AGREEMENT AND PLAN OF MERGER
Dated as of September 10, 1996
by and among
Corporate Express, Inc.,
Bevo Acquisition Corp., Inc.
and
United TransNet, Inc.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 10, 1996 (the
"Agreement"), by and among Corporate Express, Inc., a Colorado corporation
("Parent"), Bevo Acquisition Corp., Inc., a Delaware corporation and a wholly-
owned subsidiary of Parent ("Subsidiary"), and United TransNet, Inc., a Delaware
corporation (the "Company");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company have determined
that the merger of Subsidiary with and into the Company(the "Merger") is
consistent with and in furtherance of the long-term business strategy of Parent
and the Company and is fair to, and in the best interests of, Parent and the
Company and their respective stockholders; and
WHEREAS, Parent, Subsidiary and the Company intend the Merger to qualify as
a tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to be treated as a pooling-
of-interests under Accounting Principles Board Opinion Xx. 00 ("XXX 00");
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
The Merger
SECTION 1.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2) in accordance
with the Delaware General Corporation Law (the "DGCL"), Subsidiary shall be
merged with and into the Company and the separate existence of Subsidiary shall
thereupon cease. The Company shall be the surviving corporation in the Merger
and is hereinafter sometimes referred to as the "Surviving Corporation."
SECTION 1.2. Effective Time of the Merger. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in a
Certificate of Merger, in a form mutually acceptable to Parent and the Company,
to be filed with the Secretary of State of the State of Delaware in accordance
with the DGCL (the "Merger Filing"). The Merger Filing shall be
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made simultaneously with or as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.5.
ARTICLE II
The Surviving and Parent Corporations
SECTION 2.1. Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended and restated at and
as of the Effective Time to read as did the Certificate of Incorporation of the
Subsidiary immediately prior to the Effective Time (except that the name of the
Surviving Corporation shall remain unchanged).
SECTION 2.2. By-Laws. The By-laws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to read as did the By-laws
of the Subsidiary immediately prior to the Effective Time (except that the name
of the Surviving Corporation shall remain unchanged).
SECTION 2.3. Directors and Officers. The directors and officers of the
Surviving Corporation shall be as designated in Schedule 2.3, and such directors
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and officers shall serve in accordance with the By-laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
ARTICLE III
Conversion of Shares
SECTION 3.1. Conversion of Company Shares and Subsidiary Shares in the
Merger. At the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any shares of capital stock of the Company:
(a) as consideration to be issued to each such holder in the Merger (the
"Merger Consideration"), each share of Common Stock, par value $.001 per share,
of the Company (the "Company Common Stock"), shall be converted into the right
to receive one share of the common stock, par value $.0002 per share, of Parent
("Parent Common Stock") multiplied by the Exchange Ratio (as defined below);
(b) each share of capital stock of the Company, if any, owned by Parent or
any subsidiary of Parent or held in treasury by the Company or any subsidiary of
the Company immediately prior to the Effective Time shall be canceled and shall
cease to exist from and after the Effective Time;
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(c) subject to and as more fully provided in Section 7.9, each unexpired
option to purchase Company Common Stock ("Company Options") that is outstanding
at the Effective Time shall automatically and without any action on the part of
the holder thereof be assumed by Parent and converted into an option to purchase
a number of shares of Parent Common Stock equal to the number of shares of
Company Common Stock which is entitled to be purchased under such Company
Options multiplied by the Exchange Ratio, at a price per share of Parent Common
Stock equal to the per share exercise price of such Company Options divided by
the Exchange Ratio (the "Exchanged Options"). Parent shall (i) reserve for
issuance the number of shares of Parent Common Stock that will become issuable
upon the exercise of the Exchanged Options and (ii) at the Effective Time, issue
to each holder of an Exchanged Option a document evidencing Parent's assumption
of the Company's obligations under the Company Options. The Exchanged Options
shall have the same terms and conditions as the Company Options;
(d) each issued and outstanding share of common stock, par value $.001 per
share, of Subsidiary ("Subsidiary Common Stock") shall be converted into one
share of common stock, par value $.01 per share, of the Surviving Corporation;
and
(e) no share of Company Common Stock shall be deemed to be outstanding or
to have any rights other than those set forth in this Section 3.1 after the
Effective Time.
SECTION 3.2. Exchange Ratio; Adjustments to Parent Common Stock.
(a) The "Exchange Ratio" shall be forty-five one hundredths (.45) of one
share of Parent Common Stock for each one (1) share of Company Common Stock.
(b) If, prior to Closing (as defined in Section 3.5 below), Parent
(i) pays a dividend or makes a distribution on any class of
Parent Common Stock in shares of any class of Parent Common Stock;
(ii) subdivides its outstanding shares of any class of Parent
Common Stock into a greater number of shares;
(iii) combines its outstanding shares of any class of Parent
Common Stock into a smaller number of shares;
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(iv) pays a dividend or makes a distribution on any class of
Parent Common Stock in shares of its capital stock other than Parent Common
Stock;
(v) issues by reclassification of any class of Parent Common
Stock any shares of its capital stock; or
(vi) takes any other corporate action the effect of which is to
change the number of shares of Parent Common Stock outstanding;
then the Exchange Ratio in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any shares of Company Common
Stock or any Company Options thereafter shall receive the aggregate number and
kind of shares of Parent Common Stock (and other capital stock, as the case may
be) which it would have owned immediately following such action if such shares
of Company Common Stock or such Company Option had been converted to Parent
Common Stock or Parent Options, as the case may be, immediately prior to such
action. The adjustment in the Exchange Ratio provided for in this Section
3.2(b) shall become effective immediately after the record date in the case of a
dividend or distribution and immediately after the effective date in the case of
a subdivision, combination, reclassification or other corporate action.
SECTION 3.3. Exchange of Certificates. (a) From and after the
Effective Time, each holder of an outstanding certificate which immediately
prior to the Effective Time represented shares of Company Common Stock shall be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent reasonably satisfactory to Parent and the Company (the "Exchange Agent"),
a certificate or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section 3.1(a).
Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends (or
other distributions) shall be paid with respect to any shares represented by
such certificates and no payment for fractional shares shall be made and (ii)
without regard to when such certificates representing shares of Company Common
Stock are surrendered for exchange as provided herein, no interest shall be paid
on any dividends (or other distributions) or any payment for fractional shares.
Upon surrender of a certificate which immediately prior to the Effective Time
represented shares of Company Common Stock, there shall be paid to the holder of
such certificate the amount of any dividends (or other distributions) which
theretofore became payable, but which were not paid by reason of the foregoing,
with respect to the number of whole shares of Parent Common Stock
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represented by the certificate or certificates issued upon such surrender.
(b) If any certificate for shares of Parent Common Stock is to be
issued in a name other than that in which the certificate for shares of Company
Common Stock surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such exchange shall pay
any applicable transfer or other taxes required by reason of such issuance.
(c) No later than the Closing (as hereinafter defined), Parent shall
deliver to the Exchange Agent the certificates representing shares of Parent
Common Stock, registered under the Registration Statement as defined in Section
4.9, required to effect the exchanges referred to in paragraph (a) above and
cash for payment of any fractional shares referred to in Section 3.4. The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration to be issued and paid pursuant to Section (a) above and Section
3.4 to holders of Company Common Stock upon transmittal of Certificates for
exchange as provided in paragraph (d) below. Any interest, dividends or other
income earned on the investment of cash held by the Exchange Agent shall be for
the account of Parent.
(d) Promptly after the the special meeting of the Company's
stockholders at which this Agreement and the Merger will be considered, and
assuming approval thereof, the Exchange Agent shall mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time represented outstanding shares of Company Common Stock (the "Company
Certificates") (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon actual delivery of the Company Certificates to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the Company
Certificates in exchange for certificates representing shares of Parent Common
Stock. Upon surrender of Company Certificates for cancellation to the Exchange
Agent, together with a duly executed letter of transmittal and such other
documents as the Exchange Agent shall reasonably require, the holder of such
Company Certificates shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares of Company Common Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the provisions
of Section 3.1(a), and the Company Certificates so surrendered shall be
canceled. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Company Common Stock for
any shares of
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Parent Common Stock or dividends or distributions thereon delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after the
Effective Date, the Exchange Agent shall deliver to Parent all cash,
certificates (including any Parent Common Stock) and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws) receive
in exchange therefor the Parent Common Stock, without any interest thereon.
Notwithstanding the foregoing, none of the Exchange Agent, Parent, Subsidiary,
the Company or the Surviving Corporation shall be liable to a holder of Company
Common Stock for any Parent Common Stock delivered to a public official pursuant
to applicable abandoned property, escheat and similar laws.
(f) In the event any Company Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the Parent Common Stock deliverable in respect thereof determined in
accordance with this Article III. When authorizing such payment in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificate to give the
Surviving Corporation such indemnity as it may reasonably direct as protection
against any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
SECTION 3.4. No Fractional Securities. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional shares of
Parent Common Stock shall be issued in the Merger and no Parent Common Stock
dividend, stock split or interest shall relate to any fractional security, and
such fractional interests shall not entitle the owner thereof to vote or to any
other rights of a security holder. In lieu of any such fractional shares, each
holder of Company Common Stock who would otherwise have been entitled to receive
a fraction of a share of Parent Common Stock upon surrender of Company
Certificates for exchange pursuant to this Article III shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the closing price per share of Parent Common Stock on the Nasdaq National
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Market System (the "NASDAQ"), as reported by the Wall Street Journal, on the
last trading day immediately preceding the Effective Time.
SECTION 3.5. Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a location
mutually agreeable to Parent and the Company on the fifth business day
immediately following the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived (but in any case no earlier than November 4,
1996), or at such other time and place as Parent and the Company shall agree
(the date on which the Closing occurs is referred to in this Agreement as the
"Closing Date").
