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EXHIBIT 1
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BDM INTERNATIONAL, INC.,
TRW INC.
and
SYSTEMS ACQUISITION INC.
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AGREEMENT AND PLAN OF MERGER
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Dated as of November 20, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I.
TENDER OFFER AND MERGER
1.1. The Offer........................................................... 2
1.2. Company Action...................................................... 4
1.3. Directors........................................................... 5
1.4. The Merger.......................................................... 6
1.5. Effective Time...................................................... 7
1.6. Conversion of Shares................................................ 7
1.7. Dissenting Shares................................................... 8
1.8. Surrender of Shares................................................. 8
1.9. Options............................................................. 10
1.10. Certificate of Incorporation and Bylaws............................. 11
1.11. Directors and Officers.............................................. 11
1.12. Other Effects of Merger............................................. 11
1.13. Proxy Statement..................................................... 11
1.14. Additional Actions.................................................. 12
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization and Good Standing...................................... 12
2.2. Capitalization...................................................... 13
2.3. Subsidiaries........................................................ 14
2.4. Authorization; Binding Agreement.................................... 14
2.5. Governmental Approvals.............................................. 15
2.6. No Violations....................................................... 15
2.7. Securities Filings.................................................. 16
2.8. Company Financial Statements........................................ 17
2.9. Absence of Certain Changes or Events................................ 17
2.10. Compliance with Laws................................................ 18
2.11. Permits............................................................. 18
2.12. Litigation.......................................................... 18
2.13. Contracts........................................................... 19
2.14. Employee Benefit Plans.............................................. 19
2.15. Taxes and Returns................................................... 21
2.16 Intellectual Property............................................... 22
2.17. Environmental Matters............................................... 22
2.18. Offer Documents; Proxy Statement.................................... 24
2.19. Finders and Investment Bankers...................................... 25
2.20. Fairness Opinion.................................................... 25
2.21. Related Party Transactions.......................................... 25
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
3.1. Organization and Good Standing...................................... 25
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3.2. Authorization; Binding Agreement.................................... 25
3.3. Governmental Approvals.............................................. 26
3.4. No Violations....................................................... 26
3.5. Offer Documents; Proxy Statement.................................... 27
3.6. Finders and Investment Bankers...................................... 27
3.7. Financing Arrangements.............................................. 27
3.8. No Prior Activities................................................. 27
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
4.1. Conduct of Business of the Company and the Company Subsidiaries..... 28
4.2. Notification of Certain Matters..................................... 31
4.3. Access and Information.............................................. 31
4.4. Proxy Statement..................................................... 32
4.5. Reasonable Best Efforts............................................. 32
4.6. Public Announcements................................................ 32
4.7. Compliance.......................................................... 33
4.8. No Solicitation..................................................... 33
4.9. SEC and Stockholder Filings......................................... 35
4.10. Takeover Statutes................................................... 35
4.11. Related Party Agreements............................................ 35
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
5.1. Reasonable Best Efforts............................................. 36
5.2. Public Announcements................................................ 36
5.3. Compliance.......................................................... 36
5.4. Employee Benefit Plans.............................................. 37
5.5. Indemnification, Exculpation and Insurance.......................... 37
ARTICLE VI.
MERGER CONDITIONS
6.1. Offer............................................................... 38
6.2. Stockholder Approval................................................ 38
6.3. No Injunction or Action............................................. 38
6.4. Other Approvals..................................................... 38
6.5. Conditions of Obligations of Parent and Merger Sub.................. 38
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. Termination......................................................... 39
7.2. Effect of Termination and Abandonment............................... 40
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ARTICLE VIII.
MISCELLANEOUS
8.1. Confidentiality..................................................... 41
8.2. Amendment and Modification.......................................... 42
8.3. Waiver of Compliance; Consents...................................... 42
8.4. Survival............................................................ 42
8.5. Notices............................................................. 42
8.6. Binding Effect; Assignment.......................................... 43
8.7. Expenses............................................................ 44
8.8. Governing Law....................................................... 44
8.9. Counterparts........................................................ 44
8.10. Interpretation...................................................... 44
8.11. Entire Agreement.................................................... 44
8.12. Severability........................................................ 44
8.13. Specific Performance................................................ 45
8.14. Third Parties....................................................... 45
8.15. Disclosure Letters.................................................. 45
ANNEX I
Conditions to the Offer.................................................... 1
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GLOSSARY OF DEFINED TERMS
Acquisition Agreement................... 34
Affiliate............................... 44
Agreement............................... 1
Benefit Plan............................ 19
Certificate of Merger................... 7
Closing................................. 7
Closing Date............................ 7
Company................................. 1
Company Benefit Plan.................... 19
Company Class B Stock................... 13
Company Disclosure Letter............... 12
Company Filed Documents................. 16
Company Financial Statements............ 17
Company Material Adverse Effect ........ 13
Company Material Contract............... 19
Company Option Plans.................... 10
Company Options......................... 10
Company Permits......................... 18
Company Proposals....................... 32
Company Securities Filings.............. 16
Company Stock........................... 1
Company Subsidiary...................... 13
Confidentiality Agreement............... 41
Consent................................. 15
Delaware Code........................... 6
Dissenting Shares....................... 8
Effective Time.......................... 7
Environmental Claim..................... 23
Environmental Laws...................... 24
Environmental Permit.................... 24
ERISA................................... 19
Exchange Agent.......................... 8
Expiration Date......................... 3
Financial Advisor....................... 4
Governmental Authority.................. 15
Hazardous Materials..................... 24
HSR Act................................. 15
Independent Directors................... 6
Key Employees........................... 18
Law..................................... 16
Litigation.............................. 18
Merger.................................. 1
Merger Consideration.................... 7
Merger Sub.............................. 1
Minimum Condition....................... 1
Multiemployer Plan...................... 19
NASD.................................... 15
Offer................................... 1
Offer Conditions........................ 2
Offer Documents......................... 3
Offer to Purchase....................... 3
Parent.................................. 1
Parent Disclosure Letter................ 25
Parent Group............................ 36
Parent Information...................... 27
Per Share Amount........................ 1
Person.................................. 44
Proxy Statement......................... 11
Related Party........................... 25
Schedule 14D-1.......................... 3
Schedule 14D-9.......................... 4
SEC..................................... 3
Securities Act.......................... 19
Securities Exchange Act................. 2
Shares.................................. 1
Stockholders............................ 1
Stockholders Agreement.................. 1
Subsidiary.............................. 44
Superior Proposal....................... 34
Surviving Corporation................... 6
Surviving Corporation Common Stock ..... 8
Takeover Proposal....................... 33
Takeover Statute........................ 35
Tax..................................... 21
Tax Return.............................. 22
Termination Fee......................... 41
Voting Securities....................... 1
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This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of November 20, 1997, by and among, BDM International, Inc., a
Delaware corporation (the "Company"), TRW Inc., an Ohio corporation ("Parent"),
and Systems Acquisition Inc., a Delaware corporation and wholly owned subsidiary
of Parent ("Merger Sub").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Merger
Sub and Parent have approved the acquisition by Parent of the Company in
accordance with the provisions of this Agreement;
WHEREAS, in furtherance thereof, it is proposed that, upon the terms
and subject to the conditions set forth herein, Parent will make a cash tender
offer (as it may be amended from time to time in accordance herewith, the
"Offer") to purchase all of the outstanding shares ("Shares") of common stock,
$.01 par value, of the Company ("Company Stock"), for $29.50 per Share or such
higher price as may be paid in the Offer (the "Per Share Amount"), in each case
net to the seller in cash, without interest;
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of the Company, Merger Sub and Parent have each approved the
merger (the "Merger") of Merger Sub with and into the Company following the
expiration of the Offer in accordance with the laws of the State of Delaware and
the provisions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless, immediately
after the execution and delivery hereof, certain holders of Shares (the
"Stockholders") enter into an agreement (the "Stockholders Agreement") providing
for certain matters with respect to their Shares, the tender of their Shares and
certain other actions relating to the Offer and the other transactions
contemplated by this Agreement and, in order to induce Parent and Merger Sub to
enter into this Agreement, the Company has approved the execution and delivery
by Parent and Merger Sub and such Stockholders of the Stockholders Agreement,
and such Stockholders have agreed to execute and deliver the Stockholders
Agreement;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Stockholders Agreement, has resolved to recommend acceptance
of the Offer and the Merger to the holders of Shares and has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and to recommend that the holders of such Shares
accept the Offer and adopt this Agreement and the transactions contemplated
hereby; and
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WHEREAS, the Company, Merger Sub and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
TENDER OFFER AND MERGER
1.1. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 7.1 hereof and no event set forth in
Annex I hereto shall have occurred and be existing, Parent shall cause Merger
Sub to commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"Securities Exchange Act")) the Offer as promptly as practicable, but in no
event later than five business days following the public announcement of this
Agreement; provided, however, that Parent may designate another direct
subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under
the Securities Exchange Act) in the Offer, in which case references herein to
Merger Sub shall be deemed to apply to such subsidiary, as appropriate. The
obligation of Parent to cause Merger Sub to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set forth
in Annex I hereto (the "Offer Conditions"). The Per Share Amount shall be net to
each seller in cash, subject to reduction only for any applicable federal
back-up withholding or stock transfer taxes payable by such seller. The Company
agrees that no Shares held by the Company will be tendered pursuant to the
Offer.
(b) Without the prior written consent of the Company, Parent shall
not permit Merger Sub to (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought in
the Offer, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I hereto) or (iv) impose additional conditions to the Offer or
amend any other term of the Offer in any manner adverse to the holders of
Shares, provided that nothing herein will prohibit any waiver of any condition
or term of the Offer (other than the Minimum Condition) or any other action
permitted hereby. Upon the terms and subject to the conditions of the Offer,
Parent will cause Merger Sub to accept for payment and purchase, as soon as
practicable after the expiration of the Offer, all Shares validly tendered and
not withdrawn prior to the expiration of the Offer. It is agreed that the Offer
Conditions are for the benefit of Merger Sub and may be asserted by Merger Sub
regardless of the circumstances giving rise to any such condition (except for
any action or inaction by Parent or Merger Sub
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constituting a breach of this Agreement) or, except with respect to the Minimum
Condition, may be waived by Merger Sub, in whole or in part at any time and from
time to time, in its sole discretion.
