Exhibit 34
==============================================================================
AGREEMENT AND PLAN OF MERGER
by and among
DH Holdings Corp.
ACC Acquisition Corp.
and
Pacific Scientific Company
dated as of
January 31, 1998
==============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.............................................. 2
SECTION 1.2 Company Actions........................................ 3
SECTION 1.3 Directors.............................................. 4
ARTICLE II
THE MERGER
SECTION 2.1 The Merger............................................. 5
SECTION 2.2 Effective Time......................................... 5
SECTION 2.3 Effects of the Merger.................................. 6
SECTION 2.4 Articles of Incorporation and By-Laws of the
Surviving Corporation............................. 6
SECTION 2.5 Directors.............................................. 6
SECTION 2.6 Officers............................................... 6
SECTION 2.7 Conversion of Common Shares............................ 6
SECTION 2.8 Conversion of Purchaser Common Stock................... 7
SECTION 2.9 Options; Stock Plans................................... 7
SECTION 2.10 Stockholders' Meeting.................................. 7
SECTION 2.11 Merger Without Meeting of Stockholders................. 8
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1 Dissenting Shares...................................... 8
SECTION 3.2 Payment for Common Shares.............................. 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1 Organization and Qualification; Subsidiaries.......... 10
SECTION 4.2 Capitalization; Subsidiaries.......................... 11
SECTION 4.3 Authority Relative to this Agreement................... 12
-i-
SECTION 4.4 No Violation........................................... 12
SECTION 4.5 SEC Reports and Financial Statements................... 13
SECTION 4.6 Compliance with Applicable Laws........................ 13
SECTION 4.7 Change of Control...................................... 13
SECTION 4.8 Litigation............................................. 14
SECTION 4.9 Information............................................ 14
SECTION 4.10 Employee Benefit Plans................................. 14
SECTION 4.11 Taxes.................................................. 16
SECTION 4.12 Intellectual Property.................................. 17
SECTION 4.13 Contracts.............................................. 17
SECTION 4.14 Voting Requirements.................................... 17
SECTION 4.15 Absence of Certain Changes............................. 17
SECTION 4.16 Rights Agreement....................................... 18
SECTION 4.17 Brokers................................................ 19
SECTION 4.18 Opinion of Investment Banker........................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
SECTION 5.1 Organization and Qualification......................... 19
SECTION 5.2 Authority Relative to this Agreement................... 19
SECTION 5.3 No Violation........................................... 20
SECTION 5.4 Information............................................ 20
SECTION 5.5 Financing.............................................. 20
ARTICLE VI
COVENANTS
SECTION 6.1 Conduct of Business of the Company..................... 21
SECTION 6.2 Access to Information.................................. 23
SECTION 6.3 Efforts................................................ 23
SECTION 6.4 Public Announcements................................... 24
SECTION 6.5 Employee Benefit Arrangements.......................... 25
SECTION 6.6 Indemnification; Directors' and Officers' Insurance.... 25
SECTION 6.7 Notification of Certain Matters........................ 26
SECTION 6.8 Rights Agreement....................................... 27
SECTION 6.9 State Takeover Laws.................................... 27
SECTION 6.10 No Solicitation........................................ 27
SECTION 6.11 Parent Agreement....................................... 28
-ii-
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions ............................................ 29
SECTION 7.2 Conditions to the Obligations of Parent................ 29
SECTION 7.3 Conditions to Obligation of the Company................ 30
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1 Termination............................................ 31
SECTION 8.2 Effect of Termination.................................. 32
SECTION 8.3 Fees and Expenses...................................... 32
SECTION 8.4 Amendment.............................................. 33
SECTION 8.5 Extension; Waiver...................................... 33
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Non-Survival of Representations and Warranties......... 33
SECTION 9.2 Entire Agreement; Assignment.......................... 33
SECTION 9.3 Validity............................................... 34
SECTION 9.4 Notices................................................ 34
SECTION 9.5 Governing Law.......................................... 35
SECTION 9.6 Descriptive Headings................................... 35
SECTION 9.7 Counterparts........................................... 35
SECTION 9.8 Parties in Interest.................................... 35
SECTION 9.9 Certain Definitions.................................... 35
SECTION 9.10 Specific Performance................................... 36
-iii-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
31, 1998, by and among DH Holdings Corp., a Delaware corporation ("Parent"), ACC
Acquisition Corp., a California corporation and a wholly owned subsidiary of
Parent (the "Purchaser"), and Pacific Scientific Company___________________, a
California corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, pursuant to this Agreement the Purchaser has agreed to
commence a tender offer (the "Offer") to purchase all of the outstanding shares
of the Company's common stock, par value $1.00 per share (the "Common Shares")
(including the associated preferred share purchase rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of December 31, 1997, between the
Company and ChaseMellon Shareholder Services, LLC, as Rights Agent (the "Rights
Agreement"), which Rights together with the Common Shares are hereinafter
referred to as the "Shares")), at a price per Share of $30.25 net to the seller
in cash (the "Offer Price");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has, in light of and subject to the terms and conditions set forth herein, (i)
determined that (A) the consideration to be paid for each Share in the Offer and
the Merger (as hereinafter defined) is fair to the stockholders of the Company,
and (B) the Offer and the Merger are otherwise in the best interests of the
Company and its stockholders, and (ii) resolved to approve and adopt this
Agreement and the transactions contemplated hereby and to recommend acceptance
of the Offer and approval and adoption by the stockholders of the Company of
this Agreement;
WHEREAS, the respective Boards of Directors of the Purchaser and the
Company have approved the merger of the Purchaser with and into the Company, as
set forth below (the "Merger"), in accordance with the California General
Corporation Law (the "CGCL") and upon the terms and subject to the conditions
set forth in this Agreement, whereby each of the issued and outstanding Common
Shares not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive $30.25 in cash (the "Merger Price");
and
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger, and also to prescribe various conditions to the Offer
and the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, intending to be legally bound hereby,
Parent, the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VIII and none of the events set forth in
Annex I hereto (the "Tender Offer Conditions") shall have occurred, as promptly
as practicable, but in no event later than the fifth business day from the date
of this Agreement, Parent shall cause the Purchaser to commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended,
including the rules and regulations promulgated thereunder (the "Exchange Act"))
an offer to purchase all outstanding Shares at the Offer Price, shall, after
affording the Company a reasonable opportunity to review and comment thereon,
file all necessary documents with the Securities and Exchange Commission (the
"SEC") in connection with the Offer (the "Offer Documents"), and shall use
reasonable best efforts to consummate the Offer, subject to the terms and
conditions thereof. The obligation of the Purchaser to accept for payment or pay
for any Shares tendered pursuant thereto will be subject only to the
satisfaction of the conditions set forth in Annex I hereto.
