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EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AFFILIATED COMPUTER SERVICES, INC.,
A DELAWARE CORPORATION,
ACS ACQUISITION CORP.,
A MARYLAND CORPORATION,
AND
COMPUTER DATA SYSTEMS, INC.,
A MARYLAND CORPORATION
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Closing; Closing Date; Effective Time . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Articles of Incorporation; Bylaws . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration; Conversion and Cancellation of Securities . . . . . . . . 3
SECTION 2.02. Exchange and Surrender of Certificates . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries . . . . . . . . . . . . . . . . . 6
SECTION 3.02. Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.04. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . 8
SECTION 3.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.07. SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.10. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.12. Tax Matters; Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.13. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.14. Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.15. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.16. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.17. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.18. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.19. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.20. Certain Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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SECTION 3.21. Principal Customers; Competing Interests . . . . . . . . . . . . . . . . . . . 21
SECTION 3.22. Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.23. Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.24. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.25. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.26. Federal Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.27 Parent Stock Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.01. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.02. Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.04. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . 25
SECTION 4.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.07. SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.10. Tax Matters; Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.11. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.12. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.13. Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.14. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.15. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.16. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.17. Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.19. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.20. Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.21. Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.22. Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.02. Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.03. Affirmative and Negative Covenants of Parent . . . . . . . . . . . . . . . . . 36
SECTION 5.04. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.02. Registration Statement; Proxy Statements . . . . . . . . . . . . . . . . . . . 39
SECTION 6.03. Appropriate Action; Consents; Filings . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.04. Affiliates; Pooling; Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.06. NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.07. Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.08. Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.09. Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.10. Indemnification; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This Agreement . . . . . . . . . 45
SECTION 7.02. Additional Conditions to Obligations of the Parent Companies . . . . . . . . . 46
SECTION 7.03. Additional Conditions to Obligations of the Company . . . . . . . . . . . . . . 47
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.05. Fees, Expenses and Other Payments . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements . . . . . . . . . . 53
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.04. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.06. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.08. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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SECTION 9.09. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . 56
SECTION 9.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.13. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.14. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXHIBITS
Exhibit A Company Affiliate's Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September __, 1997
(this "Agreement"), is by and among Affiliated Computer Services, Inc., a
Delaware corporation ("Parent"), ACS Acquisition Corp., a Maryland corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and Computer Data
Systems, Inc., a Maryland corporation (the "Company"). Parent and Merger Sub
are sometimes referred to herein as the "Parent Companies."
WHEREAS, the parties hereto desire that Merger Sub, upon the terms and
subject to the conditions of this Agreement and in accordance with the Maryland
General Corporation Law ("Maryland Law"), merge with and into the Company (the
"Merger"), and pursuant thereto, the issued and outstanding shares of common
stock, $0.10 par value, of the Company ("the Company Common Stock") not owned
directly or indirectly by the Company or the Parent Companies or their
respective subsidiaries be converted into the right to receive shares of Class
A common stock, $0.01 par value, of Parent (the "Parent Common Stock"), as set
forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is advisable and in the best interests of the Company and its
stockholders and has authorized the execution of this Agreement and the
consummation of the transactions contemplated hereby;
WHEREAS, the Board of Directors of Parent has determined that the
Merger is fair to, and in the best interests of, Parent and its stockholders
and has approved and adopted this Agreement and the transactions contemplated
hereby;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted
this Agreement and Parent, as the sole stockholder of Merger Sub, will adopt
this Agreement promptly after the execution hereof by the parties hereto;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for financial accounting purposes;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Maryland Law, at
the Effective Time (as defined in Section 1.02 of this Agreement), Merger Sub
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). Certain terms used in this Agreement are defined in Section
9.03 hereof.
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
Agreement shall have been terminated pursuant to Section 8.01, and subject to
the satisfaction or waiver of the conditions set forth in Article VII, the
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx &
Xxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx as soon as practicable (but in
any event within two business days) after the satisfaction or waiver of the
conditions set forth in Article VII, or at such other date, time and place as
Parent and the Company may agree; provided, that the conditions set forth in
Article VII shall have been satisfied or waived at or prior to such time. The
date on which the Closing takes place is referred to herein as the "Closing
Date." As promptly as practicable on the Closing Date, the parties hereto
shall cause the Merger to be consummated by filing Articles of Merger with the
State Department of Assessments and Taxation of the State of Maryland, in such
form as required by, and executed in accordance with the relevant provisions
of, Maryland Law (the date and time of such filing, or such later date or time
agreed upon by Parent and the Company and set forth therein, being the
"Effective Time"). For all Tax purposes, the Closing shall be effective at the
end of the day on the Closing Date.
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Maryland Law.
SECTION 1.04. Articles of Incorporation; Bylaws. At the Effective
Time, the charter of the Company, as in effect immediately prior to the
Effective Time, shall be the charter of the Surviving Corporation and
thereafter shall continue to be its charter until amended as provided therein
and pursuant to Maryland Law. At the Effective Time, the bylaws of the
Company, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation and thereafter shall continue to be its
bylaws until amended as provided therein and pursuant to Maryland Law.
SECTION 1.05. Directors and Officers. In connection with the
Merger, the parties hereto shall take such actions as may be necessary or
appropriate to cause (i) the directors of Merger Sub immediately prior to the
Effective Time to be the directors of the Surviving Corporation immediately
after the Effective Time, each to hold office in accordance with the charter
and bylaws of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified; (ii) the officers of
the Company immediately prior to the Effective Time to be the officers of the
Surviving Corporation immediately after the Effective
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Time, each to hold office in accordance with the bylaws of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified; and (iii) the directors of the Company immediately
prior to the Effective Time (each such director having resigned from the CDSI
board of directors as of the Effective Time) to be advisory directors of the
Surviving Corporation immediately after the Effective Time, each to hold office
in accordance with the bylaws of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified. In
connection with the Merger, at the Effective Time or immediately thereafter,
Parent shall take such action as may be necessary or appropriate to cause
Xxxxxxxx Xxxxxxx and Xxxxx Xxxxxxx to be directors of Parent immediately after
the Effective Time (and, in the event a staggered board is approved at the 1997
Annual Meeting of Stockholders, for two-year and one-year terms, respectively),
each to hold office in accordance with the charter and bylaws of Parent, in
each case until their respective successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
further action on the part of the Parent Companies, the Company or their
respective stockholders:
(a) Subject to the other provisions of this Article II,
each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (excluding any Company Common Stock
described in Section 2.0l(b) of this Agreement) shall be converted
into the right to receive 1.759 shares of Parent Common Stock (the
"Exchange Ratio"). Notwithstanding the foregoing, if between the date
of this Agreement and the Effective Time the outstanding shares of
Parent Common Stock or Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
(b) Notwithstanding any provision of this Agreement to
the contrary, each share of Company Common Stock owned by Parent or
any direct or indirect wholly owned subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(c) All shares of the Company Common Stock shall cease to
be outstanding and shall automatically be canceled and retired, and
each certificate previously evidencing the Company Common Stock
outstanding immediately prior to the Effective Time (other than
Company Common Stock described in Section 2.01(b) of this
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Agreement) ("Converted Shares") shall thereafter represent the right
to receive, subject to Section 2.02(e) of this Agreement, that number
of shares of Parent Common Stock determined pursuant to the Exchange
Ratio and, if applicable, cash pursuant to Section 2.02(e) of this
Agreement (the "Merger Consideration"). The holders of certificates
previously evidencing Converted Shares shall cease to have any rights
with respect to such Converted Shares except as otherwise provided
herein or by law. Such certificates previously evidencing Converted
Shares shall be exchanged for certificates evidencing whole shares of
Parent Common Stock upon the surrender of such Certificates in
accordance with the provisions of Section 2.02 of this Agreement,
without interest. No fractional shares of Parent Common Stock shall be
issued in connection with the Merger and, in lieu thereof, a cash
payment shall be made pursuant to Section 2.02(e) of this Agreement.
(d) Each share of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one share of common
stock, par value $0.10 per share, of the Surviving Corporation.
SECTION 2.02. Exchange and Surrender of Certificates.
(a) As soon as practicable after the Effective Time, each
holder of a certificate previously evidencing Converted Shares shall
be entitled, upon surrender thereof to Parent or an exchange agent
designated by Parent (as specified in the letter of transmittal
described in Section 2.02 (c)), to receive in exchange therefor a
certificate or certificates representing the number of whole shares of
Parent Common Stock into which the Converted Shares so surrendered
shall have been converted as aforesaid, in such denominations and
registered in such names as such holder may request. Each holder of
Converted Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock shall, upon surrender of the certificate
or certificates representing such shares held by such holder as
aforesaid, be paid an amount in cash in accordance with the provisions
of Section 2.02(e). Until so surrendered and exchanged, each
certificate previously evidencing Converted Shares shall represent
solely the right to receive Parent Common Stock and cash in lieu of
fractional shares that the holder thereof is entitled to receive
hereunder. Unless and until any such certificates shall be so
surrendered and exchanged, no dividends or other distributions payable
to the holders of record of Parent Common Stock as of any time on or
after the Effective Time shall be paid to the holders of such
certificates previously evidencing Converted Shares; provided,
however, that, upon any such surrender and exchange of such
certificates, there shall be paid to the record holders of the
certificates issued and exchanged therefor (i) the amount, without
interest thereon, of dividends and other distributions, if any, with a
record date on or after the Effective Time theretofore paid with
respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other
distributions, if any, with a record date on or after the Effective
Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Parent Common
Stock. Notwithstanding the foregoing, except as
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otherwise provided by applicable law, no party hereto (or Parent's
exchange agent) shall be liable to any former holder of Converted
Shares for any cash, Parent Common Stock or dividends or distributions
thereon delivered to a public official pursuant to applicable
abandoned property, escheat or similar law.
(b) All shares of Parent Common Stock issued upon the
surrender for exchange of certificates previously representing
Converted Shares in accordance with the terms hereof (including any
cash paid pursuant to Section 2.02 (e)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Converted
Shares. At and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Company Common Stock that was outstanding immediately
prior to the Effective Time. If, after the Effective Time,
certificates which previously evidenced Converted Shares are presented
to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article II.
(c) As promptly as practicable after the Effective Time,
Parent will send or cause to be sent to each record holder of Company
Common Stock at the Effective Time a letter of transmittal and other
appropriate materials for use in surrendering certificates as
contemplated hereby.
(d) If any certificate for shares of Parent Common Stock
is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the certificate so surrendered
shall be properly endorsed, with signatures guaranteed, and otherwise
in proper form for transfer and that the person requesting such
exchange shall have paid to Parent or its exchange agent any transfer
or other taxes required by reason of the issuance of a certificate for
shares of Parent Common Stock in any name other than that of the
registered holder of the certificate surrendered, or established to
the satisfaction of Parent or its transfer agent that such tax has
been paid or is not payable.
(e) No certificates or scrip evidencing fractional shares
of Parent Common Stock shall be issued upon the surrender for exchange
of certificates, and such fractional share interests will not entitle
the owner thereof to any rights of a stockholder of Parent. In lieu of
any such fractional shares, each holder of a certificate previously
evidencing Converted Shares, upon surrender of such certificate for
exchange pursuant to this Article II, shall be paid an amount in cash
(without interest), rounded to the nearest cent, determined by
multiplying (a) the per share closing price as reported on the New
York Stock Exchange (the "NYSE") Composite Tape of Parent Common Stock
on the date of the Effective Time (or, if shares of Parent Common
Stock do not trade on the NYSE on such date, the first date of trading
of Parent Common Stock on the NYSE after the Effective Time) by (b)
the fractional interest to which such holder would otherwise be
entitled (after taking into account all Converted Shares held of
record by such holder at the Effective Time).
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(f) Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any
former holder of Converted Shares such amounts as Parent (or any
affiliate thereof) is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld
by Parent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the former holder of the
Converted Shares in respect of which such deduction and withholding
was made by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent Companies
that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each
of the Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
other than where the failure to be so duly qualified and in good standing could
not reasonably be expected to have a Company Material Adverse Effect. The term
"Company Material Adverse Effect" as used in this Agreement shall mean any
change or effect that, individually or when taken together with all other such
changes or effects (but after giving effect to application of insurance
proceeds or other rights of indemnification in respect of such change or
effect), could reasonably be expected to be materially adverse to the business,
operations, assets, financial condition results of operations or prospects of
the Company and its subsidiaries, taken as a whole. Schedule 3.01 of the
disclosure schedule delivered to Parent by the Company on the date hereof (the
"Company Disclosure Schedule") sets forth, as of the date of this Agreement, a
true and complete list of all the Company's directly or indirectly owned
subsidiaries, together with the jurisdiction of incorporation or organization
of each subsidiary and the percentage of each subsidiary's outstanding capital
stock or other equity interests owned by the Company or another subsidiary of
the Company. Except as set forth in Schedule 3.01 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries owns an equity
interest in any other partnership or joint venture arrangement or other
business entity.
SECTION 3.02. Charter and Bylaws. The Company has heretofore
furnished or made available to Parent complete and correct copies of the
charter and the bylaws or the equivalent organizational documents, in each case
as amended or restated, of the Company and each of its subsidiaries. Except as
set forth in Schedule 3.02 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries is in violation of any of the provisions of
its charter or bylaws (or equivalent organizational documents).
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SECTION 3.03. Capitalization.
(a) The authorized capital stock of the Company consists
of 30,000,000 shares of Company Common Stock, of which as of July 1,
1997 (i) 6,260,311 shares were issued and outstanding, (ii) 431,617
shares were reserved for future issuance pursuant to outstanding stock
options ("Stock Options") granted pursuant to the 1991 Long Term
Incentive Plan (the "Option Plan") and (iii) 314,437 shares were
reserved for future issuance pursuant to stock options eligible for
grant pursuant to the Option Plan. Except as described in this
Section 3.03 or in Schedule 3.03(a) of the Company Disclosure Schedule,
as of the date of this Agreement, no shares of capital stock of the
Company are reserved for any purpose. Except as described in Schedule
3.03(a) of the Company Disclosure Schedule, each of the outstanding
shares of capital stock of, or other equity interests in, each of the
Company and its subsidiaries is duly authorized, validly issued, and,
in the case of shares of capital stock, fully paid and nonassessable,
and has not been issued in violation of (nor are any of the authorized
shares of capital stock of, or other equity interests in such entities
subject to) any preemptive or similar rights created by statute, the
charter or bylaws (or the equivalent organizational documents) of the
Company or any of its subsidiaries, or any agreement to which the
Company or any of its subsidiaries is a party or bound, and such
outstanding shares or other equity interests owned by the Company or a
subsidiary of the Company are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations on the
Company's or such subsidiary's voting rights, charges or other
encumbrances of any nature whatsoever.