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. On
the date the Offer is commenced, Parent and Merger Sub shall file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer that will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "Offer Documents"). Each of Parent,
Merger Sub and the Company agrees promptly to correct any information provided
by it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect and to
supplement the information provided by it specifically for use in the Schedule
14D-1 or the Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and Parent and Merger Sub further
agree to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given a reasonable opportunity to review and comment on
any Offer Documents before they are filed with the SEC.
(d) The Offer to Purchase shall provide for an initial expiration
date (the "Expiration Date") of 20 business days (as defined in Rule 14d-1 under
the Securities Exchange Act) from the date of commencement. Parent and Merger
Sub agree that they shall not terminate or withdraw the Offer or extend the
Expiration Date unless at the Expiration Date any of the Offer Conditions shall
not have been satisfied or earlier waived. Notwithstanding but without limiting
the foregoing, Merger Sub may (i) extend the Expiration Date (including as it
may be extended) for up to ten business days in connection with an increase in
the consideration to be paid pursuant to the Offer so as to comply with
applicable rules and regulations of the SEC, (ii) in its sole discretion, extend
the initial Expiration Date for up to ten business days after the initial
Expiration Date, and (iii) extend the initial Expiration Date (including as it
may be extended) for up to ten business days, notwithstanding that on such
Expiration Date the Offer Conditions shall have been
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satisfied or waived, if the number of Shares that have been validly tendered and
not withdrawn represent more than 50% but less than 90% of the voting power of
the then issued and outstanding Shares, provided that, in the case of clause
(iii) of this Section 1.1(d), Parent and Merger Sub expressly and irrevocably
waive any Offer Condition that subsequently may not be satisfied during such
extension of the Offer.
1.2. COMPANY ACTION. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that (A) the Board of
Directors of the Company, at a meeting duly called and held on November 20,
1997, at which all of the Directors were present, duly approved by unanimous
vote this Agreement and the transactions contemplated hereby, including the
Offer, the Merger and the Stockholders Agreement, resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and adopt this Agreement and the transactions contemplated hereby,
including the Merger, and determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the stockholders of the Company and (B) Wasserstein Perella &
Co., Inc. (the "Financial Advisor") has delivered to the Board of Directors of
the Company its written opinion that as of the date hereof the consideration to
be received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the stockholders of the Company from a financial point of
view. The Company has been authorized by the Financial Advisor to permit the
inclusion of such fairness opinion (or a reference thereto) in the Offer
Documents and in the Schedule 14D-9 referred to below. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company's Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, no later than the fifth
business day following the public announcement of this Agreement, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that will comply in all
material respects with the provisions of all applicable Law (as hereinafter
defined), including federal securities Laws. The Company shall mail such
Schedule 14D-9 to the stockholders of the Company promptly after the
commencement of the Offer together with the initial mailing of the Offer
Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Merger Sub, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such
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information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the
Company's stockholders to the extent required by applicable Laws, including
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent with mailing labels containing the
names and addresses of all record holders of Shares, non-objecting beneficial
owner lists (to the extent reasonably available), security position listings of
Shares held in stock depositories, each as of a recent date, and shall promptly
furnish Parent with such additional information, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Parent or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Shares.
1.3. DIRECTORS. Promptly upon the purchase by Merger Sub of any
Shares pursuant to the Offer (and assuming that the Minimum Condition has been
satisfied), and from time to time thereafter as Shares are acquired by Merger
Sub, Merger Sub shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as will
give Merger Sub, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this Section 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company)
bears to the number of Shares outstanding. At such times, if requested by
Parent, the Company will also cause each committee of the Board of Directors of
the Company and the Board of Directors of each Company Subsidiary (as
hereinafter defined) to include persons designated by Parent constituting the
same percentage of each such committee and the Board of Directors of each
Company Subsidiary as Parent's designees are of the Board of Directors of the
Company. The Company shall, upon request by Parent, promptly increase the size
of the Board of Directors of the Company as is necessary to enable Parent
designees to be elected to the Board of Directors of the Company in accordance
with the terms of this Section 1.3 and shall cause Parent's
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designees to be so elected; provided, however, that, subject to the following
proviso, in the event that Parent's designees are appointed or elected to the
Board of Directors of the Company, until the Effective Time (as hereinafter
defined) the Board of Directors of the Company shall have at least one director
who is a director on the date hereof and who is neither an officer of the
Company nor a designee, stockholder, affiliate or associate (within the meaning
of the federal securities laws) of Parent (one or more of such directors, the
"Independent Directors"); provided further, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of Parent, and such person shall be deemed
to be an Independent Director for purposes of this Agreement. Subject to
applicable Law, the Company shall promptly take all action necessary pursuant to
Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if Parent has not theretofore designated directors) such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3. Parent will supply the Company and be solely responsible
for any information with respect to itself and its nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1. Notwithstanding
anything in this Agreement to the contrary, prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Parent's obligations hereunder or (iv) take any other action
by the Company in connection with this Agreement required to be taken by the
Board of Directors of the Company.
1.4. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "Delaware Code"). At the Effective Time (as defined
in Section 1.5 hereof), upon the terms and subject to the conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the Delaware Code and the separate existence of Merger Sub shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue its corporate existence under the laws
of the State of Delaware as a subsidiary of Parent. At Parent's election, any
direct or indirect subsidiary of Parent other than Merger Sub may be merged with
and into the Company instead of Merger Sub. In the event of such an election,
the parties agree to execute an appropriate amendment to this
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Agreement to reflect such election. The parties shall prepare and execute a
certificate of merger in order to comply in all respects with the requirements
of the Delaware Code and with the provisions of this Agreement or, if
applicable, a certificate of ownership and merger (each, a "Certificate of
Merger").
1.5. EFFECTIVE TIME. The Merger shall become effective at the time
of the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the Delaware Code or at
such later time as may be specified in the Certificate of Merger. As soon as
practicable after all of the conditions set forth in Article VI of this
Agreement have been satisfied or waived by the party or parties entitled to the
benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "Closing") shall
occur. The time when the Merger shall become effective is herein referred to as
the "Effective Time" and the date on which the Effective Time occurs is herein
referred to as the "Closing Date."
1.6. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section 1.6(b)
hereof and any Dissenting Shares (as hereinafter defined)) shall be cancelled
and extinguished and be converted into the right to receive the Per Share Amount
(the "Merger Consideration") in cash payable to the holder thereof, without
interest, promptly upon surrender of the certificate representing such Share or
appropriate proof of lost certificates, in accordance with Section 1.8 hereof.
From and after the Effective Time, the holders of certificates evidencing
ownership of any such Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except as otherwise
provided for herein or by applicable Law.
(b) Each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
(other than Shares held by TRW Investment Management Co., its advisors or
Parent's employee benefit plans) immediately before the Effective Time,
including without limitation Merger Sub, shall be cancelled and extinguished and
no payment or other consideration shall be made with respect thereto.
(c) The shares of Merger Sub common stock outstanding immediately
prior to the Merger shall be converted into one
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validly issued, fully paid and non-assessable share of the common stock of the
Surviving Corporation (the "Surviving Corporation Common Stock"), which one
share of the Surviving Corporation Common Stock shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation and shall be
owned by Parent.
1.7. DISSENTING SHARES.(a) Notwithstanding any provision of this
Agreement to the contrary, any Shares issued and outstanding immediately prior
to the Effective Time and held by a holder who has demanded and perfected his
demand for appraisal of his Shares in accordance with the Delaware Code
(including but not limited to Section 262 thereof) and as of the Effective Time
has neither effectively withdrawn nor lost his right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration, but the holder thereof shall be entitled to
only such rights as are granted by the Delaware Code.
(b) Notwithstanding the provisions of Section 1.7(a) hereof, if any
holder of Shares who demands appraisal of his Shares under the Delaware Code
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever occurs later, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the certificate or certificates
representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served pursuant to the Delaware Code
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the Delaware Code. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Parent, settle
or offer to settle any such demands.
1.8. SURRENDER OF SHARES. (a) Prior to the Closing Date, Parent
shall appoint First Chicago Trust Company of New York or another agent
reasonably acceptable to the Company to act as exchange agent (the "Exchange
Agent") for the Merger. When and as needed, Parent shall make available to the
Exchange Agent for the benefit of holders of Shares, the aggregate consideration
to which such holders shall be entitled at the Effective Time pursuant to
Section 1.6 hereof. Such funds shall be invested by the Exchange Agent as
directed by Parent or, after the Effective Time, the Surviving Corporation,
provided that such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investors Service, Inc. or Standard & Poor's
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Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Merger Sub or Parent, as Parent directs.
In the event that such funds as invested are inadequate to pay the full Merger
Consideration for all Shares converted into the Merger Consideration pursuant to
the Merger, the Parent shall provide additional funds to do so.
(b) On the Closing Date, Parent shall instruct the Exchange Agent
to mail to each holder of record of a certificate representing any Shares
cancelled upon the Merger pursuant to Section 1.6(a) hereof, within five
business days of receiving from the Company a list of such holders of record,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates shall pass, only upon
delivery of the certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. Each holder
of a certificate or certificates representing any Shares cancelled upon the
Merger pursuant to Section 1.6(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending one year after the Effective Time. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares or Shares held by Parent or in the
treasury of the Company) shall represent solely the right to receive the
aggregate Merger Consideration relating thereto.
(c) If payment of cash in respect of cancelled Shares is to be made
to a person other than the person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other Taxes (as hereinafter defined)
required by reason of such payment in a name other than that of the registered
holder of the certificate or instrument surrendered or shall have established to
the satisfaction of Parent or the Exchange Agent that such Tax either has been
paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and no transfer of Shares shall be made thereafter, other than
transfers of Shares that have occurred prior to the Effective Time. In the event
that, after
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the Effective Time, certificates for Shares are presented to the Surviving
Corporation, its transfer agent or the Exchange Agent, they shall be cancelled
and exchanged for cash as provided in Section 1.6(a) hereof. No interest shall
accrue or be paid on any cash payable upon the surrender of a certificate or
certificates which immediately before the Effective Time represented outstanding
Shares.
(e) The Merger Consideration paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 1.8(c) hereof, stock transfer
Taxes payable by such holder.
(f) Promptly following the date which is 180 calendar days after
the Effective Time, the Exchange Agent shall deliver to Parent all cash
(including interest received with respect thereto), certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares (other than certificates representing Dissenting
Shares and certificates representing Shares to be cancelled pursuant to Section
1.6(b) hereof) may surrender such certificate to Parent and (subject to
applicable abandoned property, escheat and similar Laws) receive in
consideration thereof the aggregate Merger Consideration relating thereto
payable upon surrender of such certificate, without any interest or dividends
thereon.