(b) Without the prior written consent of the Company, the
Purchaser shall not decrease the Offer Price or change the form of consideration
payable in the Offer, decrease the number of Shares sought to be purchased in
the Offer, impose additional conditions to the Offer or amend any other term of
the Offer in any manner adverse to the holders of Common Shares. The Offer shall
remain open until the date that is 20 business days (as such term is defined in
Rule 14d-1(c)(6) under the Exchange Act) after the commencement of the Offer
(the "Expiration Date"), unless the Purchaser shall have extended the period of
time for which the Offer is open pursuant to, and in accordance with, the two
succeeding sentences or as may be required by applicable law, in which event the
term "Expiration Date" shall mean the latest time and date as the Offer, as so
extended, may expire. Subject to the terms of the Offer and this Agreement and
the satisfaction of all the Tender Offer Conditions as of any Expiration Date,
the Purchaser shall accept for payment and pay for all Shares validly tendered
and not withdrawn pursuant to the Offer as promptly as practicable after such
Expiration Date; provided that, (i) if on any scheduled Expiration Date of the
Offer all of the Tender Offer Conditions (other than the Minimum Condition (as
defined in Annex I) shall not have been satisfied or waived, the Offer may, but
need not, be extended from time to time without the consent of the Company for
such period of time as is reasonably expected by the Purchaser to be necessary
to satisfy the unsatisfied conditions; provided further that the Offer may be
extended by the Purchaser without the consent of the Company for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer, and (ii) if all of the Tender Offer
Conditions are satisfied but less than 90% of the outstanding Common Shares have
been validly tendered and not withdrawn in the Offer, the Purchaser shall be
required to extend the Offer for one additional business day (or such longer
time as may be agreed to by the Purchaser and the Company (an "Offer
Extension"). If, following such Offer Extension, the Minimum Condition has not
been satisfied, the Purchaser shall effect successive additional Offer
Extensions (which Offer
-2-
Extensions shall each be for one business day unless the Purchaser and the
Company shall agree to a longer period) until the earlier to occur of (i) the
close of business on the business day immediately prior to the Special Meeting
(as defined herein) and (ii) such time as the Minimum Condition has been
satisfied, after which time the Purchaser may not extend the Offer for any
reason. Without the prior written consent of the Company, the Purchaser shall
not waive the Minimum Condition or accept for payment or pay for any Shares in
the Offer if, as a result, Purchaser would acquire less than the number of
Shares necessary to satisfy the Minimum Condition. It is agreed that the Tender
Offer Conditions are solely for the benefit of the Purchaser and may be asserted
by the Purchaser regardless of the circumstances giving rise to any such
condition (but not including any action or inaction by the Purchaser) or may
(except as otherwise specifically provided in this Agreement), but need not, be
waived by the Purchaser, in whole or in part at any time and from time to time,
in its sole discretion.
(c) Parent and the Purchaser represent that the Offer
Documents will comply in all material respects with the provisions of applicable
federal securities laws, and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not 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, except that no representation is made by Parent or the Purchaser
with respect to information supplied by the Company in writing for inclusion in
the Offer Documents. The Company shall provide the Purchaser and Parent with
such information as may be reasonably requested in connection with the
preparation of the Offer Documents. Each of Parent and the Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become incomplete, false or misleading in any material
respect and the Purchaser further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to stockholders of the Company, in each case, as and to the extent
required by applicable federal securities laws.
SECTION 1.2 Company Actions.
(a) The Company shall, after affording Parent a reasonable
opportunity to review and comment thereon (including any supplements or
amendments thereto), file with the SEC and mail to the holders of Common Shares,
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") reflecting the
recommendation of the Company Board that holders of Shares tender their Shares
pursuant to the Offer and shall disseminate the Schedule 14D-9 as required by
Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9 will set
forth, and the Company hereby represents, that the Company Board, at a meeting
duly called and held, has (i) determined by unanimous vote of its directors that
each of the transactions contemplated hereby, including each of the Offer and
the Merger, is fair to and in the best interests of the Company and its
stockholders, (ii) approved the Offer and adopted this Agreement in accordance
with the CGCL and pursuant to Article Five of the Restated Certificate of
Incorporation of the Company, and (iii) recommended acceptance of the Offer and
approval of this Agreement by the Company's stockholders (if such approval is
required by applicable law); provided, however, that such recommendation
-3-
and approval may be withdrawn, modified or amended only in accordance with
Section 6.10. The Company further represents that, prior to the execution
hereof, BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Investment Banker"), has delivered
to the Company Board its written opinion that, as of the date hereof, the
consideration to be received by the holders of Common Shares (other than Parent
or any of its affiliates or holders of Dissenting Shares) pursuant to the Offer
and the Merger is fair to the Company's stockholders from a financial point of
view. The Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company Board described in this Section 1.2(a).
(b) The Company represents that the Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not 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, except
that no representation is made by the Company with respect to information
supplied by Parent or the Purchaser in writing for inclusion in the Schedule
14D-9. Each of the Company, on the one hand, and Parent and the Purchaser, on
the other hand, agree promptly to correct any information provided by either of
them for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to the holders of Shares, in each case, as and to the
extent required by applicable federal securities laws.
