (an "AGT
ERISA Affiliate"), or to which AGT, its Subsidiaries or any AGT ERISA Affiliate
contributed or is obligated to contribute thereunder ("AGT Pension Plans").
Except as set forth on Section 4.11(f) of the AGT Disclosure Schedule, each of
the AGT Pension Plans which is intended to be "qualified" within the meaning of
Section 401(a) and 401(k), if applicable, and 501(a) of the Code has been
determined by the Internal Revenue Service to be so "qualified" and, to the
knowledge of AGT, there is no fact which would adversely affect the qualified
status of any such AGT Pension Plan.
(g) Except as set forth on Section 4.11(g) of the AGT Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due, or
increase the amount of compensation due, to any current or former employee of
AGT or any of its subsidiaries; (ii) increase any benefits otherwise payable
under any AGT Benefit Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
(h) If and to the extent applicable, no AGT Benefit Plan has or has
incurred an accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, nor has any waiver of the minimum funding
standards of Section 302 of ERISA and Section 4.12 of the Code been requested of
or granted by the IRS with respect to any AGT Benefit Plan, nor has any lien in
favor of any such plan arisen under Section 4.12(n) of the Code or Section
302(f) of ERISA. Except as indicated on Schedule 4.11(h) of the AGT Disclosure
Schedule, no AGT Benefit Plan is self funded by AGT. Except as disclosed on
Schedule 4.11(h) of the AGT Disclosure Schedule, with respect to any insurance
policy providing funding for benefits under any AGT Benefit Plan, there is no
liability of AGT in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability, and there will be no such
liability arising wholly or partially out of events occurring prior to the
execution of this Agreement, nor would there be any such liability if AGT
cancelled such policy as of the date hereof.
Section 4.12. Environmental Matters. (a) Except as disclosed in Section
4.12(a) of the AGT Disclosure Schedule, AGT and each of its subsidiaries, with
respect to its use of and operations at each Property, is in compliance in all
respects with all applicable Environmental Laws, except where the failure to so
be in compliance would not, individually or in the aggregate, have a Material
Adverse Effect on AGT.
(b) Except as disclosed in Section 4.12(b) of the AGT Disclosure Schedule
or as disclosed in any AGT SEC document filed with the SEC prior to the date
hereof, as of the date hereof, neither AGT nor any of its subsidiaries or any of
their respective predecessors has received any written communication form a
court, arbitrator or governmental entity or any other person that alleges that
AGT or any such subsidiary or predecessor is not in compliance, in any respect,
with any Environmental Law or has liability thereunder, except, in each case it
is reasonably unlikely, individually or in the aggregate, to have a Material
Adverse Effect on AGT.
(c) Except as disclosed in Section 4.12(c) of the AGT Disclosure Schedule,
none of the operations or Properties of AGT or any of its subsidiaries or any of
their respective predecessors or assigns is the subject of investigation by any
governmental entity whether U.S., State, local or foreign, respecting (A)
Environmental Laws, (B) Remedial Action or (C) any Environmental Claim arising
from a Release or otherwise of any
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Xxxxxxxxx Xxxxxxxxx or any other substance regulated under any Environmental
Law, which in each case would, individually or in the aggregate, have a Material
Adverse Effect on AGT.
(d) Except as disclosed in Section 4.12(d) of the AGT Disclosure Schedule,
AGT, each of its subsidiaries and any of their respective predecessors have
filed all notices required to be filed under all Environmental Laws reporting
any Release, except where failure to file such notices would not, individually
or in the aggregate, have a Material Adverse Effect on AGT.
(e) Except as disclosed in Section 4.12(e) of the AGT Disclosure Schedule,
or as disclosed in any AGT SEC Report, neither AGT nor any of its subsidiaries
has any contingent liabilities with respect to its business or that of its
predecessors in connection with any Hazardous Substance or Environmental Law
that would, individually or in the aggregate, have a Material Adverse Effect on
AGT.
(f) Except as disclosed in Section 4.12(f) of the AGT Disclosure Schedule,
or as disclosed in any AGT SEC Report, as of the date hereof, underground
storage tanks are not located on or under any Property and there have been no
Releases of Hazardous Substances on, in or under any Property or other real
property for which AGT or any of its subsidiaries would be responsible or
potentially responsible and that would have a Material Adverse Effect on AGT.
(g) Except as disclosed in Section 4.12(g) of the AGT Disclosure Schedule,
or as disclosed in any AGT SEC Report filed with the SEC prior to the date
hereof, neither AGT nor any of its subsidiaries or any of their respective
predecessors is subject to any judicial, administrative or arbitral actions,
suits, proceedings (public or private), written claims or governmental
proceedings alleging the violation of any Environmental Law or Environmental
Permit that is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on AGT.
(h) Except as disclosed in Section 4.12(h) of the AGT Disclosure Schedule,
or as disclosed in any AGT SEC Document filed with the SEC prior to the date
hereof, neither AGT nor any of its subsidiaries or any of their respective
predecessors or assigns, as a result of their respective past and current
operations, has caused or permitted any Hazardous Substances to remain or be
disposed of, either on or under any Property or on any real property not
permitted to accept, store or dispose of such Hazardous Substances, that would,
individually or in the aggregate, have a Material Adverse Effect on AGT.
Section 4.13. Tax Matters. Except as disclosed on Section 4.13 of the AGT
Disclosure Schedule:
(a) AGT and each of its subsidiaries, and each affiliated group (within the
meaning of Section 1504 of the Code) of which AGT or any of its subsidiaries is
or has ever been a member, has (or, by the Closing Date, will have) timely filed
with the appropriate taxing authorities all federal income tax returns and all
other material tax returns and reports required to be filed by it through the
Closing Date. All such tax returns are (or will be) complete and correct in all
material respects. Except to the extent adequately reserved for in accordance
with GAAP, AGT and each of its subsidiaries has (or, by the Closing Date, will
have) paid (or AGT has paid on its subsidiaries' behalf) all taxes due in
respect of the taxable periods covered by such tax returns. The most recent
consolidated financial statements contained in AGT SEC Reports reflect an
adequate reserve in accordance with GAAP for all taxes payable by AGT and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements. AGT has made available to the Company copies of all
income and franchise tax returns filed by AGT and each of its subsidiaries for
their taxable years ended in 1995, 1996 and 1997.