(g) None of the Company, Merger Sub, Parent or the Exchange Agent
shall be liable to any holder of Shares for cash delivered to a public official
pursuant to any abandoned property, escheat or similar law, rule, regulation,
statute, order, judgment or decree.
1.9. OPTIONS. (a) The Company hereby represents and warrants, and
based thereon Parent and Merger Sub hereby acknowledge, that (i) all outstanding
options to purchase Shares (the "Company Options") granted under the Company's
stock option plans referred to in Section 2.14 of the Company Disclosure Letter
(as hereinafter defined), each as amended (collectively, the "Company Option
Plans"), whether or not then exercisable or vested, shall, pursuant to the terms
of the Company Option Plans, be fully exercisable and vested during the ten-day
period immediately prior to the initial Expiration Date and (ii) pursuant to the
terms thereof, all Company Options which are outstanding immediately prior to
the consummation of the Offer shall be cancelled as of the consummation of the
Offer and the holders thereof shall be entitled to receive from the Company (or,
at Parent's option, Parent) upon consummation of the Offer, in respect of each
Share subject to such Company Option, an amount in cash equal to the excess, if
any, of the Per Share Amount over the exercise price per share thereof (such
payment to
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be net of applicable withholding taxes), provided, however, that with respect to
any person subject to Section 16(a) of the Securities Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Securities
Exchange Act. Upon the consummation of the Offer, Parent shall provide the
Company with the funds necessary to satisfy any of its obligations under this
Section 1.9(a).
(b) The Company hereby represents and warrants that all Company
Option Plans provide, or have been or will be amended to provide, for the
actions described in Section 1.9(a) hereof. The Company shall cause the Company
Option Plans to terminate as of the Effective Time.
1.10. CERTIFICATE OF INCORPORATION AND BYLAWS. Subject to Section
5.5 hereof, at the Effective Time, the Certificate of Incorporation and the
Bylaws of the Surviving Corporation shall be the Certificate of Incorporation
and the Bylaws of Merger Sub in effect at the Effective Time (subject to any
subsequent amendments).
1.11. DIRECTORS AND OFFICERS. At the Effective Time, the directors
of Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, in each
case until their successors are duly elected or appointed and qualified.
1.12. OTHER EFFECTS OF MERGER. The Merger shall have all further
effects as specified in the applicable provisions of the Delaware Code.
1.13. PROXY STATEMENT. (a) As promptly as practicable after the
consummation of the Offer and if required by applicable Law, the Company shall
prepare and file with the SEC, and shall use all reasonable best efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, a proxy
statement in connection with a meeting of the Company's stockholders to consider
the Merger or an information statement, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein referred to as the
"Proxy Statement"). The Proxy Statement shall contain the recommendation of the
Board of Directors of the Company in favor of the Merger and the fairness
opinion of the Financial Advisor and such other disclosures as are required by
Law.
(b) Parent will furnish the Company with such information
concerning Parent and its subsidiaries as is necessary in order to cause the
Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
with applicable Law. Parent agrees promptly to advise the Company if, at any
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time prior to the meeting of stockholders of the Company referenced herein, any
information provided by it specifically for inclusion in the Proxy Statement is
or becomes incorrect or incomplete in any material respect and to provide the
Company with the information needed to correct such inaccuracy or omission.
Parent will furnish the Company with such supplemental information as may be
necessary in order to cause the Proxy Statement, insofar as it relates to Parent
and its subsidiaries, to comply with applicable Law after the mailing thereof to
the stockholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of the
Proxy Statement at least such amount of time prior to each filing thereof as is
customary in transactions of the type contemplated hereby. Parent authorizes the
Company to utilize in the Proxy Statement the information concerning Parent and
its subsidiaries provided to the Company in connection with, or contained in,
the Proxy Statement.
1.14. ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the correspondingly numbered Sections of the letter,
dated the date hereof, from the Company to Parent (the "Company Disclosure
Letter"):
2.1. ORGANIZATION AND GOOD STANDING. The Company and each of the
Company Subsidiaries is a corporation or partnership
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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate or partnership power and authority and any necessary governmental
approval to own, lease and operate its properties and to carry on its business
as now being conducted. The Company and each of the Company Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the character of the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have or be reasonably
likely in the future to have a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or results of operations of the
Company and the Company Subsidiaries taken as a whole ("Company Material Adverse
Effect") or prevent or delay the consummation of the Offer or Merger. The
Company has heretofore made available to Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company. For purposes of this Agreement, the term "Company Subsidiary" shall
mean any corporation, partnership or other legal entity of which the Company
(either alone or through or together with any other subsidiary) owns a majority
of the capital stock or other equity interests, and the Company is entitled to
vote for the election of the board of directors or other governing body of such
corporation, partnership or other legal entity.
2.2. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (a) 50,000,000 shares of Company Stock, (b)
2,000,000 of Class B Common Stock, par value $0.01 per share (the "Company Class
B Stock"), and (c) 500,000 shares of preferred stock, par value $0.01 per share.
As of the close of business on the day immediately preceding the date hereof,
(a) 29,723,431 shares of Company Stock were issued and outstanding, (b) no
shares of Company Class B Stock were issued and outstanding, (c) no shares of
preferred stock were issued and outstanding and (d) 22,891 shares of Company
Stock were issued and held in the treasury of the Company. No other capital
stock of the Company is authorized or issued. All issued and outstanding shares
of the Company Stock are duly authorized, validly issued, fully paid and
non-assessable and free of preemptive or similar rights. Except as set forth in
the Company Filed Documents (as hereinafter defined) or Section 2.2 of the
Company Disclosure Letter, as of the date hereof there were no, and as of the
Expiration Date there will be no, outstanding rights, subscriptions, warrants,
puts, calls, unsatisfied preemptive rights, options or other agreements of any
kind relating to any of the outstanding, authorized but unissued, unauthorized
or treasury shares of the capital stock or any other interest in the ownership
or earnings of the Company or other security of the Company, and there is no
authorized or outstanding security of any kind convertible into
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or exchangeable for any such capital stock or other security. Except as set
forth in Section 2.2 of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any Company Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity.
2.3. SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation or organization of each
Company Subsidiary, each of which is wholly owned by the Company except as
otherwise indicated in said Section 2.3 of the Company Disclosure Letter. All of
the capital stock and other interests of the Company Subsidiaries so held by the
Company are owned by it or a Company Subsidiary as indicated in said Section 2.3
of the Company Disclosure Letter, free and clear of any claim, lien,
encumbrance, security interest or agreement with respect thereto. All of the
outstanding shares of capital stock in each of the Company Subsidiaries directly
or indirectly held by the Company are duly authorized, validly issued, fully
paid and non-assessable and were issued free of preemptive or similar rights and
in compliance with applicable Laws. No equity securities or other interests of
any of the Company Subsidiaries are or may become required to be issued or
purchased by reason of any options, warrants, rights to subscribe to, puts,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock of any
Company Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or options, warrants or rights to purchase or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable for such shares.
2.4. AUTHORIZATION; BINDING AGREEMENT. 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. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Company's
Board of Directors and no other corporate proceedings on the part of the Company
or any Company Subsidiary are necessary to authorize the execution and delivery
of this Agreement or to consummate the transactions contemplated hereby (other
than the adoption of this Agreement by the stockholders of the Company to the
extent required by the Delaware Code). This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding agreements of the Company, enforceable against the Company in accordance
with its terms. The Board of Directors
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of the Company has approved this Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby (including but not limited to the
Offer, the Merger and the matters provided for in the Stockholders Agreement) so
as to render inapplicable hereto and thereto the limitation on business
combinations contained in Section 203 of the Delaware Code (or any similar
provision), assuming Parent and its "associates" and "affiliates" (as defined in
Section 203 of the Delaware Code) collectively beneficially own and have
beneficially owned at all times during the three-year period prior to the
execution of this Agreement and the Stockholders Agreement less than 15% of the
Shares outstanding. As a result, the only vote of holders of any class or series
of the Company's capital stock required to adopt this Agreement and the
transactions contemplated hereby, including the Merger, is the affirmative vote
of a majority of the outstanding Shares, and if Section 253 of the Delaware Code
is applicable to the Merger, no such vote will be required. No other state
takeover or control share statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, the Stockholder Agreement or any of
the transactions contemplated hereby or thereby.
2.5. GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("Consent"), any
nation or government, any state or other political subdivision thereof, any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental or regulatory authority, agency,
department, board, commission, administration or instrumentality, any court,
tribunal or arbitrator and any self-regulatory organization, domestic or foreign
("Governmental Authority"), on the part of the Company or any of the Company
Subsidiaries is required in connection with the execution, delivery or
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code, (ii) filings with the SEC and the National Association of
Securities Dealers, Inc. ("NASD"), (iii) filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and similar foreign requirements, (iv)
such filings as may be required in any jurisdiction where the Company is
qualified or authorized to do business as a foreign corporation in order to
maintain such qualification or authorization and (v) those Consents that, if
they were not obtained or made, individually or in the aggregate, would not have
or be reasonably likely in the future to have a Company Material Adverse Effect,
or prevent or materially delay consummation of the Offer or the Merger or the
Company from performing its obligations under this Agreement.
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2.6. NO VIOLATIONS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of the Company or any of
the Company Subsidiaries, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any Company
Material Contract (as hereinafter defined), (iii) result in the creation or
imposition of any lien or encumbrance of any kind upon any of the assets of the
Company or any Company Subsidiary or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 2.5 hereof, contravene any
applicable provision of any statute, law, rule or regulation or any order,
decision, injunction, judgment, award or decree ("Law") to which the Company or
any Company Subsidiary or its or any of their respective assets or properties
are subject, except, in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which would not, individually or in the aggregate,
have or be reasonably likely in the future to have a Company Material Adverse
Effect or prevent or materially delay consummation of the Offer or the Merger or
the Company from performing its obligations under this Agreement.