(c) In connection with the Offer, the Company shall furnish
the Purchaser with mailing labels, security position listings, any available
non-objecting beneficial owner lists and any available listing or computer list
containing the names and addresses of the record holders of the Common Shares as
of the most recent practicable date and shall furnish the Purchaser with such
additional available information (including, but not limited to, updated lists
of holders of Common Shares and their addresses, mailing labels and lists of
security positions and non-objecting beneficial owner lists) and such other
assistance as the Purchaser or its agents may reasonably request in
communicating the Offer to the Company's record and beneficial stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, the Purchaser and their affiliates,
associates, agents and advisors, shall keep such information confidential and
use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger and, should the Offer terminate or if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
SECTION 1.3 Directors.
(a) Subject to compliance with applicable law, promptly upon
the payment by the Purchaser for Shares pursuant to the Offer representing at
least such number of Shares as shall satisfy the Minimum Condition, and from
time to time thereafter, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the
-4-
Company Board as is equal to the product of the total number of directors
on the Company Board (determined after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Common Shares beneficially owned by Parent or its affiliates bears to
the total number of Common Shares then outstanding on a fully diluted basis, and
the Company shall, upon request of Parent, promptly take all actions necessary
to cause Parent's designees to be so elected, including, if necessary, seeking
the resignations of one or more existing directors; provided, however, that
prior to the Effective Time (as hereinafter defined), the Company Board shall
always have at least two members who are neither officers, directors or
designees of the Purchaser or any of its affiliates ("Purchaser Insiders"). If
the number of directors who are not Purchaser Insiders is reduced below two
prior to the Effective Time, the remaining director who is not a Purchaser
Insider shall be entitled to designate an individual to fill such vacancy who is
not a Purchaser Insider and who shall be a director not deemed to be a Purchaser
Insider for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees
to the Company Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. The Company shall take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. Parent will
supply in a timely manner any information with respect to itself and its
officers, directors and affiliates required by such Section and Rule to the
Company.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 1.3 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
will require the concurrence of a majority of the directors of the Company then
in office who are not Purchaser Insiders (or, in the case where there are two or
fewer directors who are not Purchaser Insiders, the concurrence of one director
who is not a Purchaser Insider).
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the CGCL, at the Effective Time the
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.1(a) and
7.1(b), but subject to Sections 7.1(c) and 7.1(d) and, if applicable, Sections
7.2 and 7.3, the Company shall duly file with the Secretary of State of
California, in the manner required by the CGCL, an appropriate Agreement of
Merger
-5-
with an officer's certificate of each of Purchaser and the Company, and
the parties shall take such other and further actions as may be required by law
to make the Merger effective. The time the Merger becomes effective in
accordance with applicable law is referred to herein as the "Effective Time."
SECTION 2.3 Effects of the Merger. The Merger shall have the
effects set forth in the CGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and the Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and the Purchaser shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.4 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Restated Articles of Incorporation of the Company
shall, at the Effective Time, be amended to be identical to the Articles of
Incorporation of the Purchaser as in effect immediately prior to the Effective
Time, and shall be the Articles of Incorporation of the Surviving Corporation
until thereafter amended in accordance with the provisions thereof and hereof
and applicable law.
(b) The By-Laws of the Company shall, at the Effective Time,
be amended to be identical to the By-Laws of Purchaser as in effect immediately
prior to the Effective Time, and shall be the By-Laws of the Surviving
Corporation until amended, subject to the provisions of Section 6.6 of this
Agreement, in accordance with the provisions thereof and applicable law.
SECTION 2.5 Directors. Subject to applicable law, the directors of
the Purchaser immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 2.6 Officers. Except as set forth on Schedule 2.6 to this
Agreement, the officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold office
until their respective successors are duly elected and qualified, or their
earlier death, resignation or removal.
SECTION 2.7 Conversion of Common Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Common Share issued and outstanding immediately prior to the Effective Time
(other than (i) any Common Shares held by Parent, the Purchaser, any wholly
owned subsidiary of Parent or the Purchaser, in the treasury of the Company or
by any wholly owned subsidiary of the Company, which Common Shares, by virtue of
the Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto and (ii) Dissenting Shares (as hereinafter defined)), shall be
cancelled and retired and shall be converted into the right to receive the
Merger Price in cash, payable to the holder
-6-
thereof, without interest thereon, upon surrender of the certificate
formerly representing such Common Share.
SECTION 2.8 Conversion of Purchaser Common Stock. At the Effective
Time, each share of common stock of the Purchaser issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one validly issued, fully paid and non-assessable share of common stock,
par value $1.00 per share, of the Surviving Corporation.
SECTION 2.9 Options; Stock Plans. Immediately following the
Effective Time, each holder of a then-outstanding employee or director stock
option, whether or not fully exercisable, to purchase Common Shares (an
"Option") granted under any stock option or similar plan or separate option
agreement of the Company (such plans and agreements, collectively, the "Stock
Plans") will be entitled to receive in settlement of such Option a cash payment
from the Company equal to the product of (i) the total number of Common Shares
previously subject to such Option and (ii) the excess of the Merger Price over
the exercise price per Common Share subject to such Option, subject to any
required withholding of taxes. If necessary or appropriate, the Company will,
upon the request of Parent, use reasonable efforts to obtain the written
acknowledgment of each employee holding an Option that the payment of the amount
of cash referred to above will satisfy in full the Company's obligation to such
employee pursuant to such Option and take such other action as is necessary to
effect the provisions of this Section 2.9.
SECTION 2.10 Stockholders' Meeting.
(a) In order to consummate the Merger, the Company, acting
through the Company Board, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the date hereof for the purpose of considering and taking action
upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to this Agreement, and use its reasonable efforts (A)
to obtain and furnish the information required to be included by the SEC
in a definitive proxy statement (the "Proxy Statement") and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy statement and cause the Proxy
Statement to be mailed to its stockholders and (B) to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(iii) subject to the terms of Section 6.10, include in the
Proxy Statement the recommendation of the Company Board that stockholders
of the Company vote in favor of the adoption and approval of this
Agreement.
(b) Parent agrees that it will vote, or cause to be voted,
all of the Common Shares then owned by it, the Purchaser or any of its other
subsidiaries in favor of the approval of the Merger and of this Agreement.