(b) No material deficiencies for any taxes have been proposed, asserted or
assessed against AGT or any of its subsidiaries that have not been fully paid or
adequately provided for in the appropriate financial statements of AGT and its
subsidiaries, no State where AGT or one of its subsidiaries does not file an
income or franchise tax return has asserted in writing during the preceding five
years that such corporation should be so filing, no requests for waivers of the
time to assess any taxes are pending, and no power of attorney with respect to
any taxes has been executed or filed with any taxing authority. No material
issues relating to taxes have been raised in writing by the relevant taxing
authority during any presently pending audit or examination. The federal income
tax returns of AGT and each of its subsidiaries consolidated in such tax returns
have not been reviewed or passed upon by the Internal Revenue Service.
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(c) No material Liens for taxes exist with respect to any assets or
properties of AGT or any of its subsidiaries, except for statutory liens for
taxes not yet due.
(d) None of AGT or any of its subsidiaries is a party to or is bound by any
tax sharing agreement, tax indemnity obligation or similar agreement,
arrangement or practice with respect to taxes (including any advance pricing
agreement, closing agreement or other agreement relating to taxes with any
taxing authority) (other than any such tax sharing agreement among AGT and its
subsidiaries as set forth in Section 4.13(d) of the AGT Disclosure Schedule).
(e) None of AGT or any of its subsidiaries has taken, agreed to take or
will take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(f) Neither AGT nor any of its subsidiaries has made, will make, is
obligated to make or is party to any employment, severance or termination
agreement, other compensation arrangement or AGT Benefit Plan currently in
effect which provides for the making of any payment (whether in cash or property
or the vesting of property) that would not be deductible by reason of Sections
280G or 162(m) of the Code.
(g) AGT and its subsidiaries have complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of taxes.
(h) No federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending or threatened in writing
with regard to any federal income or material state, local or foreign taxes or
tax returns of AGT or its subsidiaries and neither AGT nor any of its
subsidiaries has received a written notice of any pending audit or proceeding.
(i) Neither AGT nor any of its subsidiaries has agreed to or is required to
make any adjustment under Section 481(a) of the Code.
(j) Neither AGT nor any of its subsidiaries has (i) with regard to any
assets or property held or acquired by any of them, filed a consent to the
application of Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by AGT or any of its
subsidiaries, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local or foreign law
or (iii) received or filed any requests for rulings or determinations in respect
of any taxes within the last five years.
(k) No property owned by AGT or any of its subsidiaries (i) is property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is "tax exempt bond financed property" within
the meaning of Section 168(g) of the Code.
(l) AGT and each of its subsidiaries are not currently, have not been
within the last five years and do not anticipate becoming a "United States real
property holding company" within the meaning of Section 897(c) of the Code.
(m) AGT is not a foreign person within the meaning of Section 1445(b)(2) of
the Code.
Section 4.14. Intellectual Property. Except as set forth in Section 4.14
of the AGT Disclosure Schedule, AGT or one of its subsidiaries owns or possesses
(and will own or possess as of the Effective Time) all right, title and interest
in and to, or a valid and enforceable license or other right to use all of the
Intellectual Property (as defined below), and all of the right, benefits and
privileges associated therewith, that is material to the conduct of the business
of AGT and its subsidiaries as currently conducted (and as conducted as of the
Effective Time). To the knowledge of AGT, neither AGT nor any of its
subsidiaries has infringed, misappropriated or otherwise violated any
Intellectual Property of any other person. To the knowledge of AGT, no person is
materially infringing upon any Intellectual Property right of AGT or any of its
subsidiaries.
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Section 4.15. Material Contracts.
(a) AGT has made available to the Company true, correct and complete copies
of all contracts and agreements (and all amendments, modifications and
supplements thereto and all side letters to which AGT is a party affecting the
obligations of any party thereunder) to which AGT or any of its subsidiaries is
a party or by which any of its properties or assets are bound that are material
to the business, properties or assets of AGT and its subsidiaries taken as a
whole, including, without limitation, (I) contracts or agreements with any
supplier or customer, in each case which could result in the payment or receipt
of monies in excess of $2,500,000 in any calendar year period; (II) to the
extent any of the following are, individually or in the aggregate, material to
the business, properties or assets of AGT and its subsidiaries taken as a whole,
all: (i) employment, product design or development, personal services,
consulting, non-competition, severance or indemnification contracts (including,
without limitation, any contract to which AGT or any of its subsidiaries is a
party involving employees of AGT or any of its subsidiaries); (ii) licensing,
merchandising or distribution agreements; (iii) contracts granting a right of
first refusal or first negotiation; (iv) partnership or joint venture
agreements; (v) agreements for the acquisition, sale, lease or other disposition
of material properties or assets of AGT or its subsidiaries or predecessors (by
merger, purchase or sale of assets or stock or otherwise) entered into since
April 16, 1996 and (vi) contracts or agreements with any Governmental Entity and
(III) all commitments and agreements to enter into any of the foregoing items in
(I) or (II) above (collectively, together with any such contracts entered into
in accordance with Section 5.1 hereof, the "AGT Contracts").
(b) Each of the AGT Contracts is valid and enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity), and there is no default under any AGT Contract so listed either by
AGT or, to the knowledge of AGT, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by AGT or, to the knowledge of AGT, any other
party, in any such case in which such default or event would have a Material
Adverse Effect on AGT.
(c) No party to any such AGT Contract has given notice to AGT of or made a
claim against AGT with respect to any breach or default thereunder, in any such
case in which such breach or default would have a Material Adverse Effect on
AGT.
Section 4.16. Labor Matters. Except as set forth in Section 4.16 of the
AGT Disclosure Schedule, neither AGT nor any of its subsidiaries is a party to
or bound by any employment, severance compensation, labor or collective
bargaining agreement pertaining to any current or former directors, senior
executive officers or general managers of AGT or any of its subsidiaries. No
labor organization or group of employees of AGT or any of its subsidiaries has
made a pending written demand for recognition or certification.