2.7. SECURITIES FILINGS. The Company and, to the extent applicable,
each of its then or current Company Subsidiaries, has filed all forms, reports,
statements and documents required to be filed with the SEC since December 31,
1994, each of which has complied in all material respects with the applicable
requirements of the Securities Act (as hereinafter defined) or the Securities
Exchange Act, each as in effect on the date so filed. The Company has made
available to Parent true and complete copies of (i) its Annual Reports on Form
10-K, as amended, for the years ended December 31, 1994, 1995 and 1996, as filed
with the SEC, (ii) its proxy statements relating to all of the meetings of
stockholders (whether annual or special) of the Company since January 1, 1995,
as filed with the SEC, and (iii) all other reports, statements and registration
statements and amendments thereto (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by the
Company with the SEC since January 1, 1994, or, in the case of Quarterly Reports
on Form 10-Q, since October 1, 1996, and prior to the date hereof (collectively,
the "Company Filed Documents"). The reports and statements required to be filed
or furnished to stockholders pursuant to the Securities Exchange Act subsequent
to the date hereof, collectively with the Company Filed Documents, are referred
to collectively herein as the "Company Securities Filings." As of their
respective dates, or as of the date of the last amendment thereof, if amended
after filing, none of the Company Securities Filings contained or, as
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to the Company Securities Filings subsequent to the date hereof, will contain,
any untrue statement of a material fact or omitted or, as to the Company
Securities Filings subsequent to the date hereof, will omit, to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Company has heretofore furnished or made available to Parent a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to executed agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act or the Securities Exchange Act.
2.8. COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings (the "Company Financial Statements")
have been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except, with
respect to any Company Filed Documents, as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the consolidated
financial position of the Company and the Company Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments (which in the aggregate are not
material in nature or amount), any other adjustments described in the Company
Filed Documents and the fact that certain information and notes have been
condensed or omitted in accordance with the Securities Exchange Act.
2.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company Filed Documents, since December 31, 1996, the Company and the
Company Subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been: (i) any event that, individually or in the aggregate, has had or is
reasonably likely in the future to have a Company Material Adverse Effect, (ii)
any declaration, payment or setting aside for payment of any dividend or other
distribution or any redemption or other acquisition of any shares of capital
stock or securities of the Company by the Company, (iii) any material damage or
loss to any material asset or property, whether or not covered by insurance,
(iv) any change by the Company in accounting principles or practices, (v) any
revaluation by the Company of any of its material assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business, (vi) any entry by the
Company or any Company Subsidiaries into any commitment or transactions material
to the Company and the Company Subsidiaries taken as a whole (other than
commitments or transactions entered into in the ordinary course
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of business), or (vii) any increase in or establishment 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 agreement or arrangement, or, since
July 1, 1997, any other increase in the compensation payable or to become
payable to any present or former directors or officers, or any employment,
consulting or severance agreement or arrangement entered into with any such
present or former directors, officers or employees of the Company or any of the
Company Subsidiaries covered by Section 5.4 of the Company Disclosure Letter
("Key Employees"). Since January 1, 1997, neither the Company nor any Company
Subsidiary has taken, or failed to take, any action that would have constituted
a breach of Section 4.1 hereof had the covenants therein applied since that
date, except as described in Section 2.9 of the Company Disclosure Schedule or
ordinary course increases in compensation as relates to Key Employees (other
than those entitled under Section 5.4 of the Company Disclosure Letter to
"Senior Management Severance").
2.10. COMPLIANCE WITH LAWS. The business and operations of the
Company and each of the Company Subsidiaries have been operated in compliance
with all Laws applicable thereto, except for any instances of non-compliance
which, individually or in the aggregate, have had or would be reasonably likely
in the future to have a Company Material Adverse Effect.
2.11. PERMITS. (i) The Company and the Company Subsidiaries have
all permits, certificates, licenses, approvals and other authorizations required
in connection with the operation of their respective businesses (collectively,
"Company Permits"), (ii) neither the Company nor any of the Company Subsidiaries
is in violation of any Company Permit and (iii) no proceedings are pending or,
to the knowledge of the Company, threatened, to revoke or limit any Company
Permit, except, in each case, those the absence or violation of which,
individually or in the aggregate, have had or would be reasonably likely in the
future to have a Company Material Adverse Effect or prevent or result in a
material delay of the consummation of the Offer or the Merger.
2.12. LITIGATION. Except as disclosed in the Company Filed
Documents, there is no suit, action, investigation, claim or proceeding
("Litigation") pending or, to the best knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries which, individually or in
the aggregate, has had or would be reasonably likely in the future to have a
Company Material Adverse Effect, nor is there any judgment, decree, writ, award,
injunction, rule or order of any Governmental Authority outstanding against the
Company or any of the Company Subsidiaries which, individually or in the
aggregate, has had or
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would be reasonably likely in the future to have a Company Material Adverse
Effect or prevent or result in a material delay of the consummation of the Offer
or the Merger.
2.13. CONTRACTS. Neither the Company nor any of the Company
Subsidiaries is a party or is subject to any note, bond, mortgage, indenture,
contract, lease, license, agreement or instrument that is required to be
described in or filed as an exhibit to any Company Securities Filing ("Company
Material Contract") that is not so described in or filed as required by the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), or the Securities Exchange Act in respect of the Company
Filed Documents, as the case may be. All such Company Material Contracts are
valid and binding and are in full force and effect and enforceable against the
Company or such subsidiary and, to the knowledge of the Company, against the
other parties thereto in accordance with their respective terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies. Neither the Company nor any of the Company
Subsidiaries is in violation or breach of or default under any such Company
Material Contract where such violation or breach, individually or in the
aggregate, has had or would be reasonably likely in the future to have a Company
Material Adverse Effect.
2.14. EMPLOYEE BENEFIT PLANS. (a) Section 2.14 of the Company
Disclosure Letter contains a complete and accurate list of all material Benefit
Plans (as hereinafter defined) maintained or contributed to by the Company or
any of the Company Subsidiaries ("Company Benefit Plan"). A "Benefit Plan" shall
include (i) an employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, together with all
regulations thereunder ("ERISA"), even if, because of some other provision of
ERISA, such plan is not subject to any or all of ERISA's provisions, and (ii)
whether or not described in the preceding clause, any pension, profit sharing,
severance, employment, change-in-control, bonus, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock option
plan or any other compensation, welfare, fringe benefit or retirement plan,
program, policy or arrangement providing for benefits for or the welfare of any
or all of the current or former employees or agents of the Company or any of the
Company Subsidiaries or their beneficiaries or dependents; provided that Benefit
Plans shall not include any multiemployer plan, as defined in Section 3(37) of
ERISA (a "Multiemployer Plan"). Each of the Company Benefit Plans has been
maintained in compliance with its terms and all applicable Law, except where the
failure to do so would not be reasonably likely in the future to result in a
Company Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries
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contributes to, or has any outstanding liability with respect to, any
Multiemployer Plan.
(b) Except to the extent that any of the following would not have
or be reasonably likely in the future to have a Company Material Adverse Effect:
(i) each Benefit Plan has been established and administered in accordance with
its terms and in compliance with applicable provisions of ERISA, the Code and
other applicable laws, rules and regulations; (ii) each Benefit Plan which is
intended to be qualified (within the meaning of Code Section 401(a)) is so
qualified in form and operation and has received a favorable determination
letter as to its qualification, and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification; (iii) no event
has occurred and no condition exists that would subject the Company or any of
the Company Subsidiaries, either directly or by reason of their affiliation with
an ERISA Affiliate (as hereinafter defined) to any tax, fine, lien or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv)
for each Benefit Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the most
recent Form 5500 since the date thereof; and (v) no "reportable event" (as such
term is defined in ERISA Section 4043), "prohibited transactions" (as such term
is defined in ERISA Section 406 and Code Section 4975), "accumulated funding
deficiency" (as such term is defined in ERISA Section 302 and Code Section 412
(whether or not waived)) or failure to make by its due date a required
installment under Code Section 412(m) has occurred with respect to any Benefit
Plan or any other plan maintained for employees of any ERISA Affiliate of the
Company or any of the Company Subsidiaries. "ERISA Affiliate," as applied to any
person, means (i) any corporation which is a member of a controlled group of
corporations (within the meaning of Code Section 414(b)) of which that person is
a member, (ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control (within the
meaning of Code Section 414(c)) of which that person is a member and (iii) any
member of an affiliated service group (within the meaning of Code Section 414(m)
and (o)) of which that person, any corporation described in clause (i) above or
any trade or business described in clause (ii) above is a member.
(c) With respect to any Benefit Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened which has had or would
be reasonably likely in the future to have a Company Material Adverse Effect and
(ii) no facts or circumstances exist, to the knowledge of the Company, that
could give rise to any such actions, suits or claims which would be reasonably
likely in the future to result in a Company Material Adverse Effect.
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(d) Except for (i) payments required to be made under the Company
Supplemental Severance Program and (ii) the accelerated vesting and cash-out of
Company Options as described in Section 1.9 hereof, no Benefit Plan exists that
could result in the payment to any present or former employee of the Company or
any Company Subsidiary of any money or other property, or accelerate or provide
any other rights or benefits, to any present or former employee of the Company
or any Company Subsidiary as a result of the transactions contemplated by this
Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code Section 280G, which payments, acceleration or
provision of benefits would be reasonably likely in the future to result in a
Company Material Adverse Effect.
2.15. TAXES AND RETURNS. (a) The Company and each of the Company
Subsidiaries and any consolidated, combined, unitary or aggregate group for tax
purposes of which the Company or any of the Company Subsidiaries is or has been
a member has timely filed, or caused to be timely filed all Tax Returns (as
hereinafter defined) required to be filed by it, and has paid, collected or
withheld, or caused to be paid, collected or withheld, all Taxes required to be
paid, collected or withheld, other than such Taxes for which adequate reserves
in the Company Financial Statements have been established in accordance with
generally accepted accounting principles, consistently applied, or which are
being contested in good faith. All such Tax Returns were true, correct and
complete in all material respects. There are no claims or assessments pending
against the Company or any of the Company Subsidiaries for any alleged
deficiency in any Tax, and the Company has not been notified in writing of any
proposed Tax claims or assessments against the Company or any of the Company
Subsidiaries (other than in each case, claims or assessments for which adequate
reserves in the Company Financial Statements have been established or which are
being contested in good faith and are immaterial in amount). Neither the Company
nor any of the Company Subsidiaries has any waivers or extensions of any
applicable statute of limitations to assess any Taxes. There are no outstanding
requests by the Company or any of the Company Subsidiaries for any extension of
time within which to file any Tax Return or within which to pay any material
amounts of Taxes shown to be due on any return. To the best knowledge of the
Company, there are no liens for Taxes on the assets of the Company or any of the
Company Subsidiaries except for statutory liens for current Taxes not yet due
and payable.