(b) Except as set forth in Section 3.03(a) above or in
Schedule 3.03(b)(i) to the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or
commitments of any character to which the Company or any of its
subsidiaries is a party relating to the issued or unissued capital
stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to grant, issue or sell any shares
of the capital stock of the Company or any of its subsidiaries, by
sale, lease, license or otherwise. Except as set forth in Schedule
3.03(b)(ii) to the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its
subsidiaries to (A) repurchase, redeem or otherwise acquire any shares
of the Company Common Stock or other capital stock of the Company, or
the capital stock or other equity interests of any subsidiary of the
Company; or (B) (other than advances to subsidiaries in the ordinary
course of business) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations
of, any subsidiary of the Company or any other person. Except as
described in Schedule 3.01 or Schedule 3.03(b)(iii) to the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries
(x) directly or indirectly owns, (y) has agreed to purchase or
otherwise acquire or (z) holds any interest convertible into or
exchangeable or exercisable for 5% or more of the capital stock of any
corporation, partnership, joint venture or other business association
or entity (other than the subsidiaries of the Company set forth in
Schedule 3.01 of the Company Disclosure Schedule). Except as set
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forth in Schedule 3.03(b)(iv) of the Company Disclosure Schedule and
except for any agreements, arrangements or commitments between the
Company and its subsidiaries or between such subsidiaries, there are
no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company or any of its
subsidiaries. There are no voting trusts, proxies or other agreements
or understandings to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or
any of its subsidiaries.
(c) The Company has delivered or made available to Parent
complete and correct copies of (i) the Option Plan and the forms of
Stock Options issued pursuant to the Option Plan, including all
amendments thereto and (ii) all Stock Options which are not in the
respective forms thereof provided under clause (i) above. Schedule
3.03(c) to the Company Disclosure Schedule sets forth a complete and
correct list of all outstanding Stock Options, including any not
granted pursuant to the Option Plan, setting forth as of the date
hereof (i) the number and type of Stock Options outstanding, (ii) the
exercise price of each outstanding Stock Option, (iii) the number of
Stock Options exercisable, and (iv) assuming no amendment or waiver of
the terms thereof, the number of Stock Options which will become
exercisable on account of the Merger or any other transaction
contemplated hereby.
SECTION 3.04. Authority. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby
(subject to, with respect to the Merger, the approval of the Merger by the
stockholders of the Company as described in Section 3.16 hereof). The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby (subject to, with respect to the Merger,
the approval of the Merger by the stockholders of the Company as described in
Section 3.16 hereof). This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Parent Companies, constitutes the legal, valid and binding obligation of
the Company.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 3.05 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by
the Company does not, and the consummation of the transactions
contemplated hereby will not (i) conflict with or violate the charter
or bylaws, or the equivalent organizational documents, in each case as
amended or restated, of the Company or any of its subsidiaries, (ii)
conflict with or violate any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to the Company or any of its
subsidiaries or by which any of their respective properties is bound
or subject or (iii)
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result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation
of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by or to which the Company or
any of its subsidiaries or any of their respective properties is bound
or subject, except in the case of clauses (ii) and (iii) where such
conflict, violation, breach, default, right, requirement, lien or
encumbrance could not reasonably be expected to have a Company
Material Adverse Effect. The Board of Directors of the Company has
taken all actions necessary under Maryland Law, including approving
the transactions contemplated by this Agreement and taking appropriate
actions under any stockholder protection laws applicable to the
Company or any of its subsidiaries, to ensure that restrictions on
business combinations or the owning or voting of the capital stock of
the Company or any of its subsidiaries do not, and will not apply with
respect or as a result of the transactions contemplated by this
Agreement.
(b) The execution and delivery of this Agreement by the
Company does not, and consummation of the transactions contemplated
hereby will not, require the Company to obtain any consent, license,
permit, approval, waiver, authorization or order of, or to make any
filing with or notification to, any governmental or regulatory
authority, domestic or foreign (collectively, "Governmental
Entities"), except for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
state securities or blue sky laws ("Blue Sky Laws"), the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and those matters referenced in Schedule 3.05(b) of the
Company Disclosure Schedule, and the filing and recordation of
appropriate merger documents as required by Maryland Law.
SECTION 3.06. Permits; Compliance. Except as set forth in Schedule
3.06 of the Company Disclosure Schedule, each of the Company and its
subsidiaries is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Company Permits"), and there is no action, proceeding or
investigation pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Except as set forth
in Schedule 3.06 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries is in material conflict with, or in material default or
violation of (a) any Law applicable to the Company or any of its subsidiaries
or by or to which any of their respective properties is bound or subject or (b)
any of the Company Permits. Except as set forth in Schedule 3.06 of the
Company Disclosure Schedule, since June 30, 1995, neither the Company nor any
of its subsidiaries has received from any Governmental Entity any written
notification with respect to possible material conflicts, defaults or
violations of Laws.
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SECTION 3.07. SEC Reports; Financial Statements.
(a) Since June 30, 1995, the Company and its subsidiaries
have filed all forms, reports, statements and other documents required
to be filed with the Securities and Exchange Commission (the "SEC")
including, without limitation, (l) all Annual Reports on Form l0-K,
(2) all Quarterly Reports on Form l0-Q, (3) all proxy statements
relating to meetings of stockholders (whether annual or special), (4)
all Current Reports on Form 8-K and (5) all other reports, schedules,
registration statements or other documents (collectively referred to
as the "Company SEC Reports"). The Company SEC Reports, including all
the Company SEC Reports filed after the date of this Agreement and
prior to the Effective Time, (i) were or will be prepared in all
material respects in accordance with the requirements of applicable
Law and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Company SEC Reports filed prior to the Effective Time (i) have been or
will be prepared in accordance with the published rules and
regulations of the SEC and generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except (A) to the extent required by changes in generally accepted
accounting principles, (B) as may be indicated in the notes thereto,
or (C) for consolidated financial statements included in Quarterly
Reports on Form 10-Q, which are not prepared in accordance with GAAP)
and (ii) fairly present or will fairly present the consolidated
financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations
and cash flows for the periods indicated (including reasonable
estimates of normal and recurring year-end adjustments), except that
(x) any unaudited interim financial statements were or will be subject
to normal and recurring year-end adjustments and (y) any pro forma
financial statements contained in such consolidated financial
statements are not necessarily indicative of the consolidated
financial position of the Company and its subsidiaries as of the
respective dates thereof and the consolidated results of operations
and cash flows for the periods indicated.
SECTION 3.08. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement
or as contemplated by this Agreement or as set forth in Schedule 3.08 of the
Company Disclosure Schedule, since June 30, 1997, the Company and its
subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and there has not been:
(i) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any material assets of the Company or any of its
subsidiaries; (ii) any material change by the Company or its subsidiaries in
their accounting methods, principles or practices (other than changes
contemplated by GAAP or applicable SEC regulations); (iii) except for dividends
by a subsidiary of the Company to the Company or another subsidiary of the
Company, dividends
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paid by a subsidiary prior to the time it became a subsidiary, and except for
regular semi-annual dividends with respect to the Company Common Stock in an
amount not to exceed $0.07 per share, any declaration, setting aside or payment
of any dividends or distributions in respect of shares of the Company Common
Stock or the shares of stock of, or other equity interests in, any majority
owned subsidiary of the Company, or any redemption, purchase or other
acquisition by the Company or any of its subsidiaries of any of the Company's
securities or any of the securities of any subsidiary of the Company; (iv) any
increase in the benefits under, or the establishment or amendment of, any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any increase in the
compensation payable or to become payable to directors, officers or employees
of the Company or its subsidiaries, except for (A) increase in salaries or
wages payable or to become payable in the ordinary course of business and
consistent with past practice or (B) the granting of stock options pursuant to
the Option Plans in the ordinary course of business to employees of the Company
or its subsidiaries who are not directors or executive officers of the Company;
(v) any revaluation by the Company or any of its subsidiaries of any of their
assets, including the writing down of the value of inventory or the writing
down or off of notes or accounts receivable, other than in the ordinary course
of business and consistent with past practices; (vi) any entry by the Company
or any of its subsidiaries into any commitment or transaction material to the
Company and its subsidiaries, taken as a whole (other than this Agreement and
the transactions contemplated hereby or other than in the ordinary course of
business); (vii) any material increase in indebtedness for borrowed money; or
(viii) any Company Material Adverse Effect.
SECTION 3.09. Absence of Litigation. Except as set forth in
Schedule 3.09 of the Company Disclosure Schedule, there is no claim, action,
suit, litigation, proceeding, arbitration or, to the knowledge of the Company,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries or any
properties or rights of the Company or any of its subsidiaries (except for
claims, actions, suits, litigation, proceedings, arbitrations or investigations
which could not reasonably be expected to have a Company Material Adverse
Effect), and neither the Company nor any of its subsidiaries is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Government Entity or arbitrator, including,
without limitation, cease-and-desist or other orders.
SECTION 3.10. Employee Benefit Plans; Labor Matters.
(a) Set forth in Schedule 3.10 to the Company
Disclosure Schedule is a complete and correct list of all "employee
benefit plans" (as defined in the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), all plans or policies providing
for "fringe benefits" (including but not limited to vacation, paid
holidays, personal leave, employee discount, educational benefit or
similar programs), and each other bonus, incentive compensation,
deferred compensation, profit sharing, stock,
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severance, retirement, health, life, disability, group insurance,
employment, stock option, stock purchase, stock appreciation right,
supplemental unemployment, layoff, consulting, or any other similar
plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any
trust, escrow or other agreement related thereto, which (a) is or has
been established, maintained or contributed to by the Company or any
ERISA Affiliate and with respect to which the Company or any ERISA
Affiliate has any liability, or (b) provides benefits, or describes
policies or procedures applicable, to any officer, employee, director,
former officer, former employee or former director of the Company or
any ERISA Affiliate, or any dependent thereof, regardless of whether
funded (each, an "Employee Plan," and collectively, the "Employee
Plans").
(b) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, no written or oral representations have
been made to any employee or officer or former employee or officer of
the Company or its subsidiaries promising or guaranteeing any coverage
under any employee welfare plan for any period of time beyond the end
of the current plan year (except to the extent of coverage required
under Code Section 4980B). Except as set forth in Schedule 3.10 of
the Company Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment
or vesting, or increase the amount of compensation (including amounts
due under Employee Plans) due to any employee, officer, former
employee or former officer of the Company, or its subsidiaries.
(c) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, all employees of the Company and its
subsidiaries are terminable at the will of the Company, and neither
the Company, nor any present or former director, or officer, employee
or agent of the Company has made any binding commitments of the
Company or any of its subsidiaries, written or verbal, to any present
or former director, officer, agent or employee concerning his term,
condition, benefits or employment.
(d) With respect to each Employee Plan, the Company
has furnished or made available to Buyer true, correct and complete
copies of (i) the plan documents and summary plan description; (ii)
the most recent determination letter received from the Internal
Revenue Service; (iii) the annual reports required to be filed for the
three most recent plan years of each such Employee Plan; (iv) all
related trust agreements, insurance contracts or other funding
agreements which implement such Employee Plan; and (v) all other
documents, records or other materials related thereto reasonably
requested by Buyer.
(e) The Retirement Plan for Employees of Computer
Data Systems, Inc., the 401(k) Savings Plan for Employees of Computer
Data Systems, Inc., the Supplemental Deferred Compensation Plan and
the Supplementary Benefit Plan for Computer Data Systems, Inc.
Non-Exempt Employees Assigned to Central Xxxx Xxxxxxxx Xx.
XX00X00XXX0000 are (i) the only employee pension benefit plans
maintained by the Company or any ERISA Affiliate that are intended to
qualify under
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Code Section 401; and (ii) meet the qualification requirements of the
Code in form and operation; and such plans, and each trust (if any)
forming a part thereof, has received a favorable determination letter
from the Internal Revenue Service as to the qualification under the
Code of such plan and the tax-exempt status of such related trust,
and, except as set forth in Schedule 3.10 to the Company Disclosure
Statement, nothing has occurred since the date of such determination
letter that may adversely affect the qualification of such plan or the
tax-exempt status of such related trust. Except as set forth in
Schedule 3.10 of the Company Disclosure Schedule, all Employee Plans
purporting to qualify for special tax treatment under any provision of
the Code, including, without limitation, Code Sections 79, 105, 106,
125, 127, 129, 132, 421 or 501(c)(9) meet the requirement of such
sections in form and in operation. All reports, returns or filings
required by any government agency have been timely filed in accordance
with all applicable requirements, except as could not reasonably be
expected to have a Company Material Adverse Effect.
(f) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, no condition exists that would subject
the Company, any ERISA Affiliate or Parent to any excise tax, penalty
tax or fine related to any Employee Plan, except as could not
reasonably be expected to have a Company Material Adverse Effect.
(g) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, there are no agreements which will or may
provide payments to any officer, employee, stockholder, or highly
compensated individual which, in connection with or as a result of the
Merger and the transactions contemplated by this Agreement, will be
"parachute payments" under Code Section 280G that are nondeductible to
the Company or subject to tax under Code Section 4999 for which the
Company or any ERISA Affiliate would have withholding liability.
(h) There is no Employee Plan that is subject to Part
3 of Title I of ERISA or Title IV of ERISA; each Employee Plan has
been operated in all material respects in compliance with ERISA, the
Code and all other applicable laws; none of the Employee Plans is a
"multiple employer plan" or "multiemployer plan" (as described or
defined in ERISA or the Code), nor has the Company or any ERISA
Affiliate ever contributed or been required to contribute to any such
plan; there are no material unfunded liabilities existing under any
Employee Plans, and each Employee Plan could be terminated as of the
Closing Date without any material liability to the Parent, the Company
or any ERISA Affiliate.
(i) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, there are no material actions, suits,
claims, audits, or investigations pending or, to the knowledge of the
Company, threatened against, or with respect to, any of the Employee
Plans or their assets, other than benefit claims in the normal course
of plan operations; and except as set forth in Schedule 3.10 of the
Company Disclosure Schedule and except as could not reasonably be
expected to have a Company Material Adverse Effect, all contributions
required to be made to the Employee Plans have been made.
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(j) Neither the Company nor any of its subsidiaries
is a party to any collective bargaining or other labor union contract.
No collective bargaining agreement is being negotiated by the Company
or any of its subsidiaries. Except as set forth in Schedule 3.10 of
the Company Disclosure Schedule, the Company and its subsidiaries are
in compliance in all material respects with all applicable laws
respecting employment, employment practices and wages and hours.
There is no pending or threatened labor dispute, strike or work
stoppage against the Company or any of its subsidiaries which may
materially interfere with the respective business activities of the
Company or any of its subsidiaries. None of the Company, its
subsidiaries or any of their respective representatives or employees
has committed any material unfair labor practices in connection with
the operation of the respective businesses of the Company or its
subsidiaries, and there is no material pending or threatened charge or
complaint against the Company or any of its subsidiaries by the
National Labor Relations Board or any comparable state agency.
(k) Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to or is bound by any severance agreements,
programs, policies, plans or arrangements, whether or not written.