-7-
(c) The Company shall prepare and file with the SEC the
preliminary proxy statement referred to in Section 2.10(a)(ii) as soon as
practicable after the date hereof, and if the Minimum Condition has not been
satisfied on or prior to the initial Expiration Date (prior to any extension of
the Offer), the Company shall, as soon as practicable following such initial
Expiration Date, mail the Proxy Statement to its stockholders for the purpose of
obtaining the necessary approvals of the Merger and this Agreement, unless the
Minimum Condition is satisfied subsequent to such initial Expiration Date and
prior to the earliest practicable date upon which the Company can mail the Proxy
Statement.
SECTION 2.11 Merger Without Meeting of Stockholders.
Notwithstanding Section 2.10, in the event that Parent, the Purchaser or any
other subsidiary of Parent shall acquire at least 90% of the outstanding Common
Shares pursuant to the Offer or otherwise, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acceptance for payment of and payment for Common Shares
by the Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 1110 of the CGCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1 Dissenting Shares. Notwithstanding Section 2.7, Common
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has perfected such holder's right to demand cash payment for the fair market
value of such holder's Shares in accordance with Chapter 13 of the CGCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Price, unless such holder fails to perfect or withdraws or otherwise loses such
holder's right to a determination of the fair market value of such holder's
Shares under the CGCL. If after the Effective Time such holder fails to perfect
or withdraws or loses such holder's right to a determination of the fair market
value of such holder's Shares under the CGCL, such Common Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Price. The Company shall give Parent prompt notice of any
demands received by the Company for a determination of the fair market value of
such holder's Shares under the CGCL, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands. As soon
as practicable after the approval of the Merger by the Company's shareholders
(including, without limitation, by written consent thereto), to the extent
required by the CGCL, and in any event not later than ten (10) days following
such approval, Parent shall mail to each shareholder of the Company who is
entitled to such notice pursuant to Chapter 13 of the CGCL, a notice of such
approval of the Merger, such notification to include the information and
materials required by Section 1301(a) of the CGCL (including, without
limitation, the price determined by Parent to represent the fair market value of
any Dissenting Shares).
-8-
SECTION 3.2 Payment for Common Shares.
(a) From and after the Effective Time, such bank or trust
company as shall be mutually acceptable to Parent and the Company shall act as
paying agent (the "Paying Agent") in effecting the payment of the Merger Price
in respect of certificates (the "Certificates") that, prior to the Effective
Time, represented Common Shares entitled to payment of the Merger Price pursuant
to Section 2.7. At or prior to the Effective Time, Parent or the Purchaser shall
deposit, or Parent shall otherwise take all steps necessary to cause to be
deposited, with the Paying Agent the aggregate Merger Price to which holders of
Common Shares shall be entitled at the Effective Time pursuant to Section 2.7,
assuming for such purpose that there will be no Dissenting Shares.
(b) Promptly after the Effective Time, Parent shall cause the
Paying Agent to mail to each record holder of Certificates that immediately
prior to the Effective Time represented Common Shares a form of letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and instructions for use in surrendering such
Certificates and receiving the Merger Price in respect thereof. Upon the
surrender of each such Certificate, the Paying Agent shall pay the holder of
such Certificate the Merger Price multiplied by the number of Common Shares
formerly represented by such Certificate, in consideration therefor, and such
Certificate shall forthwith be canceled. Until so surrendered, each such
Certificate (other than Certificates representing Common Shares held by Parent
or the Purchaser, any wholly owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly owned subsidiary of the Company or
Dissenting Shares) shall represent solely the right to receive the aggregate
Merger Price relating thereto. No interest or dividends shall be paid or accrued
on the Merger Price. If the Merger Price (or any portion thereof) is to be
delivered to any person other than the person in whose name the Certificate
formerly representing Common Shares surrendered therefor is registered, it shall
be a condition to such right to receive such Merger Price that the Certificate
so surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such Common Shares shall pay to the
Paying Agent any transfer or other taxes required by reason of the payment of
the Merger Price to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable.
(c) The Purchaser or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Common Shares such amounts as the Purchaser or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the United States Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder (the "Code"), or any provision of
United States state or local or foreign tax law. To the extent that amounts are
so deducted or withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Common Shares in
respect of which such deduction and withholding was made.
-9-
(d) Promptly following the date which is 120 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Common Share may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating thereto, without any
interest or dividends thereon.
(e) Neither the Company, the Purchaser, Parent, nor the
Surviving Corporation shall be liable to any holder of Common Shares for any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Common Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Common Shares are presented
to the Surviving Corporation or the Paying Agent, they shall be surrendered and
canceled in return for the payment of the aggregate Merger Price relating
thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4. The Company represents and warrants to Parent and the
Purchaser as follows:
SECTION 4.1 Organization and Qualification; Subsidiaries. The
Company and each of its Significant Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing under the laws
of its state or jurisdiction of incorporation and is in good standing as a
foreign corporation in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and where
failure to be in good standing or to so qualify would have a Material Adverse
Effect on the Company. Each of the Company and its Significant Subsidiaries has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect. The term "Material Adverse Effect on the Company," as
used in this Agreement, means any change in or effect on the business, financial
condition or results of operations of the Company or any of its subsidiaries
that would, individually or in the aggregate, reasonably be expected to be
materially adverse to the Company and its subsidiaries taken as a whole. The
Company has heretofore made available to Parent and the Purchaser a complete and
correct copy of its Restated Articles of Incorporation and By-Laws, each as
amended to the date hereof, and of the Articles of Incorporation and By-Laws or
equivalent organizational documents, each as amended to the date hereof, of the
Significant Subsidiaries. Such Articles of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither the Company nor
any Significant Subsidiary is in violation of any provision of its Articles of
Incorporation,
-10-
By-Laws or equivalent organizational documents. A "Significant Subsidiary"
means (i) a subsidiary or other person in which the Company has an investment of
$10,000,000 or more or (ii) a subsidiary of any person that constitutes a
significant subsidiary of such person within the meaning of Rule 1-02(v) of
Regulation S-X. Section 4.1 of the disclosure schedule delivered to Parent by
the Company on the date hereof (the "Company Disclosure Schedule") contains a
complete list as of the date hereof of each Significant Subsidiary of the
Company and sets forth with respect to each of the Company's Significant
Subsidiaries its name and jurisdiction of organization and, with respect to each
Significant Subsidiary of the Company that is not wholly owned by the Company or
another wholly owned subsidiary of the Company, the percentage of shares of
capital stock or share capital owned by the Company or a wholly owned subsidiary
of the Company.