SECTION 3.6. Closing of the Company's Transfer Books. At and after
the Effective Time, holders of Company Certificates shall cease to have any
rights as stockholders of the Company, except for the right to receive shares of
Parent Common Stock pursuant to Section 3.3 and the right to receive cash for
payment of fractional shares pursuant to Section 3.4. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time shall thereafter be made. If, after the Effective Time, subject
to the terms and conditions of this Agreement, Company Certificates formerly
representing Company Common Stock are presented to the Surviving Corporation,
they shall be canceled and exchanged for Parent Common Stock in accordance with
this Article III.
ARTICLE IV
Representations and Warranties
of Parent and Subsidiary
Parent and Subsidiary each represent and warrant to the Company as
follows:
SECTION 4.1. Organization and Qualification. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its
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subsidiaries, taken as a whole (a "Parent Material Adverse Effect"). True,
accurate and complete copies of each of Parent's and Subsidiary's Certificates
of Incorporation and By-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been (or, in the case of
Subsidiary, will promptly be) delivered to the Company.
SECTION 4.2. Capitalization.
(a) The authorized capital stock of Parent consists of (i)
100,000,000 shares of Parent Common Stock, of which 70,351,327 shares were
outstanding as of August 29, 1996, (ii) 3,000,000 shares of non-voting common
stock, par value $.0001 per share, none of which was outstanding as of July 19,
1996, and (ii) 25,000,000 shares of preferred stock, par value $.0001 per share,
none of which was issued and outstanding as of July 8, 1996. All of the issued
and outstanding shares of Parent Common Stock are validly issued and are fully
paid, nonassessable and free of preemptive rights.
(b) The authorized capital stock of Subsidiary consists of 1,000
shares of Subsidiary Common Stock, of which 100 shares are issued and
outstanding, which shares are owned beneficially and of record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.5) or as set forth on Schedule 4.2 attached hereto, as of the date
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hereof, there are (i) no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other anti-
takeover agreement, obligating Parent or any subsidiary of Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Parent or obligating Parent or any subsidiary of Parent to
grant, extend or enter into any such agreement or commitment, and (ii) no voting
trusts, proxies or other agreements or understandings to which Parent or any
subsidiary of Parent is a party or is bound with respect to the voting of any
shares of capital stock of Parent. The shares of Parent Common Stock issued to
stockholders of the Company in the Merger will be at the Effective Time duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
SECTION 4.3. Subsidiaries. Each direct and indirect corporate
subsidiary of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on
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its business as it is now being conducted except where any failure would not
have a Parent Material Adverse Effect. Each subsidiary of Parent is qualified
to do business, and is in good standing, in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not, when taken together with all
such other failures, have a Parent Material Adverse Effect. All of the
outstanding shares of capital stock of each corporate subsidiary of Parent are
validly issued, fully paid, nonassessable and free of preemptive rights, and are
owned directly or indirectly by Parent, free and clear of any liens, claims or
encumbrances except that such shares are pledged to secure Parent's credit
facilities and except as set forth on Schedule 4.3. There are no subscriptions,
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options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights with respect to any
shares of capital stock of any corporate subsidiary of Parent, including any
right of conversion or exchange under any outstanding security, instrument or
agreement. As used in this Agreement, the term "subsidiary" shall mean, when
used with reference to any person or entity, any corporation, partnership, joint
venture or other entity which such person or entity, directly or indirectly,
controls or of which such person or entity (either acting alone or together with
its other subsidiaries) owns, directly or indirectly, 50% or more of the stock
or other voting interests, the holders of which are entitled to vote for the
election of a majority of the board of directors or any similar governing body
of such corporation, partnership, joint venture or other entity.
SECTION 4.4. Authority; Non-Contravention; Approvals.
(a) Parent and Subsidiary each have full corporate power and
authority to enter into this Agreement and, subject to the Parent Required
Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. This Agreement has been approved by the
Boards of Directors of Parent and Subsidiary and no other corporate proceedings
on the part of Parent or Subsidiary are necessary to authorize the execution and
delivery of this Agreement or the consummation by Parent and Subsidiary of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Subsidiary, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and legally
binding agreement of each of Parent and Subsidiary enforceable against each of
them in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of
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creditors' rights generally and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by each of Parent
and Subsidiary do not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective charters or by-laws of Parent or any of its
subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to Parent or any of its subsidiaries or any of their
respective properties or assets or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of its
subsidiaries is now a party or by which Parent or any of its subsidiaries or any
of their respective properties or assets may be bound or affected. The
consummation by Parent and Subsidiary of the transactions contemplated hereby
will not result in any violation, conflict, breach, termination, acceleration or
creation of liens under any of the terms, conditions or provisions described in
clauses (i) through (iii) of the preceding sentence, subject (x) in the case of
the terms, conditions or provisions described in clause (ii) above, to obtaining
(prior to the Effective Time) the Parent Required Statutory Approvals (as
defined in Section 4.4(c)) and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Effective
Time) consents required from commercial lenders, lessors or other third parties.
Excluded from the foregoing sentences of this paragraph (b), insofar as they
apply to the terms, conditions or provisions described in clauses (ii) and (iii)
of the first sentence of this paragraph (b), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
Parent Material Adverse Effect.
(c) Except for (i) the filings by Parent and the Company required by
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in
Section 4.9) with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act of 1933, as amended (the "Securities Act"), and the declaration
of the effectiveness
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thereof by the SEC and filings with various state blue sky authorities, (iii)
the making of the Merger Filing with the Secretary of State of the State of
Delaware in connection with the Merger, (iv) any required filing with the
Interstate Commerce Commission ("ICC") or the Department of Transportation
("DOT") and (v) any required filings or approvals under the Interstate Commerce
Act or filings with or approvals from the DOT, the Federal Communications
Commission, applicable state environmental authorities, public service
commissions and public utility commissions (the filings and approvals referred
to in clauses (i) through (v) are collectively referred to as the "Parent
Required Statutory Approvals"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and delivery of this
Agreement by Parent or Subsidiary or the consummation by Parent or Subsidiary of
the transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a Parent
Material Adverse Effect.
SECTION 4.5. Reports and Financial Statements. Since September 23,
1994, Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. Parent has
previously delivered to the Company copies of its (a) Annual Reports on Form 10-
K for the fiscal years ended February 25, 1995 and March 2, 1996, as filed with
the SEC, (b) proxy and information statements relating to (i) all meetings of
its stockholders (whether annual or special) and (ii) actions by written consent
in lieu of a stockholders' meeting from September 23, 1994 until the date
hereof, and (c) all other reports, including quarterly reports, or registration
statements filed by Parent with the SEC since September 23, 1994 (other than
registration statements filed on Form S-3/S-8) (the documents referred to in
clauses (a), (b) and (c) are collectively referred to as the "Parent SEC
Reports"). As of their respective dates, the Parent SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim consolidated
financial statements of Parent included in such reports (collectively, the
"Parent Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a
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consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of Parent and its subsidiaries as of
the dates thereof and the results of their 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 and audit adjustments and any
other adjustments described therein.
SECTION 4.6. Absence of Undisclosed Liabilities. Except as
disclosed in the Parent SEC Reports or with respect to acquisitions or potential
transactions or commitments heretofore disclosed to the Company, neither Parent
nor any of its subsidiaries had at May 31, 1996, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except: (a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the Parent Financial Statements or
reflected in the notes thereto or (ii) which were incurred after May 31, 1996
and were incurred in the ordinary course of business and consistent with past
practices, (b) liabilities, obligations or contingencies which (i) would not, in
the aggregate, have a Parent Material Adverse Effect, or (ii) have been
discharged or paid in full prior to the date hereof, and (c) liabilities and
obligations which are of a nature not required to be accrued or reserved against
in the consolidated financial statements of Parent and its subsidiaries, or
reflected in the notes thereto, prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the
ordinary course of business.
SECTION 4.7. Absence of Certain Changes or Events. Since the date
of the most recent Parent SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of Parent and its subsidiaries,
taken as a whole, including as a result of any change in capital structure,
employee compensation arrangement (including severance rights and benefit
plans), accounting method or applicable law.
SECTION 4.8. Litigation. Except as disclosed in the Parent SEC
Reports or in Schedule 4.8 attached hereto, there are no claims, suits, actions
------------
or proceedings pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seek to restrain or enjoin the consummation of the Merger or
which could reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to cause a Parent Material Adverse Effect.
Except as set forth in the Parent SEC Reports or in Schedule 4.8 attached
------------
hereto, neither Parent nor any of its subsidiaries is subject to any
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judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any Parent Material Adverse Effect.
SECTION 4.9. Registration Statement and Proxy Statement. None of
the information to be supplied by Parent or its subsidiaries for inclusion in
(a) the Registration Statement on Form S-4 to be filed under the Securities Act
with the SEC by Parent in connection with the Merger for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger (the
"Registration Statement") or (b) the proxy statement to be distributed in
connection with the Company's meeting of its stockholders to vote upon this
Agreement and the transactions contemplated hereby (the "Proxy Statement" and,
together with the prospectus included in the Registration Statement, the "Joint
Proxy Statement/Prospectus") will, in the case of the Proxy Statement or any
amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the meeting of stockholders of the Company to be held in connection with the
transactions contemplated by this Agreement, or, in the case of the Registration
Statement, as amended or supplemented, at the time it becomes effective, at the
time of such meeting of the stockholders of the Company and for so long as it
remains effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Joint Proxy Statement/Prospectus will, as of its
effective date, comply as to form in all material respects with all applicable
laws, including the provisions of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, except that no representation
or covenant is made by Parent or Subsidiary with respect to information in
writing supplied or to be supplied by the Company for inclusion therein.
SECTION 4.10. No Violation of Law. Except as disclosed in the Parent
SEC Reports, neither Parent nor any of its subsidiaries is in violation of, or
has been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect.
Except as disclosed in the Parent SEC Reports, as of the date of this Agreement,
to the knowledge of Parent, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory
14
body or authority indicated an intention to conduct the same, other than, in
each case, those the outcome of which, as far as reasonably can be foreseen,
will not have a Parent Material Adverse Effect. Parent and its subsidiaries
have all permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct their
businesses as presently conducted (collectively, the "Parent Permits"), except
for permits, licenses, franchises, variances, exemptions, orders, and other
governmental authorizations, consents and approvals the absence of which, alone
or in the aggregate, would not have a Parent Material Adverse Effect. Parent
and its subsidiaries are not in violation of the terms of any Parent Permit,
except for delays in filing reports or violations which, alone or in the
aggregate, would not have a Parent Material Adverse Effect.