(b) For purposes of this Agreement, the term "Tax" shall mean any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any
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Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
2.16. INTELLECTUAL PROPERTY. The Company or its Subsidiaries own,
or are licensed or otherwise possess legal enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, domain names and tangible or intangible proprietary information or
materials that are used in the respective businesses of the Company and the
Company Subsidiaries as currently conducted, except for any such failures to
own, be licensed or possess that, individually or in the aggregate, has not had
and is not reasonably likely in the future to have a Company Material Adverse
Effect. To the best knowledge of the Company, all patents, trademarks, trade
names, service marks and copyrights held by the Company or its Subsidiaries are
valid and subsisting.
2.17. ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
2.17 of the Company Disclosure Letter and except as, individually or in the
aggregate, have not had and are not reasonably likely in the future to have a
Company Material Adverse Effect or prevent or materially delay the consummation
of the Offer or the Merger, to the Company's knowledge;
(i) the Company and the Company Subsidiaries are, and within
the period of all applicable statutes of limitation have been, in
compliance with all Environmental Laws (as hereinafter defined);
(ii) the Company and the Company Subsidiaries hold all
Environmental Permits (as hereinafter defined) (each of which is in
full force and effect) required for any of their current operations
and for any property owned, leased, or otherwise operated by any of
them, and are, and within the period of all applicable statutes of
limitation have been, in compliance with the terms of all such
Environmental Permits;
(iii) no review by, or approval of, any Governmental
Authority or other person is required under any Environmental Law in
connection with the execution or delivery of this Agreement;
(iv) neither the Company nor any of the Company Subsidiaries
has received any written notice of Environmental Claim (as
hereinafter defined) and no
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such Environmental Claims are currently pending or threatened;
(v) Hazardous Materials are not present on any property
owned, leased or operated by the Company or any Company Subsidiaries
that is reasonably likely to form the basis of any Environmental
Claim against any of them, and neither the Company nor any of the
Company Subsidiaries has reason to believe that Hazardous Materials
are present on any other property that is reasonably likely to form
the basis of any Environmental Claim against any of them; and
(vi) the Company has informed the Parent and Merger Sub of:
(A) all material facts which the Company reasonably believes could
form the basis of a material Environmental Claim against any person
(including, without limitation, any predecessor of the Company or
any of the Company Subsidiaries whose liability the Company or any
of the Company Subsidiaries has or may have retained or assumed,
either contractually or by operation of law, arising out of
non-compliance with any Environmental Law or the presence of
Hazardous Materials (as hereinafter defined) at any location owned,
operated or leased by the Company or the Company Subsidiaries or on
any other property; (B) all currently estimated material costs the
Company reasonably expects it and any of the Company Subsidiaries to
incur to comply with Environmental Laws during the next three years;
and (C) all currently estimated material costs the Company and any
of the Company Subsidiaries reasonably expect to incur for ongoing,
and reasonably anticipated, investigation and remediation of
Hazardous Materials (including, without limitation, any payments to
resolve any threatened or asserted Environmental Claim for
investigation and remediation costs).
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or notice
of alleged noncompliance, violation or liability, by any person or entity
asserting liability or potential liability (including without limitation,
liability or potential liability for enforcement, investigatory costs,
remediation costs, operation and maintenance costs, governmental response costs,
natural resource damages, property damage, personal injury, fines or penalties),
regardless of legal theory, arising out of, based on or resulting from (i) the
presence, discharge, emission, release or threatened release of any
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Hazardous Materials at any location or (ii) otherwise relating to obligations or
liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees or other legally
enforceable requirement (including, without limitation, common law) of any
foreign government, the United States or any state, local, municipal or other
governmental authority regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment.
"Environmental Permit" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants, contaminants and all other materials, whether or not defined as
such, that are regulated pursuant to any Environmental Laws.
2.18. OFFER DOCUMENTS; PROXY STATEMENT. The Proxy Statement will
comply in all material respects with the applicable requirements of the
Securities Exchange Act except that no representation or warranty is being made
by the Company with respect to any information supplied to the Company by Parent
or Merger Sub specifically for inclusion in the Proxy Statement. The Proxy
Statement will not, at the time the Proxy Statement is filed with the SEC or
first sent to stockholders, at the time of the Company's 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 light of the circumstances under which
they were made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
meeting of the Company's stockholders held for approval of the Merger which has
become false or misleading. The Schedule 14D-9 will comply in all material
respects with the Securities Exchange Act. Neither the Schedule 14D-9 nor any of
the information relating to the Company or its affiliates provided by or on
behalf of the Company specifically for inclusion in the Schedule 14D-1 or the
Offer Documents will, at the respective times the Schedule 14D-9, the Schedule
14D-1 and the Offer Documents are filed with the SEC or are first published,
sent or given to stockholders of the Company, 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 made therein, in light of the
circumstances under which they were made, not misleading. No representation is
made by the Company with respect to written
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information supplied by Parent or Merger Sub specifically for inclusion in the
Schedule 14D-9.
2.19. FINDERS AND INVESTMENT BANKERS. Neither the Company nor any
of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with the Financial
Advisor, a copy of which has been provided to Parent.
2.20. FAIRNESS OPINION. The Company's Board of Directors has
received from the Financial Advisor a written opinion addressed to it to the
effect that, as of the date hereof, the consideration to be paid to stockholders
pursuant to each of the Offer and the Merger is fair to such stockholders from a
financial point of view.
2.21. RELATED PARTY TRANSACTIONS. Except as set forth in the
Company Filed Documents, no director, officer or affiliate of the Company,
including for these purposes, the Stockholders, or director, officer or partner
of such affiliate (each a "Related Party")(i) has outstanding any indebtedness
or other similar obligation to the Company or any of the Company Subsidiaries or
(ii) other than employment-related benefits contemplated by or disclosed in this
Agreement, is a party to any legally binding material contract, commitment or
obligation to, from or with the Company or any Company Subsidiary.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that, except as set
forth in the correspondingly numbered Sections of the letter, dated the date
hereof, from Parent to the Company (the "Parent Disclosure Letter"):
3.1. ORGANIZATION AND GOOD STANDING. Parent and Merger Sub are each
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority and any necessary governmental authority to own, lease and
operate its properties and to carry on its business as now being conducted.
3.2. AUTHORIZATION; BINDING AGREEMENT. Parent and Merger Sub have
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby,
including,
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but not limited to, the Merger, have been duly and validly authorized by the
respective Boards of Directors of Parent and Merger Sub, as appropriate, and no
other corporate proceedings on the part of Parent, Merger Sub or any other
subsidiary of Parent are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated hereby (other than
the requisite approval by the sole stockholder of Merger Sub of this Agreement
and the Merger). This Agreement has been duly and validly executed and delivered
by each of Parent and Merger Sub and constitutes the legal, valid and binding
agreements of Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms.
3.3. GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent or Merger Sub is required in
connection with the execution or delivery by Parent and Merger Sub of this
Agreement or the consummation by Parent and Merger Sub of the transactions
contemplated hereby other than (i) filings under the HSR Act and similar foreign
requirements, (ii) filings with the SEC and the NASD, (iii) those Consents that,
if they were not obtained or made, would not prevent or materially delay
consummation of the Offer or the Merger, Parent or Merger Sub from performing
its obligations under this Agreement and (iv) such filings as may be required in
any jurisdiction where Parent is qualified or authorized to do business as a
foreign corporation in order to maintain such qualification or authorization.
3.4. NO VIOLATIONS. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of Parent or any of the
Parent Subsidiaries, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any material contract,
instrument, permit, license or franchise to which the Parent is a party or by
which Parent or any of its assets or property is subject, (iii) result in the
creation or imposition of any material lien or encumbrance of any kind upon any
of the assets of Parent or any subsidiary of Parent or (iv) subject to obtaining
the Consents from Governmental Authorities referred to in Section 3.4 hereof,
contravene any Law to which Parent or any subsidiary of Parent or its or any of
their respective assets or properties are subject, except, in the case of
clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which
would not, individually or in the aggregate, have or be reasonably likely in the
future to have a material adverse effect on the business, assets, condition
(financial or otherwise),
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liabilities or results of operations of Parent and its subsidiaries taken as a
whole.
3.5. OFFER DOCUMENTS; PROXY STATEMENT. None of the information
supplied by Parent, its officers, directors, representatives, agents or
employees (the "Parent Information"), specifically for inclusion in the Proxy
Statement will, on the date the Proxy Statement is first mailed to stockholders,
at the time of the Company's stockholders' meeting or at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it will be made, will be false or misleading with respect to any
material fact, or will omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for such stockholders' meeting which has become false or misleading.
Neither the Offer Documents nor any amendments thereof or supplements thereto
will, at any time the Offer Documents are filed with the SEC or first published,
sent or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, neither Parent nor Merger Sub
makes any representation or warranty with respect to any information that has
been supplied by the Company or its accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Offer Documents
will comply as to form in all material respects with the provisions of the
Securities Exchange Act.
3.6. FINDERS AND INVESTMENT BANKERS. Neither Parent nor any of its
officers or directors has employed any broker, finder or financial advisor or
otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with Bear Stearns &
Co., Inc.
3.7. FINANCING ARRANGEMENTS. At the Effective Time, Parent will
have funds available to it sufficient to purchase the Shares in accordance with
the terms of this Agreement and to pay all amounts due (or which will, as a
result of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8. NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Merger Sub has not incurred
any obligations or liabilities, and has not engaged in any
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business or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person or entity.