Section 4.17. Insurance. Except as set forth in Section 4.17 of the AGT
Disclosure Schedule, each of AGT and its subsidiaries, is, and has been
continuously since April 16, 1996 or as to those subsidiaries acquired by AGT
subsequent to April 16, 1996, since becoming a subsidiary insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
AGT and its subsidiaries during such time period. Except as set forth in Section
4.17 of the AGT Disclosure Schedule, since April 16, 1996 or as to those
subsidiaries acquired by AGT subsequent to April 16, 1996, since becoming a
subsidiary, neither AGT nor any of its subsidiaries has received notice of
cancellation or termination (or a denial of coverage) with respect to any
material insurance policy of AGT or its subsidiaries. The insurance policies of
AGT and its subsidiaries are valid and enforceable policies.
Section 4.18. Customers. Except as set forth in Section 4.18 of the AGT
Disclosure Schedule, no customer from which AGT has received revenues of at
least $2,500,000 in any of the past three fiscal years has: (a) threatened
within the last twelve months to terminate, or to the knowledge of AGT, intends
to cancel or otherwise terminate, the relationship of such person with AGT or
any of its subsidiaries or (b) has during the last twelve months decreased
materially or threatened in writing to decrease or limit materially its usage or
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purchase of the services or products of AGT or any of its subsidiaries, or, to
the knowledge of AGT, intends to modify materially its relationship with AGT or
any of its subsidiaries.
Section 4.19. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person or entity.
Section 4.20. Opinion of Financial Advisor. Xxxxxxx, Xxxxx & Co. (the
"AGT Financial Advisor") has delivered to the AGT Board its opinion, dated the
date of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair to the holders of AGT Common Stock from a financial point
of view, and such opinion has not been withdrawn or modified.
Section 4.21. Brokers. No broker, finder or investment banker (other than
Xxxxxxx, Sachs & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of AGT or Acquisition or any of
their affiliates.
Section 4.22. Ownership of Company Common Stock. AGT does not own any
shares of Company Common Stock.
ARTICLE 5
COVENANTS
Section 5.1. Conduct of Business. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time, each of
the Company and AGT will, and will cause each of their respective subsidiaries
to, conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organizations, seek to keep available the
service of its current officers and employees and seek to preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the Effective Time,
neither the Company, nor AGT, nor any of their respective subsidiaries will,
without the prior written consent of the other, which consent shall not be
unreasonably withheld:
(a) amend its certificate or articles of incorporation or bylaws (or other
similar governing instrument), except as may be necessary to effectuate the
transactions contemplated hereby;
(b) other than in connection with a Business Acquisition (as hereinafter
defined), authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for the
issuance of options by AGT to employees of AGT and its subsidiaries in the
ordinary course of business and the issuance or sale of shares of common stock
by the Company or AGT pursuant to outstanding options granted prior to the date
hereof;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, make any
other actual, constructive or deemed distribution in respect of any shares of
its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities or any
securities of any of its subsidiaries;
(d) other than in connection with a Business Acquisition, adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company, AGT or
any of their respective subsidiaries (other than the Merger);
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(e) other than in connection with a Business Acquisition, alter through
merger, liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any subsidiary;
(f) except as may be required by law or as contemplated by this Agreement,
and other than in connection with a Business Acquisition, enter into, adopt or
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund, award or other arrangement for the benefit
or welfare of any director, officer or employee in any manner, or (except as set
forth in Section 5.1(f) of the Company Disclosure Schedule or Section 5.1(f) of
the AGT Disclosure Schedule and except for normal increases in the ordinary
course of business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to the Company
or AGT, as the case may be, and as required under existing agreements or in the
ordinary course of business generally consistent with past practice) increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock appreciation rights or performance units);
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(h) revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary course of business;
(i) make or revoke any tax election or settle or compromise any tax
liability material to the Company and its subsidiaries or AGT and its
subsidiaries, as the case may be, taken as a whole or change (or make a request
to any taxing authority to change) any material aspect of its method of
accounting for tax purposes;
(j) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its subsidiaries or AGT and its subsidiaries, as the case may
be, or incurred in the ordinary course of business consistent with past
practice;
(k) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby; or
(l) other than in connection with a Business Acquisition, take, propose to
take, or agree in writing or otherwise to take, any of the actions described in
Sections 5.1(a) through 5.1(k) or any action which would make any of the
representations or warranties of the Company or AGT and Acquisition contained in
this Agreement untrue or incorrect in any material respect.
In addition, prior to the Effective Time, neither the Company nor any of
its subsidiaries will, without the prior written consent of AGT, which consent
shall not be unreasonably withheld:
(m) enter into or modify in any material respect (i) any agreement which,
if in effect on the date hereof, would have been a Contract or (ii) any
employment, consulting, non-competition or severance agreement as disclosed in
Section 3.18 of the Company Disclosure Schedule.
In addition, prior to the Effective Time, neither the Company nor its
subsidiaries will, without the prior written consent of AGT:
(n) (i) incur or assume any long-term or short-term debt or issue any debt
securities except for borrowings under existing lines of credit in the ordinary
course of business and in amounts not material to the Company and its
subsidiaries, taken as a whole; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of business
consistent with past practice and in amounts not material to the Company and its
subsidiaries, taken as a whole, and except for obligations of wholly owned
subsidiaries; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned
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subsidiaries of the Company or customary loans or advances to employees in the
ordinary course of business consistent with past practice and in amounts not
material to the maker of such loan or advance); (iv) pledge or otherwise
encumber shares of capital stock of the Company or its subsidiaries; or (v)
mortgage or pledge any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon;
(o) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets which in the aggregate are material to the
Company and its subsidiaries, taken as a whole, enter into any commitment or
transaction outside the ordinary course of business or grant any exclusive
distribution rights;
(p) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $500,000 or, in
the aggregate, are in excess of $2.0 million; provided, that none of the
foregoing shall limit any capital expenditure already included in the Company's
fiscal 1998 capital expenditure budget provided to AGT prior to the date hereof;
or (iv) enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder; or
(q) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(n) through (p).