SECTION 4.2 Capitalization; Subsidiaries. The authorized capital
stock of the Company consists of 30,000,000 Common Shares and 2,000,000 shares
of preferred stock, par value $1.00 per share ("Preferred Stock"), of which
500,000 shares are designated Series B Junior Participating Preferred Stock, par
value $1.00 per share ("Junior Preferred Stock"). As of the close of business on
January 30, 1998, 12,481,306 Common Shares were issued and outstanding, all of
which are entitled to vote on this Agreement, and no Common Shares were held in
treasury. The Company has no shares of Preferred Stock issued and outstanding.
As of the date hereof, except for (i) 1,153,264 Common Shares reserved for
issuance pursuant to outstanding Options granted under the Stock Plans and (ii)
500,000 shares of Junior Preferred Stock reserved for issuance upon exercise of
the Rights, there are not now, and at the Effective Time there will not be, any
existing options, warrants, calls, subscriptions, or other rights, or other
agreements or commitments, obligating the Company to issue, transfer or sell any
shares of capital stock of the Company or any of its subsidiaries or any Voting
Debt (as defined below) of, or other equity interest in, the Company or any of
its subsidiaries or securities convertible into or exchangeable for such shares
or equity interest or obligating the Company or any of its subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment. Since January 30, 1998, the
Company has not issued any shares of its capital stock, except pursuant to
Options outstanding on such date. All issued and outstanding Common Shares are
and all Common Shares which may be issued pursuant to the exercise of
outstanding Options will be, when issued in accordance with the respective terms
thereof, validly issued, fully paid, nonassessable and free of preemptive
rights. There are no bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its subsidiaries issued and
outstanding. All of the outstanding shares of capital stock of each of the
Company's Significant Subsidiaries have been validly issued and are fully paid
and non-assessable and, except as set forth on Section 4.2 of the Company
Disclosure Schedule, are owned by either the Company or a wholly owned
Significant Subsidiary free and clear of all liens, charges, claims or
encumbrances. There are no outstanding options, warrants, calls, subscriptions,
or other rights, or other agreements or commitments, obligating any subsidiary
of the Company to issue, transfer or sell any shares of its capital stock,
Voting Debt or other equity interest in, or securities convertible into or
exchangeable for such shares, Voting Debt or equity interests or obligating any
Significant Subsidiary to grant, or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. Except as
contemplated by the Offer and the Merger
-11-
contemplated by this Agreement, there are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Common Shares or the capital stock of the Company or any
of its subsidiaries.
SECTION 4.3 Authority Relative to this Agreement.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, except for the approval of
this Agreement by the shareholders of the Company with respect to the Merger, to
the extent required by applicable law, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Company Board and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval of this Agreement by the
shareholders of the Company with respect to the Merger, to the extent required
by applicable law). This Agreement has been duly and validly executed and
delivered by the Company, and, assuming this Agreement constitutes a valid and
binding obligation of each of Parent and the Purchaser, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) Except as set forth on Section 4.3 of the Company
Disclosure Schedule, other than in connection with, or in compliance with, the
provisions of the CGCL with respect to the transactions contemplated hereby, the
Exchange Act, the securities laws of the various states and the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no authorization, consent or approval of, or filing with, any
Governmental Entity (as hereinafter defined) is necessary for the consummation
by the Company of the transactions contemplated by this Agreement other than
authorizations, consents and approvals the failure to obtain, or filings the
failure to make, which would not, individually in the aggregate, have a Material
Adverse Effect on the Company. As used in this Agreement, the term "Governmental
Entity" means any government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or regulatory authority,
agency, commission, tribunal or body, domestic, foreign or supranational.
SECTION 4.4 No Violation. Neither the execution or delivery of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Restated Articles of Incorporation or By-Laws of the Company or the
comparable organizational document of any of the Significant Subsidiaries, (ii)
except as set forth on Section 4.4 of the Company Disclosure Schedule,
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under, any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument to which the
Company or any of its subsidiaries is a party or by which they or any of their
respective properties or assets are bound, or (iii) conflict with or violate any
statute, ordinance, rule, regulation, order, judgment
-12-
or decree applicable to the Company or its subsidiaries, or by which any of
them or any of their respective properties or assets may be bound or affected,
other than, in the case of the foregoing clauses (ii) or (iii), conflicts,
breaches, violations, defaults, terminations, accelerations or creation of liens
and encumbrances which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company.
SECTION 4.5 SEC Reports and Financial Statements. Since January 1,
1996, the Company has filed all forms, reports and documents ("SEC Reports")
with the SEC required to be filed by it pursuant to the federal securities laws
and the SEC rules and regulations thereunder. Copies of all such SEC Reports
have been made available to Parent by the Company. None of such SEC Reports (as
of their respective filing dates) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited and unaudited
consolidated financial statements of the Company included in the SEC Reports
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise stated in such financial
statements, including the related notes), comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto and fairly present the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the results of their operations and changes in financial position
for the periods then ended, subject, in the case of the unaudited financial
statements, to year-end audit adjustments. The Company and its subsidiaries have
no liabilities or obligations of any nature (whether absolute, accrued,
contingent, unmatured, unaccrued, unliquidated, unasserted, conditional or
otherwise), except for liabilities or obligations (i) disclosed in the Company
Disclosure Schedule or reflected or reserved against on the balance sheet as at
September 27, 1997 (including the notes thereto and the other disclosure made in
the Company's Form 10-Q for the quarter ended September 27, 1997) included in
the SEC Reports, or (ii) incurred in the ordinary course of business consistent
with past practice since such date, in each case of clauses (i) and (ii) which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
SECTION 4.6 Compliance with Applicable Laws. Except as set forth on
Section 4.6 of the Company Disclosure Schedule, (i) the Company and its
subsidiaries hold all material permits, licenses and approvals of all
Governmental Entities and (ii) the Company and its subsidiaries are in
compliance with, and their respective business operations are being conducted in
compliance with, all laws, ordinances, orders and regulations of any
Governmental Entity, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
SECTION 4.7 Change of Control. Except as set forth on Section 4.7
of the Company Disclosure Schedule or as provided in Section 2.9, the
transactions contemplated by this Agreement will not constitute a "change of
control" under, require the consent from or the giving of notice to a third
party pursuant to, permit a third party to terminate or accelerate vesting or
repurchase rights, or create any other detriment under the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or
-13-
any of their properties or assets may be bound, except where the adverse
consequences resulting from such change of control or where the failure to
obtain such consents or provide such notices would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
SECTION 4.8 Litigation. Except as set forth on Section 4.8 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened, against
the Company or any of its subsidiaries, individually or in the aggregate, which
would have a Material Adverse Effect on the Company or would reasonably be
expected to prevent or materially delay the consummation of the transactions
contemplated by this Agreement. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, would have a Material Adverse Effect on
the Company or would reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated hereby.