Schedule 3.10(d) of the Company Disclosure Schedule sets forth, and
the Company has provided or made available to Parent true and correct
copies of, (i) all employment agreements with officers or employees of
the Company or its subsidiaries; (ii) all agreements with consultants
of the Company or its subsidiaries obligating the Company or any
subsidiary to make annual cash payments in an amount exceeding
$50,000; and (iii) all non-competition agreements with the Company.
(l) Set forth on Schedule 3.10 of the Company
Disclosure Schedule is a complete listing of all employee benefit
plans that are currently being reviewed by the Internal Revenue
Service or Department of Labor under an Amnesty Program. Amnesty
Program includes, but is not limited to any voluntary or involuntary
entry into the Voluntary Compliance Resolutions programs (VCR),
Closing Agreement Programs (CAP), or any other amnesty-type programs.
SECTION 3.11. Taxes.
(a) Except for such matters as would not have a Company
Material Adverse Effect, and except as set forth on Schedule 3.11(a)
to the Company Disclosure Schedule, (i) all returns and reports ("Tax
Returns") of or with respect to any Tax which is required to be filed
on or before the Closing Date by or with respect to the Company or any
its subsidiaries have been or will be duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items
required to be included in each such Tax Return have been or will be
so included and all information provided in each such Tax Return is
true, correct and complete in all material respects, (iii) all Taxes
which have become or will become due with respect to the period
covered by each such Tax Return have been or will be timely paid in
full, (iv) all withholding Tax requirements imposed on or with respect
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to the Company or any of its subsidiaries have been or will be
satisfied in full in all material respects, and (v) no penalty,
interest or other charge is or will become due with respect to the
late filing of any such Tax Return or late payment of any such Tax,
except where such penalty, interest or charge could not reasonably be
expected to have a Company Material Adverse Effect.
(b) All Tax Returns of or with respect to the Company or
any of its subsidiaries, with unexpired or extended statutes of
limitations, which have not been audited by the applicable
governmental authority are set forth in Schedule 3.11(b) to the
Company Disclosure Schedule.
(c) Except as set forth on Schedule 3.11(c) to the
Company Disclosure Schedule, there is not in force any extension of
time with respect to the due date for the filing of any Tax Return of
or with respect to the Company or any its subsidiaries or any waiver
or agreement for any extension of time for the assessment, collection
or payment of any Tax of or with respect to the Company or any of its
subsidiaries.
(d) There are no pending audits, actions, proceedings,
investigations, disputes or claims with respect to or against the
Company or any of its subsidiaries for or with respect to any Taxes,
no assessment, deficiency or adjustment has been assessed or, to the
Company's knowledge, proposed with respect to any Tax Return of or
with respect to the Company or any of its subsidiaries, and there is
no reasonable basis on which any claim for material Taxes can be
asserted against the Company or any of its subsidiaries, other than
those disclosed on Schedule 3.11(d) to the Company Disclosure Schedule
(true and correct copies of all such audit or similar reports having
been made available to Parent) or which could not reasonably be
expected to have a Company Material Adverse Effect.
(e) Except as set forth in Schedule 3.11(e) to the
Company Disclosure Schedule, the total amounts set up as liabilities
for current and deferred Taxes in the financial statements referred to
in Section 3.07 of this Agreement are sufficient, in accordance with
GAAP, to cover in all material respects the payment of all Taxes,
whether or not assessed or disputed, which are, or are hereafter found
to be, or to have been, due by or with respect to the Company and any
of its subsidiaries up to and through the periods covered thereby.
(f) The Company has previously delivered or made
available to Parent true and complete copies of each written Tax
allocation or sharing agreement and a true and complete description of
each unwritten Tax allocation or sharing arrangement affecting the
Company or any of its subsidiaries.
(g) Except for statutory liens for current Taxes not yet
due, no material liens for Taxes exist upon the assets of any of the
Company or its subsidiaries.
(h) Neither the Company nor any of its subsidiaries will
be required to include any amount in income for any taxable period
beginning after [July 1, 1997] as a result of
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a change in accounting method for any taxable period ending on or
before [June 30, 1997] or pursuant to any agreement with any Tax
authority with respect to any such taxable period.
(i) Except as set forth on Schedule 3.11(i) to the
Company Disclosure Schedule, none of the property of the Company or
any of its subsidiaries is held in an arrangement for which
partnership Tax Returns are being filed, and neither the Company nor
any of its subsidiaries owns any interest in any controlled foreign
corporation (as defined in section 957 of the Code), passive foreign
investment company (as defined in section 1296 of the Code) or other
entity the income of which is required to be included in the income of
the Company or such subsidiary.
(j) Except as set forth on Schedule 3.11(j) to the
Company Disclosure Schedule, none of the property of the Company or
any of its subsidiaries is subject to a safe-harbor lease (pursuant to
Section 168(f) (8) of the Internal Revenue Code of 1954 as in effect
after the Economic Recovery Tax Act of 1981 and before the Tax Reform
Act of 1986) or is "tax-exempt use property" (within the meaning of
Section 168(h) of the Code) or "tax-exempt bond financed property"
(within the meaning of Section 168(g)(5) of the Code).
(k) Except as set forth on Schedule 3.11(k) to the
Company Disclosure Schedule, none of the transactions contemplated by
this Agreement will result in any Tax liability or the recognition of
any item of income or gain to the Company or any of its subsidiaries.
(l) Neither the Company nor any of its subsidiaries has
made an election under Section 341(f) of the Code.
(m) Except as set forth in Schedule 3.11 of the Company
Disclosure Schedule, neither the Company nor any subsidiary has ever
been a member of an affiliated group of corporations (as defined in
Section 1504(a) of the Internal Revenue Code) other than the group of
which the Company is currently the common parent.
(n) Except as set forth in Schedule 3.11 of the Company
Disclosure Schedule, neither the Company nor any subsidiary is or has
ever been subject to Taxes in any jurisdiction outside the United
States.
SECTION 3.12. Tax Matters; Pooling.
(a) Neither the Company nor, to the knowledge of the
Company, any of its affiliates has taken or agreed to take any action
that would prevent the Merger from (a) constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code or (b)
being treated for financial accounting purposes as a "pooling of
interests" in accordance with GAAP and the rules, regulations and
interpretations of the SEC (a "Pooling Transaction").
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(b) To the knowledge of the Company, there is no plan or
intention by any stockholder of the Company who owns five percent or
more of the Company Common Stock, and there is no plan or intention on
the part of any of the remaining stockholders of the Company Common
Stock, to sell, exchange or otherwise dispose of a number of shares of
Parent Common Stock to be received in the Merger that would reduce the
Company stockholders' ownership of Parent Common Stock to a number of
shares having a value, as of the Effective Time, of less than 45
percent of the value of all of the Company Common Stock (including
shares of the Company Common Stock exchanged for cash in lieu of
fractional shares of Parent Common Stock) outstanding immediately
prior to the Effective Time.
(c) Immediately following the Merger, the Company will
hold at least 90 percent of the fair market value of its net assets
and at least 70 percent of the fair market value of its gross assets
held immediately prior to the Merger. For purposes of this
representation, amounts used by the Company to pay Merger expenses and
all redemptions and distributions made by the Company will be included
as assets of the Company immediately prior to the Merger.
(d) The Company and the holders of the Company Common
Stock will each pay their respective expenses, if any, incurred in
connection with the Merger.
(e) There is no intercorporate indebtedness existing
between the Company and Parent or between the Company and Merger Sub
that was issued, acquired, or will be settled at a discount.
(f) The Company is not an investment company as defined
in Section 368(a) (2) (F) (iii) and (iv) of the Code.
(g) The Company is not under the jurisdiction of a court
in a title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
SECTION 3.13. Affiliates. Schedule 3.13 to the Company Disclosure
Schedule identifies all persons who the Company considers to be affiliates of
the Company under Rule 145 of the Securities Act. Concurrently with the
execution and delivery of this Agreement, the Company has delivered to Parent
an executed letter agreement, substantially in the form of Exhibit A hereto,
from certain of such persons identified on Schedule 3.13 to the Company
Disclosure Schedule and will deliver to Parent within ten days after the date
of this Agreement an executed letter agreement, substantially in the form of
Exhibit A hereto, from each of the other persons identified on Schedule 3.13 to
the Company Disclosure Schedule.
SECTION 3.14. Certain Business Practices. None of the Company, any
of its subsidiaries or any directors or officers, or to the knowledge of the
Company any agents or employees, of the Company or any of its subsidiaries has
individually or in the aggregate in any material respect (i) used any funds for
unlawful contributions, gifts, entertainment or other
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unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
SECTION 3.15. Environmental Matters. Except for matters disclosed
in Schedule 3.15 of the Company Disclosure Schedule and except for matters that
could not reasonably be expected to result, individually or in the aggregate
with all other such matters, in liability to the Company or any of its
subsidiaries in excess of $750,000, (i) the properties, operations and
activities of the Company and its subsidiaries are in compliance with all
applicable Environmental Laws; (ii) the Company and its subsidiaries and the
properties and operations of the Company and its subsidiaries are not subject
to any existing, pending or, to the knowledge of the Company, threatened
action, suit, claim, investigation, inquiry or proceeding by or before any
governmental authority under any Environmental Laws; (iii) all notices,
permits, licenses, or similar authorizations, if any, required to be obtained
or filed by the Company or any of its subsidiaries under any Environmental Laws
in connection with any aspect of the business of the Company or its
subsidiaries, including without limitation those relating to the treatment,
storage, disposal or release of a hazardous or otherwise regulated substance,
have been duly obtained or filed and will remain valid and in effect after the
Merger, and the Company and its subsidiaries are in compliance with the terms
and conditions of all such notices, permits, licenses and similar
authorizations; (iv) the Company and its subsidiaries have satisfied and are
currently in compliance with all financial responsibility requirements
applicable to their operations and imposed by any governmental authority under
any Environmental Laws, and the Company and its subsidiaries have not received
any notice of noncompliance with any such financial responsibility
requirements; (v) to the Company's knowledge, there are no physical or
environmental conditions existing on any property of the Company or its
subsidiaries or resulting from the Company's or such subsidiaries' operations
or activities, past or present, at any location, that would give rise to any
on-site or off-site remedial obligations imposed on the Company or any of its
subsidiaries under any Environmental Laws or that would impact the soil,
groundwater or surface water or human health (to the extent of exposure to
hazardous substances); (vi) to the Company's knowledge, since the effective
date of the relevant requirements of applicable Environmental Laws and to the
extent required by such applicable Environmental Laws, all hazardous or
otherwise regulated substances generated by the Company and its subsidiaries
have been transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at treatment,
storage, and disposal facilities authorized under Environmental Laws to treat,
store or dispose of such substances and wastes; (vii) there has been no
exposure of any person or property to hazardous substances or any pollutant or
contaminant, nor has there been any release of hazardous substances, or any
pollutant or contaminant into the environment by the Company or its
subsidiaries or in connection with their properties or operations that could
reasonably be expected to give rise to any claim against the Company or any of
its subsidiaries for damages or compensation; and (viii) subject to
restrictions necessary to preserve any attorney client privilege, the Company
and its subsidiaries have made available to Parent all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters in the possession of the
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Company or its subsidiaries relating to any of the current or former properties
or operations of the Company and its subsidiaries.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, or orders of
any Governmental Entity pertaining to health (to the extent of exposure to
hazardous substances) the environment currently in effect in any and all
jurisdictions in which the Company and its subsidiaries own property or conduct
business, including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended,
the Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990 ("OPA"), any
state laws implementing the foregoing federal laws, and all other environmental
conservation or protection laws. For purposes of this Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA and
RCRA and shall include petroleum and petroleum products, radon and PCB's, and
the term "disposal" has the meaning specified in RCRA; provided, however, that
to the extent the laws of the state in which the property is located establish
a meaning for "hazardous substance," "release," or "disposal" that is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply.
SECTION 3.16. Vote Required. The only vote of the holders of any
class or series of the Company capital stock necessary to approve the Merger is
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of the Company Common Stock.
SECTION 3.17. Brokers. Except as set forth in Schedule 3.17 to the
Company Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
SECTION 3.18. Insurance. Except as set forth in Schedule 3.18 to
the Company Disclosure Schedule, the Company and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business and similarly situated would, in accordance with good business
practice, customarily be insured.
SECTION 3.19. Properties. Except as set forth on Schedule 3.19 to
the Company Disclosure Schedule and except for liens arising in the ordinary
course of business after the date hereof and properties and assets disposed of
in the ordinary course of business after June 30, 1997, the Company and its
subsidiaries have good and marketable title, free and clear of all liens (other
than liens that could not reasonably be expected to have a Company Material
Adverse Effect), to all their material properties and assets, whether tangible
or intangible, real, personal or mixed, reflected in the June 30, 1997
consolidated balance sheet (as previously provided to
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Parent) as being owned by the Company and its subsidiaries as of the date
thereof or purported to be owned on the date hereof. All buildings, and all
fixtures, equipment and other property and assets which are material to its
business on a consolidated basis, held under leases by any of the Company or
its subsidiaries are held under valid instruments enforceable by the Company or
its subsidiaries in accordance with their respective terms. Substantially all
of the Company's and its subsidiaries' equipment in regular use has been well
maintained and is in good and serviceable condition, except for failures to be
in good and serviceable condition that could not reasonably be expected to have
a Company Material Adverse Effect.
SECTION 3.20. Certain Material Contracts.
(a) Schedule 3.20(a) to the Company Disclosure Schedule
lists each of the following agreements and arrangements (whether
written or oral and including all amendments thereto) to which the
Company or any of its subsidiaries is a party or a beneficiary or by
which the Company or any of its subsidiaries is bound that are
material, directly or indirectly, to the business of the Company and
any of its subsidiaries, taken as a whole (collectively, the "Material
Contracts") (i) any supply, distribution or other agreements or
arrangements pursuant to which the Company or its subsidiaries sell or
distribute any products or services and which is not cancelable within
30 days notice without penalty that reasonably could be expected to
result in fiscal year 1997 or 1998 revenues in excess of $5,000,000;
(ii) any warranty agreements or arrangements under which the Company
or any of its subsidiaries has any liability with a value in excess of
$250,000; (iii) any capital or operating leases or conditional sales
agreements relating to vehicles or equipment with a value in excess of
$250,000; (iv) any agreements or arrangements pursuant to which the
Company or any of its subsidiaries is entitled or obligated to acquire
any assets from a third party in excess of $250,000; (v) material
insurance policies currently in effect; (vi) any agreement evidencing,
securing or otherwise relating to any indebtedness for which the
Company or any of its subsidiaries has any liability in excess of
$250,000, (vii) any agreement with or for the benefit of any
stockholder, director, officer or employee of the Company or any of
its subsidiaries, or any affiliate or family member thereof (other
than employee benefit plans, benefit arrangements and other
compensatory arrangements referred to in Section 3.10); and (viii) any
other agreement or arrangement (other than contracts for the purchase
or sale of goods or services in the ordinary course of business in
connection with the performance of the Company's contracts) pursuant
to which the Company or any of its subsidiaries could be required to
make or be entitled to receive aggregate payments in excess of
$250,000 and which is not cancelable within 30 days notice without
penalty.