In addition, prior to the Effective Time, neither AGT nor its subsidiaries
will, other than in conjunction with this Merger, without the prior written
consent of the Company, which consent shall not be unreasonably withheld:
(r) enter into or modify in any material respect any agreement which, if in
effect on the date hereof, would have been an AGT Contract pursuant to Section
4.15.
In addition, prior to the Effective Time, neither AGT nor its subsidiaries
will, other than in conjunction with this Merger, without the prior written
consent of the Company:
(s) (i) incur or assume any long-term or short-term debt or issue any debt
securities except for borrowings under existing lines of credit in the ordinary
course of business, borrowings in conjunction with Sections (t) and (u) of this
Section 5.1; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except in the ordinary course of business consistent with past
practice, and except for obligations of wholly owned subsidiaries; (iii) make
any loans, advances or capital contributions to, or investments in, any other
person (other than to wholly owned subsidiaries of AGT or customary loans or
advances to employees in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (iv)
pledge or otherwise encumber shares of capital stock of AGT or its subsidiaries;
or (v) mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon; provided, however, that
notwithstanding the foregoing provisions of the paragraph (s), AGT shall be
permitted to take any action under this paragraph (s), which without this
proviso would otherwise require the Company's prior written consent, without the
prior written consent of the Company if such actions in the aggregate are in an
amount not in excess of $20,000,000;
(t) acquire, sell, lease or dispose of any assets outside the ordinary
course of business in a transaction or series of transactions for which AGT
would be required to amend the Form S-4 filed with the SEC pursuant to Section
5.2 below had the Form S-4 been filed on the date hereof, enter into any
commitment or transaction outside the ordinary course of business or grant any
exclusive distribution rights;
(u) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein for which AGT would be required to amend
the Form S-4 filed with the SEC pursuant to Section 5.2 below had the Form S-4
been filed on the date hereof; (ii) authorize any new capital expenditure or
expenditures which, in the aggregate, are in excess of $3,000,000; provided,
that none of the foregoing shall limit any capital expenditure already included
in AGT's fiscal 1998 capital expenditure budget provided to the Company prior to
the date hereof; or
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(iii) enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder; or
(v) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(s) through (u).
For purposes hereof, a "Business Acquisition" shall be any acquisition by
AGT or any of its subsidiaries of any assets, capital stock or operating
businesses as may be approved by the Board of Directors of AGT and, if required
by this Section 5.1, by the Company.
Section 5.2. Preparation of S-4 and the Joint Proxy Statement. AGT and
the Company will, as promptly as practicable, jointly prepare and file with the
SEC the Joint Proxy Statement in connection with the vote of the stockholders of
the Company with respect to the Merger and the vote of the stockholders of AGT
with respect to the Share Issuance. AGT will, as promptly as practicable,
prepare and following receipt of notification from the SEC that it has no
further comments on the Joint Proxy Statement, file with the SEC the S-4,
containing the Joint Proxy Statement and forms of proxy, in connection with the
registration under the Securities Act of the shares of AGT Common Stock issuable
upon conversion of the Shares and the other transactions contemplated hereby.
AGT and the Company will, and will cause their accountants and lawyers to, use
all reasonable best efforts to have or cause the S-4 to be declared effective as
promptly as practicable, including, without limitation, causing their
accountants to deliver necessary or required instruments such as opinions,
consents and certificates, and will take any other action required or necessary
to be taken under federal or state securities laws or otherwise in connection
with the registration process. Each of AGT and the Company will use its
reasonable best efforts to cause the Joint Proxy Statement to be mailed to its
stockholders at the earliest practicable date after the effectiveness of the
S-4.
Section 5.3. No Solicitation.
(a) Until the termination of this Agreement, the Company shall not, and
shall not permit any of its subsidiaries, or any of its or its subsidiaries'
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, financial advisor,
attorney, accountant or other representative of the Company or any of its
subsidiaries), to, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, an
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors or
employees or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative of it or any of its
subsidiaries to take any such action; provided, however, that this Section
5.3(a) shall not prohibit the Company from furnishing non-public information
regarding the Company to, or entering into discussions and negotiations with,
any person in response to an unsolicited written Acquisition Proposal submitted
by such person if (i) the Company Board concludes in good faith, after having
received the advice of its financial advisor, that such Acquisition Proposal, if
consummated, could result in a transaction that is more favorable from a
financial point of view to the Company's stockholders than the Merger, including
as part of the Company Board's determination, that, as to any cash consideration
to be paid pursuant to such Acquisition Proposal, the person making the
Acquisition Proposal has all requisite funds on hand or has provided customary
financing commitments for the requisite funds to consummate the Acquisition
Proposal, (ii) not later than 24 hours after receipt of any unsolicited
Acquisition Proposal, the Company gives AGT notice (which notice shall be
provided orally and in writing and shall identify the person making such
Acquisition Proposal and set forth the material terms thereof) of the receipt of
such Acquisition Proposal unless the Company Board determines in good faith,
after having received the advice of its legal counsel, that giving such notice
is inconsistent with the Company Board's fiduciary duties to the Company's
stockholders under applicable law, (iii) prior to furnishing any such non-public
information to such Person, the Company enters into a confidentiality agreement
with terms not materially less favorable to the Company than the Confidentiality
Agreement (as defined in Section 5.6(d)) and (iv) prior to furnishing such
non-public information to such Person, the Company furnishes such non-public
information to AGT to the extent such
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non-public information has not previously been furnished by the Company to AGT.