SECTION 4.9 Information. None of the information supplied by the
Company in writing (other than projections of future financial performance)
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Proxy Statement, or (iii) any other document to be filed
with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to stockholders, at the time of the Special Meeting and 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 made therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or the Purchaser in writing specifically for inclusion in the Proxy Statement.
Notwithstanding the foregoing, no representation is made by the Company with
respect to (i) any forward-looking information which may have been supplied by
the Company, whether or not included by Parent or the Purchaser in any Offer
Document or in the Proxy Statement or (ii) statements made in any of the
foregoing documents based upon information supplied by Parent or the Purchaser.
SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Company Disclosure Schedule
includes a complete list of all material employee benefit plans and programs
providing benefits to any employee or former employee of the Company and its
subsidiaries sponsored or maintained by the Company or any of its subsidiaries
or to which the Company or any of its subsidiaries contributes or is obligated
to contribute ("Plans"). Without limiting the generality of the foregoing, the
term "Plans" includes all employee welfare benefit plans within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended,
and the regulations there-
-14-
under ("ERISA"), and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.
(b) With respect to each Plan, the Company has made available
to Parent (to the extent requested) a true, correct and complete copy of: (i)
all plan documents, benefit schedules, trust agreements, and insurance contracts
and other funding vehicles; (ii) the most recent Annual Report (Form 5500
Series) and accompanying schedule, if any; (iii) the current summary plan
description, if any; (iv) the most recent annual financial report, if any; (v)
the most recent actuarial report, if any; and (vi) the most recent determination
letter from the United States Internal Revenue Service (the "IRS"), if any.
(c) Except as set forth in Section 4.10(c) of the Company
Disclosure Schedule, the Company and each of its subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans. Except as set forth
in Section 4.10(c) of the Company Disclosure Schedule, with respect to each Plan
that is intended to be a "qualified plan" within the meaning of Section 401(a)
of the Code ("Qualified Plans"), the IRS has issued a favorable determination
letter.
(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, have been timely made or paid in full or, to the extent not
required to be made or paid, have been fully reflected in the financial
statements of the Company included in the SEC Reports to the extent required
under generally accepted accounting principles.
(e) Except as set forth on Section 4.10(e) of the Company
Disclosure Schedule, no Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, except as set forth on Section 4.10(e) of the Company Disclosure
Schedule, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA and which is subject to Title IV of ERISA
(a "Multiple Employer Plan").
(f) There does not now exist, nor do any circumstances exist
that would reasonably be expected to result in, any liability under (i) Title IV
of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code,
(iv) the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, or (v) corresponding or similar provisions of foreign
laws or regulations, other than a liability that arises solely out of, or relate
solely to, the Plans, that would be a liability of the Company or any of its
subsidiaries following the Effective Time. Without limiting the generality of
the foregoing, (i) none of the Company, its subsidiaries nor any ERISA Affiliate
of the Company or any of its subsidiaries has engaged in any transaction
described in Section 4069 or Section 4204 or 4212 of ERISA, (ii) no liability
under Title IV or a violation of Section 302 of ERISA has been incurred by the
Company that has not been satisfied in full, and no condition exists that
presents a material risk to the Company of incurring any such liability, other
than liability for premiums due to the Pension Benefit Guar-
-15-
anty Corporation (which premiums have been paid when due) and for
contributions due to a pension plan (which contributions have been paid through
the end of 1997), and (iii) no Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Plan ended prior to the Effective Time. An
"ERISA Affiliate" means any entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the Company or any of its subsidiaries, or
that is a member of the same "controlled group" as the Company or any of its
subsidiaries, pursuant to Section 4001(a)(14) of ERISA.
(g) There are no pending, threatened or anticipated claims by
or on behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
SECTION 4.11 Taxes.
(a) The Company and each of its subsidiaries has (i) timely
filed all income Tax Returns (as hereinafter defined), and all other material
Tax Returns required to be filed by or with respect to it, and all such Tax
Returns are true, correct and complete, and (ii) paid or caused to be paid all
Taxes (as hereinafter defined) shown as due and payable on such Tax Returns or
otherwise due and payable, in the case of Taxes for which no Tax Returns are
required or otherwise due and payable, and (iii) made adequate provision in the
Company's financial statements for payment of all Taxes anticipated to be
payable in respect of all taxable periods or portions thereof ending on or
before the date hereof, except where the failures to so file or pay or make
adequate provision would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return of the
Company or any of its subsidiaries. Except as set forth on Section 4.11 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries (i)
has been a member of a group filing consolidated returns for federal income tax
purposes (except for the group of which the Company is the common parent), or
(ii) is a party to a Tax sharing or Tax indemnity agreement or any other
agreement of a similar nature that remains in effect. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company or any of its
subsidiaries which would, individually or in the aggregate, have a Material
Adverse Effect on the Company. There are no Tax liens upon any of the assets or
property of the Company or its subsidiaries, except liens for current Taxes not
yet due and payable. As soon as practicable after the public announcement of the
execution of this Agreement, the Company will provide Parent with written
schedules with respect to income taxes of (i) the taxable years of the Company
or any of its subsidiaries as to which the respective statutes of limitations
with respect to Taxes have not expired and (ii) with respect to such taxable
years, those years for which examinations have been completed, those years for
which examinations are presently being conducted, those years for which
examinations have not been initiated and those years for which required Tax
Returns have not yet been filed.