(b) The Company and its subsidiaries have performed all
of their obligations under each Material Contract and there exists no
breach or default (or event that with notice or lapse of time would
constitute a breach or default) under any Material Contract, except as
could not reasonably be expected to have a Company Material Adverse
Effect.
(c) Except as set forth in Schedule 3.20 of the Company
Disclosure Schedule, on the date hereof and on the Closing Date, each
Material Contract is valid, binding and
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in full force and effect and enforceable in all material respects in
accordance with its respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance or other similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of
equity. Except as set forth in Schedule 3.20 of the Company
Disclosure Schedule, there has been no termination or, to the
Company's knowledge, threatened termination or notice of default under
any Material Contract. The Company has delivered or made available to
Parent a copy of each written Material Contract.
(d) Except as set forth in Schedule 3.20(d) to the
Company Disclosure Schedule, no consent of any person is required in
connection with the transactions contemplated by this Agreement in
order to preserve the rights of the Company or any of its subsidiaries
under or to prevent any disadvantage to the Company or any of its
subsidiaries in respect of any Material Contract after the Effective
Time.
SECTION 3.21. Principal Customers; Competing Interests. The
Company has made available to Parent a list of the ten largest customers by
dollar volume of sales for fiscal year 1997 of the Company and its subsidiaries
(the "Largest Customers"), with the amount of revenues attributable to each
such customer, for the Company's 1996 and 1997 fiscal years. Except as
described in such Schedule 3.21, none of the Largest Customers has terminated
or materially altered its relationship with the Company since the beginning of
the Company's 1996 fiscal year, or, to the Company's knowledge, threatened to
do so or otherwise notified the Company of any intention to do so, and there
has been no material dispute with any of the Largest Customers since the
beginning of the Company's 1996 fiscal year. Except as described in such
Schedule 3.21, none of the Company, any of its subsidiaries, any director,
officer or stockholder of any of the foregoing owns, directly or indirectly, an
interest in any entity that is a competitor, customer or supplier of the
Company or any of its subsidiaries or that otherwise has business dealings with
the Company or any of its subsidiaries that are material to the Company and its
subsidiaries taken as a whole, other than the beneficial ownership of not more
than 1% of the voting securities of any such entity that are publicly traded.
SECTION 3.22. Intellectual Property Rights. There are no
registered patents, trademarks, service marks, trade names or copyrights, or
applications for or licenses (to or from the Company or any of its
subsidiaries) with respect to any of the foregoing that are material to the
Company and its subsidiaries taken as a whole, that (a) are owned by the
Company or any of its subsidiaries, or with respect to which the Company or any
of its subsidiaries has any rights, or (b) are used, whether directly or
indirectly, by the Company or any of its subsidiaries, other than as set forth
on Schedule 3.22 to the Company Disclosure Schedule. Except as set forth in
Schedule 3.22 of the Company Disclosure Schedule, the Company and its
subsidiaries have the right to use the trademarks and trade names set forth on
such Schedule 3.22 and any other computer software and software licenses,
intellectual property, proprietary information, trade secrets, trademarks,
trade names, copyrights, material and manufacturing specifications, drawings
and designs used by the Company or any of its subsidiaries and material to the
operation of the business of the Company or any of its subsidiaries
(collectively, "Intellectual Property"), without infringing on or otherwise
acting adversely to the rights or claimed rights of
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any person, except to the extent such infringement or actions adverse to
another's rights or claimed rights could not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth on Schedule 3.22 to the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
obligated to pay any royalty or other consideration material to the Company and
its subsidiaries taken as a whole to any person in connection with the use of
any Intellectual Property. Except as set forth in Schedule 3.22 of the Company
Disclosure Schedule and as could not reasonably be expected to have a Company
Material Adverse Effect, to the Company's knowledge, no other person is
infringing on the rights of the Company and its subsidiaries in any of their
Intellectual Property.
SECTION 3.23. Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of the Company and no statement by the Company or other information contained
in the Company Disclosure Schedule, any side letters delivered or entered into
by the Company pursuant to this Agreement or any document incorporated therein
by reference as of the date of such representation, warranty, statement or
document, contains any untrue statement of material fact, or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which such statements were made (but after
taking into account (i) all such representations, warranties, statements or
documents and (ii) the information included in the Company's reports filed with
the SEC on or after July 1, 1996), not misleading.
SECTION 3.24. Opinion of Financial Advisor. The Company has
received the opinion of Xxxx Xxxxx Xxxx, Incorporated to the effect that, as of
the date of delivery of such opinion, the Merger Consideration to be received
by the holders of the Company Common Stock in the Merger is fair, from a
financial point of view, to such holders.
SECTION 3.25. [Reserved]
SECTION 3.26. Federal Government Contracts.
(a) Except as set forth in Schedule 3.26 to the Company
Disclosure Schedule, (i) none of the federal government contracts of
the Company or its subsidiaries have been terminated for default or
convenience; (ii) no show cause or cure notices, as defined by each
contract or applicable federal regulation, have been issued; and (iii)
neither the Company nor its subsidiaries have received any notices to
cure any defaults of the contracts. In addition, to the Company's
knowledge, there are no material delivery or performance problems or
issues on the part of the Company or its subsidiaries.
(b) Except as set forth in Schedule 3.26 to the Company
Disclosure Schedule, none of the Company's federal government
contracts, to the Company's knowledge, are anticipated to be
terminated for convenience or discontinued for any reason including
for lack of funding or federal budget constraints.
(c) All information, data, representations, statements
and certificates as submitted or provided to the government (the
"Information") relative to federal
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government contracts of the Company or any of its subsidiaries were
current, complete and accurate in all material respects as of the date
made (including particularly invoices, claims or other requests for
payments and any certificate regarding procurement integrity "or
certificates of current cost and pricing data"), in each case to the
extent of any open statute of limitations.
SECTION 3.27. Parent Stock Ownership. Neither the Company nor any
of its subsidiaries beneficially owns any shares of Parent Common Stock of
other securities convertible into or exchangeable for Parent Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
The Parent Companies hereby represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification. Each of the Parent
Companies is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing could not be reasonably expected to have a
Parent Material Adverse Effect. The term "Parent Material Adverse Effect" as
used in this Agreement shall mean any change or effect that, individually or
when taken together with all other such changes or effects (but after giving
effect to application of insurance proceeds or other rights of indemnification
in respect of such change or effect), could reasonably be expected to be
materially adverse to the business, operations, assets, financial condition, or
results of operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.02. Charter and Bylaws. Parent has heretofore furnished
or made available to the Company a complete and correct copy of the charter and
bylaws, as amended or restated, of each of the Parent Companies. Except as set
forth in Schedule 4.02 of the disclosure schedule delivered to the Company by
Parent on the date hereof (the "Parent Disclosure Schedule"), none of the
Parent Companies is in violation of any of the provisions of its charter or
bylaws.
SECTION 4.03. Capitalization.
(a) The authorized capital stock of Parent consists of
(i) 75,000,000 shares of Parent Common Stock, of which as of June 30,
1997, (x) 29,495,497 shares were issued and outstanding, (y) no shares
were held in treasury and (z) 2,752,710 shares were reserved for
future issuance pursuant to outstanding stock options and 6,405,686
shares were reserved for future issuance upon conversion of shares of
Class B common stock, par value $0.01 per share, of Parent (the "Class
B Common Stock"); (ii) 6,405,686 shares
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of Class B Common Stock of which all such shares were issued and
outstanding; and (iii) 3,000,000 shares of preferred stock, par value
$0.01 per share ("Parent Preferred Stock"), of which no shares are
issued and outstanding. Except as described in this Section 4.03 or
in Schedule 4.03(a) of the Parent Disclosure Schedule, as of the date
of this Agreement, no shares of capital stock of Parent are reserved
for any purpose. The outstanding shares of capital stock of Parent
are duly authorized, validly issued, fully paid and nonassessable, and
have not been issued in violation of (nor are any of the authorized
shares of capital stock of Parent subject to) any preemptive or
similar rights created by statute, the charter or bylaws of Parent, or
any agreement to which Parent is a party or bound.
(b) Except as set forth in Section 4.03(a) above or in
Schedule 4.03(b)(i) to the Parent Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or
commitments of any character to which the Parent or any of its
subsidiaries is a party relating to the issued or unissued capital
stock of the Parent or any of its subsidiaries or obligating the
Parent or any of its subsidiaries to grant, issue or sell any shares
of the capital stock of the Parent or any of its subsidiaries, by
sale, lease, license or otherwise. Except as set forth in Schedule
4.03(b)(ii) to the Parent Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Parent or any of its
subsidiaries to (A) repurchase, redeem or otherwise acquire any shares
of the Parent Common Stock or other capital stock of the Parent, or
the capital stock or other equity interests of any subsidiary of the
Parent; or (B) (other than advances to subsidiaries in the ordinary
course of business) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations
of, any subsidiary of the Parent or any other person. Except as
described in Schedule 4.03(b)(iii) to the Parent Disclosure Schedule,
neither the Parent nor any of its subsidiaries (x) directly or
indirectly owns, (y) has agreed to purchase or otherwise acquire or
(z) holds any interest convertible into or exchangeable or exercisable
for 5% or more of the capital stock of any corporation, partnership,
joint venture or other business association or entity. Except as set
forth in Schedule 4.03(b)(iv) of the Parent Disclosure Schedule and
except for any agreements, arrangements or commitments between the
Parent and its subsidiaries or between such subsidiaries, there are no
agreements, arrangements or commitments of any character (contingent
or otherwise) pursuant to which any person is or may be entitled to
receive any payment based on the revenues or earnings, or calculated
in accordance therewith, of the Parent or any of its subsidiaries.
There are no voting trusts, proxies or other agreements or
understandings to which the Parent or any of its subsidiaries is a
party or by which the Parent or any of its subsidiaries is bound with
respect to the voting of any shares of capital stock of the Parent or
any of its subsidiaries.
(c) The authorized capital stock of Merger Sub consists
of 1,000 shares of common stock, par value $0.01 per share ("Merger
Sub Common Stock"). As of the date of this Agreement, 100 shares of
Merger Sub Common Stock were issued and outstanding and held by
Parent, all of which are duly authorized, validly issued, fully paid
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and nonassessable and not subject to preemptive rights created by
statute, Merger Sub's charter or bylaws or any agreement to which
Merger Sub is a party or is bound.
(d) The shares of Parent Common Stock to be issued
pursuant to the Merger (i) will be duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights
created by statute, Parent's charter or bylaws or any agreement to
which Parent is a party or is bound and (ii) will, when issued, be
listed on the NYSE.
SECTION 4.04. Authority. Each of the Parent Companies has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby (subject to, with respect to the issuance of the Parent
Common Stock in the Merger, the approval thereof by the holders of the Parent
Common Stock as described in Section 4.12). The execution and delivery of this
Agreement by each of the Parent Companies and the consummation by each of the
Parent Companies of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of any of the Parent Companies are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (subject to,
with respect to the issuance of the Parent Common Stock in the Merger, the
approval thereof by the holders of the Parent Common Stock as described in
Section 4.12). This Agreement has been duly executed and delivered by each of
the Parent Companies and, assuming the due authorization, execution and
delivery thereof by the Company, constitutes the legal, valid and binding
obligation of each of the Parent Companies.
SECTION 4.05. No Conflict; Required Filings and Consent.
(a) Except as set forth in Schedule 4.05 of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by
each of the Parent Companies does not, and the consummation of the
transactions contemplated hereby will not (i) conflict with or violate
the charter or bylaws, or the equivalent organizational documents, in
each case as amended or restated, of Parent or any of Parent's
subsidiaries, (ii) conflict with or violate any Laws applicable to
Parent or any of Parent's subsidiaries or by which any of their
properties is bound or subject, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or
assets of Parent or any of Parent's subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or
any of Parent's subsidiaries is a party or by or to which Parent or
any of Parent's subsidiaries or any of their respective properties is
bound or subject, except in the case of clauses (ii) and (iii) where
such conflict, violation, breach, default, right, requirement, lien or
encumbrance could not reasonably be expected to have a Parent Material
Adverse Effect. The Board of Directors of the Parent has taken all
actions necessary under Delaware Law, including approving the
transactions contemplated by this Agreement and taking appropriate
actions under any stockholder protection laws applicable to the Parent
or any of its subsidiaries, to ensure that restrictions on business
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combinations or the owning or voting of the capital stock of the
Parent or any of its subsidiaries do not, and will not apply in
respect or as a result of the transactions contemplated by this
Agreement.
(b) The execution and delivery of this Agreement by each
of the Parent Companies does not, and the consummation of the
transactions contemplated hereby will not, require any of the Parent
Companies to obtain any consent, license, permit, approval, waiver,
authorization or order of, or to make any filing with or notification
to, any Governmental Entities, except for applicable requirements, if
any, of the Securities Act, the Exchange Act, Blue Sky Laws, the HSR
Act and those matters referenced in Schedule 4.05(b) of the Parent
Disclosure Schedule and the filing and recordation of appropriate
merger documents as required by Maryland Law.
SECTION 4.06. Permits; Compliance. Except as set forth in Schedule
4.06 of the Parent Disclosure Schedule, each of Parent and its subsidiaries is
in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals
and orders necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the "Parent Permits"),
and there is no action, proceeding or investigation pending or, to the
knowledge of Parent, threatened regarding suspension or cancellation of any of
the Parent Permits. Except as set forth in Schedule 4.06 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is in material
conflict with, or in material default or violation of (a) any Law applicable to
Parent or any of its subsidiaries or by or to which any of their respective
properties is bound or subject or (b) any of the Parent Permits. Except as set
forth in Schedule 4.06 of the Parent Disclosure Schedule, since June 30, 1995,
neither Parent nor any of its subsidiaries has received from any Governmental
Entity any written notification with respect to possible material conflicts,
defaults or violations of Laws.
SECTION 4.07. SEC Reports; Financial Statements.
(a) Since June 30, 1995, Parent and its subsidiaries have
filed all forms, reports, statements and other documents required to
be filed with the SEC, including, without limitation, (1) all Annual
Reports on Form l0-K, (2) all Quarterly Reports on Form 10-Q, (3) all
proxy statements relating to meetings of stockholders (whether annual
or special), (4) all Current Reports on Form 8-K and (5) all other
reports, schedules, registration statements or other documents
(collectively, the "Parent SEC Reports"). The Parent SEC Reports,
including all Parent SEC Reports filed after the date of this
Agreement and prior to the Effective Time (x) were or will be prepared
in all material respects in accordance with the requirements of
applicable Law and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
Parent SEC Reports filed prior to the Effective Time (i) have been or
will be prepared in accordance with the published rules and
regulations of the SEC and generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except
(A) to the extent required by changes in generally accepted accounting
principles and (B) with respect to Parent SEC Reports filed prior to
the date of this Agreement, as may be indicated in the notes thereto)
and (ii) fairly present or will fairly present the consolidated
financial position of Parent and its subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash
flows for the periods indicated (including reasonable estimates of
normal and recurring year-end adjustments), except that (x) any
unaudited interim financial statements were or will be subject to
normal and recurring year-end adjustments and (y) any pro forma
financial information contained in such consolidated financial
statements is not necessarily indicative of the consolidated financial
position of Parent and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for
the periods indicated.