Notwithstanding anything to the contrary in this Agreement, the Company may give
a copy of this Section 5.3 to any person who inquires about submitting an
unsolicited Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" means any proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving the Company or any of its
subsidiaries: (w) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (x) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20 percent or more
of the assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of related transactions; (y) any tender offer or exchange
offer that if consummated would result in any person beneficially owning more
than 20 percent of the outstanding shares of Company Common Stock or the filing
of a registration statement under the Securities Act in connection therewith; or
(z) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) Except as set forth in this Section 5.3(b), the Company Board shall not
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
AGT, the approval or recommendation of the Merger and this Agreement by the
Company Board, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (iii) cause the Company to enter into any agreement
(including, without limitation, any letter of intent) with respect to any
Acquisition Proposal (any of (i), (ii) or (iii), "Withdraw"); provided, however,
that nothing in this Agreement shall prevent the Company Board from withdrawing,
amending or modifying its recommendation of the Merger and this Agreement if (i)
an unsolicited bona fide written Acquisition Proposal is submitted to the
Company, (ii) the Company Board concludes in good faith, after having received
the advice of its independent financial advisor, that such Acquisition Proposal
would result in a transaction that is more favorable from a financial point of
view to the Company's stockholders than the Merger (a "Superior Proposal") and
(iii) the Company Board concludes in good faith, after consultation with its
legal counsel, that the withdrawal, amendment or modification of such
recommendation in connection with the Superior Proposal is consistent with the
fiduciary obligations of the Company Board to the Company's stockholders under
applicable law. Nothing herein shall prevent the Company Board from recommending
that its stockholders accept an unsolicited tender offer or exchange offer
commenced by a third party with respect to the Company's Common Stock if (u)
such tender offer or exchange offer constitutes an Acquisition Proposal, (v) the
Company Board shall have withdrawn its recommendation in favor of the Merger in
accordance with and as permitted by the preceding sentence, (w) the Company
Board shall have concluded in good faith, after having received the advice of
its financial advisor, that such tender offer or exchange offer is a Superior
Proposal, (x) the Company Board shall have concluded in good faith, after
consultation with legal counsel, that the recommendation in favor of acceptance
of such tender offer or exchange offer is consistent with the fiduciary
obligations of the Company Board to the Company's stockholders under applicable
law, (y) the Company shall have given AGT notice of the Company Board's
intention to Withdraw and (z) AGT does not make within five days of AGT's
receipt of such notice, an offer which the Company Board, after consultation
with its financial advisors, determines is superior to such Superior Proposal.
In addition, if the Company Withdraws, it shall concurrently pay, or cause to be
paid, to AGT the fee required by Section 7.3(a) hereof.
Section 5.4. Letters of the Company's and AGT's Accountants.
(a) The Company shall use all reasonable best efforts to cause to be
delivered to AGT a letter of KPMG Peat Marwick LLP (or its successor firm), the
Company's independent auditors, dated a date within two business days before the
date on which the S-4 shall become effective and addressed to AGT, in form and
substance reasonably satisfactory to AGT and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
(b) AGT shall use all reasonable best efforts to cause to be delivered to
the Company a letter of Deloitte & Touche LLP (or its successor firm), AGT's
independent auditors, dated a date within two business days before the date on
which the S-4 shall become effective and addressed to the Company, in form and
substance reasonably satisfactory to the Company and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4.
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Section 5.5. Meetings. The Company and AGT each shall call a meeting of
its stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and the Merger (with respect to the Company) and the Share
Issuance (with respect to AGT). Subject to Section 5.3(b), the Company agrees
that its obligations pursuant to the first sentence of this Section 5.5 shall
not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal. AGT and the Company
will, through their respective Boards of Directors, recommend to their
respective stockholders approval of this Agreement and the Merger (with respect
to the Company) and the Share Issuance (with respect to AGT), subject to the
right of the Company Board to modify or withdraw its recommendation pursuant to
Section 5.3(b). The Company and AGT shall coordinate and cooperate with respect
to the timing of such meetings and each of the Company and AGT shall use its
best efforts to hold such meeting as soon as practicable after the date hereof.
Section 5.6. Access to Information.
(a) Between the date hereof and the Effective Time, each of the parties
hereto will give the other party hereto and their authorized representatives
reasonable access to all its employees, plants, offices, warehouses and other
facilities and to all its and its subsidiaries' books and records, will permit
the other parties hereto to make such inspections as the other parties may
reasonably require and will cause its officers and those of its subsidiaries to
furnish the other parties with such financial and operating data and other
information with respect its and its subsidiaries' business, properties and
personnel as the other parties may from time to time reasonably request,
provided that no investigation pursuant to this Section 5.6(a) shall affect or
be deemed to modify any of the representations or warranties made by any party
hereto.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to AGT and Acquisition (i) within five business days after the delivery
thereof to management, such monthly financial statements and data as are
regularly prepared for distribution to Company management and (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company's SEC filings, which (in the case of this clause
(ii)), shall be in accordance with the books and records of the Company.
(c) Between the date hereof and the Effective Time, AGT shall furnish to
the Company (i) within five business days after the delivery thereof to
management, such monthly financial statements and data as are regularly prepared
for distribution to AGT management and (ii) at the earliest time they are
available, such quarterly and annual financial statements as are prepared for
AGT's SEC filings, which (in the case of this clause (ii)), shall be in
accordance with the books and records of AGT.
(d) Each of AGT and Acquisition will hold and will cause its consultants
and advisors to hold in confidence all documents and information concerning the
Company and its subsidiaries furnished to AGT or Acquisition in connection with
the transactions contemplated by this Agreement to the extent required by that
certain confidentiality agreement entered into between the Company and AGT dated
November 25, 1997 (the "Confidentiality Agreement").
Section 5.7. Additional Agreements; Reasonable Best Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperation in the preparation and filing of the Joint Proxy Statement and the
S-4, any filings that may be required under the HSR Act, and any amendments to
any thereof; (ii) cooperation in obtaining, prior to the Effective Time, the
approval for quotation on the NASDAQ, effective upon the official notice of
issuance, of the shares of AGT Common Stock into which the Company Common Stock
will be converted pursuant to Article I hereof; (iii) the taking of all action
reasonably necessary, proper or advisable to secure any necessary consents of
all third parties and Governmental Entities, including those relating to
existing debt obligations of the Company, AGT and their respective subsidiaries;
(iv) contesting any legal proceeding relating to the Merger; and (v) the
execution of any additional instruments, including the Certificate of Merger,
necessary to consummate the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement, AGT and Acquisition agree to use all
reasonable efforts to cause the Effective Time to occur as soon as practicable
after the shareholder vote with
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respect to the Merger. In case at any time after the Effective Time any further
action is necessary to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto shall take all such necessary
action.
Section 5.8. Antitrust Reviews. Each party hereto will use all reasonable
efforts (a) to file with the US Department of Justice and US Federal Trade
Commission, as soon as practicable after the date hereof, the Notification and
Report Form under the HSR Act and any supplemental information or material
requested pursuant to the HSR Act, and (b) to comply as soon as practicable
after the date hereof with any other laws of any country and the European Union
under which any consent, authorization, registration, declaration or other
action with respect to the transactions contemplated herein may be required.