SECTION 4.11. Compliance with Agreements. Except as disclosed in the
Parent SEC Reports, Parent and each of its subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under (a) the respective charters, by-
laws or other similar organizational instruments of Parent or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which Parent or any of its subsidiaries is a party or by which any of them is
bound or to which any of their property is subject, which breaches, violations
and defaults, in the case of clause (b) of this Section 4.11, would have, in the
aggregate, a Parent Material Adverse Effect.
SECTION 4.12. Taxes.
(a) Parent and its subsidiaries have (i) duly filed with the
appropriate governmental authorities all Tax Returns (as defined in Section
4.12(c)) required to be filed by them for all periods ending on or prior to the
Effective Time, other than those Tax Returns the failure of which to file would
not have a Parent Material Adverse Effect, and such Tax Returns are true,
correct and complete in all material respects and (ii) duly paid in full or made
adequate provision for the payment of all Taxes (as defined in Section 4.12(b))
for all periods ending at or prior to the Effective Time. The liabilities and
reserves for Taxes reflected in the Parent balance sheet included in the latest
Parent SEC Report are adequate to cover all Taxes for all periods ending at or
prior to the Effective Time and there are no material liens for Taxes upon any
property or assets of Parent or any subsidiary thereof, except for liens for
Taxes not yet due. There are no unresolved issues of law or fact arising out of
a notice of deficiency, proposed deficiency or assessment from the
15
Internal Revenue Service (the "IRS") or any other governmental taxing authority
with respect to Taxes of the Parent or any of its subsidiaries which, if decided
adversely, singly or in the aggregate, would have a Parent Material Adverse
Effect. Neither Parent nor any of its subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes with any entity that is not,
directly or indirectly, a wholly-owned corporate subsidiary of Parent other than
agreements disclosed in Schedule 4.12 the consequences of which are fully and
-------------
adequately reserved for in the Parent Financial Statements. Neither Parent nor
any of its corporate subsidiaries has, with regard to any assets or property
held, acquired or to be acquired by any of them, filed a consent to the
application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, including, without limitation, income, gross receipts, excise, property,
sales, withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees and charges,
windfall profits, severance, customs, import, export, employment or similar
taxes, charges, fees, levies or other assessments imposed by the United States,
or any state, local or foreign government or subdivision or agency thereof,
whether computed on a separate, consolidated, unitary, combined or any other
basis, and such term shall include any interest, fines, penalties or additional
amounts and any interest in respect of any additions, fines or penalties
attributable or imposed or with respect to any such taxes, charges, fees, levies
or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
any return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.
SECTION 4.13. Employee Benefit Plans; ERISA. (a) Except as set forth
in the Parent SEC Reports, at the date hereof, Parent and its subsidiaries do
not maintain or contribute to any material employee benefit plans, programs,
arrangements or practices (such plans, programs, arrangements or practices of
Parent and its subsidiaries being referred to as the "Parent Plans"), including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
similar material arrangements for the provision of benefits (excluding any
"Multi-employer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the Code).
Schedule 4.13 attached hereto lists all Multi-employer Plans and Multiple
-------------
Employer Plans which any of Parent or its subsidiaries maintains or to which any
of them makes contributions. Neither Parent nor its subsidiaries has any
16
obligation to create any additional such plan or to amend any such plan so as to
increase benefits thereunder, except as required under the terms of the Parent
Plans, under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as disclosed in the Parent SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Parent Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a Parent Material Adverse Effect, (ii) except for premiums
due, there is no outstanding material liability, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of the Parent Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Parent Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Parent Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Parent Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Parent Plans which is subject to Title IV of ERISA did not, as
of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if any,
disclosed in the Parent SEC Reports as of March 2, 1996, based upon reasonable
actuarial assumptions currently utilized for such Parent Plan, (vi) each of the
Parent Plans has been operated and administered in all material respects in
accordance with applicable laws during the period of time covered by the
applicable statute of limitations, (vii) each of the Parent Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified and such determination has not
been modified, revoked or limited by failure to satisfy any condition thereof or
by a subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Parent Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to Multi-
employer Plans, neither Parent nor any of its subsidiaries has made or suffered
a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the best
knowledge of Parent and its subsidiaries, no event has occurred or is expected
to occur which presents a material risk of a complete withdrawal or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the best knowledge
of Parent and its
17
subsidiaries, there are no material pending, threatened or anticipated claims
involving any of the Parent Plans other than claims for benefits in the ordinary
course, and (x) Parent and its subsidiaries have no current material liability,
whether measured alone or in the aggregate, for plan termination or complete
withdrawal or partial withdrawal under Title IV of ERISA based on any plan to
which any entity that would be deemed one employer with Parent and its
subsidiaries under Section 4001 of ERISA or Section 414 of the Code contributed
during the period of time covered by the applicable statute of limitations (a
"Parent Controlled Group Plan"), and Parent and its subsidiaries do not
reasonably anticipate that any such liability will be asserted against Parent or
any of its subsidiaries. None of the Parent Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code).
(c) The Parent SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions and
all severance agreements with executive officers.
SECTION 4.14. Labor Controversies. Except as set forth in the Parent
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of Parent, threatened between Parent or its subsidiaries and any
representatives of any of their employees, (b) to the knowledge of Parent, there
are no material organizational efforts presently being made involving any of the
presently unorganized employees of Parent and its subsidiaries, (c) Parent and
its subsidiaries have, to the knowledge of Parent, complied in all material
respects with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes, and (d) no
person has, to the knowledge of Parent, asserted that Parent or any of its
subsidiaries is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing, except for
such controversies, organizational efforts, non-compliance and liabilities
which, singly or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 4.15. Environmental Matters. (a) Except as set forth in the
Parent SEC Reports or in Schedule 4.15, (i) Parent and its subsidiaries have
-------------
conducted their respective businesses in compliance with all applicable
Environmental Laws, including, without limitation, having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (ii) none of the properties owned,
leased or operated by Parent or any of its subsidiaries contains any Hazardous
Substance in amounts
18
exceeding the levels permitted by, or which otherwise create liability under,
applicable Environmental Laws, (iii) neither Parent nor any of its subsidiaries
has received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that Parent or any of its subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation of their
businesses, or any of the properties owned, leased or operated by Parent or any
of its subsidiaries (iv) there are no civil, criminal or administrative actions,
suits, demands, claims, hearings, investigations or proceedings pending or
threatened, against Parent or any of its subsidiaries relating to any violation,
or alleged violation, of or any liability or alleged liability, under any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by Parent or any of its subsidiaries concerning the release of any Hazardous
Substance or the threatened or actual violation of any Environmental Law, (vi)
no Hazardous Substance has been disposed of or released at, from or onto any
properties owned, leased or operated by Parent or any of its subsidiaries during
the time such properties were owned, leased or operated by Parent or any of its
subsidiaries or to the best knowledge of Parent and its subsidiaries at any
other time or at any other facility or site to which Hazardous Substances from
or generated by Parent or any of its subsidiaries have been taken at any time in
the past, (vii) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses regarding compliance or noncompliance
with any applicable Environmental Law conducted by or which are in the
possession of Parent or its subsidiaries relating to the activities of or
properties owned, leased or operated by Parent or its subsidiaries which have
not been delivered to the Company prior to the date hereof, (viii) there are no
underground storage tanks on, in or under any properties owned, leased or
operated by Parent and any of its subsidiaries and no underground storage tanks
have been closed or removed from any of such properties during the time such
properties were owned, leased or operated by Parent or any of its subsidiaries,
or, to the best knowledge of Parent and its subsidiaries, at any other time (ix)
there is no friable asbestos or asbestos containing material present in any of
the properties owned by Parent and its subsidiaries, and no asbestos has been
removed from any of such properties during the time such properties were owned,
leased or operated by Parent or any of its subsidiaries, and (x) neither Parent,
its subsidiaries nor any of their respective properties are subject to any
material liabilities or expenditures (fixed or contingent) relating to any suit,
settlement, court order, administrative order, regulatory requirement, judgment
or claim asserted or arising under any Environmental Law, except for violations
of the foregoing clauses (i) through (x) that, singly or in the
19
aggregate, would not reasonably be expected to have a Parent Material Adverse
Effect.
(b) As used herein, "Environmental Law" means any Federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental entity
relating to (x) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource) or to human health or safety or (y) the exposure to,
or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as in effect on the Closing Date. The
term Environmental Law includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act, the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by any
government authority pursuant to any Environmental Law including, without
limitation, any toxic waste, hazardous substance, toxic substance, hazardous
waste, special waste or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos or asbestos containing material, urea
formaldehyde foam insulation, lead or polychlorinated biphenyls.
SECTION 4.16. Title to Assets. Parent and each of its subsidiaries
has good and marketable title in fee simple to all its real property and good
title to all its leasehold interests and other properties as reflected in the
most recent balance sheet included in the Parent Financial Statements, except
for
20
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Parent's business
operations (in the manner presently carried on by the Parent), or (iii) as
disclosed in the Parent SEC Reports, and except for such matters which, singly
or in the aggregate, could not reasonably be expected to have a Parent Material
Adverse Effect. All leases under which Parent leases any real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than defaults under such leases which in the aggregate will not
have a Parent Material Adverse Effect.
SECTION 4.17. Trademarks and Intellectual Property Compliance.
Parent and its subsidiaries own or have the right to use, without any material
payment to any other party, all of their patents, trademarks (registered or
unregistered), trade names, service marks, copyrights and applications
("Intellectual Property Rights") and the consummation of the transactions
contemplated hereby will not alter or impair such rights in any material
respect. To the best knowledge of Parent, no claims are pending by any person
with respect to the ownership, validity, enforceability or use of any such
Intellectual Property Rights challenging or questioning the validity or
effectiveness of any of the foregoing which claims could reasonably be expected
to have a Parent Material Adverse Effect.