-16-
(b) For purposes of this Agreement, the term "Taxes" means
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.12 Intellectual Property.
(a) Except as would not, individually and in the aggregate,
have a Material Adverse Effect on the Company or as set forth in Section 4.12 of
the Company Disclosure Schedule, (i) the Company and each of its subsidiaries
owns, has the right to acquire or is licensed or otherwise has the right to use
(in each case, free and clear of any liens or encumbrances of any kind), all
Intellectual Property (as defined below) used in or necessary for the conduct of
its business as currently conducted, (ii) no claims are pending or, to the
knowledge of the Company, threatened, that the Company or any of its
subsidiaries is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property, and (iii) to the knowledge of the
Company, no person is infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its subsidiaries.
(b) For purposes of this Agreement, "Intellectual Property"
shall mean patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing; and trade secrets and rights in any
jurisdiction to limit the use or disclosure thereof by any person.
SECTION 4.13 Contracts. Each material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound (the "Material
Contracts") is valid and binding and in full force and effect, except where
failure to be valid and binding and in full force and effect would not have a
Material Adverse Effect on the Company, and there are no defaults by the Company
or any of its subsidiaries or, to the Company's knowledge, any other party
thereto, thereunder, except those defaults that would not have a Material
Adverse Effect on the Company.
SECTION 4.14 Voting Requirements. Assuming that neither Parent nor
the Purchaser directly or indirectly beneficially owns any Common Shares other
than shares acquired pursuant to and in accordance with the terms of the Offer,
the affirmative vote of the holders of a majority of the outstanding Common
Shares approving the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary in connection with this
Agreement.
SECTION 4.15 Absence of Certain Changes. Except as disclosed in the
SEC Reports filed prior to the date of this Agreement, there has not been, since
December 27, 1996,
-17-
any Material Adverse Effect on the Company or any event that is reasonably
expected to have a Material Adverse Effect. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement or as set forth in Section
4.15 of the Company Disclosure Schedule, since December 27, 1996, the Company
and its subsidiaries have conducted their businesses only in the ordinary course
of business consistent with past practices and there has not been, directly or
indirectly:
(i) any payment or granting by the Company or any of its
subsidiaries of any increase in compensation to any director or executive
officer of the Company or, except in the ordinary course of business and
consistent with past practice or as required under employment agreements
in effect as of or prior to the date of this Agreement, any employee of
the Company or its subsidiaries;
(ii) any granting by the Company or any of its subsidiaries to
any such director, executive officer or employee of any increase in
severance or termination pay, except as required under employment,
severance or termination agreements or plans in effect as of the date of
this Agreement;
(iii) any entry by the Company or any of its subsidiaries into
any employment, severance or termination agreement with any such director
or executive officer, or, except in the ordinary course of business
consistent with past practice, employee;
(iv) except in the ordinary course of business and consistent
with past practice or as required under employment agreements in effect as
of or prior to the date of this Agreement, any material adoption or
material increase in payments to or benefits under any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement or
other employee benefit plan for or with any employees of the Company or
any of its subsidiaries;
(v) any change in accounting methods, principles or practices
by the Company or any of its Subsidiaries materially affecting their
assets, liabilities or business, except insofar as may have been required
by change in generally accepted accounting principles; or
(vi) any agreement to do any of the things described in the
preceding clauses (i) through (v).
SECTION 4.16 Rights Agreement. The Company and the Company Board
have authorized all necessary action to amend the Rights Agreement (without
redeeming the Rights) so that none of the execution or delivery of this
Agreement, the making of the Offer, the acquisition of Shares pursuant to the
Offer or the consummation of the Merger will (i) cause any Rights issued
pursuant to the Rights Agreement to become exercisable or to separate from the
stock certificates to which they are attached, (ii) cause Parent, the Purchaser
or any of their Affiliates to be an Acquiring Person (as each such term is
defined in the Rights Agreement), or (iii) trigger other provisions of the
Rights Agreement, including giving rise to a Distribution Date (as
-18-
such term is defined in the Rights Agreement), and such amendment shall be
in full force and effect from and after the date hereof.
SECTION 4.17 Brokers. Except for the engagement of the Investment
Bankers, none of the Company, any of its subsidiaries, or any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement.
SECTION 4.18 Opinion of Investment Banker. The Company has received
the written opinion of the Investment Banker to the effect that, as of the date
hereof, the consideration to be received by the holders of Common Shares (other
than Parent or any of its affiliates or holders of Dissenting Shares) pursuant
to the Offer and the Merger is fair to the Company's stockholders from a
financial point of view.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.1 Organization and Qualification. Each of Parent and the
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its state or jurisdiction of incorporation and is in good
standing as a foreign corporation in each other jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification and where failure to be in good standing or to so qualify
would have a Material Adverse Effect on Parent. The term "Material Adverse
Effect on Parent", as used in this Agreement, means any change in or effect on
the business, financial condition or results of operations of Parent or any of
its subsidiaries that would, individually or in the aggregate, be materially
adverse to Parent and its subsidiaries taken as a whole. The Purchaser is a
wholly owned subsidiary of Parent formed solely for the purpose of executing
this Agreement and consummating the transactions contemplated hereby, and has
not, since its formation, conducted any operations or owned any material assets.
Parent is a wholly owned subsidiary of ▇▇▇▇▇▇▇ Corporation, a Delaware
corporation ("▇▇▇▇▇▇▇"). Parent is the holding company for the majority of
▇▇▇▇▇▇▇'▇ operating subsidiaries and its holdings represent more than 50% of the
assets, sales, and profits of ▇▇▇▇▇▇▇. Parent is not an operating company.
SECTION 5.2 Authority Relative to this Agreement.