SECTION 4.08. Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Reports filed prior to the date of this Agreement
or as contemplated by this Agreement or as set forth in Schedule 4.08 to the
Parent Disclosure Schedule, since June 30, 1997, each of Parent and its
subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice, and there has not been:
(i) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any material assets of Parent or any of its
subsidiaries; (ii) any material change by Parent or its subsidiaries in their
accounting methods, principles or practices; (iii) except for dividends by a
subsidiary of Parent to Parent or another subsidiary of Parent, any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of Parent Common Stock or the shares of stock of, or other
equity interests in, any majority-owned subsidiary of Parent, or any
redemption, purchase or other acquisition by Parent or any of Parent's
subsidiaries of any of Parent's securities or any of the securities of any
subsidiary of Parent; or (iv) any Parent Material Adverse Effect.
SECTION 4.09. Absence of Litigation. Except as set forth in
Schedule 4.09 to the Parent Disclosure Schedule, there is no claim, action,
suit, litigation, proceeding, arbitration or, to the knowledge of Parent,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge or Parent,
threatened against Parent or any of its subsidiaries or any properties or
rights of Parent or any of its subsidiaries (except for claims, actions, suits,
litigation, proceedings, arbitrations or investigations which could not
reasonably be expected to have a Parent Material Adverse Effect) and neither
Parent nor any of its subsidiaries is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with,
or, to the knowledge of Parent, continuing investigation by, any Governmental
Entity, or any judgment, order, writ, injunction, decree or award of any
Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders.
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SECTION 4.10. Tax Matters; Pooling.
(a) None of the Parent Companies nor, to the knowledge of
Parent, any of their affiliates has taken or agreed to take any action
that would prevent the Merger (i) from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code or (ii)
from being treated as a Pooling Transaction for financial accounting
purposes.
(b) There is no intercorporate indebtedness existing
between Parent and the Company or between Merger Sub and the Company
that was issued, acquired, or will be settled at a discount.
(c) Parent has no present plan or intention to sell or
dispose of any of the assets of the Company or any of its subsidiaries
after the Effective Time, except for (i) sales, transfers or other
distributions made in the ordinary course of business and (ii)
transfers described in Section 368(a)(2)(C) of the Code.
(d) Parent has no present plan or intention to reacquire
any of the shares of Parent Common Stock it will issue to stockholders
of the Company in the Merger.
(e) Following the Effective Time, Parent currently
intends to continue the historic businesses of the Company and its
subsidiaries that are presently conducted.
SECTION 4.11. Vote Required. The only vote of the holders of any
class or series of Parent capital stock necessary to approve the issuance of
the Parent Common Stock in the Merger is, pursuant to the requirements of the
NYSE, the affirmative vote of the holders of a majority of the outstanding
shares of the common stock of Parent voted on the proposal to so issue the
Parent Common Stock; provided that the total vote cast on such proposal
represents over 50% in interest of the outstanding common stock of Parent. No
vote of the holders or any class or series of Parent capital stock is required
to approve the Merger and adopt this Agreement. Parent, as the sole
stockholder of Merger Sub, will promptly vote to approve the Merger and adopt
this Agreement.
SECTION 4.12. Brokers. Except as set forth on Schedule 4.12 to the
Parent Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Parent Companies.
SECTION 4.13. Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of Parent and no statement by the Parent or other information contained in the
Parent Disclosure Schedule, any side letters delivered or entered into by the
Parent pursuant to this Agreement or any document incorporated therein by
reference as of the date of such representation, warranty, statement or
document, contains any untrue statement of material fact, or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which such
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statements were made (but after taking into account (i) all such
representations, warranties, statements or documents and (ii) the information
included in Parent's reports filed with the SEC on or after July 1, 1996), not
misleading.
SECTION 4.14. Opinion of Financial Advisor. Parent has received
the opinion of Xxxxx Xxxxxx Inc. to the effect that, as of the date of the
Agreement, the Exchange Ratio is fair, from a financial point of view, to
Parent.
SECTION 4.15. [Reserved]
SECTION 4.16. Employee Benefit Plans; Labor Matters.
(a) The Affiliated Computer Services, Inc. Savings Plan
(a) is the only employee pension benefit plan maintained by the Parent
or any ERISA Affiliate that is intended to qualify under Code Section
401; and (b) meets the qualification requirements of the Code in form
and operation, and such plan, and each trust (if any) forming a part
thereof, has received a favorable determination letter from the
Internal Revenue Service as to the qualification under the Code of
such plan and the tax-exempt status of such related trust, and nothing
has occurred since the date of such determination letter that may
adversely affect the qualification of such plan or the tax-exempt
status of such related trust. Except as set forth in Schedule 4.16 of
the Parent Disclosure Schedule, all Employee Plans purporting to
qualify for special tax treatment under any provision of the Code,
including, without limitation, Code Sections 79, 105, 106, 125, 127,
129, 132, 421 or 501(c)(9) meet the requirement of such sections in
form and in operation. All reports, returns or filings required by
any government agency have been filed in accordance with all
applicable requirements.
(b) Except as set forth in Schedule 4.16 of the Company
Disclosure Schedule, no condition exists that would subject the
Parent, any ERISA Affiliate or Parent to any excise tax, penalty tax
or fine related to any Employee Plan, except as could not reasonably
be expected to have a Parent Material Adverse Effect.
(c) There is no Employee Plan that is subject to Part 3
of Title I of ERISA or Title IV of ERISA; each Employee Plan has been
operated in all material respects in compliance with ERISA, the Code
and all other applicable laws; none of the Employee Plans is a
"multiple employer plan" or "multiemployer plan" (as described or
defined in ERISA or the Code), nor has the Parent or any ERISA
Affiliate ever contributed or been required to contribute to any such
plan; there are no material unfunded liabilities existing under any
Employee Plans, and each Employee Plan could be terminated as of the
Closing Date without any material liability to the Parent, the Parent
or any ERISA Affiliate.
(d) Except as set forth in Schedule 4.16 of the Parent
Disclosure Schedule, there are no material actions, suits, claims,
audits, or investigations pending or, to the
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knowledge of the Parent, threatened against, or with respect to, any
of the Employee Plans or their assets, other than benefit claims in
the normal course of plan operations, and except as set forth in
Schedule 4.16 of the Parent Disclosure Schedule and except as could
not reasonably be expected to have a Parent Material Adverse Effect,
all contributions required to be made to the Employee Plans have been
made.
SECTION 4.17. Certain Business Practices. None of the Parent, any
of its subsidiaries or any directors or officers, or to the knowledge of
Parent, any agents or employees, of the Parent or any of its subsidiaries has
individually or in the aggregate in any material respect (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iii) made any other unlawful payment.
SECTION 4.18. Environmental Matters. Except for matters disclosed
in Schedule 4.18 of the Parent Disclosure Schedule and except for matters that
could not reasonably be expected to result, individually or in the aggregate
with all other such matters, in liability to the Parent or any of its
subsidiaries in excess of $750,000, (i) the properties, operations and
activities of the Parent and its subsidiaries are in compliance with all
applicable Environmental Laws; (ii) the Parent and its subsidiaries and the
properties and operations of the Parent and its subsidiaries are not subject to
any existing, pending or, to the knowledge of the Parent, threatened action,
suit, claim, investigation, inquiry or proceeding by or before any governmental
authority under any Environmental Laws; (iii) all notices, permits, licenses,
or similar authorizations, if any, required to be obtained or filed by the
Parent or any of its subsidiaries under any Environmental Laws in connection
with any aspect of the business of the Parent or its subsidiaries, including
without limitation those relating to the treatment, storage, disposal or
release of a hazardous or otherwise regulated substance, have been duly
obtained or filed and will remain valid and in effect after the Merger, and the
Parent and its subsidiaries are in compliance with the terms and conditions of
all such notices, permits, licenses and similar authorizations; (iv) the Parent
and its subsidiaries have satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by any governmental authority under any Environmental Laws, and the
Parent and its subsidiaries have not received any notice of noncompliance with
any such financial responsibility requirements; (v) to the Parent's knowledge,
there are no physical or environmental conditions existing on any property of
the Parent or its subsidiaries or resulting from the Parent's or such
subsidiaries' operations or activities, past or present, at any location, that
would give rise to any on-site or off-site remedial obligations imposed on the
Parent or any of its subsidiaries under any Environmental Laws or that would
impact the soil, groundwater, or surface water or human health (to the extent
of exposure to hazardous substances); (vi) to the Parent's knowledge, since the
effective date of the relevant requirements of applicable Environmental Laws
and to the extent required by such applicable Environmental Laws, all hazardous
or otherwise regulated substances generated by the Parent and its subsidiaries
have been transported only by carriers authorized under Environmental Laws to
transport such substances and wastes, and disposed of only at treatment,
storage, and disposal facilities authorized under Environmental Laws to treat,
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store or dispose of such substances and wastes; (vii) there has been no
exposure of any person or property to hazardous substances or any pollutant or
contaminant, nor has there been any release of hazardous substances, or any
pollutant or contaminant into the environment by the Parent or its subsidiaries
or in connection with their properties or operations that could reasonably be
expected to give rise to any claim against the Parent or any of its
subsidiaries for damages or compensation; and (viii) subject to restrictions
necessary to preserve any attorney client privilege, the Parent and its
subsidiaries have made available to Parent all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters in the possession of the Parent or its subsidiaries
relating to any of the current or former properties or operations of the Parent
and its subsidiaries.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, or orders of
any Governmental Entity pertaining to health (to the extent of exposure to
hazardous substances) or the environment currently in effect in any and all
jurisdictions in which the Parent and its subsidiaries own property or conduct
business, including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended,
the Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990 ("OPA"), any
state laws implementing the foregoing federal laws, and all other environmental
conservation or protection laws. For purposes of this Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA and
RCRA and shall include petroleum and petroleum products, radon and PCB's, and
the term "disposal" has the meaning specified in RCRA; provided, however, that
to the extent the laws of the state in which the property is located establish
a meaning for "hazardous substance," "release," or "disposal" that is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply.
SECTION 4.19. Insurance. Except as set forth on Schedule 4.19 to
the Parent Disclosure Schedule, the Parent and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business and similarly situated would, in accordance with good business
practice, customarily be insured.
SECTION 4.20. Intellectual Property Rights. There are no
registered patents, trademarks, service marks, trade names or copyrights, or
applications for or licenses (to or from the Parent or any of its subsidiaries)
with respect to any of the foregoing that are material to the Parent and its
subsidiaries taken as a whole, that (a) are owned by the Parent or any of its
subsidiaries, or with respect to which the Parent or any of its subsidiaries
has any rights, or (b) are used, whether directly or indirectly, by the Parent
or any of its subsidiaries, other than as set forth on Schedule 4.20 to the
Parent Disclosure Schedule. Except as set forth in Schedule 4.20 of the Parent
Disclosure Schedule, the Parent and its subsidiaries have the right to
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use the trademarks and trade names set forth on such Schedule 4.20 and any
other computer software and software licenses, intellectual property,
proprietary information, trade secrets, trademarks, trade names, copyrights,
material and manufacturing specifications, drawings and designs used by the
Parent or any of its subsidiaries and material to the operation of the business
of the Parent or any of its subsidiaries (collectively, "Intellectual
Property"), without infringing on or otherwise acting adversely to the rights
or claimed rights of any person, except to the extent such infringement or
actions adverse to another's rights or claimed rights could not reasonably be
expected to have a Parent Material Adverse Effect. Except as set forth on
Schedule 4.20 to the Parent Disclosure Schedule, neither the Parent nor any of
its subsidiaries is obligated to pay any royalty or other consideration
material to the Parent and its subsidiaries taken as a whole to any person in
connection with the use of any Intellectual Property. Except as set forth in
Schedule 4.20 of the Parent Disclosure Schedule and as could not reasonably be
expected to have a Parent Material Adverse Effect, to the Parent's knowledge,
no other person is infringing on the rights of the Parent and its subsidiaries
in any of their Intellectual Property.
SECTION 4.21. Credit Facilities. As of the date of this Agreement,
Parent has, and as of the Closing Date Parent will have, sufficient cash and
available sources of credit to repay any and all amounts outstanding under the
Company's principal credit facility with NationsBank, N.A.