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1. CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Except as expressly contemplated by Section 4.1 of the Company
Disclosure Letter, during the period from the date of this Agreement to the
Effective Time, (i) the Company shall conduct, and it shall cause the Company
Subsidiaries to conduct, its or their businesses in the ordinary course and
consistent with past practice, and the Company shall, and it shall cause the
Company Subsidiaries to, use its or their reasonable commercial efforts to
preserve intact its business organization, to keep available the services of its
officers and employees and preserve intact the present commercial relationships
of the Company and the Company Subsidiaries with all persons with whom it does
business and (ii) without limiting the generality or effect of the foregoing,
neither the Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws (or comparable governing instruments);
(B) authorize for issuance, issue, deliver, grant, sell,
pledge, dispose of or propose to issue, deliver, grant, sell, pledge or
dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, the
capital stock or other securities of the Company or any of the Company
Subsidiaries including, but not limited to, stock appreciation rights,
phantom stock, any securities convertible into or exchangeable for shares
of stock of any class of the Company or any of the Company Subsidiaries,
except for (a) the issuance of up to 3,327,445 Shares pursuant to the
exercise of either incentive or non-qualified stock options, including
management stock options, outstanding on the close of business on the day
immediately preceding the date of this Agreement and listed in Section 2.2
of the Company Disclosure Schedule in accordance with their present terms
and (b) shares issued in accordance with the Company's Employee Stock
Purchase Plan that are issuable on or prior to the date hereof (the
specific number of which the Company will inform Parent within three
business days of the date hereof);
(C) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any
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dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than dividends
or distributions to the Company or a Company Subsidiary in the ordinary
course of business, or directly or indirectly redeem, purchase or
otherwise acquire or offer to acquire, directly or indirectly, any shares
of its capital stock or other securities;
(D) (a) other than in the ordinary course of business
consistent with past practice, (i) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, indirectly, contingently
or otherwise) for the obligations of any person or (ii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to a Company Subsidiary (or other entity in which the Company
directly or indirectly owns at least 100% of the outstanding voting
securities) and customary travel, relocation or business advances to
employees); (b) acquire the stock or the assets of, or merge or
consolidate with, any other person; (c) voluntarily incur any material
liability or obligation (absolute, accrued, contingent or otherwise) other
than in the ordinary course of business and in a manner consistent with
past practice; or (d) sell, transfer, mortgage, pledge or otherwise
dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or
otherwise dispose of or encumber, any assets or properties, real, personal
or mixed material to the Company and the Company Subsidiaries other than
sales of products in the ordinary course of business and in a manner
consistent with past practice; (e) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans, advances or capital contributions to, or
investments in, any other person (other than in the ordinary course of
business consistent with past practice); (f) enter into any contract or
agreement other than in the ordinary course of business consistent with
past practice; or (g) authorize any single capital expenditure which is in
excess of $1,400,000 or capital expenditures (during any two-month period)
which are, in the aggregate, in excess of $4,000,000 for the Company and
the Company Subsidiaries taken as a whole;
(E) increase in any manner the compensation of any of
its directors, officers or employees or enter into, establish, amend or
terminate any employment, consulting, retention, change in control,
collective bargaining, bonus or other incentive compensation, profit
sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any stockholder, officer,
director, other
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employee, agent, consultant or affiliate other than (i) as required
pursuant to the terms of agreements in effect on the date of this
Agreement and set forth in Section 4.1 of the Company Disclosure Schedule,
(ii) increases in salaries of employees who are not directors or officers
of the Company or Key Employees made in the ordinary course of business
consistent with past practice or (iii) increases in salaries of Key
Employees who are not officers or entitled to "Senior Management
Severance" pursuant to Section 5.4 of the Company Disclosure Letter, with
Parent's prior written consent (which will not be unreasonably withheld);
(F) except as may be required as a result of a change in
Law or in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
(G) make any material Tax election, settle or compromise
any material federal, state, local or foreign Tax liability, or waive any
statute of limitations for any Tax claim or assessment;
(H) settle or compromise any pending or threatened suit,
action or claim which is material or which relates to the transactions
contemplated hereby;
(I) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any Company Subsidiary not
constituting an inactive subsidiary (other than the Merger);
(J) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (a) in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice and (b) of liabilities required to be paid, discharged
or satisfied pursuant to the terms of any contract in existence on the
date hereof (including, without limitation, benefit plans relating to
directors) or entered into in accordance with this Section 4.1;
(K) permit any material insurance policy naming the
Company or any Company Subsidiary as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except in the
ordinary course of business and consistent with past practice; or
(L) take, or offer or propose to take, or agree to take
in writing or otherwise, any of the actions
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described in Section 4.1(a) or any action which would make any of the
representations or warranties of the Company contained in this Agreement
untrue and incorrect in any material respect as of the date when made if
such action had then been taken, or would result in any of the Offer
Conditions not being satisfied.
(b) The Company shall, and the Company shall cause each of the
Company Subsidiaries to, use its or their best efforts to comply in all material
respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all the Company Permits necessary
for, or otherwise material to, such business.
4.2. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt
notice to Parent if any of the following occur after the date of this Agreement:
(i) receipt of any notice or other communication in writing from any third party
alleging that the Consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (ii) receipt of
any notice or other communication from any Governmental Authority (including,
but not limited to, the NASD or any securities exchange) in connection with the
transactions contemplated by this Agreement; (iii) the occurrence of an event
which would or would be reasonably likely in the future to (A) have a Company
Material Adverse Effect or prevent or delay the consummation of the Offer or the
Merger or (B) cause any Offer Condition to be unsatisfied at any time prior to
the consummation of the Offer; (iv) any breach by the Company of any provision
hereof; or (v) the commencement or threat of any Litigation involving or
affecting the Company or any of the Company Subsidiaries, or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of the Company or any of
the Company Subsidiaries which, if pending on the date hereof, would have been
required to have been disclosed in this Agreement or which relates to the
consummation of the Merger.
4.3. ACCESS AND INFORMATION. Between the date of this Agreement and
the Effective Time, the Company will give, and shall cause its accountants and
legal counsel to give, Parent and its respective authorized representatives
(including, without limitation, its financial advisors, accountants and legal
counsel), at all reasonable times, access as reasonably requested to all
personnel, offices and other facilities and to all contracts, agreements,
commitments, books and records of or pertaining to the Company and the Company
Subsidiaries, will permit the foregoing to make such reasonable inspections as
they may require and will cause its officers promptly to furnish Parent with (a)
such financial and operating data and other information with respect to the
business and properties of the Company and the Company Subsidiaries as Parent
may from time to time reasonably request, and (b) a copy of each report,
schedule
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and other document filed or received by the Company or any of the Company
Subsidiaries pursuant to the requirements of applicable securities laws or the
NASD.
4.4. STOCKHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the approval and adoption of this Agreement and the
transactions contemplated hereby and thereby (the "Company Proposals"), if such
meeting is required. Except as otherwise contemplated by this Agreement, (i) the
Board of Directors of the Company will recommend to the stockholders of the
Company that they approve the Company Proposals, (ii) the Company will include
in the Proxy Statement the unanimous recommendation of the Company's Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the transactions contemplated hereby and the written opinion
of the Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair from a
financial point of view and (iii) the Company will use its reasonable best
efforts to obtain any necessary approval by the Company's stockholders of the
Company Proposals. Notwithstanding the foregoing, in the event that Merger Sub
shall acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Merger Sub, subject to Article VI, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the Delaware Code.
4.5. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, the Company agrees to use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby, (ii) timely making all necessary filings
under the HSR Act and German anticompetition laws and (iii) having vacated,
dismissed or withdrawn any order, stay, decree, judgment or injunction of any
Governmental Authority which temporarily, preliminarily or permanently prohibits
or prevents the transactions contemplated by this Agreement. Upon the terms and
subject to the conditions hereof, the Company agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the closing set
forth herein.
4.6. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
the Company shall not, and shall cause its
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affiliates not to, issue or cause the publication of any press release or any
other announcement with respect to the Offer or the Merger or the transactions
contemplated hereby without the consent of Parent, except for such as the
foregoing as the Company determines that such release or announcement is
required by applicable Law or pursuant to any applicable listing agreement with,
or rules or regulations of, the NASD, in which case the Company, prior to making
such announcement, will, if practicable in the circumstances, consult with
Parent regarding the same.
4.7. COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply, and/or cause the Company Subsidiaries to
comply or to be in compliance, in all material respects, with all applicable
Laws.
4.8. NO SOLICITATION. (a) The Company shall, and shall cause its
officers, directors, employees, representatives and agents to, immediately cease
any discussions or negotiations with any parties that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
nor shall it permit any of the Company Subsidiaries to, nor shall it authorize
or permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of the Company Subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action designed or reasonably likely to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the Expiration Date and following the receipt of a Superior Proposal, the
Board of Directors of the Company determines in good faith, based upon the
advice of outside counsel, that such action is necessary for the Board of
Directors to comply with its fiduciary duties to the Company's stockholders
under applicable Law, the Company may, in response to a Superior Proposal that
was made in circumstances not otherwise involving a breach of this Agreement,
and subject to compliance with Section 4.8(c), (x) furnish information with
respect to the Company to any person pursuant to a confidentiality agreement
having terms substantially the same as the Confidentiality Agreement (as
hereinafter defined), provided that (i) such confidentiality agreement may not
include any provision calling for an exclusive right to negotiate with the
Company and (ii) the Company advises Parent of all such nonpublic information
delivered to such person concurrently with its delivery to the requesting party,
and (y) participate in negotiations regarding such Superior Proposal. "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 15% or more of the assets of the
Company and the Company Subsidiaries or 15% or more of any class of equity
securities of the Company or any Company Subsidiary, any tender offer or
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exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or any
Company Subsidiary, any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary, other than the transactions
contemplated by this Agreement.
(b) Except as set forth in this Section 4.8, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Offer, the Stockholders Agreement or the Company Proposals, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the Expiration Date the Board of Directors
of the Company determines in good faith, in response to a Superior Proposal that
was made in circumstances not otherwise involving a breach of this Agreement,
after consultation with outside counsel, that such action is necessary for the
Board of Directors to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Board of Directors of the Company may
(subject to this and the following sentences) (x) withdraw or modify its
approval or recommendation of the Offer or the Company Proposals or (y) approve
or recommend a Superior Proposal, provided, however, that any actions described
in clauses (x) and (y) may be taken only at a time that is after the fifth
business day following Parent's receipt of written notice advising Parent that
the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal and providing notice of the
determination of the Board of Directors of the Company of what action referred
to herein the Board of Directors of the Company has determined to take,
provided, further, that the foregoing proviso shall not prevent the Board of
Directors of the Company from taking any actions described in clause (x) within
five business days of the Expiration Date so long as the notice described in the
foregoing proviso is received by Parent prior to Noon, New York City time, on
the then scheduled Expiration Date. For purposes of this Agreement, a "Superior
Proposal" means a bona fide written Takeover Proposal which (i) a majority of
the disinterested members of the Board of Directors of the Company determines,
in their good faith judgment (based on the opinion of independent financial
advisors) that the value of the consideration provided for in such proposal
exceeds 110% of the Per Share Amount then provided in the Offer, and,
considering all relevant factors, is as or more favorable to the Company and its
stockholders than the
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Offer and the Merger and (ii) for which financing, to the extent required, is
then fully committed or which, in the good faith judgment of a majority of the
disinterested members of the Board of Directors (based on the advice of
independent financial advisors), is reasonably capable of being financed by such
third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.8, the Company shall promptly advise
Parent orally and in writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request or the Takeover
Proposal and the identity of the person making such request or Takeover Proposal
and shall keep Parent promptly advised of all significant developments which
could reasonably be expected to culminate in the Board of Directors of the
Company withdrawing, modifying or amending its recommendation of the Offer, the
Merger and the Transaction contemplated by this Agreement.