SECTION 4.18. Material Agreements. Parent and Subsidiary have no
material agreements other than those filed as exhibits to Parent SEC Reports or
which will be filed with the Registration Statement, copies of which (to the
extent such agreements exist on and as of the date hereof) have been delivered
to the Company, or which will be delivered to the Company promptly after they
become available.
SECTION 4.19. Pooling Matters. To the Parent's knowledge and based
upon consultation with its independent accountants, neither the Parent nor any
of its affiliates has taken or agreed to take any action that would affect the
ability of Parent to account for the Merger as a pooling of interests.
SECTION 4.20. Insurance. Except to the extent there would be no
Parent Material Adverse Effect, all of Parent's and
21
its subsidiaries' liability, theft, life, health, fire, title, worker's
compensation and other forms of insurance, surety bonds and umbrella policies,
insuring Parent and its subsidiaries and their directors, officers, employees,
independent contractors, properties, assets and business, are valid and in full
force and effect and without any premium past due or pending notice of
cancellation, are, in the reasonable judgment of Parent, adequate for the
business of Parent and its subsidiaries as now conducted, and there are no
claims, singly or in the aggregate, under such policies in excess of $200,000,
which, in any event, are not in excess of the limitations of coverage set forth
in such policies. Parent and its subsidiaries have taken all actions reasonably
necessary to insure that their independent contractors obtain and maintain
adequate insurance coverage. All of the insurance policies referred to in this
Section 4.20 are "occurrence" policies and no such policies are "claims made"
policies. Neither Parent nor any of its subsidiaries has knowledge of any fact
indicating that such policies will not continue to be available to Parent and
its subsidiaries upon substantially similar terms subsequent to the Effective
Time. The provision and/or reserves in the Parent Financial Statements are
adequate for any and all self insurance programs maintained by Parent or its
subsidiaries.
SECTION 4.21. Transactions with Related Parties. Except as set forth
in the Parent SEC Reports, (a) there have been no transactions by Parent or its
subsidiaries with any officer or director of Parent or beneficial owner of more
than five percent (5%) of Parent which are required to be disclosed pursuant to
the Exchange Act and (b) there are no material agreements or understandings now
in effect between Parent or its subsidiaries and any Related Party.
ARTICLE V
Representations and Warranties of the Company
The Company represents and warrants to Parent and Subsidiary as
follows:
SECTION 5.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is now being conducted. The Company is qualified to do business and is in
good standing in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not,
22
when taken together with all other such failures, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of the Company and its subsidiaries, taken as a whole
(a "Company Material Adverse Effect"). True, accurate and complete copies of
the Company's Certificate of Incorporation and By-laws, in each case as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to Parent.
SECTION 5.2. Capitalization.
(a) The authorized capital stock of the Company consists of
25,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock (par value $.001 per shares). As of August 7, 1996, 9,380,946 shares of
Company Common Stock and no shares of preferred stock were issued and
outstanding. All of such issued and outstanding shares are validly issued and
are fully paid, nonassessable and free of preemptive rights.
(b) Except as set forth in the Company SEC Reports (as defined in
Section 5.5) or on Schedule 5.2 attached hereto, as of the date hereof there
------------
are: (i) no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement and also including any rights plan or other anti-takeover
agreement, obligating the Company or any subsidiary of the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of the Company or obligating the Company or any subsidiary of
the Company to grant, extend or enter into any such agreement or commitment, and
(ii) no voting trusts, proxies or other agreements or understandings to which
the Company or any subsidiary of the Company is a party or is bound with respect
to the voting of any shares of capital stock of the Company.
SECTION 5.3. Subsidiaries. Except as set forth in Schedule 5.3,
------------
each direct and indirect corporate subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted except where any failure would not have a Company Material
Adverse Effect. Each subsidiary of the Company is qualified to do business, and
is in good standing, in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not, when taken together with all such other failures, have a
Company Material Adverse Effect. All of the outstanding shares of capital stock
of each corporate
23
subsidiary of the Company are validly issued, fully paid, nonassessable and free
of preemptive rights, and are owned directly or indirectly by the Company free
and clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever except that such shares are pledged
to secure the Company's (and such subsidiaries') credit facilities or as set
forth in Schedule 5.3 attached hereto. There are no subscriptions, options,
------------
warrants, rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock of any corporate subsidiary of the Company, including any right of
conversion or exchange under any outstanding security, instrument or agreement.
SECTION 5.4. Authority; Non-Contravention; Approvals.
(a) The Company has full corporate power and authority to enter into
this Agreement and, subject to the Company Stockholders' Approval (as defined in
Section 7.3) and the Company Required Statutory Approvals (as defined in Section
5.4(c)), to consummate the transactions contemplated hereby. This Agreement has
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Stockholders'
Approval, the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery hereof by Parent and
Subsidiary, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles. Without
limitation of the foregoing, each of the covenants and obligations of the
Company set forth in Sections 6.1, 6.5, 7.3, 7.6, 7.7, 7.8 and 7.10 is valid,
legally binding and enforceable notwithstanding the absence of the Company
Stockholders' Approval.
(b) Except as set forth in Schedule 5.4(b), the execution and
---------------
delivery of this Agreement by the Company do not violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or
24
encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of the Company or any of its subsidiaries, (ii)
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. Except as set forth in Schedule 5.4(b), the consummation by the
---------------
Company of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Company Required Statutory Approvals and the Company
Stockholders' Approval and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Effective
Time) consents required from commercial lenders, lessors or other third parties.
Excluded from the foregoing sentences of this paragraph (b), insofar as they
apply to the terms, conditions or provisions described in clauses (ii) and (iii)
of the first sentence of this paragraph (b), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
Company Material Adverse Effect.
(c) Except for (i) the filings by Parent and the Company required by
the HSR Act, (ii) the filing of the Joint Proxy Statement/Prospectus with the
SEC pursuant to the Exchange Act and the Securities Act and the declaration of
the effectiveness thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger and (iv) any required
filings or approvals under the Interstate Commerce Act or filings with or
approvals from the DOT, the Federal Communications Commission, applicable state
environmental authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i) through (iv)
are collectively referred to as the "Company Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions
25
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, have a Company Material Adverse
Effect.
SECTION 5.5. Reports and Financial Statements. Except as set forth
on Schedule 5.5 attached hereto, since December 20, 1995, the Company has filed
------------
with the SEC all material forms, statements, reports and documents (including
all exhibits, amendments and supplements thereto) required to be filed by it
under each of the Securities Act, the Exchange Act and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. The Company has previously delivered to
Parent copies of its (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as filed with the SEC, (b) proxy and information statements
relating to (i) all meetings of its stockholders (whether annual or special) and
(ii) actions by written consent in lieu of a stockholders' meeting, if any, from
December 20, 1995 until the date hereof, and (c) all other reports, including
quarterly reports, or registration statements filed by the Company with the SEC
since December 20, 1995 (other than registration statements filed on Form S-3/S-
8) (the documents referred to in clauses (a), (b) and (c) are collectively
referred to as the "Company SEC Reports"). As of their respective dates, the
Company SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements of the Company included in
such reports (collectively, the "Company Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of the Company and its subsidiaries as
of the dates thereof and the results of their 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 and audit adjustments
and any other adjustments described therein.
SECTION 5.6. Absence of Undisclosed Liabilities. Except as
disclosed in the Company SEC Reports, neither the Company nor any of its
subsidiaries had at June 29, 1996, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except: (a) liabilities, obligations or contingencies (i) which
are accrued or reserved against in the Company Financial Statements or reflected
in the notes thereto or (ii) which were
26
incurred after June 29, 1996 and were incurred in the ordinary course of
business and consistent with past practices, (b) liabilities, obligations or
contingencies which (i) would not, in the aggregate, have a Company Material
Adverse Effect, or (ii) have been discharged or paid in full prior to the date
hereof, and (c) liabilities and obligations which are of a nature not required
to be accrued or reserved against in the consolidated financial statements of
the Company and its subsidiaries, or reflected in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied
and which were incurred in the ordinary course of business.
SECTION 5.7. Absence of Certain Changes or Events. Since the date of
the most recent Company SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, including as a result of any change in capital
structure, employee compensation arrangement (including severance rights and
benefit plans), accounting method or applicable law.
SECTION 5.8. Litigation. Except as referred to in the Company SEC
Reports or in Schedule 5.8 attached hereto, there are no claims, suits, actions
------------
or proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company or any of its subsidiaries, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain the consummation of the
Merger or which could reasonably be expected, either alone or in the aggregate
with all such claims, actions or proceedings, to cause a Company Material
Adverse Effect. Except as referred to in the Company SEC Reports or in Schedule
--------
5.8 attached hereto, neither the Company nor any of its subsidiaries is subject
---
to any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any Company Material Adverse Effect.
SECTION 5.9. Registration Statement and Proxy Statement. None of
the information to be supplied by the Company or its subsidiaries for inclusion
in (a) the Registration Statement or (b) the Proxy Statement will, in the case
of the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meeting of stockholders of the Company to be
held in connection with the transactions contemplated by this Agreement or, in
the case of the Registration Statement, as amended or supplemented, at the
27
time it becomes effective, at the time of such meeting of the stockholders of
the Company and for so long as it remains effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will, as of its effective date, comply as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation or covenant is made by the Company
with respect to information in writing supplied or to be supplied by Parent or
Subsidiary for inclusion therein.
SECTION 5.10. No Violation of Law. Except as disclosed in the
Company SEC Reports or in Schedule 5.10 attached hereto, neither the Company nor
-------------
any of its subsidiaries is in violation of or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. Except as
disclosed in the Company SEC Reports, as of the date of this Agreement, to the
knowledge of the Company, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same,
other than, in each case, those the outcome of which, as far as reasonably can
be foreseen, will not have a Company Material Adverse Effect. The Company and
its subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (collectively, the "Company
Permits"), except for permits, licenses, franchises, variances, exemptions,
orders, and other governmental authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a Company Material
Adverse Effect. The Company and its subsidiaries are not in violation of the
terms of any Company Permit, except for delays in filing reports or violations
which, alone or in the aggregate, would not have a Company Material Adverse
Effect.