Each party hereto shall furnish to the other such information and assistance as
the other may reasonably request in connection with any filing or other act
undertaken in compliance with the HSR Act or other such laws, and shall keep
each other timely apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental Entity
under the HSR Act or other such laws. Each of the Company and AGT shall take any
and all action reasonably necessary to prevent the entry of any order,
preliminary or permanent injunction, or other legal restraint or prohibition
preventing consummation of the Merger or any related transactions contemplated
by this Agreement, and to lift, mitigate or rescind the effect of any litigation
or administrative proceeding adversely affecting this Agreement or any
transactions contemplated herein.
Section 5.9. Public Announcements. Each of AGT, Acquisition and the
Company will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, 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 applicable law or by
obligations pursuant to any agreement with NASDAQ, as determined by AGT,
Acquisition or the Company, as the case may be.
Section 5.10. Indemnification; Directors' and Officers' Insurance.
(a) Indemnification. From and after the Effective Time, AGT shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, a director, officer or employee of the
parties hereto or any subsidiary thereof (each an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, expenses (including
reasonable attorneys' fees and expenses), claims, damages or liabilities or,
subject to the proviso of the next succeeding sentence, amounts paid in
settlement, arising out of actions or omissions occurring at or prior to the
Effective Time and whether asserted or claimed prior to, at or after the
Effective Time that are in whole or in part (i) based on, or arising out of, the
fact that such person is or was a director, officer or employee of such party or
a subsidiary of such party or (ii) based on, arising out of or pertaining to the
transactions contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising before the Effective
Time), (i) AGT shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to AGT,
promptly after statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses reasonably
incurred, in either case to the extent not prohibited by the DGCL and upon
receipt of any affirmation and undertaking required by the DGCL, (ii) AGT will
cooperate in the defense of any such matter and (iii) any determination required
to be made with respect to whether an Indemnified Party's conduct complies with
the standards set forth under the DGCL and AGT's articles of incorporation or
bylaws shall be made by independent counsel mutually acceptable to AGT and the
Indemnified Party; provided, however, that AGT shall not be liable for any
settlement effected without its written consent (which consent shall not be
reasonably withheld). The Indemnified Parties as a group may retain only one law
firm with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions of
any two or more Indemnified Parties.
(b) Insurance. For a period of six years after the Effective Time, AGT
shall cause to be maintained in effect the policies of directors' and officers'
liability insurance maintained by the Company for the benefit of those persons
who are covered by such policies at the Effective Time (or AGT may substitute
therefor policies
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of at least the same coverage with respect to matters occurring prior to the
Effective Time), to the extent that such liability insurance can be maintained
annually at a cost to AGT not greater than 150 percent of the premium for the
current Company directors' and officers' liability insurance; provided that if
such insurance cannot be so maintained or obtained at such costs, AGT shall
maintain or obtain as much of such insurance as can be so maintained or obtained
at a cost equal to 150 percent of the current annual premiums of the Company for
such insurance.
(c) Successors. In the event AGT or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of AGT shall assume the obligations set for in this
Section 5.10.
(d) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification now existing in
favor of the employees, agents, directors or officers of the Company and its
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in the Company's articles of incorporation or bylaws, in
effect on the date thereof or otherwise in effect on the date hereof, shall
survive the Merger and shall continue in full force and effect for a period of
the lesser of six years from the Effective Time and the expiration of the
applicable statute of limitations.
(e) Benefit. The provisions of this Section 5.10 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 5.11. Notification of Certain Matters. The Company shall give
prompt notice to AGT and Acquisition, and AGT and Acquisition shall give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time, (ii) any material failure of
the Company, AGT or Acquisition, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default or
event which, with notice or lapse of time or both, would become a default,
received by it or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any contract or agreement
material to the financial condition, properties, businesses or results of
operations of it and its subsidiaries taken as a whole to which it or any of its
subsidiaries is a party or is subject, (iv) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement, or
(v) the occurrence of any Material Adverse Effect; provided, however, that the
delivery of any notice pursuant to this Section 5.11 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.12. Tax-Free Reorganization Treatment. The Company, Company
Affiliates, AGT and Acquisition shall execute and deliver to X'Xxxxxxxx Graev &
Karabell, LLP, counsel to the Company, and Weil, Gotshal & Xxxxxx LLP, counsel
to AGT, certificates containing customary representations substantially in the
forms agreed to by the parties on or prior to the date hereof (with such changes
as may be reasonably requested by such law firms) at such time or times as may
be reasonably requested by such law firms in connection with their respective
deliveries of opinions, pursuant to Sections 6.2(c) and 6.3(f) hereof, with
respect to the tax-free reorganization treatment of the Merger. Prior to the
Effective Time, none of the Company, Company Affiliates, AGT or Acquisition
shall take or cause to be taken any action which would cause to be untrue (or
fail to take or cause not to be taken any action which would cause to be untrue)
any of the representations in such previously-agreed upon certificates.
Section 5.13. Company Employee Benefits. Through December 31, 1998, the
employees of the Company shall continue to receive employee benefits
substantially comparable in the aggregate to those provided for under Company
Benefit Plans (other than the plans being terminated as set forth on Schedule
5.14 of the Company Disclosure Schedule) provided by the Company on the date
prior to the Effective Time.
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Section 5.14. Certain Payment of Deferred Compensation and
Bonuses. Notwithstanding anything to the contrary herein, the Company shall
take such action as necessary (i) to terminate the Company Benefit Plans as
indicated on Schedule 5.14 of the Company Disclosure Schedule and (ii) make the
payments required to be made or elected by the Company to be made under all
Company Benefit Plans as set forth on Schedule 5.14 of the Company Disclosure
Schedule on or immediately prior to the Effective Time.
Section 5.15. Stock Options. The Company shall take any actions required
under the terms of the Stock Option Plans, including, but not limited to,
obtaining any required written consents of the Option holders, in order to
effectuate the provisions of Section 2.3 hereof.