SECTION 4.22. Company Common Stock. Neither Parent nor any of its
subsidiaries beneficially owns any shares of Company Common Stock of other
securities convertible into or exchangeable for Company Common Stock.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company. The Company
hereby covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will and will cause its subsidiaries to:
(a) operate its business in all material respects in the
usual and ordinary course consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its material rights and
franchises, retain the services of its respective officers and key
employees and maintain its relationships with its material customers
and suppliers;
(c) maintain and keep its material properties and assets
in as good repair and condition as at present, ordinary wear and tear
excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice; and
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(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
SECTION 5.02. Negative Covenants of the Company. Except as
expressly contemplated by this Agreement, otherwise consented to in writing by
Parent or set forth in Schedule 5.02 of the Company Disclosure Schedule, from
the date of this Agreement until the Effective Time, the Company will not do,
and will not permit any of its subsidiaries to do, any of the foregoing:
(a) (i) increase the compensation payable to or to become
payable to any director or executive officer, unless such increase
results from the operation of compensation arrangements in effect
prior to the date hereof; (ii) grant any severance or termination pay
(other than pursuant to the normal severance policy of the Company or
its subsidiaries as in effect on the date of this Agreement or any of
the agreements or arrangements disclosed in the Company Disclosure
Schedule) to, or enter into or amend any employment or severance
agreement with, any director, officer or employee; (iii) establish,
adopt or enter into any employee benefit plan or arrangement; or (iv)
except as may be required by applicable law and actions that are not
inconsistent with the provisions of Section 6.08 of this Agreement,
amend in any material respect, or take any other actions with respect
to, any of the Benefit Plans or any of the plans, programs,
agreements, policies or other arrangements described in Section
3.10(d) of this Agreement;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock,
except for dividends by a wholly owned subsidiary of the Company to
the Company or another wholly owned subsidiary of the Company and
except for regular semi-annual dividends with respect to the Company
Common Stock in an amount not to exceed $0.11 per share;
(c) (i) except as described in Schedule 3.03(b)(ii) of
the Company Disclosure Schedule, redeem, purchase or otherwise acquire
any shares of its or any of its subsidiaries' capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its or its subsidiaries' capital stock (other than any such
acquisition directly from any wholly owned subsidiary of the Company
in exchange for capital contributions or loans to such subsidiary), or
any options, warrants or conversion or other rights to acquire any
shares of its or its subsidiaries' capital stock or any such
securities or obligations (except in connection with the exercise of
outstanding Stock Options in accordance with their terms); (ii) effect
any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its subsidiaries' capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its or its
subsidiaries' capital stock;
(d) (i) except as described in Schedule 3.03(b)(i) of the
Company Disclosure Schedule, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale
(including the grant of any security interests, liens, claims,
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pledges, limitations in voting rights, charges or other encumbrances)
of, any shares of any class of its or its subsidiaries' capital stock
(including shares held in treasury), any securities convertible into
or exercisable or exchangeable for any such shares, or any rights,
warrants or options to acquire any such shares (except as permitted
pursuant to Section 6.08 of this Agreement or for the issuance of
shares upon the exercise of outstanding Stock Options); (ii) amend or
otherwise modify the terms of any such rights or options the effect of
which shall be to make such terms more favorable to the holders
thereof; or (iii) except as contemplated by the terms of existing
Stock Options, take any action to accelerate the exercisability of
Stock Options;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any
assets of any other person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent
with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its material assets
or any material assets of any of its subsidiaries, except for
dispositions of inventories and of assets in the ordinary course of
business and consistent with past practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into discussions or negotiate
with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or
employees of the Company or any of its subsidiaries or any investment
banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of the Company's
subsidiaries to take any such action, and the Company shall promptly
notify Parent of all relevant terms of any such inquiries and
proposals received by the Company or any of its subsidiaries or by any
such officer, director, investment banker, financial advisor,
attorney, accountant or other representative relating to any of such
matters and if such inquiry or proposal is in writing, the Company
shall promptly deliver or cause to be delivered to Parent a copy of
such inquiry or proposal; provided, however, that nothing contained in
this subsection (g) shall prohibit the Board of Directors of the
Company from (i) furnishing information to, or entering into
discussions or negotiations with, or following termination of this
Agreement in accordance with Section 8.01, entering into an agreement
with, any person or entity in connection with an unsolicited bona fide
written proposal, by such person or entity to acquire the Company
pursuant to a merger, consolidation, share exchange, business
combination or other similar transaction or to acquire a substantial
portion of the assets of the Company or any of its subsidiaries, if,
and only to the extent that (A) the Board of
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Directors of the Company, after consultation with and based upon the
advice of independent legal counsel, determines in good faith that
such action is necessary for such Board of Directors to comply with
its fiduciary duties to stockholders under applicable law and (B)
prior to furnishing such information to, or entering into discussions
or negotiations with, such person or entity the Company (x) provides
one day's prior written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or
negotiations with, such person or entity and (y) enters into with such
person or entity a confidentiality agreement in reasonably customary
form on terms not more favorable to such person or entity than the
terms contained in that certain Confidentiality Agreement dated as of
July 20, 1997 between Parent and the Company (the "Confidentiality
Agreement"); (ii) complying with Rule 14e-2 or Rule 14d-9 promulgated
under the Exchange Act with regard to a Competing Transaction; or
(iii) failing to make or withdrawing or modifying its recommendation
referred to in Section 6.02(a) if there exists a Competing Transaction
and the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel, determines in good
faith that such action is necessary for such Board of Directors to
comply with its fiduciary duties to stockholders under applicable law.
For purposes of this Agreement, "Competing Transaction" shall mean any
of the following (other than the transactions contemplated by this
Agreement) involving the Company or any of its subsidiaries: (i) any
merger, consolidation, share exchange, business combination or similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the assets of the
Company and its subsidiaries, taken as a whole, (iii) any tender offer
or exchange offer for 20% or more of the outstanding shares of capital
stock of the Company or the filing of a registration statement under
the Securities Act in connection therewith; (iv) any person having
acquired beneficial ownership of, or any group (as such term is used
in Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) having been formed which beneficially owns or
has the right to acquire beneficial ownership of, 20% or more of the
outstanding shares of capital stock of the Company; or (v) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing;
(h) release any third party from its obligations, or
grant any consent, under any existing standstill provision relating to
a Competing Transaction or otherwise under any confidentiality or
other agreement relating thereto, or fail to fully enforce any such
agreement;
(i) adopt or propose to adopt any amendments to its
charter or bylaws, which would have an adverse impact on the
consummation of the transactions contemplated by this Agreement,
except to the extent necessary to implement the Advisory Board
contemplated by Section 1.05;
(j) (A) change any of its methods of accounting in effect
at June 30, 1997, or (B) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit
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or controversy relating to Taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes from
those employed in the preparation of the federal income tax returns
for the taxable year ending June 30, 1997, except, in each case, as
may be required by Law or GAAP;
(k) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except in the ordinary course of
business consistent with past practice and in no event in excess of
$250,000 in the aggregate (unless such borrowings are incurred under
the Company's principal credit facility with NationsBank, N.A. and
relate to working capital or capital expenditures in the ordinary
course of business);
(l) enter into any arrangement, agreement or contract
material to the Company and its subsidiaries taken as a whole with any
third party (other than customers in the ordinary course of business)
which provides for an exclusive arrangement with that third party or
is substantially more restrictive on the Company or substantially less
advantageous to the Company than arrangements, agreements or contracts
existing on the date hereof;
(m) agree in writing or otherwise to do any of the
foregoing.
SECTION 5.03. Affirmative and Negative Covenants of Parent.
(a) Parent hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this
Agreement or consented to in writing by the Company, Parent will and
will cause its material subsidiaries to:
(i) operate its business in all material respects
in the usual and ordinary course consistent with past
practices;
(ii) use all reasonable efforts to preserve
substantially intact its business organization, maintain its
material rights and franchises, retain the services of its
respective officers and key employees and maintain its
relationships with its material customers and suppliers;
(iii) maintain and keep its material properties and
assets in as good repair and condition as at present, ordinary
wear and tear excepted, and maintain supplies and inventories
in quantities consistent with its customary business practice;
(iv) use all reasonable efforts to keep in full
force and effect insurance and bonds comparable in amount and
scope of coverage to that currently maintained; and
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(v) take all actions necessary to cause Merger
Sub to approve the Merger, this Agreement and the transactions
contemplated thereby and hereby.
(b) Except as expressly contemplated by this Agreement,
otherwise consented to in writing by the Company or set forth in
Schedule 5.03 of the Parent Disclosure Schedule, from the date of this
Agreement until the Effective Time, Parent will not do, and will not
permit any of its subsidiaries to do, any of the following:
(i) knowingly take any action which would result
in a failure to maintain the trading of the Parent Common
Stock on the NYSE;
(ii) declare or pay any dividend on, or make any
other distribution in respect of, outstanding shares of
capital stock, except for dividends by a wholly owned
subsidiary of Parent to Parent or another wholly owned
subsidiary of Parent;
(iii) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person (other than
the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past
practice), which, in each case, would prevent the consummation
of the transactions contemplated by this Agreement;
(iv) adopt or propose to adopt any amendments to
its charter or bylaws, which would have an adverse impact on
the consummation of the transactions contemplated by this
Agreement; or
(v) agree in writing or otherwise to do any of
the foregoing.
With respect to Subsections 5.03(b)(iv) and (v) above, the
parties hereto acknowledge that, in connection with the Parent's
upcoming Annual Meeting of Stockholders, a proposed increase in the
amount of the Parent's authorized Class A Common Stock to 500,000,000
shares and a proposed increase in the amount of the Parent's
authorized Class B Common Stock to 14,000,000 shares and charter and
bylaw amendments to implement for Parent a staggered Board of
Directors consistent with the resolutions of the Parent's Board of
Directors passed on August 5, 1997 do not violate or breach such
subsections.
(c) Parent hereby expressly consents to the terms and
conditions of, and assumes the obligations of the Company under, the
split-dollar life insurance agreements between the Company and each of
Xxxxxxxx Xxxxxxx, Xxx Xxxxxxx and Xxxx Xxx Xxxxxx as are disclosed on
Schedule 3.10 to the Company Disclosure Schedule.
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SECTION 5.04. Access and Information.
(a) Except as may be deemed necessary or appropriate to
comply with applicable laws (including, without limitation, any
requirements with respect to security clearances) and subject to any
applicable privileges (including, without limitation, the
attorney-client privilege), the Company shall, and shall cause its
subsidiaries to (i) afford to Parent and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Parent Representatives")
reasonable access at reasonable times, upon reasonable prior notice,
to the officers, employees, agents, properties, offices and other
facilities of the Company and its subsidiaries and to the books and
records thereof and (ii) furnish promptly to Parent and the Parent
Representatives such information concerning the business, properties,
contracts, records and personnel of the Company and its subsidiaries
(including, without limitation, financial, operating and other data
and information) as may be reasonably requested, from time to time, by
Parent.
(b) Parent shall, and shall cause its subsidiaries to (i)
afford to the Company and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives (collectively, the " Company Representatives")
reasonable access at reasonable times, upon reasonable prior notice,
to the officers, employees, accountants, agents, properties, offices
and other facilities of Parent and its subsidiaries and to the books
and records thereof and (ii) furnish promptly to the Company and the
Company Representatives such information concerning the business,
properties, contracts, records and personnel of Parent and its
subsidiaries (including, without limitation, financial, operating and
other data and information) as may be reasonably requested, from time
to time, by the Company.
(c) Notwithstanding the foregoing provisions of this
Section 5.04, neither party shall be required to grant access or
furnish information to the other party to the extent that such access
or the furnishing of such information is prohibited by law. No
investigation by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are
herein contained and each such representation and warranty shall
survive such investigation.
(d) The information received pursuant to Section 5.04(a)
and (b) shall be deemed to be "Confidential Information" for purposes
of the Confidentiality Agreement.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Meetings of Stockholders.
(a) The Company shall, promptly after the date of this
Agreement, take all actions necessary in accordance with Maryland Law
and its charter and bylaws to convene a meeting of the Company's
stockholders to act on this Agreement (the "Company Stockholders
Meeting"), and the Company shall consult with Parent in connection
therewith. The Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the approval and
adoption of this Agreement and to secure the vote of stockholders
required by Maryland Law and its charter and bylaws to approve and
adopt this Agreement, unless otherwise necessary due to the applicable
fiduciary duties of the directors of the Company, as determined by
such directors in good faith after consultation with and based upon
the advice of independent legal counsel.
(b) Parent shall, promptly after the date of this
Agreement, take all actions necessary in accordance with the Delaware
General Corporation Law and its charter and bylaws to convene a
meeting of Parent's stockholders to approve the issuance of the Parent
Common Stock in connection with the Merger pursuant to the
requirements of the NYSE (the "Parent Stockholders Meeting"). Parent
shall use its best efforts to solicit from stockholders of Parent
proxies in favor of the approval of such issuance of Parent Common
Stock and to secure the vote of stockholders required by the NYSE.
SECTION 6.02. Registration Statement; Proxy Statements.
(a) As promptly as practicable after the execution of
this Agreement, Parent shall prepare and file with the SEC a
registration statement on Form S-4 (such registration statement,
together with any amendments thereof or supplements thereto, being the
"Registration Statement"), containing a proxy statement/prospectus for
stockholders of the Company (the "Company Proxy Statement/Prospectus")
and a proxy statement and form of proxy for stockholders of Parent
(together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to Parent's stockholders, the "Parent
Proxy Statement"), in connection with the registration under the
Securities Act of the offer and sale of Parent Common Stock to be
issued in the Merger and the other transactions contemplated by this
Agreement. As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC a proxy
statement that will be the same as the Company Proxy
Statement/Prospectus, and a form of proxy, in connection with the vote
of the Company's stockholders with respect to the Merger (such proxy
statement and form of proxy, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, being the "Company Proxy Statement"). Each of
Parent and the Company will use its best efforts to cause the
Registration Statement to be declared effective as promptly as
practicable, and shall take any action required to be taken under
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any applicable federal or state securities laws in connection with the
issuance of shares of Parent Common Stock in the Merger. Each of
Parent and the Company shall furnish to the other all information
concerning it and the holders of its capital stock as the other may
reasonably request in connection with such actions. As promptly as
practicable after the Registration Statement shall have been declared
effective, the Company shall mail the Company Proxy Statement to its
stockholders entitled to notice of and to vote at the Company
Stockholders Meeting and Parent shall mail the Parent Proxy Statement
to its stockholders entitled to notice of and to vote at the Parent
Stockholders Meeting. The Company Proxy Statement shall include the
recommendation of the Company's Board of Directors in favor of the
Merger and adoption of this Agreement, unless otherwise necessary due
to the applicable fiduciary duties of the directors of the Company, as
determined by such directors in good faith after consultation with and
based upon the advice of independent legal counsel. The Parent Proxy
Statement shall include the recommendation of Parent's Board of
Directors in favor of approval of the issuance of the Parent Common
Stock in the Merger.
(b) The information supplied by the Company for inclusion
in the Registration Statement shall not, at the time the Registration
Statement is declared 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 not
misleading. The information supplied by the Company for inclusion in
(i) the Company Proxy Statement to be sent to the stockholders of the
Company in connection with the Company Stockholders Meeting shall not,
at the date the Company Proxy Statement (or any supplement thereto) is
first mailed to stockholders, at the time of the Company Stockholders
Meeting or at the Effective Time and (ii) the Parent Proxy Statement
to be sent to the stockholders of Parent in connection with the Parent
Stockholders Meeting shall not, at the date the Parent Proxy Statement
(or any supplement thereto) is first mailed to stockholders, at the
time of the Parent Stockholders Meeting or at the Effective Time,
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 the light of the circumstances under
which they are made, not misleading. If at any time prior to the
Effective Time any event or circumstance relating to the Company or
any of its affiliates, or its or their respective officers or
directors, should be discovered by the Company that should be set
forth in an amendment to the Registration Statement or a supplement to
the Company Proxy Statement or the Parent Proxy Statement, the Company
shall promptly inform Parent thereof in writing. All documents that
the Company is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form in all
material respects with the applicable requirements of the Securities
Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(c) The information supplied by Parent for inclusion in
the Registration Statement shall not, at the time the Registration
Statement is declared 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 not
misleading. The
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information supplied by Parent for inclusion in (i) the Company Proxy
Statement to be sent to the stockholders of the Company in connection
with the Company Stockholders Meeting shall not, at the date the
Company Proxy Statement (or any supplement thereto) is first mailed to
stockholders, at the time of the Company Stockholders Meeting or at
the Effective Time and (ii) the Parent Proxy Statement to be sent to
the stockholders of Parent in connection with the Parent Stockholders
Meeting shall not, at the date the Parent Proxy Statement (or any
supplement thereto) is first mailed to stockholders, at the time of
the Parent Stockholders Meeting or at the Effective Time, 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 the light of the circumstances under which they
are made, not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Parent or any of its affiliates,
or to their respective officers or directors, should be discovered by
Parent that should be set forth in an amendment to the Registration
Statement or a supplement to the Company Proxy Statement or the Parent
Proxy Statement, Parent shall promptly inform the Company thereof in
writing. All documents that Parent is responsible for filing with the
SEC in connection with the transactions contemplated hereby will
comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations
thereunder.