SECTION 5.11. Compliance with Agreements. Except as disclosed in the
Company SEC Reports or in Schedule 5.11, the Company and each of its
-------------
subsidiaries are not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a default under, (a)
the respective charters, by-laws or similar
28
organizational instruments of the Company or any of its subsidiaries or (b) any
contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which the Company or any
of its subsidiaries is a party or by which any of them is bound or to which any
of their property is subject, which breaches, violations and defaults, in the
case of clause (b) of this Section 5.11, would have, in the aggregate, a Company
Material Adverse Effect.
SECTION 5.12. Taxes. The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns required to
be filed by them for all periods ending on or prior to the Effective Time, other
than those Tax Returns the failure of which to file would not have a Company
Material Adverse Effect, and such Tax Returns are true, correct and complete in
all material respects, and (ii) duly paid in full or made adequate provision for
the payment of all Taxes for all periods ending at or prior to the Effective
Time. The liabilities and reserves for Taxes reflected in the Company balance
sheet included in the latest Company SEC Report are adequate to cover all Taxes
for all periods ending at or prior to the Effective Time and there are no
material liens for Taxes upon any property or assets of the Company or any
subsidiary thereof, except for liens for Taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the IRS or any other governmental taxing authority
with respect to Taxes of the Company or any of its subsidiaries which, if
decided adversely, singly or in the aggregate, would have a Company Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes with any entity
that is not, directly or indirectly, a wholly-owned corporate subsidiary of the
Company. Neither the Company nor any of its corporate subsidiaries has, with
regard to any assets or property held, acquired or to be acquired by any of
them, filed a consent to the application of Section 341(f) of the Code.
SECTION 5.13. Employee Benefit Plans; ERISA.
(a) Except as set forth in the Company SEC Reports, at the date
hereof, the Company and its subsidiaries do not maintain or contribute to any
material employee benefit plans, programs, arrangements and practices (such
plans, programs, arrangements and practices of the Company and its subsidiaries
being referred to as the "Company Plans"), including employee benefit plans
within the meaning set forth in Section 3(3) of ERISA, or other similar material
arrangements for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the
29
meaning of Section 413(c) of the Code). Schedule 5.13(a) attached hereto lists
----------------
all Multi-employer Plans and Multiple Employer Plans which any of the Company or
its subsidiaries maintains or to which any of them makes contributions. Neither
the Company nor its subsidiaries has any obligation to create any additional
such plan or to amend any such plan so as to increase benefits thereunder,
except as required under the terms of the Company Plans, under existing
collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a Company Material Adverse Effect, (ii) except for
premiums due, there is no outstanding material liability, whether measured alone
or in the aggregate, under Title IV of ERISA with respect to any of the Company
Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Company Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Company Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if any,
disclosed in the Company SEC Reports as of June 29, 1996, based upon reasonable
actuarial assumptions currently utilized for such Company Plan, (vi) each of the
Company Plans has been operated and administered in all material respects in
accordance with applicable laws during the period of time covered by the
applicable statute of limitations, (vii) each of the Company Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the IRS to be so qualified and such determination has not
been modified, revoked or limited by failure to satisfy any condition thereof or
by a subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Company Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to Multi-
employer Plans, neither the Company nor any of its subsidiaries has, made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
30
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the best
knowledge of the Company and its subsidiaries, no event has occurred or is
expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the best knowledge
of the Company and its subsidiaries, there are no material pending, threatened
or anticipated claims involving any of the Company Plans other than claims for
benefits in the ordinary course, and (x) the Company and its subsidiaries have
no current material liability, whether measured alone or in the aggregate, for
plan termination or complete withdrawal or partial withdrawal under Title IV of
ERISA based on any plan to which any entity that would be deemed one employer
with the Company and its subsidiaries under Section 4001 of ERISA or Section 414
of the Code contributed during the period of time covered by the applicable
statute of limitations (the "Company Controlled Group Plans"), and the Company
and its subsidiaries do not reasonably anticipate that any such liability will
be asserted against the Company or any of its subsidiaries. None of the Company
Controlled Group Plans has an "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code).
(c) The Company SEC Reports or Schedule 5.13(c) contain a true and
----------------
complete summary or list of or otherwise describe all material employment
contracts and other employee benefit arrangements with "change of control" or
similar provisions and all severance agreements with executive officers.
SECTION 5.14. Labor Controversies. Except as set forth in the
Company SEC Reports, (a) there are no significant controversies pending or, to
the knowledge of the Company, threatened between the Company or its subsidiaries
and any representatives of any of their employees, (b) to the knowledge of the
Company, there are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company or its
subsidiaries, (c) the Company and its subsidiaries have, to the knowledge of the
Company, complied in all material respects with all laws relating to the
employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes, and (d) no person has, to the knowledge of the
Company, asserted that the Company or any of its subsidiaries is liable in any
material amount for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing, except for such controversies,
organizational efforts, non-compliance and liabilities which, singly or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 5.15. Environmental Matters. Except as set forth in the
Company SEC Reports or in Schedule 5.15, (i) the
-------------
31
Company and its subsidiaries have conducted their respective businesses in
compliance with all applicable Environmental Laws, including, without
limitation, having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as presently
conducted, (ii) none of the properties owned, leased or operated by the Company
or any of its subsidiaries contains any Hazardous Substance in amounts exceeding
the levels permitted by, or which otherwise create liability under, applicable
Environmental Laws, (iii) neither the Company nor any of its subsidiaries has
received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that the Company or any of its subsidiaries may be in violation of, or liable
under, any Environmental Law in connection with the ownership or operation of
their businesses, or any of the properties owned, leased or operated by the
Company or any of its subsidiaries (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by the Company or any of its subsidiaries concerning the release of any
Hazardous Substance or the threatened or actual violation of or any liability,
or alleged liability under any Environmental Law, (vi) no Hazardous Substance
has been disposed of or released at, from or onto any properties owned, leased
or operated by the Company or any of its subsidiaries during the time such
properties were owned, leased or operated by the Company or any of its
subsidiaries or to the best knowledge of Company and its subsidiaries at any
other time or at any other facility or site to which Hazardous Substances from
or generated by the Company or any of its subsidiaries have been taken at any
time in the past, (vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
noncompliance with any applicable Environmental Law conducted by or which are in
the possession of the Company or its subsidiaries relating to the activities of
or properties owned, leased or operated by the Company or its subsidiaries which
have not been delivered to Parent prior to the date hereof, (viii) there are no
underground storage tanks on, in or under any properties owned, leased or
operated by the Company or any of its subsidiaries and no underground storage
tanks have been closed or removed from any of such properties during the time
such properties were owned, leased or operated by the Company or any of its
subsidiaries, or to the best knowledge of the Company and its subsidiaries at
any other time, (ix) there is no friable asbestos or asbestos containing
material present in any of the properties owned by the Company and its
subsidiaries, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by the Company or
any of its
32
subsidiaries, and (x) neither the Company, its subsidiaries nor any of their
respective properties are subject to any material liabilities or expenditures
(fixed or contingent) relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim asserted or
arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (x) that, singly or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 5.16. Title to Assets. The Company and each of its
subsidiaries has good and marketable title in fee simple to all its real
property and good title to all its leasehold interests and other properties, as
reflected in the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and clear
of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not materially
detract from the value, or interfere with the present use of the property
subject thereto or affected thereby, or otherwise materially impair the
Company's business operations (in the manner presently carried on by the
Company), (iii) as disclosed in the Company SEC Reports or (iv) as provided in
the credit facility, dated April 12, 1996, between the Company and its lending
banks, and except for such matters which, singly or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. All leases
under which the Company leases any substantial amount of real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than defaults under such leases which in the aggregate will not
have a Company Material Adverse Effect.
SECTION 5.17. Company Stockholders' Approval. The affirmative vote
of stockholders of the Company required for approval and adoption of this
Agreement and the Merger is a majority of the outstanding shares of Company
Common Stock.
SECTION 5.18 No Excess Parachute Payments. Except as set forth on
Schedule 5.18, the Company has no contracts, arrangements or understandings
-------------
pursuant to which any person may receive any amount or entitlement from the
Company or any of its subsidiaries (including cash or property or the vesting of
property) that may be characterized as an "excess parachute payment" (as such
term is defined in Section 280G(B)(1) of the Code) (any such amount being an
"Excess Parachute Payment") as a
33
result of any of the transactions contemplated by this Agreement. Except as set
forth on Schedule 5.18, to the best knowledge of the Company, no person is
-------------
entitled to receive any additional payment from the Company, its subsidiaries or
any other person (a "Parachute Gross-up Payment") in the event that the 20
percent (20%) parachute excise tax of Section 4999(a) of the Code is imposed on
such person. Except as set forth on Schedule 5.18, the Board of Directors of
-------------
the Company has not during the six months prior to the date of this Agreement
granted to any officer, director or employee of the Company any right to receive
any Parachute Gross-Up Payment.
SECTION 5.19 Trademarks and Intellectual Property Compliance. The
Company and its subsidiaries own or have the right to use, without any material
payment to any other party, all of their Intellectual Property Rights, and the
consummation of the transactions contemplated hereby will not alter or impair
such rights in any material respect. To the knowledge of the Company, no claims
are pending by any person with respect to the ownership, validity,
enforceability or use of any such Intellectual Property Rights challenging or
questioning the validity or effectiveness of any of the foregoing which claims
could reasonably be expected to have a Company Material Adverse Effect.
SECTION 5.20 Material Agreements. The Company has no material
agreements other than those filed as exhibits to the Company SEC Reports or as
set forth on Schedule 5.20 or which will be filed with the Registration
-------------
Statement, copies of which (to the extent such agreements exist on and as of the
date hereof) have been delivered to Parent, or which will be delivered to Parent
promptly after they become available.