Section 5.16. SEC Filings. Each of AGT and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 5.17. Guarantee of Performance. AGT hereby guarantees the
performance by Acquisition of its obligations under this Agreement.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of the Company and, the Share Issuance shall have been
approved by the requisite vote of the stockholders of AGT;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority and continued in
effect which prohibits, restrains, enjoins or restricts the consummation of the
Merger;
(c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices or
approvals required with respect to the transactions contemplated hereby shall
have been either filed or received;
(d) the S-4 shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order and AGT
shall have received all state securities laws or "blue sky" permits and
authorizations necessary to issue shares of AGT Common Stock in exchange for the
Shares in the Merger;
(e) the AGT Common Stock issuable in the Merger shall have been authorized
for quotation on the NASDAQ, upon official notice of issuance; and
(f) the number of directors of AGT shall have been increased by two, and
the vacancies created thereby shall have been initially filled by Xxxxx
Xxxxxxxxx, Xx. and a designee to be determined jointly by the Company and AGT.
Section 6.2. Conditions to the Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations and warranties of AGT and Acquisition contained in
this Agreement or in any other document delivered pursuant hereto shall be true
and correct in all material respects at and as of the Effective Time with the
same effect as if made at and as of the Effective Time, and at the Closing AGT
and Acquisition shall have delivered to the Company a certificate to that
effect;
(b) each of the obligations of AGT and Acquisition to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before
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the Effective Time and at the Closing AGT and Acquisition shall have delivered
to the Company a certificate to that effect;
(c) the opinion of X'Xxxxxxxx Graev & Karabell, LLP, dated the Closing Date
and addressed to the Company substantially to the effect that (i) the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code; (ii) each of AGT, Acquisition and the
Company will be a party to the reorganization within the meaning of Section
368(b) of the Code; and (iii) no gain or loss will be recognized by the Company
as a result of the Merger or by a stockholder of the Company as a result of the
Merger with respect to Shares converted into shares of AGT Common Stock (other
than with respect to the Per Share Cash Amount and cash received in lieu of
fractional shares of AGT Common Stock), shall have been delivered and such
opinion shall not have been withdrawn or modified in any material respect. In
rendering such opinion, X'Xxxxxxxx Graev & Karabell, LLP shall have received and
may rely upon the representations contained in the certificates referred to in
Section 5.12; and
(d) other than a change in the price of AGT Common Stock, there shall have
been no events, changes or effects with respect to AGT or its subsidiaries which
would have a Material Adverse Effect on AGT.
Section 6.3. Conditions to the Obligations of AGT and Acquisition. The
respective obligations of AGT and Acquisition to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained in this
Agreement or in any other document delivered pursuant hereto shall be true and
correct in all material respects at and as of the Effective Time with the same
effect as if made at and as of the Effective Time, and at the Closing the
Company shall have delivered to AGT and Acquisition a certificate to that
effect;
(b) each of the obligations of the Company to be performed at or before the
Effective Time pursuant to the terms of this Agreement shall have been duly
performed in all material respects at or before the Effective Time and at the
Closing the Company shall have delivered to AGT and Acquisition a certificate to
that effect;
(c) the Dissenting Shares shall constitute not more than ten percent (10%)
of the Shares;
(d) the Company shall have delivered to AGT and Acquisition all consents or
notices necessary to effect valid assignments of the contracts listed on Section
3.18 of the Company Disclosure Schedule, except for the contracts indicated
thereon with an asterisk, all in form and substance reasonably acceptable to
AGT;
(e) there shall have been no events, changes or effects with respect to the
Company or its subsidiaries which would have a Material Adverse Effect on the
Company;
(f) the opinion of Weil, Gotshal & Xxxxxx LLP, dated the Closing Date and
addressed to AGT, substantially to the effect that (i) the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code; (ii) each of AGT, Acquisition and the Company
will be a party to the reorganization within the meaning of Section 368(b) of
the Code; and (iii) no gain or loss will be recognized by AGT, Acquisition or
the Company as a result of the Merger, shall have been delivered and such
opinion shall not have been withdrawn or modified in any material respect. In
rendering such opinion, Well, Gotshal & Xxxxxx LLP shall have received and may
rely upon the representations contained in the certificates referred to in
Section 5.12;
(g) employment agreements between Black Dot Graphics, Inc., a wholly-owned
subsidiary of the Company, and each of Xxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx,
each dated August 1, 1989, as amended, shall be in full force and effect unless
terminated due to death or disability (as defined therein).
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ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of AGT, Acquisition and the Company;
(b) by AGT and Acquisition or the Company if the Merger has not been
consummated by July 31, 1998, provided that no party may terminate this
Agreement pursuant to this Section 7.1(b) if such party's failure to fulfill any
of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date;
(c) by AGT and Acquisition or the Company if (i) the Company shall have
convened a meeting of its stockholders and failed to obtain the requisite vote
to approve this agreement and the Merger, (ii) AGT shall have convened a meeting
of its stockholders and failed to obtain the requisite vote to approve the Share
Issuance, or (iii) the U.S. Department of Justice or U.S. Federal Trade
Commission shall have obtained or stated its intention in writing to seek an
order, preliminary or permanent injunction, or other legal restraint or
prohibition preventing consummation of the Merger or any related transactions
contemplated by this Agreement.
(d) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of AGT or Acquisition set forth in this
Agreement, or if any representation or warranty of AGT or Acquisition shall have
become untrue, in either case such that the conditions set forth in Section
6.2(a) would be incapable of being satisfied by July 31, 1998 (or as otherwise
extended), (ii) there shall have been a breach by AGT or Acquisition of any of
their respective covenants or agreements hereunder having or constituting a
Material Adverse Effect on AGT or Acquisition, as the case may be, has not cured
such breach within 15 days after notice by the Company thereof, or (iii) the
Company enters into a definitive agreement relating to a Superior Proposal in
accordance with Section 5.3(b), so long as the Company is not then in breach of
its obligations under Section 5.3 (provided that such termination shall not be
effective until payment of the amount required under Section 7.3(a)); or
(e) by AGT and Acquisition if (i) there shall have been a breach of any
representation or warranty on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have become
untrue, in either case such that the conditions set forth in Section 6.3(a)
would be incapable of being satisfied by July 31, 1998 (or as otherwise
extended), (ii) there shall have been a breach by the Company of its covenants
or agreements hereunder having or constituting a Material Adverse Effect on the
Company and the Company has not cured such breach within 15 days after notice by
AGT or Acquisition thereof or (iii) the Company Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger, shall have recommended to the Company's stockholders any Acquisition
Proposal (other than the Merger), shall have failed to call, give notice of,
convene or hold a stockholders' meeting to vote upon the Merger, or shall have
adopted any resolution to effect any of the foregoing, or the Company shall have
entered into a definitive agreement relating to a Superior Proposal.