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall each use, and shall
cause each of their respective subsidiaries to use, all reasonable
efforts to (i) take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, (ii) obtain from any
Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by
Parent or the Company or any of their subsidiaries in connection with
the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including,
without limitation, the Merger, (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this
Agreement and the Merger required under (A) the Securities Act (in the
case of Parent) and the Exchange Act and the rules and regulations
thereunder, and any other applicable federal or state securities laws,
(B) the HSR Act and (C) any other applicable Law; provided that Parent
and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such
documents to the nonfiling party and its advisors prior to filings
and, if requested, shall accept all reasonable additions, deletions or
changes suggested in connection therewith. The Company and Parent
shall furnish all information required for any application or other
filing to be made pursuant to the rules and regulations of any
applicable Law (including all information required to be included in
the Company Proxy Statement, the Parent Proxy Statement or the
Registration Statement) in connection with the transactions
contemplated by this Agreement. Parent and the Company shall request
early termination of the waiting period with respect to the Merger
under the HSR Act.
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(b) Parent and the Company agree to cooperate with
respect to, and shall cause each of their respective subsidiaries to
cooperate with respect to, and agree to use all reasonable efforts
vigorously to contest and resist, any action, including legislative,
administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") of any
Governmental Entity that is in effect and that restricts, prevents or
prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative action.
(c) (i) Each of the Company and Parent shall give (or
shall cause their respective subsidiaries to give) any notices to
third parties, and use, and cause their respective subsidiaries to use
all reasonable efforts to obtain any third party consents (A)
necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, (B) otherwise required under any
contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated hereby or (C) required
to prevent a Company Material Adverse Effect or a Parent Material
Adverse Effect from occurring prior to the Effective Time.
(ii) In the event that any party shall fall to
obtain any third party consent described in subsection (c)(i) above,
such party shall use all reasonable efforts, and shall take any such
actions reasonably requested by the other parties, to limit the
adverse effect upon the Company and Parent, their respective
subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from
the failure to obtain such consent.
(d) Subject to any restrictions imposed by applicable
law, each of Parent and the Company shall promptly notify the other of
(w) any material change in its business, financial condition or
results of operations, (x) any complaints, investigations or hearings
(or communications indicating that the same may be contemplated) of
any Governmental Entities with respect to its business or the
transactions contemplated hereby, (y) the institution or the threat of
material litigation involving it or any of its subsidiaries or (z) any
event or condition that might reasonably be expected to cause any of
its representations, warranties, covenants or agreements set forth
herein not to be true and correct at the Effective Time. As used in
the preceding sentence, "material litigation" means any case,
arbitration or adversary proceeding or other matter which would have
been required to be disclosed on the Company Disclosure Schedule
pursuant to Section 3.09 or the Parent Disclosure Schedule pursuant to
Section 4.09, as the case may be, if in existence on the date hereof.
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SECTION 6.04. Affiliates; Pooling; Tax Treatment.
(a) The Company shall use all reasonable efforts to
obtain from any person who may be deemed to have become an affiliate
of the Company after the date of this Agreement and on or prior to the
Effective Time, a written agreement substantially in the form of
Exhibit A hereto as soon as practicable after attaining such status.
(b) Parent shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale
by stockholders of the Company who may be affiliates of the Company or
Parent pursuant to Rule 145 under the Securities Act.
(c) Each party hereto shall use all reasonable efforts to
cause the Merger to be treated for financial accounting purposes as a
Pooling Transaction, and shall not take, and shall use all reasonable
efforts to prevent any affiliate of such party from taking, any
actions which could prevent the Merger from being treated for
financial accounting purposes as a Pooling Transaction,
(d) Each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any affiliate of such party from taking,
any actions which could prevent the Merger from qualifying as a
reorganization under the provisions of Section 368(a) of the Code.
SECTION 6.05. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation.
The press release announcing the execution and delivery of this Agreement may
be a joint press release of Parent and the Company.
SECTION 6.06. NYSE Listing. Parent shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
to be approved for listing (subject to official notice of issuance) on the NYSE
prior to the Effective Time.
SECTION 6.07. Comfort Letters.
(a) The Company shall use all reasonable efforts to cause
Ernst & Young LLP to deliver a letter dated as of the date of the
Company Proxy Statement, and addressed to itself and Parent and their
respective Boards of Directors, in form and substance reasonably
satisfactory to Parent, and customary in scope and substance for
agreed-upon procedures letters delivered by independent public
accountants in connection with registration statements and proxy
statements similar to the Registration Statement and the Company Proxy
Statement.
(b) Parent shall use all reasonable efforts to cause
Price Waterhouse LLP to deliver a letter dated as of the date of the
Parent Proxy Statement, and addressed to itself and the Company and
their respective Boards of Directors, in form and substance
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reasonably satisfactory to the Company, and customary in scope and
substance for agreed-upon procedures letters delivered by independent
public accounts in connection with registration statements and proxy
statements similar to the Registration Statement and the Parent Proxy
Statement.
SECTION 6.08. Stock Option Plans.
(a) Option Plans. Parent and the Company shall take such
actions not inconsistent with the Merger being accounted for financial
accounting purposes as a Pooling Transaction, including (with respect
to the Company) the amendment of the Option Plans and Stock Options,
to permit Parent to assume, and Parent shall assume, effective at the
Effective Time, each Stock Option that remains unexercised in whole or
in part as of the Effective Time and substitute shares of Parent
Common Stock for the shares of the Company Common Stock purchasable
under each such assumed option ("Assumed Option"), which assumption
and substitution shall be effected as follows:
(i) the Assumed Option shall not give the
optionee additional benefits which such optionee did not have
under the Stock Option before such assumption and shall be
assumed on the same terms and conditions as the Stock Option
being assumed (including any terms and conditions arising as a
result of the transactions contemplated by this Agreement),
subject to Section 6.08(a)(ii) and (iii) below;
(ii) the number of shares of Parent Common Stock
purchasable under the Assumed Option shall be equal to the
number of shares of Parent Common Stock that the holder of the
Stock Option being assumed would have received (without regard
to any vesting schedule) upon consummation of the Merger had
such Stock Option been exercised in full immediately prior to
consummation of the Merger; and
(iii) the per share exercise price of such Assumed
Option shall be an amount equal to the per share exercise
price of the Stock Option being assumed divided by the
Exchange Ratio.
(b) Registration. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise of the Assumed Options,
and, as soon as practicable after the Effective Time, Parent shall
file a registration statement on Form S-8 (or other appropriate form)
with respect to the shares of Parent Common Stock subject to the
Assumed Options, and shall use its best efforts to maintain the
effectiveness of such registration statement for so long as any of the
Assumed Options remain outstanding.
SECTION 6.09. Merger Sub. Prior to the Effective Time, Merger Sub
shall not conduct any business or make any investments other than as
specifically contemplated by this Agreement and will not have any assets (other
than a de minimis amount of cash paid to Merger Sub for the issuance of its
stock to Parent) or liabilities.
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SECTION 6.10. Indemnification; Insurance. For a period of six
years after the Effective Time, Parent shall not amend or otherwise modify, or
cause the Company to amend or otherwise modify, Article NINTH of the charter of
the Company or Article VII of the bylaws of the Company (in each case as in
effect on the date hereof), or similar provisions of the charter or bylaws of
any subsidiaries of the Company, in a manner that would adversely affect the
rights thereunder of any individuals who at any time prior to the Effective
Time were directors or officers of the Company or any of its subsidiaries in
respect of acts or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such amendment or modification is required by law. For a
period of six years after the Effective Time, Parent shall cause the Surviving
Corporation to maintain officers' and directors' liability insurance for all
persons currently covered under the Company's officers' and directors'
liability insurance policies, in their capacities as officers and directors, on
terms no less favorable to the covered persons than such existing insurance;
provided, however, that Parent shall not be required in order to maintain or
procure such coverage to pay an annual premium in excess of 150% of the current
annual premium paid by the Company for its existing coverage (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, Parent shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap. This Section 6.10 is intended to be for the
benefit of, and shall be enforceable by, the persons referred to above, their
heirs and personal representatives, and shall be binding on Parent and its
successors and assigns.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing Date of the following conditions, any or all of
which may be waived in writing by the parties hereto, in whole or in part, to
the extent permitted by applicable law:
(a) Effectiveness of the Registration Statement; Blue
Sky. The Registration Statement shall have been declared effective by
the SEC under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by
the SEC and no proceedings for that purpose shall have been initiated
by the SEC. Parent shall have received all Blue Sky permits and other
authorizations necessary to consummate the transactions contemplated
by this Agreement.
(b) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the
stockholders of the Company, and the issuance of the Parent Common
Stock in the Merger shall have been approved by the requisite vote of
the stockholders of Parent.
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(c) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger; and no such Governmental Entity shall have initiated or
threatened to initiate any proceeding seeking any of the foregoing
that reasonably could be expected to prevent the Merger or otherwise
result in a Company Material Adverse Effect or a Parent Material
Adverse Effect.
(d) HSR Act. The applicable waiting period under the HSR
Act with respect to the transactions contemplated by this Agreement
shall have expired or been terminated.
(e) Pooling of Interests. Parent and the Company shall
have been advised in writing by each of Price Waterhouse LLP and Ernst
& Young LLP, respectively, on the Closing Date that the Merger should
be treated for financial accounting purposes as a Pooling Transaction.
SECTION 7.02. Additional Conditions to Obligations of the Parent
Companies. The obligations of the Parent Companies to effect the Merger and
the other transactions contemplated hereby are also subject to the satisfaction
at or prior to the Closing Date of the following conditions, any or all of
which may be waived in writing by Parent, in whole or in part:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement shall be true and correct as of the Closing Date as though
made on and as of the Closing Date (except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall be true and
correct as of such earlier date) except as, individually or in the
aggregate, could not reasonably be expected to have a Company Material
Adverse Effect. The Parent Companies shall have received a
certificate of the President and the Chief Financial Officer of the
Company, dated the Closing Date, to such effect.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Closing Date. The Parent Companies shall
have received a certificate of the President and the Chief Financial
Officer of the Company, dated the Closing Date, to that effect.
(c) Material Adverse Change. Since June 30, 1997, there
shall have been no change, occurrence or circumstance in the financial
condition, results of operations, business, operations or prospects of
the Company or any of its subsidiaries having or
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reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial condition, results of
operations, business, operations or prospects of the Company and its
subsidiaries, taken as a whole. The Parent Companies shall have
received a certificate of the President and the Chief Financial
Officer of the Company, dated the Closing Date, to such effect.
(d) Absence of Regulatory Conditions. There shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, by any
Governmental Entity in connection with the grant of a regulatory
approval necessary, in the reasonable business judgment of Parent, to
the continuing operation of the current or future business of the
Company, which imposes any condition or restriction upon the Parent
Companies or the business or operations of the Company which, in the
reasonable business judgment of Parent, would be materially burdensome
in the context of the transactions contemplated by this Agreement.
(e) Earnings Per Share. The earnings per share of the
Company for the quarter ending September 30, 1997 shall be no less
than as disclosed elsewhere by the Company to the Parent, as
determined in accordance with GAAP applied on a consistent basis with
the financial statements referred to in Section 3.07.
(f) Tax Opinion. Xxxxxx & Xxxx, L.L.P. shall have
delivered to Parent its written opinion as of the date that the Parent
Proxy Statement is first mailed to Parent stockholders substantially
to the effect that (x) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code, (y) Parent, Merger
Sub and the Company will each be a party to that reorganization within
the meaning of Section 368(b) of the Code, and (z) Parent, Merger Sub
and the Company will not recognize any gain or loss for U.S. federal
income tax purposes as a result of the Merger, and such opinion shall
not have been withdrawn or modified in any material respect.
(h) VCR Submission. The Company shall have filed a VCR
submission with the Internal Revenue Service in respect of each of the
401(k) Savings Plan for Employees of Computer Data Systems, Inc., the
Retirement Plan for Employees of Computer Data Systems, Inc. and the
Company's Supplemental Deferred Compensation Plan, as set forth in
Schedule 3.10 to the Company Disclosure Schedule.
SECTION 7.03. Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
writing by the Company, in whole or in part:
(a) Representations and Warranties. Each of the
representations and warranties of the Parent Companies contained in
this Agreement shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except to the extent such
representations and warranties specifically relate to an earlier date,
in which case
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such representations and warranties shall be true and correct as of
such earlier date) except as, individually or in the aggregate, could
not reasonably be expected to have a Parent Material Adverse Effect.
The Company shall have received a certificate of the President and the
Chief Financial Officer of the Parent, dated the Closing Date, to such
effect.
(b) Agreements and Covenants. The Parent Companies shall
have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing Date. The Company
shall have received a certificate of the President and the Chief
Financial Officer of the Parent, dated the Closing Date, to that
effect.
(c) Material Adverse Change. Since June 30, 1997, there
shall have been no change, occurrence or circumstance in the financial
condition, results of operations, business, operations or prospects of
Parent or any of its subsidiaries having or reasonably likely to have,
individually or in the aggregate, a material adverse effect on the
financial condition, results of operations, business, operations or
prospects of Parent and its subsidiaries, taken as a whole. The
Company shall have received a certificate of the President and the
Chief Financial Officer of each of the Parent Companies, dated the
Closing Date, to such effect.
(d) Absence of Regulatory Conditions. There shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, by any
Governmental Entity in connection with the grant of a regulatory
approval necessary, in the reasonable business judgment of the
Company, to the continuing operation of the current or future business
of Parent, which imposes any condition or restriction upon Parent or
the business or operations of Parent which, in the reasonable business
judgment of the Company, would be materially burdensome in the context
of the transactions contemplated by this Agreement.
(e) New York Stock Exchange Listing. The shares of
Parent Common Stock to be issued in the Merger shall have been
approved for listing (subject to official notice of issuance) on the
NYSE.