SECTION 5.21 Pooling Matters. To the Company's knowledge and based
upon consultation with its independent accountants, neither the Company nor any
of its affiliates has taken or agreed to take any action that would affect the
ability of Parent to account for the Merger as a pooling of interests.
SECTION 5.22 Transactions with Related Parties. Except as set forth
in the Company SEC Reports or on Schedule 5.22, (a) there have been no
-------------
transactions by the Company or its subsidiaries with any officer or director of
the Company or beneficial owner of more than five percent (5%) of the Company
Common Stock or their affiliates ("Related Parties") which are required to be
disclosed pursuant to the Exchange Act and (b) there are no material agreements
or understandings now in effect between the Company or its subsidiaries and any
Related Party.
SECTION 5.23 Insurance. Except to the extent there would be no
Company Material Adverse Effect, all of the Company's
34
and its subsidiaries' liability, theft, life, health, fire, title, worker's
compensation and other forms of insurance, surety bonds and umbrella policies,
insuring the Company and its subsidiaries and their directors, officers,
employees, independent contractors, properties, assets and business, are valid
and in full force and effect and without any premium past due or pending notice
of cancellation, are, in the reasonable judgment of the Company, adequate for
the business of the Company and its subsidiaries as now conducted, and there are
no claims, singly or in the aggregate, under such policies in excess of $250,000
(as to which the Company is self-insured), which, in any event, are not in
excess of the limitations of coverage set forth in such policies. The Company
and its subsidiaries have taken all actions reasonably necessary to insure that
their independent contractors obtain and maintain adequate insurance coverage.
All of the insurance policies referred to in this Section 5.23 are "occurrence"
policies and no such policies are "claims made" policies. Neither the Company
nor any of its subsidiaries has knowledge of any fact indicating that such
policies will not continue to be available to the Company and its subsidiaries
upon substantially similar terms subsequent to the Effective Time. The
provision and/or reserves in the Company Financial Statements are adequate for
any and all self insurance programs maintained by the Company or its
subsidiaries.
SECTION 5.24 Employment Agreements. Except as set forth on Schedule
--------
5.24, any and all employees of the Company who are parties to agreements that
----
would provide to them cash compensation upon a change of control (as defined
therein) of the Company or upon a voluntary termination of employment by any
such employee (collectively, the "Employment Agreements") have executed
amendments and/or waivers of the cash compensation provisions applicable upon
such a change of control (as defined therein) or upon a voluntary termination of
employment by any such employee.
SECTION 5.25 Affiliate Agreements. Each person who may be deemed an
affiliate of the Company under Rule 145 of the Securities Act ("Rule 145"),
including, without limitation, all directors and executive officers of the
Company, has delivered an agreement to Parent agreeing to the resale
restrictions imposed by applicable securities laws and accounting rules
(including, but not limited to, Accounting Series Release Xx. 000 ("XXX 000")).
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1. Conduct of Business by the Company Pending the Merger.
Except as otherwise contemplated by this
35
Agreement, after the date hereof and prior to the Closing Date or earlier
termination of this Agreement, unless Parent shall otherwise agree in writing,
the Company shall, and shall cause its subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
by-laws, (ii) split, combine or reclassify their outstanding capital stock or
(iii) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions by a wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of Company Common Stock, or any
options, warrants or rights of any kind to acquire any shares of their capital
stock of any class or any debt or equity securities convertible into or
exchangeable for such capital stock, except that the Company may issue shares
(i) upon conversion of convertible securities and exercise of options
outstanding on the date hereof; and (ii) in connection with the potential
acquisitions described in Schedule 6.1;
------------
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business or (B) borrowings to refinance existing indebtedness, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock or
any security convertible into or exchangeable for its capital stock, (iii) take
any action which to the knowledge of the Company would unreasonably jeopardize
the treatment of the Merger as a pooling of interests under APB 16, (iv) take or
fail to take any action which action or failure to the knowledge of the Company
would cause the Company or its stockholders (except to the extent that any
stockholders receive cash in lieu of fractional shares) to recognize gain or
loss for federal income tax purposes as a result of the consummation of the
Merger, (v) sell, pledge, dispose of or encumber any assets or businesses other
than sales in the ordinary course of business or (vi) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill and
business relationships with customers and others having business
36
relationships with them and not engage in any action, directly or indirectly,
with the intent to adversely impact the transactions contemplated by this
Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of materiality and the
general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice (excluding material
management non-competition and severance agreements);
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law; and
(i) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice.
SECTION 6.2. Conduct of Business by Parent and Subsidiary Pending
the Merger. Except as otherwise contemplated by this Agreement, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause its subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
by-laws, (ii) split, combine or reclassify (whether by stock dividend or
otherwise) their outstanding capital stock, or (iii) declare, set aside or pay
any dividend or distribution payable in cash, stock, property or otherwise,
except for the payment of dividends or distributions by a wholly-owned
subsidiary of Parent;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any shares of Parent Common Stock, or any options,
warrants or rights of any kind to acquire any shares of their capital stock of
any class or any debt or equity securities convertible into or exchangeable for
such
37
capital stock, except that Parent may issue shares (i) upon conversion of
convertible securities and exercise of options outstanding on the date hereof
and (ii) in connection with potential acquisitions;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business or (B) borrowings to refinance existing indebtedness, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock or
any security convertible into or exchangeable for its capital stock, (iii) take
any action which to the knowledge of Parent would unreasonably jeopardize the
treatment of the Merger as a pooling of interests under APB No. 16, (iv) take or
fail to take any action which action or failure to take action would cause the
Company or its stockholders (except to the extent that any stockholders receive
cash in lieu of fractional shares) to recognize gain or loss for federal income
tax purposes as a result of the consummation of the Merger, (v) sell, pledge,
dispose of or encumber any assets or businesses other than sales in the ordinary
course of business or (vi) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill and
business relationships with customers and others having business relationships
with them and not engage in any action, directly or indirectly, with the intent
to adversely impact the transactions contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of the Company to report operational matters of materiality and
the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice; provided, however,
that Parent and its subsidiaries shall in no event enter into any written
employment agreement which provides for an annual base salary in excess of
$125,000 and has a term in excess of one year or enter into or amend any
material severance or termination arrangement;
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee
38
benefit plan, agreement, trust, fund or arrangement for the benefit or welfare
of any employee or retiree, except as required to comply with changes in
applicable law; and
(i) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice.
SECTION 6.3. Control of the Company's Operations. Nothing contained
in this Agreement shall give to Parent, directly or indirectly, rights to
control or direct the Company's operations prior to the Effective Time. Prior
to the Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
SECTION 6.4. Control of Parent's Operations. Nothing contained in
this Agreement shall give to the Company, directly or indirectly, rights to
control or direct Parent's operations prior to the Effective Time. Prior to the
Effective Time, Parent shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision of its operations.
SECTION 6.5. Acquisition Transactions.
(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, the Company shall not, and shall not permit any
of its subsidiaries to, initiate or solicit, and the Company shall, and shall
use its best efforts to cause each of its subsidiaries to, cause any officer,
director or employee of, or any attorney, accountant, investment banker,
financial advisor or other agent retained by it, not to initiate or solicit, any
proposal or offer to acquire all or any substantial part of the business and
properties of the Company and its subsidiaries or any capital stock of the
Company and its subsidiaries, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof in a transaction, upon the consummation of which the holders
of Company Common Stock will own less than a majority of the equity of the
offeror or resulting entity or have the right to elect no more than a minority
of the board of directors (or similar governing board) of the offeror or the
resulting entity (any such transactions being referred to herein as "Acquisition
Transactions").
(b) Notwithstanding any other provision of this Agreement, in response
to an unsolicited proposal or inquiry with respect to an Acquisition
Transaction, (i) the Company may engage in discussions or negotiations regarding
such proposal or inquiry with a third party who (without any solicitation or
initiation,
39
directly or indirectly, by or with the Company or any Company representative
after the date of this Agreement) seeks to initiate such discussions or
negotiations and may negotiate with and furnish to such third party information
concerning the Company and its business, properties and assets, and (ii) if such
Acquisition Transaction is a tender offer subject to the provisions of Section
14(d) under the Exchange Act, the Company's Board of Directors may take and
disclose to the Company's stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act.
(c) In the event the Company shall determine to provide any
information or negotiate as described in paragraph (b) above, or shall receive
any offer of the type referred to in paragraph (b) above, it shall (i)
immediately provide Parent a copy of all information provided to the third
party, (ii) inform Parent that information is to be provided, that negotiations
are to take place or that an offer has been received, as the case may be, and
(iii) furnish to Parent the identity of the person receiving such information or
the proponent of such offer, if applicable, and, if any offer has been received,
unless the Board of Directors of the Company concludes that such disclosure is
inconsistent with its fiduciary duties under applicable law, a description of
the material terms thereof.
(d) The Company may terminate this Agreement, withdraw, modify or not
make its recommendation referred to in Section 7.3, if but only if (i) the
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Company shall have determined in good faith after consultation with the
independent financial advisors of the Company that such Acquisition Transaction
would be more favorable to the Company's stockholders from a financial point of
view than the Merger, (ii) the Board of Directors of the Company shall conclude
in good faith after consultation with its legal counsel that such action is
necessary in order for the Board of Directors of the Company to act in a manner
that is consistent with its fiduciary obligations under applicable law and (iii)
the Company shall have furnished the Parent with a copy of a definitive
agreement (if any) with an offeror of an Acquisition Transaction at least five
business days prior to its execution and Parent shall have failed within such
five business day period to offer to amend the terms of this Agreement so that
the Merger would be, in the good faith determination of the Board of Directors
of the Company, at least as favorable to the Company's stockholders from a
financial point of view as the Acquisition Transaction.