Section 7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its affiliates, directors, officers or shareholders, other than the
provisions of this Section 7.2 and Sections 5.6(c) and 7.3, and nothing
contained in this Section 7.2 shall relieve any party from liability for any
breach of this Agreement prior to such termination.
Section 7.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant to:
(i) Sections 7.1(e)(i) or 7.1(e)(ii), and, within twelve months
thereafter, the Company enters into an agreement with respect to any
Acquisition Proposal (other than the Merger); or
(ii) Sections 7.1(d)(iii) or 7.1(e)(iii), then AGT and Acquisition
would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate
X-00
00
XXX and Acquisition for such damages, the Company shall pay to AGT the
amount of $13 million as liquidated damages and not a penalty as follows:
(i) in the case of a termination under Sections 7.1(e)(i) or 7.1(e)(ii),
such amount shall be paid on the date the Company enters into an agreement
with respect to any Acquisition Proposal and (ii) in the case of a
termination under Section 7.1(d)(iii) or 7.1(e)(iii), such amount shall be
paid concurrently with and, in the case of Section 7.1(d)(iii), as a
precondition of, such termination.
(b) Upon the termination of this Agreement pursuant to Sections 7.1(c)(i),
7.1(d)(iii), or 7.1(e)(iii), in addition to any amounts that may otherwise be
payable under Section 7.3(a), the Company shall reimburse AGT, Acquisition and
their affiliates for all actual documented out-of-pocket fees and expenses, not
to exceed $3 million, actually incurred by any of them or on their behalf in
connection with the Merger and the consummation of all transactions contemplated
by this Agreement (including, without limitation, fees payable to investment
bankers, counsel to any of the foregoing, and accountants). If AGT or
Acquisition shall submit a request for reimbursement hereunder, AGT or
Acquisition will provide the Company in due course with invoices or other
reasonable evidence of such expenses upon request. The Company shall in any
event pay the amount (not to exceed $3 million) within 10 business days from
when invoices are received by the Company.
(c) Upon the termination of this Agreement pursuant to Section 7.1(c)(ii),
AGT shall reimburse the Company for all actual documented out-of-pocket fees and
expenses, not to exceed $3 million, actually incurred by the Company or on its
behalf in connection with the Merger and the consummation of all transactions
contemplated by this Agreement (including, without limitation, fees payable to
investment bankers, counsel to any of the foregoing, and accountants). If the
Company shall submit a request for reimbursement hereunder, the Company will
provide AGT in due course with invoices or other reasonable evidence of such
expenses upon request. AGT shall in any event pay the amount (not to exceed $3
million) within 10 business days from when invoices are received by AGT.
(d) Except as specifically provided in this Section 7.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby. The cost of printing the S-4 and the Joint Proxy Statement
of filing any required notification under the HSR Act shall be borne equally by
the Company and AGT.
Section 7.4. Amendment. This Agreement may be amended by action taken by
the Company, AGT and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company and stockholders of AGT but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties
hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, AGT and Acquisition shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
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Section 8.2. Entire Agreement; Assignment. This Agreement:
(a) and the Confidentially Agreement constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof; and
(b) shall not be assigned by operation of law or otherwise; provided,
however, that Acquisition may assign any or all of its rights and obligations
under this Agreement to any direct or indirect wholly-owned subsidiary of AGT,
but no such assignment shall relieve Acquisition of its obligations hereunder if
such assignee does not perform such obligations.
Section 8.3. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to AGT or to Acquisition to:
Applied Graphics Technologies, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx/Xxxxx Xxxxxxxx, Xx.
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company to:
Devon Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Xx.
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 8.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law thereof.
Section 8.5. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.6. Interpretive Provisions; Certain Definitions. Whenever used
in this Agreement, "to the Company's knowledge" or "to the knowledge of the
Company" shall mean the actual knowledge of those persons who are listed on
Exhibit 1 and "to AGT's knowledge" or "to the knowledge of AGT" shall mean the
actual knowledge of the Persons listed on Exhibit 2. The inclusion of any
information on any schedule to this Agreement shall not be deemed to be an
admission or acknowledgement by the Company, in and of itself, that
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such information is required to be listed on such Schedule or is material to or
outside the ordinary course of the business of the Company. Nothing contained
herein or in any of the exhibits or schedules hereto shall constitute an
admission of liability or an admission against the Company's interest.
Section 8.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 5.10 and 8.2 nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
Section 8.8. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
Section 8.9. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and, shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
Section 8.10. Brokers. Except as otherwise provided in Section 7.3, the
Company agrees to indemnify and hold harmless AGT and Acquisition, and AGT and
Acquisition agree to indemnify and hold harmless the Company, from and against
any and all liability to which AGT and Acquisition, on the one hand, or the
Company, on the other hand, may be subjected by reason of any brokers, finder's
or similar fees or expenses with respect to the transactions contemplated by
this Agreement to the extent such similar fees and expenses are attributable to
any action undertaken by or on behalf of the Company, or AGT or Acquisition, as
the case may be.
Section 8.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
APPLIED GRAPHICS TECHNOLOGIES, INC.
By: /s/ XXXX XXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
AGT ACQUISITION CORP.
By: /s/ XXXX XXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
DEVON GROUP, INC.
By: /s/ XXXXX XXXXXXXXX, XX.
--------------------------------------
Name: Xxxxx Xxxxxxxxx, Xx.
Title: Chief Executive Officer
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Exhibit 1
Xxxxx Xxxxxxxxx, Xx.
Xxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
44
Exhibit 2
Xxxx Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxxxxx, Xx.