(d) Nothing contained in this Section 4.8 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's stockholders; provided, however, neither the
Company nor its Board of Directors nor any committee thereof shall, except as in
accordance with Section 4.8(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Offer or the Company
Proposals or approve or recommend, or propose publicly to approve or recommend,
a Takeover Proposal.
4.9. SEC AND STOCKHOLDER FILINGS. The Company shall send to Parent
a copy of all public reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign securities commission.
4.10. TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States (each a "Takeover
Statute") is or may become applicable to the Offer or the Merger, the Company
and the members of its Board of Directors will grant such approvals, and take
such actions as are necessary so that the transactions contemplated by this
Agreement and the Company Proposals may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any Takeover Statute on any of the transactions
contemplated hereby.
4.11. RELATED PARTY AGREEMENTS. Except as set forth in Section 4.11
of the Company Disclosure Letter and except for employment-related agreements or
obligations contemplated by or disclosed in this Agreement, the Company shall
take all actions
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necessary to terminate, effective as of the Effective Time, all contracts,
commitments or obligations to, from or with the Company or Company Subsidiary,
on the one hand, and any Related Party, on the other hand.
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
5.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein provided, Parent agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but not
limited to, (i) obtaining all Consents from Governmental Authorities and other
third parties required for the consummation of the Offer and the Merger and the
transactions contemplated thereby, (ii) timely making all necessary filings
under the HSR Act and (iii) having vacated, dismissed or withdrawn any order,
stay, decree, judgment or injunction of any Governmental Authority which
temporarily, preliminarily or permanently prohibits or prevents the transactions
contemplated by this Agreement. Upon the terms and subject to the conditions
hereof, Parent agrees to use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the closing set forth herein. Notwithstanding
any other provision hereof, in no event will Parent, Merger Sub or any of their
affiliates (collectively, the "Parent Group") be required to take or fail to
take any action in order to obtain or make a Consent arising out of any
contractual or legal obligation of or applicable to the Company or the Company
Subsidiaries, other than obligations such as those under the HSR Act which apply
to both the Company and the Parent Group and then only to the extent applicable
to the Parent Group, and in no event will any member of the Parent Group be
required to enter into or offer to enter into any divestiture, hold-separate,
business limitation or similar agreement or undertaking in connection with this
Agreement or the transactions contemplated hereby.
5.2. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Parent shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the consent
of the Company, except for such of the foregoing as to which Parent determines
that such release or announcement is required by applicable Law or pursuant to
any applicable listing agreement with, or rules or regulations of, any stock
exchange on which shares the Parent's capital stock are listed or the NASD, in
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which case Parent, prior to making such announcement, will, if practicable in
the circumstances, consult with the Company regarding the same.
5.3. COMPLIANCE. In consummating the transactions contemplated
hereby, Parent shall comply in all material respects with the provisions of the
Securities Exchange Act and the Securities Act and shall comply, and/or cause
its subsidiaries to comply or to be in compliance, in all material respects,
with all other applicable Laws.
5.4. EMPLOYEE BENEFIT PLANS. As of the Effective Time or the
consummation of the Offer, as applicable, Parent shall cause the Surviving
Corporation to take such actions with respect to the Company Benefit Plans and
the Key Employees as are set forth in Section 5.4 of the Company Disclosure
Letter.
5.5. INDEMNIFICATION, EXCULPATION AND INSURANCE (a) All rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time existing in favor of the current or former
directors, officers or employees of the Company as provided in the Company's
certificate of incorporation or bylaws will be assumed by the Surviving
Corporation and Parent will cause the Surviving Corporation to honor such
obligations in accordance with the terms thereof, without further action, as of
the Effective Time, and such rights will continue in full force and effort in
accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's concomitant obligations, shall apply in all respects
to the current or former directors, officers and employees of each of the
Company Subsidiaries as though such directors, officers and employees were
entitled to indemnification rights pursuant to the Company's certificate of
incorporation or bylaws as in effect on the date hereof. In addition, from and
after the Effective Time, directors and officers of the Company who become or
remain directors or officers of Parent will be entitled to the same indemnity
rights and protections (including those provided by directors' and officers'
liability insurance) as are afforded to other directors and officers of Parent.
Notwithstanding any other provision hereof, the provisions of this Section 5.5
(i) are intended to be for the benefit of, and will be enforceable by, each
indemnified party, his or her heirs and his or her representatives and (ii) are
in addition to, and not in substitution for, any other rights to indemnification
or contribution that any such person may have by contract or otherwise.
(b) Parent will, and will cause the Surviving Corporation to,
maintain in effect for not less than six years after the Effective Time policies
of directors' and officers' liability insurance equivalent in all material
respects to those maintained by or on behalf of the Company and the Company
Subsidiaries on the date hereof (and having coverage and containing terms and
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conditions which in the aggregate are not less advantageous to the persons
currently covered by such policies as insured) with respect to claims arising
from any actual or alleged wrongful act or omission occurring prior to the
Effective Time for which a claim has not been made against any director or
officer of the Company and/or any director or officer of the Company
Subsidiaries prior to the Effective Time; provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
exceed 150% of the per annum rate of premium currently paid by the Company and
the Company Subsidiaries for such insurance on the date of this Agreement, then
Parent will cause the Surviving Corporation to, and the Surviving Corporation
will, provide the maximum coverage that will then be available at an annual
premium equal to 150% of such rate.
ARTICLE VI.
MERGER CONDITIONS
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions, provided that the obligation of each party to effect the
Merger shall not be relieved by the failure of any such conditions if such
failure is the proximate result of any breach by such party of any of its
material obligations under this Agreement:
6.1. OFFER. Merger Sub shall have accepted for payment all Shares
validly tendered in the Offer and not withdrawn; provided, however, that neither
Parent nor Merger Sub may invoke this condition if Parent shall have failed to
purchase Shares so tendered and not withdrawn in violation of the terms of this
Agreement or the Offer.
6.2. STOCKHOLDER APPROVAL. If required, the Company Proposals shall
have been approved at or prior to the Effective Time by the requisite vote of
the stockholders of the Company in accordance with the Delaware Code and the
Company Certificate of Incorporation, which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares.
6.3. NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
which temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or withdrawn
prior to the Effective Time.
6.4. OTHER APPROVALS. On or prior to the Closing Date, the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or
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shall have expired and the Consents specified in Section 6.4 of the Company
Disclosure Letter, if any, shall have been obtained.
6.5. CONDITIONS OF OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the condition (which may be waived in whole or in part by
Parent) that the Company shall have performed in all material respects all
material obligations required to be performed by it under this Agreement on or
before the earlier of (i) such time as Parent's or Merger Sub's designees shall
constitute at least a majority of the Company's Board of Directors pursuant to
Section 1.3 of this Agreement and (ii) the Closing Date; provided, however, that
no failure by the Company to have so performed any such material obligation
shall constitute a failure of satisfaction of the foregoing condition where the
Company's failure of performance was caused by Parent or occurred, and was
actually known to Parent, at or prior to the time Parent, Merger Sub or any of
their affiliates accepted for payment any Shares pursuant to the Offer.
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of the stockholders of the Company and the
stockholders of Parent described herein:
(a) by mutual written consent of Parent and the Company or by the
mutual action of their respective Boards of Directors;
(b) by either Parent or the Company if any Governmental Authority
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement or, for the benefit of Parent
only, the Stockholders Agreement, and such order, decree or ruling or other
action shall have become final and nonappealable;
(c) by Parent if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement which breach or failure to perform is incapable of
being cured or has not been cured within one business day prior to the then
scheduled Expiration Date;
(d) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified
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in a manner adverse to Parent its approval or recommendation of the Offer or any
of the Company Proposals, or failed to reconfirm its recommendation within five
business days after a written request to do so, or approved or recommended any
Takeover Proposal or (ii) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions;
(e) by the Parent if the Offer shall have expired or been
terminated or withdrawn in accordance with this Agreement without any Shares
being purchased thereunder by Parent or any of the events set forth in Annex I
hereto shall have occurred and be continuing at the time of termination;
(f) by the Company or the Parent if the Offer shall not have been
consummated on or before the 120th calendar day after the date hereof, provided
that the Company's failure to perform any of its obligations under this
Agreement does not result in the failure of the Offer to be so consummated by
such time;
(g) by the Company if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within one business day prior to the
Expiration Date;
(h) by the Company in order to enter into a definitive agreement
providing for a Superior Proposal entered into in accordance with Section 4.8,
provided that prior thereto the Company has paid the Termination Fee in
accordance with Section 7.2; or
(i) by Parent, if the Company, any of its officers or directors or
financial or legal advisors shall take any of the actions that would be
proscribed by Section 4.8 hereof but for the exceptions therein allowing certain
actions to be taken pursuant to the proviso in the second sentence of Section
4.8(a) hereof or pursuant to the second sentence of Section 4.8(b) hereof.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the other
party in accordance with Section 8.5 hereof.
7.2. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this Article VII, this Agreement (other than Sections 7.2, 8.1, 8.3,
8.5, 8.6, 8.7, 8.8, 8.11, 8.12, 8.13, 8.14 and 8.15 hereof) shall become void
and of no effect with no liability on the part of any party hereto (or
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of any of its directors, officers, employees, agents, legal or financial
advisors or other representatives); provided, however, that no such termination
shall relieve any party hereto from any liability for any breach of this
Agreement prior to termination. If this Agreement is terminated as provided
herein, each party shall hold in confidence in accordance with the terms and
conditions of the Confidentiality Agreement all materials obtained from, or
based on or otherwise reflecting or generated in whole or in part from
information obtained from, any other party hereto in connection with the
transactions contemplated by this Agreement, and shall not use any such
materials for the purpose of competing with the businesses of the other parties
hereto, whether obtained before or after the execution hereof.