(e) Each party (i) acknowledges that a breach of any of its covenants
contained in this Section 6.5 will result in irreparable harm to the other party
which will not be compensable in money damages, and (ii) agrees that such
covenant shall be specifically enforceable and that specific performance and
40
injunctive relief shall be a remedy properly available to the other party for a
breach of such covenant. In any event, if Company enters into an Acquisition
Transaction, it will immediately pay to Parent the sums described in Section 7.6
below.
ARTICLE VII
Additional Agreements
SECTION 7.1. Access to Information. (a) The Company and its
subsidiaries shall afford to Parent and Subsidiary and their respective
accountants, counsel, financial advisors and other representatives (the "Parent
Representatives") and Parent and its subsidiaries shall afford to the Company
and its accountants, counsel, financial advisors and other representatives (the
"Company Representatives") full access during normal business hours throughout
the period prior to the Effective Time to all of their respective properties,
books, contracts, commitments and records (including, but not limited to, Tax
Returns) and, during such period, shall furnish promptly to one another (i) a
copy of each report, schedule and other document filed or received by any of
them pursuant to the requirements of federal or state securities laws or filed
by any of them with the SEC in connection with the transactions contemplated by
this Agreement or which may have a material effect on their respective
businesses, properties or personnel and (ii) such other information concerning
their respective businesses, properties and personnel as Parent or Subsidiary or
the Company, as the case may be, shall reasonably request; provided that no
investigation pursuant to this Section 7.1 shall amend or modify any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Parent and its subsidiaries
shall hold and shall use their reasonable best efforts to cause the Parent
Representatives to hold, and the Company and its subsidiaries shall hold and
shall use their reasonable best efforts to cause the Company Representatives to
hold, in strict confidence all non-public documents and information furnished to
Parent and Subsidiary or to the Company, as the case may be, in connection with
the transactions contemplated by this Agreement, except that (i) Parent,
Subsidiary and the Company may disclose such information as may be necessary in
connection with seeking the Parent Required Statutory Approvals, the Company
Required Statutory Approvals and the Company Stockholders' Approval and (ii)
each of Parent, Subsidiary and the Company may disclose any information that it
is required by law or judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to
41
the other all non-public written material provided pursuant to this Section 7.1
and shall not retain any copies, extracts or other reproductions in whole or in
part of such written material. In such event, all documents, memoranda, notes
and other writings prepared by Parent or the Company based on the information in
such material shall be destroyed (and Parent and the Company shall use their
respective reasonable best efforts to cause their advisors and representatives
to similarly destroy their documents, memoranda and notes), and such destruction
(and reasonable best efforts) shall be certified in writing by an authorized
officer supervising such destruction.
(c) The Company shall promptly advise Parent and Parent shall
promptly advise the Company in writing of any change or the occurrence of any
event after the date of this Agreement having, or which, insofar as can
reasonably be foreseen, in the future may have, any material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company and its subsidiaries or Parent
and its subsidiaries, as the case may be, taken as a whole.
SECTION 7.2. Registration Statement and Proxy Statement. Parent and
the Company shall file with the SEC as soon as is reasonably practicable after
the date hereof the Joint Proxy Statement/Prospectus and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. Parent shall also take any action required to
be taken under applicable state blue sky or securities laws in connection with
the issuance of Parent Common Stock pursuant hereto. Parent and the Company
shall promptly furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any action by any of
them in connection with the first sentence of this Section 7.2.
SECTION 7.3. Stockholders' Approval. The Company shall, as promptly
as practicable, submit this Agreement and the transactions contemplated hereby
for the approval of its stockholders at a meeting of stockholders and, subject
to the fiduciary duties of the Board of Directors of the Company under
applicable law, or except to the extent contemplated by Section 6.5, shall use
its reasonable best efforts to obtain stockholder approval and adoption (the
"Company Stockholders' Approval") of this Agreement and the transactions
contemplated hereby. Such meeting of stockholders shall be held as soon as
practicable following the date upon which the Registration Statement becomes
effective. Subject to the fiduciary duties of the Board of Directors of the
Company under applicable law, or except as contemplated by Section 6.5, the
Company shall, through its Board of Directors, recommend to its stockholders
approval of the
42
transactions contemplated by this Agreement. The Company (i) acknowledges that
a breach of its covenant contained in this Section 7.3 to convene a meeting of
its stockholders and call for a vote thereat with respect to the approval of
this Agreement and the Merger will result in irreparable harm to Parent which
will not be compensable in money damages and (ii) agrees that such covenant
shall be specifically enforceable and that specific performance and injunctive
relief shall be a remedy properly available to Parent for a breach of such
covenant.
SECTION 7.4. [Intentionally omitted.]
SECTION 7.5. Exchange Listing. Parent shall use its best efforts to
effect, at or before the Effective Time, authorization for listing on the
NASDAQ, upon official notice of issuance, of the shares of Parent Common Stock
to be issued pursuant to the Merger.
SECTION 7.6. Expenses and Fees.
(a) Except as provided in Section 7.6(b), all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except that those
expenses incurred in connection with printing and mailing of the Joint Proxy
Statement/Prospectus shall be shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to Three Million
Three Hundred Seventy-Five Thousand Dollars ($3,375,000) if (i) the Company
terminates this Agreement pursuant to Section 6.5, and (ii) within twelve (12)
months thereafter consummates the Acquisition Transaction to which such
termination is attributable or another Acquisition Transaction commenced within
sixty (60) days after such termination.
SECTION 7.7. Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
and SEC "no-action" letters to effect all necessary registrations, filings and
submissions and to lift any injunction or other legal bar to the Merger (and, in
such case, to proceed with the Merger as expeditiously as possible), subject,
however, to the requisite votes of the
43
stockholders of the Company and the boards of directors of the Company and
Parent.
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable after the date
hereof a Notification and Report Form under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division"). Each of Parent and the Company shall (i) use its
reasonable efforts to comply as expeditiously as possible with all lawful
requests of the FTC or the Antitrust Division for additional information and
documents and (ii) not extend any waiting period under the HSR Act or enter into
any agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, including any
Acquisition Transaction, Parent shall have the right, at its own expense, to
participate therein, and the Company will not settle any such litigation without
the consent of Parent, which consent will not be unreasonably withheld.
SECTION 7.8. Public Statements and Filings. The parties shall
consult with each other prior to issuing any press release or any written public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as required by law in the judgment of the issuing party, shall not
issue any such press release or written public statement prior to such
consultation. In addition, each party shall provide the other party with a
written copy of any of its SEC Reports to be filed at least 48 hours prior to
the filing of such report.
SECTION 7.9. Option Plans. Prior to the Effective Time, the Company
through the Compensation Committee of its Board of Directors and Parent shall
take such action as may be necessary to cause each unexpired and unexercised
option (each a "Company Option"), whether immediately exercisable, exercisable
at Closing by virtue of acceleration attributable to the Merger or exercisable
only after Closing, to be automatically converted at the Effective Time into an
option (each a "Parent Option") to purchase a number of shares of Parent Common
Stock equal to the number of shares of Company Common Stock that could have been
purchased under the Company Option multiplied by the Exchange Ratio, at a price
per share of Parent Common Stock equal to the option exercise price determined
pursuant to the Company Option divided by the Exchange Ratio and subject to the
same terms and conditions as the Company Option, including acceleration and
44
period of exercise. At the Effective Time, all references in the stock option
agreements to the Company shall be deemed to refer to Parent. As of the
Effective Time, Parent shall assume all of the Company's obligations with
respect to Company Options as so amended and, from and after the Effective Time,
shall have reserved for issuance upon exercise of the Parent Options all shares
of Parent Common Stock covered thereby and, as of the Effective Time, shall have
filed an amendment to its Registration Statement on Form S-8 to register the
additional shares of Parent Common Stock subject to Parent Options granted in
replacement of Company Options.
SECTION 7.10. Notification of Certain Matters. Each of the Company,
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
reasonable efforts to prevent or promptly remedy, (i) the occurrence or failure
to occur or the impending or threatened occurrence or failure to occur, of any
event which occurrence or failure to occur would be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect at any time from the date hereof to the Effective Time and
(ii) any material failure on its part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 7.10
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 7.11. Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, Parent shall, and Parent shall
cause the Surviving Corporation to, indemnify, defend and hold harmless the
present and former officers and directors of the Company (collectively, the
"Indemnified Parties") against all losses, expenses, claims, damages,
liabilities or amounts that are paid in settlement of, or otherwise in
connection with any claim, action, suit, proceeding or investigation (a
"claim"), based in whole or in part on the fact that such person is or was a
director or officer of the Company and arising out of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, this
Agreement, the Merger and the transactions contemplated hereby), in each case to
the fullest extent permitted under the DGCL (and shall pay any expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under the DGCL, upon receipt
from the Indemnified Party to whom expenses are advanced of any undertaking to
repay such advances required under the DGCL). Parent shall, and Parent shall
cause the Surviving Corporation
45
to, observe and comply with the Company's obligations pursuant to the
indemnification agreements listed on Schedule 7.11 hereto.
-------------
(b) Parent shall, and Parent shall cause the Surviving Corporation
to, cause to be maintained in effect until sixty (60) days after the running of
the statute of limitations the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors) with respect to claims arising from
facts or events which occurred at or before the Effective Time.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations set forth in this Section
7.11.
(d) This Section 7.11 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on Parent, the Surviving Corporation and
their respective successors and assigns.
SECTION 7.12. Corrections to the Joint Proxy Statement/Prospectus and
Registration Statement. Prior to the date of approval of the Merger by the
Company's stockholders, each of the Company, Parent and Subsidiary shall correct
promptly any information provided by it to be used specifically in the Joint
Proxy Statement/Prospectus and Registration Statement that shall have become
false or misleading in any material respect and shall take all steps necessary
to file with the SEC and have declared effective or cleared by the SEC any
amendment or supplement to the Joint Proxy Statement/Prospectus or the
Registration Statement so as to correct the same and to cause the Joint Proxy
Statement/Prospectus as so corrected to be disseminated to the stockholders of
the Company and Parent, in each case to the extent required by applicable law.
SECTION 7.13. [Intentionally omitted.]