(f) Tax Opinion. Miles & Stockbridge, a Professional
Corporation, shall have delivered to the Company its written opinion
as of the date that the Company Proxy Statement is first mailed to the
Company stockholders substantially to the effect that (x) the Merger
will constitute a reorganization within the meaning of Section 368(a)
of the Code, (y) Parent, Merger Sub and the Company will each be a
party to that reorganization within the meaning of Section 368(b) of
the Code, and (z) no gain or loss for U.S. federal income tax purposes
will be recognized by the holders of the Company Common Stock upon
receipt of shares of Parent Common Stock in the Merger, except with
respect to any cash received in lieu of a fractional share interest in
Parent Common Stock, and such opinion shall not have been withdrawn or
modified in any material respect.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set
forth in Section 7.02(a) or Section 7.02(b) of this Agreement, as the
ease may be, would be incapable of being satisfied by February 15,
1998; provided, that in any case, a willful breach shall be deemed to
cause such conditions to be incapable of being satisfied for purposes
of this Section 8.01(b);
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Parent Companies
set forth in this Agreement, or if any representation or warranty of
the Parent Companies shall have become untrue, in either case such
that the conditions set forth in Section 7.03(a) or Section 7.03(b) of
this Agreement, as the case may be, would be incapable of being
satisfied by February 15, 1998; provided, that in any case, a willful
breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 8.01(c);
(d) by either Parent or the Company, if there shall be
any Order which is final and nonappealable preventing the consummation
of the Merger, except if the party relying on such Order to terminate
this Agreement has not complied with its obligations under Section
6.03(b) of this Agreement;
(e) by either Parent or the Company, if the Merger shall
not have been consummated before February 15, 1998, except if the
party relying on this Section 8.01(e) shall have failed to comply with
its covenants and agreements hereunder and such failure to consummate
the Merger shall be a result of the breach or violation of such
covenants and agreements;
(f) by either Parent or the Company, if this Agreement
and the Merger shall fail to receive the requisite vote for approval
and adoption by the stockholders of the Company at the Company
Stockholders Meeting or if the issuance of the Parent Common Stock in
connection with the Merger shall fail to receive the requisite vote
for approval by the stockholders of Parent at the Parent Stockholders
Meeting;
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(g) by Parent, if (i) the Board of Directors of the
Company withdraws, modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to Parent or shall have
resolved to do any of the foregoing; (ii) the Board of Directors of
the Company shall have recommended to the stockholders of the Company
any Competing Transaction or shall have resolved to do so; (iii) a
tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of the Company is commenced, and the Board of
Directors of the Company recommends that stockholders tender their
shares into such tender or exchange offer; or (iv) any person (other
than Parent or an affiliate thereof) shall have acquired beneficial
ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is used in Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding shares of capital
stock of the Company; or
(h) by the Company, if the Board of Directors of the
Company (x) fails to make or withdraws its recommendation referred to
in Section 6.02(a) if there exists at such time a Competing
Transaction, or (y) recommends to the Company's stockholders approval
or acceptance of a Competing Transaction, in each case only if the
Board of Directors of the Company, after consultation with and based
upon the advice of independent legal counsel, determines in good faith
that such action is necessary for such Board of Directors to comply
with its fiduciary duties to stockholders under applicable law.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 8.02. Effect of Termination. Except as provided in Section
8.05 or Section 9.01 of this Agreement, in the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void,
there shall be no liability on the part of the Parent Companies or the Company
to the other and all rights and obligations of any party hereto shall cease,
except that nothing herein shall relieve any party of any liability for (i) any
breach of such party's covenants or agreements contained in this Agreement, or
(ii) any willful breach of such party's representations or warranties contained
in this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, (i) no
amendment, which under applicable law may not be made without the approval of
the stockholders of the Company, may be made without such approval, and (ii) no
amendment, which under the applicable rules of the NYSE, may not be made
without the approval of the stockholders of Parent, may be made without such
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
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SECTION 8.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. For purposes of
this Section 8.04, the Parent Companies as a group shall be deemed to be one
party.
SECTION 8.05. Fees, Expenses and Other Payments.
(a) Except as provided in Section 8.05(c) of this
Agreement, all Expenses (as defined in paragraph (b) of this Section
8.05) incurred by the parties hereto shall be borne solely and
entirely by the party which has incurred such Expenses; provided,
however, that (i) the allocable share of the Parent Companies as a
group and the Company for all Expenses related to printing, filing and
mailing the Registration Statement, the Company Proxy Statement and
the Parent Proxy Statement and all SEC and other regulatory filing
fees incurred in connection with the Registration Statement, the
Company Proxy Statement and the Parent Proxy Statement shall be
one-half each (ii) any and all filing fees under the HSR Act shall be
borne one-half each by Parent and the Company and (iii) in the event
that the Company Stockholders Meeting is held and this Agreement and
the transactions contemplated hereby are not approved by the requisite
vote of the stockholders of the Company (and at the time of such
meeting, there shall not exist a Competing Transaction), then the
Company shall pay all of Parent's Expenses up to $1 million if, but
only if (x) the conditions set forth in Sections 7.01(a), (b), (c) and
(d) and Sections 7.03(a), (b), (c), (d), and (e) have been satisfied,
(y) with respect to Section 7.01(e), Price Waterhouse LLP advises
Parent that but for the failure of the Company's stockholders to
approve the Merger or other actions or inactions by the Company or an
affiliate of the Company or within the control of either, the Merger
would be treated for financial accounting purposes as a Pooling
Transaction, and (z) with respect to Section 7.03(f), but for the
failure of the Company's stockholders to approve the Merger or other
actions or inactions by the Company or an affiliate of the Company or
within the control of either, the Merger would constitute a
reorganization with the meaning of Section 368(a) of the Code.
(b) "Expenses" as used in this Agreement shall include
all out-of-pocket expenses (including, without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party
or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement,
the preparation, printing, filing and mailing of the Registration
Statement, the Company Proxy Statement and the Parent Proxy Statement,
the solicitation of stockholder approvals and all other matters
related to the consummation of the transactions contemplated hereby.
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(c) The Company agrees that if this Agreement is
terminated pursuant to:
(i) Section 8.01(b) and (x) such termination is
the result of a willful breach of any representation,
warranty, covenant or agreement of the Company contained
herein and (y) the Company shall have entered into
negotiations relating to a Competing Transaction, in any such
case at any time within the period commencing on the date of
this Agreement through the date of termination of this
Agreement; or
(ii) Section 8.01(f) because this Agreement and
the Merger shall fail to receive the requisite vote for
approval and adoption by the stockholders of the Company at
the Company Stockholders Meeting and, at the time of such
meeting there shall exist a Competing Transaction, the
conditions to the Company's obligations to close set forth in
Article VIII of this Agreement have been otherwise satisfied
and, within nine months of the Company Stockholders Meeting,
the Company or its Board of Directors enters into an agreement
with the same party, or an affiliate of that party, as is
involved in the Competing Transaction, which agreement relates
to (x) any merger, consolidation, share exchange, business
consolidation or similar transaction, or (y) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of
20% or more of the assets of the Company and its subsidiaries,
taken as a whole (provided, however, that in addition to the
foregoing provisions of this Section 8.05(c)(ii), (x) the
conditions set forth in Sections 7.01(a), (b), (c) and (d) and
Sections 7.03(a), (b), (c), (d), and (e) have been satisfied,
(y) with respect to Section 7.01(e), Price Waterhouse LLP
advises Parent that but for the failure of the Company's
stockholders to approve the Merger or other actions or
inactions by the Company or an affiliate of the Company or
within the control of either, the Merger would be treated for
financial accounting purposes as a Pooling Transaction, and
(z) with respect to Section 7.03(f), but for the failure of
the Company's stockholders to approve the Merger or other
actions or inactions by the Company or an affiliate of the
Company or within the control of either, the Merger would
constitute a reorganization with the meaning of Section 368(a)
of the Code); or
(iii) Section 8.01(g)(i) and at the time of the
withdrawal, modification or change (or resolution to do so) of
its recommendation by the Board of Directors of the Company,
there exists a Competing Transaction; or
(iv) Sections 8.01(g)(ii) or (iii); or
(v) Section 8.01(h);
then the Company shall pay to Parent an amount equal to $15,000,000,
which amount is inclusive of all of Parent's Expenses.
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(d) Any payment required to be made pursuant to Section
8.05(c) of this Agreement shall be made as promptly as practicable but
not later than three business days after termination of this
Agreement, and shall be made by wire transfer of immediately available
funds to an account designated by Parent.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 9.01(b) of this
Agreement, the representations, warranties and agreements of each
party hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any other
party hereto, any person controlling any such party or any of their
officers, directors, representatives or agents, whether prior to or
after the execution of this Agreement.
(b) The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Article VIII, except that
the agreements set forth in Articles I and II and IX and Sections 6.08
and 6.10 shall survive the Effective Time and those set forth in
Sections 5.04(d), 8.02 and 8.05 and Article IX hereof shall survive
termination. Nothing herein shall be construed to cause the
Confidentiality Agreement to terminate upon the termination of this
Agreement pursuant to Article VIII.
SECTION 9.02. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) or mailed by an
overnight delivery service to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to any of the Parent Companies, to:
Affiliated Computer Services, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000)000-0000
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with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
(b) If to the Company, to:
Computer Data Systems, Inc.
Xxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile No: (000)000-0000
with a copy to:
Miles & Stockbridge, a Professional Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
SECTION 9.03. Certain Definitions. For the purposes of this
Agreement, the term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
person;
(b) a person shall be deemed a "beneficial owner" of or
to have "beneficial ownership" of the Company Common Stock or Parent
Common Stock, as the case may be, in accordance with the
interpretation of the term "beneficial ownership" as defined in Rule
13d-3 under the Exchange Act, as in effect on the date hereof;
provided that a person shall be deemed to be the beneficial owner of,
and to have beneficial ownership of, the Company Common Stock or
Parent Common Stock, as the case may be, that such person or any
affiliate of such person has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise.
(c) "business day" means any day other than a day on
which banks in the State of New York are authorized or obligated to be
closed;
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(d) "control" (including the terms "controlled,"
"controlled by," and "under common control with") means the
possession, directly or indirectly, or as trustee or executor, of the
power to direct or cause the direction of the management or policies
of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "ERISA Affiliate" means the Company and each
corporation, partnership, or other trade or business, whether or not
incorporated, which is or has been treated as a single employer or
controlled group member with the Company pursuant to Code Section 414
or ERISA Section 4001.
(f) "knowledge" or "known" means with respect to any
matter in question, if an executive officer of the Company or Parent,
as the case may be, has actual knowledge of such matter;
(g) "federal government contract" is to be given its
customary use within the industry. It is further defined to include
any contractual arrangement (implied or express) with any agency,
department, or branch of the United States Government that is subject
to the laws and regulations of the United States of America,
regardless of whether the Company is in privity of contract with the
United States or is operating through a subcontract, partnership,
teaming arrangement, affiliate, or other indirect arrangement.
(g) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other
entity or group (as used in Section l3(d) of the Exchange Act);
(h) "subsidiary" or "subsidiaries" of the Company,
Parent, the Surviving Corporation or any other person, means any
corporation, partnership, joint venture or other legal entity of which
the Company, Parent, the Surviving Corporation or any such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of
the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity; and
(i) "Tax" or "Taxes" means any and all taxes, charges,
fees, levies, assessments, duties or other amounts payable to any
federal, state, local or foreign taxing authority or agency,
including, without limitation, (x) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer and gains taxes,
(y) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto.
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SECTION 9.04. Headings. 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 Section references herein are, unless the
context otherwise requires, references to sections of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 9.06. Entire Agreement. This Agreement (together with the
Exhibits, the Company Disclosure Schedule, the Parent Disclosure Schedule), the
Confidentiality Agreement and any side letter entered into pursuant to this
Agreement constitute the entire agreement of the parties, and supersede all
prior agreements and undertakings, both written and oral, among the parties or
between any of them, with respect to the subject matter hereof. The Company
agrees that nothing contained in this Agreement, the proxies granted by certain
officers and directors of the Company to Parent on or about the date hereof or
the transactions contemplated hereby or thereby shall be deemed to violate the
Confidentiality Agreement and that such agreements and proxies have been
entered into or granted with the prior written consent of the Company.
SECTION 9.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.08. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than as contemplated by Section 6.08 and
Section 6.11), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. Specific Performance. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation,
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warranty or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 9.11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law. Notwithstanding the foregoing, the effect of the Merger
shall be governed by, and construed in accordance with, Maryland Law.
SECTION 9.12. Counterparts. This Agreement may be executed in
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 9.13. Disclosure. Certain information set forth in the
Company Disclosure Schedule has been included and disclosed solely for
informational purposes and may not be required to be disclosed pursuant to the
terms and conditions of this Agreement. The disclosure of any such information
shall not be deemed to constitute an acknowledgment or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in this Agreement or that the information is material, nor
shall any information so included and disclosed be deemed to establish a
standard of materiality or otherwise used to determine whether any other
information is material.
SECTION 9.14. Voting. The directors and executive officers of each
of Parent and the Company, solely in their capacity as stockholders, have
entered into side letters agreeing (a) to not sell their shares of capital
stock of Parent and the Company, respectively, prior to the earliest to occur
of (i) the closing of the Merger or (ii) the termination of the Agreement
pursuant to its terms and (b) to vote their shares of capital stock in Parent
and the Company, respectively, in favor of the Merger and the transactions
contemplated by this Agreement at the Parent Stockholders Meeting and the
Company Stockholders Meeting, respectively.
****
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AFFILIATED COMPUTER SERVICES, INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXXX
--------------------------------------
Xxxxxx Xxxxxx
Chief Executive Officer
ACS ACQUISITION CORP.,
a Maryland corporation
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
President
COMPUTER DATA SYSTEMS, INC.,
a Maryland corporation
By: /s/ XXXXX X. XXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxx
President
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SCHEDULES
COMPUTER DATA SYSTEMS, INC.
Schedule 3.01 - Organization and Qualification; Subsidiaries
Schedule 3.03 - Capitalization
Schedule 3.05 - No Conflict; Required Filings and Consent
Schedule 3.06 - Permits; Compliance
Schedule 3.08 - Absence of Certain Changes or Events
Schedule 3.09 - Litigation
Schedule 3.10 - Employee Benefit Plans; Labor Matters
Schedule 3.11 - Taxes
Schedule 3.13 - Affiliates
Schedule 3.15 - Environmental Matters
Schedule 3.17 - Brokers
Schedule 3.18 - Insurance
Schedule 3.19 - Properties
Schedule 3.20 - Certain Material Contracts
Schedule 3.21 - Principal Customers; Competing Interests
Schedule 3.22 - Intellectual Property Rights
Schedule 3.26 - Federal Government Contracts
Schedule 5.02 - Negative Covenants of Company
AFFILIATED COMPUTER SERVICES, INC.
Schedule 4.02 - Charter and Bylaws
Schedule 4.03 - Capitalization
Schedule 4.05 - No Conflict; Required Filings and Consent
Schedule 4.06 - Permits; Compliance
Schedule 4.08 - Absence of Certain Changes or Events
Schedule 4.09 - Litigation
Schedule 4.12 - Brokers
Schedule 4.16 - Conditions Related to Employee Benefit Plans; Labor Matters
Schedule 4.18 - Environmental Matters
Schedule 4.19 - Insurance
Schedule 4.20 - Intellectual Property Rights
Schedule 5.03 - Affirmative and Negative Covenants of Parent
Affiliated Computer Services, Inc. and Computer Data Systems, Inc.
agree to furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