(b) In the event that (A) a Takeover Proposal shall have been made
known to the Company or has been made directly to its stockholders generally or
any person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal and thereafter this Agreement is
terminated by the Company pursuant to Section 7.1(f) hereof or (B) this
Agreement is terminated (x) by the Company pursuant to Section 7.1(h) hereof,
(y) by Parent pursuant to Section 7.1(d) or 7.1(i) hereof or (z) Parent pursuant
to Section 7.1(c) hereof as a result of an intentional breach by the Company
after a Takeover Proposal has been made, then the Company shall promptly, but in
no event later than two business days after the date of such termination, pay
Parent a fee equal to $35,000,000 (the "Termination Fee"), payable by wire
transfer of same day funds; provided, however, that no Termination Fee shall be
payable to Parent pursuant to a termination by the Company pursuant to Section
7.1(f) hereof or by Parent pursuant to Section 7.1(i) hereof unless and until
within 18 months of such termination, the Company or any of the Company
Subsidiaries enters into a definitive agreement providing for any Takeover
Proposal. The Company acknowledges that the agreements contained in this Section
7.2(b) are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent would not enter into this Agreement.
In the event the Termination Fee becomes payable pursuant to this Section
7.2(b), the Company shall promptly pay upon Parent's request, all reasonable
out-of-pocket charges and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby in an amount not to exceed
$5,000,000, which payments shall be in addition to the Termination Fee.
Notwithstanding the foregoing, the fee or expense reimbursement contemplated
hereby shall be paid pursuant to this Section 7.2(b) regardless of any alleged
breach by Parent of its obligations hereunder, provided that no payment by the
Company made pursuant to this Section 7.2(b) shall operate or be construed as a
waiver by the Company of any breach of this Agreement by Parent or Merger Sub or
of any rights of the Company in respect thereof.
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ARTICLE VIII.
MISCELLANEOUS
8.1. CONFIDENTIALITY. Each of Parent, Merger Sub and the Company
will hold, and will cause its respective officers, employees, accountants,
counsel, financial advisors and other representatives to hold, any nonpublic
information in accordance with the terms of the Confidentiality Agreement dated
September 12, 1997, between Parent and the Company (the "Confidentiality
Agreement"). Notwithstanding the foregoing, paragraphs 2, 4, 5, 6 and 11 of the
Confidentiality Agreement are hereby terminated as of the date hereof, provided,
however, that if this Agreement shall be terminated prior to the Effective Time,
paragraphs 5 and 6 shall be reinstated as of the date of such termination. As of
the Effective Time, all of Parent's restrictions and obligations under the
Confidentiality Agreement shall terminate.
8.2. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Merger Sub.
8.3. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company on
the one hand, or Parent and Merger Sub on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 8.3.
8.4. SURVIVAL. The respective representations, warranties,
covenants and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time, except for those contained in Sections 1.7,
1.8, 1.9, 1.14, 5.4, 5.5 and 8.1 hereof, which shall survive beyond the
Effective Time.
8.5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt
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requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) if to the Company, to:
BDM International, Inc.
1501 BDM Way
McLean, Virginia 22102
Attention: John F. McCabe
Telecopy: 703-848-6457
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: William J. Grant, Jr., Esq.
Telecopy: 212-821-8111
and
(ii) if to Parent or Merger Sub, to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Secretary
Telecopy: (216) 291-7563
with copies to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Treasurer
Telecopy: (216) 291-7831
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Telecopy: (212) 755-7306
8.6. BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or delegated by any of the parties hereto prior to the Effective
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Time without the prior written consent of the other party hereto except that
Parent and Merger Sub may assign or delegate all or any of their respective
rights and obligations hereunder to a direct or indirect wholly-owned subsidiary
or subsidiaries of Parent, provided, however, that no such assignment or
delegation shall relieve the assigning or delegating party of its duties
hereunder.
8.7. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, subject to the rights of Parent under
Section 7.2(b) hereof.
8.8. GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Delaware.
8.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10. INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "affiliate," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "subsidiary" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11. ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Disclosure Letters referred to herein, which Annex(es)
and Disclosure Letters are incorporated herein by reference, the Confidentiality
Agreement and the Stockholders Agreement embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
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herein. This Agreement supersedes all prior agreements and the understandings
between the parties with respect to such subject matter.
8.12. SEVERABILITY. In case any provision in this Agreement shall
be held invalid, illegal or unenforceable in a jurisdiction, such provision
shall be modified or deleted, as to the jurisdiction involved, only to the
extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
8.13. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14. THIRD PARTIES. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person that is not a party hereto or thereto or
a successor or permitted assign of such a party; provided however, that the
parties hereto specifically acknowledge that the provisions of Sections 1.9, 5.4
and 5.5 hereof are intended to be for the benefit of, and shall be enforceable
by, the current or former employees, officers and directors of the Company
and/or the Company Subsidiaries affected thereby and their heirs and
representatives and the provisions of Section 1.8(b) are intended to be for the
benefit of, and shall be enforceable by, stockholders of the Company affected
thereby and their heirs and representatives.
8.15. DISCLOSURE LETTERS. The Company and Parent acknowledge that
the Company Disclosure Letter and the Parent Disclosure Letter (i) relate to
certain matters concerning the disclosures required and transactions
contemplated by this Agreement, (ii) are qualified in their entirety by
reference to specific provisions of this Agreement, (iii) are not intended to
constitute and shall not be construed as indicating that such matter is required
to be disclosed, nor shall such disclosure be construed as an admission that
such information is material with respect to the Company or Parent, as the case
may be, except to the extent required by this Agreement, and (iv) disclosure of
the
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information contained in one Section of the Company Disclosure Letter or Parent
Disclosure Letter shall be deemed proper disclosure for the Section to which
specific reference is made.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
TRW INC.
By: /s/ William B. Lawrence
----------------------------------------
Name: William B. Lawrence
Title: Executive Vice President
and General Counsel
SYSTEMS ACQUISITION INC.
By: /s/ Kathleen A. Weigand
----------------------------------------
Name: Kathleen A. Weigand
Title: Vice President and Secretary
BDM INTERNATIONAL, INC.
By: /s/ Philip A. Odeen
----------------------------------------
Name: Philip A. Odeen
Title: President and Chief
Executive Officer
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ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the
Offer, Merger Sub shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Securities Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer (whether or
not any Shares have been theretofore purchased or paid for pursuant to the
Offer) (A) unless the following conditions shall have been satisfied: (i) there
shall be validly tendered and not withdrawn prior to the expiration of the Offer
a number of Shares which represents a majority of the total voting power of the
outstanding securities of the Company entitled to vote in the election of
directors or in a merger ("Voting Securities") on a fully-diluted basis (the
"Minimum Condition") ("on a fully-diluted basis" having the following meaning as
of any date: the number of Voting Securities outstanding, together with Voting
Securities issuable pursuant to obligations outstanding at that date under
employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting period under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer and the required approval of the
German anticompetition authorities shall have been obtained or (B) if at any
time after the date of this Agreement and before the time of payment for any
such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer,) any of the following events shall
occur and be continuing:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction or a
Law shall have been promulgated, enacted, taken or threatened by a Governmental
Authority of competent jurisdiction which in any such case (i) restrains or
prohibits the making or consummation of the Offer, the consummation of the
Merger or the transactions contemplated by the Stockholders Agreement, (ii)
prohibits or restricts the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of its or the Company's business or
assets which is material to the business of all such entities taken as a whole,
or compels Parent (or any of its affiliates or subsidiaries) to dispose of or
hold separate any portion of its or the Company's business or assets which is
material to the business of all such entities taken as a whole, (iii) imposes
material limitations on the ability of Merger Sub effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by Merger Sub on all matters
properly presented to the stockholders of the Company, or (iv) imposes any
material
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limitations on the ability of Parent or any of its affiliates or subsidiaries
effectively to control in any material respect the business and operations of
the Company;
(b) any Governmental Authority shall have instituted any action,
suit or proceeding seeking any relief or remedy referred to in paragraph (a) or
material damages as a result of any of this Agreement, the Stockholders
Agreement or any transactions contemplated thereby;
(c) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which gives
Parent or Merger Sub the right to terminate the Agreement or not to consummate
the Merger;
(d) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely in
the future to have a Company Material Adverse Effect;
(e) there shall have occurred (i) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered on the New
York Stock Exchange by price fluctuations on a trading day) for, trading in
securities on any national securities exchange or the over-the-counter market,
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any material limitation (whether or
not mandatory) by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, on, the extension of credit by banks
or other lending institutions, (iv) a commencement of a war or armed hostilities
or other national calamity directly involving the United States and Parent shall
have determined that there is a reasonable likelihood that such event may be of
material adverse significance to it or the Company, (v) any decline of at least
20% in the Dow Jones Average of Industrial Stocks or 20% in the Standard &
Poor's 500 Index from the levels thereof as of the last trading day immediately
preceding the dated of this Agreement or (vi) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a material
acceleration or worsening thereof;
(f) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Securities Exchange
Act) of more than 25% of the outstanding Shares has been acquired by any person
(including the Company, any of the Company Subsidiaries or affiliates thereof)
or group (as defined in Section 13(d)(3) of the Securities Exchange Act), other
than Purchaser or any of its affiliates;
(g) the Company or any of its officers, directors or financial or
legal advisors shall have, directly or indirectly,
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(i) solicited, initiated, encouraged (including by way of furnishing
information) or taken any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constituted, or
may reasonably be expected to lead to, any Takeover Proposal or (ii)
participated in any discussions or negotiations regarding any Takeover Proposal
regardless of whether or not any of the foregoing actions is permitted by this
Agreement;
(h) any of the representations and warranties of the Company set
forth in this Agreement that are qualified by reference to materiality or a
Company Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be true and
correct in any respect that is reasonably likely to have a Company Material
Adverse Effect, in each case as if such representations and warranties were made
at the time of such determination;
(i) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied with
by it under this Agreement; or
(j) Parent and the Company shall have agreed that Parent shall
amend the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto;
which, in the judgment of Parent with respect to each and every matter referred
to above and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Parent and may
be asserted by Parent regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Parent or any of its affiliates
constituting a breach of this Agreement) or (other than the Minimum Condition)
may be waived by Parent in whole or in part at any time and from time to time in
its sole discretion (subject to the terms of this Agreement). The failure by
Parent at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
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