SECTION 7.14. Irrevocable Proxies. Upon the execution hereof, the
Company will use its best efforts to cause its officers and directors to execute
and deliver to Parent irrevocable proxies in a form reasonably acceptable to
Parent
46
authorizing the Parent to vote all shares of Company Common Stock which such
executive officers and directors are entitled to vote in favor of the Merger.
SECTION 7.15. Tax-Free Treatment of Merger. The Parent, the
Subsidiary and Company shall each use its best efforts to cause the Merger to be
treated as a tax-free reorganization for federal income tax purposes.
SECTION 7.16. Parent's Periodic Reports Following the Merger.
Following the Effective Time, Parent shall file with the SEC a periodic report
under the Exchange Act which contains at least thirty (30) days of combined
results of operations of the Company and the Parent as required by ASR 135
within the time prescribed under the Exchange Act for the filing of such report.
SECTION 7.17. Grant of Options to Company Employees. Upon
consummation of the Merger, Parent shall grant non-qualified options to purchase
1,000,000 shares of Parent Common Stock at an exercise price equal to Fair
Market Value (as defined in Section 2.8 of Parent's 1994 Stock Option and
Incentive Plan, as amended) on the grant date (which shall be the Closing Date),
to certain employees of the Company as recommended to Parent by senior
management of the Company in accordance with Schedule 7.17 and as agreed to by
-------------
the compensation committee of the Parent's Board of Directors. Such options
will vest over five years (2.083% per month, for months thirteen (13) through
sixty (60), inclusive, following the Effective Time), expire ten (10) years from
the date of grant and otherwise be subject to the terms and conditions of
Parent's existing stock option plan, except that such options shall not qualify
as incentive stock options under the Code. Parent shall register under the S-8
the shares issuable pursuant to the options Parent has agreed to grant under
this Section 7.17,and shall use reasonable efforts to cause such shares to be
listed on Nasdaq.
ARTICLE VIII
Conditions
SECTION 8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) this Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the stockholders of the
Company under applicable law and applicable listing requirements;
47
(b) the shares of Parent Common Stock issuable in the Merger shall
have been authorized for listing on the NASDAQ upon official notice of issuance;
(c) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect and no
proceeding for that purpose shall have been instituted by the SEC or any state
regulatory authorities;
(e) no preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted);
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal;
(g) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby, and all consents from lenders required to consummate the Merger, shall
have been obtained and be in effect at the Effective Time; and
(h) Coopers & Xxxxxxx, certified public accountants for Parent, shall
have delivered a letter, dated the Closing Date, addressed to Parent, in form
and substance reasonably satisfactory to Parent, stating that the Merger will
qualify as a pooling-of-interests transaction under XXX Xx. 00.
SECTION 8.2. Conditions to Obligation of the Company to Effect the
Merger. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Closing Date and the representations and warranties of Parent
and Subsidiary contained in this Agreement shall be true and correct in all
material respects on and as of the date made and, on and as of the Closing
48
Date as if made at and as of such date, and the Company shall have received a
certificate of the Chairman of the Board and Chief Executive Officer, the
President or a Vice President of Parent and of the President and Chief Executive
Officer or a Vice President of Subsidiary to that effect;
(b) the Company shall have received an opinion of Xxxxxxxx &
Worcester LLP, counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated the Closing Date, to the effect that the
Company and holders of Company Common Stock will recognize no gain or loss for
federal income tax purposes as a result of consummation of the Merger (except to
the extent any stockholders receive cash in lieu of fractional shares);
(c) the Company shall have received an opinion or opinions from
Ballard, Spahr, Xxxxxxx & Xxxxxxxxx, counsel to Parent and Subsidiary, dated the
Closing Date, substantially in the form of Exhibit 8.2(c);
(d) the Company shall have received "comfort" letters in customary
form from Coopers & Xxxxxxx, certified public accountants for Parent and
Subsidiary, dated the date of the Proxy Statement, the effective date of the
Registration Statement and the Closing Date (or such other date reasonably
acceptable to the Company) with respect to certain financial statements and
other financial information included in the Registration Statement and any
subsequent changes in specified balance sheet and income statement items,
including total assets, working capital, total stockholders' equity, total
revenues and the total and per share amounts of net income;
(e) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole;
(f) all governmental waivers, consents, orders, and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date, and no
governmental authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would materially impair
the value to Parent of the Merger; and
(g) the Company shall have received from Xxxxx Xxxxxx Inc. (or other
nationally recognized investment banking firm reasonably acceptable to Parent)
an opinion, dated the date hereof, and, if requested by the Company, confirmed
as of the
49
date of the Joint Proxy Statement/Prospectus, to the effect that the Exchange
Ratio is fair, from a financial point of view, to the holders of Company Common
Stock, and such opinion shall not have been withdrawn.
SECTION 8.3. Conditions to Obligations of Parent and Subsidiary to
Effect the Merger. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following additional conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date as if made at and as of such
date, and Parent shall have received a Certificate of the President and Chief
Executive Officer or of a Vice President of the Company to that effect;
(b) Parent shall have received an opinion from Xxxxxxxx & Worcester
LLP, counsel to the Company, dated the Closing Date, substantially in the form
of Exhibit 8.3(b);
(c) Parent shall have received "comfort" letters in customary form
from Price Waterhouse, certified public accountants for the Company, dated the
date of the Proxy Statement, the effective date of the Registration Statement
and the Closing Date (or such other date reasonably acceptable to Parent) with
respect to certain financial statements and other financial information included
in the Registration Statement and any subsequent changes in specified balance
sheet and income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of net
income;
(d) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole;
(e) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date, and no
governmental authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would materially impair
the value to Parent of the Merger; and
50
(f) Parent shall have received from Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (or other nationally recognized investment banking firm
reasonably acceptable to the Company) an opinion, dated the date hereof, and, if
requested by Parent, confirmed as of the date of the Joint Proxy
Statement/Prospectus, to the effect that the Exchange Ratio is fair, from a
financial point of view, to Parent's stockholders, and such opinion shall not
have been withdrawn.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.1. Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
stockholders of the Company, as follows:
(a) The Company shall have the right to terminate this Agreement:
(i) if the Merger is not completed by December 31, 1996
otherwise than account of delay or default on the part of the Company or
any of its 5% stockholders or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company or any
of its 5% stockholders or any of their affiliates or associates;
(iii) if the terms and conditions of Section 6.5(d), the last
sentence of Section 6.5(e) and Section 7.6(b) are satisfied;
(iv) if the Company's shareholder vote is not sufficient to
approve the Merger;
(v) if Parent (A) fails to perform in any material respect any
of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written notice of
such default is given to Parent by the Company; or
(vi) if (A) Parent is subjected to any claim, suit, action or
proceeding, the existence or threat of which has not been disclosed to the
Company as of the date hereof, that could reasonably be expected to have a
Parent Material Adverse Effect, and (B) the Company notifies Parent within
ten days after the Company receives notice of such claim, suit, action or
proceeding that the Company is terminating this Agreement.
51
(b) Parent shall have the right to terminate this Agreement:
(i) if the Merger is not completed by December 31, 1996
otherwise than account of delay or default on the part of Parent or any of
its 5% stockholders or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of Parent or any of
its 5% stockholders or any of their affiliates or associates;
(iii) if the Company's shareholder vote is not sufficient to
approve the Merger;
(iv) if the Company (A) fails to perform in any material respect
any of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written notice of
such default is given to the Company by Parent; or
(v) if (A) the Company is subjected to any claim, suit, action
or proceeding, the existence or threat of which has not been disclosed to
Parent as of the date hereof, that could reasonably be expected to have a
Company Material Adverse Effect, and (B) Parent notifies the Company within
ten days after Parent receives notice of such claim, suit, action or
proceeding that Parent is terminating this Agreement.
SECTION 9.2. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, Parent, Subsidiary or their respective officers or
directors (except as set forth in this Section 9.2 and in Sections 7.1, 7.6 and
7.8, all of which shall survive the termination). Nothing in this Section 9.2
shall relieve any party from liability for any breach of this Agreement.
SECTION 9.3. Amendment. This Agreement may not be amended except
by action taken by the parties' respective Boards of Directors or duly
authorized committees thereof and then only by an instrument in writing signed
on behalf of each of the parties hereto and in compliance with applicable law.
SECTION 9.4. Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the
52
representations and warranties contained herein or in any document delivered
pursuant thereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X
General Provisions
SECTION 10.1. Non-Survival of Representations and Warranties. All
representations and warranties in this Agreement shall not survive the Merger,
and after effectiveness of the Merger neither the Company, Parent, Subsidiary or
their respective officers or directors shall have any further obligation with
respect thereto.
SECTION 10.2. Brokers. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee (except for the fee payable to the investment banking firm described
in Section 8.2(g)) or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Parent and Subsidiary represent and warrant that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee (except for the fee payable to the investment banking firm described
in Section 8.3(f)) or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Subsidiary.
SECTION 10.3. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Parent or Subsidiary to:
Corporate Express, Inc.
000 Xxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
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with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
(b) If to the Company, to:
United TransNet, Inc.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx 000, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
SECTION 10.4. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
SECTION 10.5. Miscellaneous. This Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
(b) is not intended to confer upon any other person any rights or remedies
hereunder, except for rights of indemnified Parties under Section 7.11 and (c)
shall not be assigned by operation of law or otherwise, except that Subsidiary
may assign this Agreement to any other wholly-owned subsidiary of Parent. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION
AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
54
SECTION 10.6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 10.7. Parties In Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and except as set
forth in the exception to Section 10.5(b), nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 10.8. Exhibits and Schedules. All Exhibits and Schedules
referred to in this Agreement shall be attached hereto and are incorporated by
reference herein. A disclosure in any Schedule referred to this Agreement shall
constitute disclosure for purposes of each other Schedule referred to in this
Agreement.
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused
this Agreement to be signed by their respective officers as of the date first
written above.
CORPORATE EXPRESS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory
BEVO ACQUISITION CORP., INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: Authorized Signatory
UNITED TRANSNET, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
55