(a) Each of Parent and the Purchaser has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of each of Parent and the Purchaser
and no other corporate proceedings on the part of Parent or the
-19-
Purchaser are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by each of Parent and the Purchaser and, assuming this Agreement
constitutes a valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) Other than in connection with, or in compliance with, the
provisions of the CGCL with respect to the transactions contemplated hereby, the
Exchange Act, the securities laws of the various states and the HSR Act, no
authorization, consent or approval of, or filing with, any Governmental Entity
is necessary for the consummation by Parent or the Purchaser of the transactions
contemplated by this Agreement other than authorizations, consents and approvals
the failure to obtain, or filings the failure to make, which would not, in the
aggregate, have a Material Adverse Effect on Parent.
SECTION 5.3 No Violation. Neither the execution or delivery of this
Agreement by either Parent or the Purchaser nor the consummation by either
Parent or the Purchaser of the transactions contemplated hereby will (i)
constitute a breach or violation of any provision of the Certificate of
Incorporation or By-Laws of either Parent or the Purchaser or (ii) constitute a
breach, violation or default (or any event which, with notice or lapse of time
or both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien or
encumbrance upon any of the properties or assets of Parent, the Purchaser or any
of their respective subsidiaries under, any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument to which Parent,
the Purchaser or any of their respective subsidiaries is a party or by which
they or any of their respective properties or assets are bound, other than
breaches, violations, defaults, terminations, accelerations or creation of liens
and encumbrances which, in the aggregate would not have a Material Adverse
Effect on Parent.
SECTION 5.4 Information. None of the information supplied by Parent
or the Purchaser in writing (other than projections of future financial
performance) specifically for inclusion or incorporation by reference in (i) the
Schedule 14D-9, (ii) the Proxy Statement, or (iii) the Other Filings will, at
the respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement, at the date it or any amendment or
supplement is mailed to stockholders, at the time of the Special Meeting and 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 made therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, no representation is
made by the Parent or the Purchaser with respect to statements made in any of
the foregoing documents based upon information supplied by the Company.
SECTION 5.5 Financing. Parent and the Purchaser have on the date
hereof and will have at the time of acceptance for payment and purchase of
Shares pursuant to the Offer and at the Effective Time, the funds necessary to
consummate the Offer and the Merger and the transactions contemplated thereby on
a timely basis in accordance with this Agreement.
-20-
ARTICLE VI
COVENANTS
SECTION 6.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent,
during the period from the date of this Agreement to the Effective Time, the
Company will, and will cause each of its subsidiaries to, conduct its operations
according to its ordinary and usual course of business and consistent with past
practice and will use its reasonable efforts, and will cause each of its
subsidiaries to use its reasonable efforts, to preserve intact the business
organization of the Company and each of its subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the good will of those having business relationships with it. Without limiting
the generality of the foregoing, and except as (w) otherwise expressly provided
in this Agreement, (x) required by law, (y) previously disclosed to Parent in
the Company's 1998 operating budget, or (z) set forth on Section 6.1 of the
Company Disclosure Schedule, prior to the Effective Time, the Company will not,
and will cause its subsidiaries not to, without the prior written consent of
Parent (which consent shall not be unreasonably withheld):
(i) except with respect to annual bonuses made in the ordinary
course of business consistent with past practice, adopt or amend in any
material respect any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, pension, retirement,
employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or
employee of the Company or any of its subsidiaries or increase in any
manner the compensation or fringe benefits of any director, officer or
employee of the Company or any of its subsidiaries or pay any benefit not
required by any existing agreement or place any assets in any trust for
the benefit of any director, officer or employee of the Company or any of
its subsidiaries (in each case, except with respect to employees,
non-executive officers and directors in the ordinary course of business
consistent with past practice);
(ii) incur any indebtedness for borrowed money (other than
under existing lines of credit) or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any other person, other than
to the Company or any direct or indirect wholly owned subsidiary of the
Company;
(iii) expend funds for capital expenditures in excess of
$4,000,000 per fiscal quarter, including amounts reflected in the
Company's 1998 operating budget;
(iv) sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of its properties or
assets other than immaterial
-21-
properties or assets (or immaterial portions of properties or assets),
except in the ordinary course of business consistent with past practice;
(v) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock (except
(A) as contemplated by the Rights Agreement, (B) for dividends paid by
subsidiaries to the Company with respect to capital stock and (C) for
regular quarterly dividends not to exceed $.03 per quarter), (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(vi) authorize for issuance, issue, deliver, sell or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its subsidiaries, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or any other securities or equity equivalents (including
without limitation stock appreciation rights) (other than issuances upon
exercise of Options outstanding on the date hereof pursuant to the Stock
Plans or the Rights Agreement);
(vii) amend its Restated Articles of Incorporation, By-Laws or
equivalent organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any material subsidiary of the Company;
(viii) make or agree to make any acquisition of assets which
is material to the Company and its subsidiaries, taken as a whole, except
for (x) purchases of inventory, supplies and material in the ordinary
course of business or (y) pursuant to purchase orders entered into in the
ordinary course of business which do not call for payments in excess of
$1,000,000 per annum;
(ix) settle or compromise any shareholder derivative suits
arising out of the transactions contemplated hereby or any other
litigation (whether or not commenced prior to the date of this Agreement)
or settle, pay or compromise any claims not required to be paid,
individually in an amount in excess of $1,000,000, other than in
consultation and cooperation with Parent, and, with respect to any such
settlement, with the prior written consent of Parent, which consent shall
not be unreasonably withheld;
(x) make any material Tax election or settle or compromise any
material Tax liability (whether with respect to amount or timing); or
-22-
(xi) except in the ordinary course of business, modify, amend
or terminate any Material Contract or waive or release or assign any
material rights or claims.
SECTION 6.2 Access to Information. From the date of this Agreement
until the Effective Time, the Company will, and will cause its subsidiaries, and
each of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives (collectively, the "Parent Representatives") reasonable
access, upon reasonable notice and during normal business hours, to the offices
and other facilities and to the books and records of the Company and its
subsidiaries and will cause the Company Representatives and the Company's
subsidiaries to furnish Parent, the Purchaser and the Parent Representatives
with such financial and operating data and such other information with respect
to the business and operations of the Company and its subsidiaries as Parent and
the Purchaser may from time to time reasonably request. Parent and the Purchaser
agree that any information furnished pursuant to this Section 6.2 will be
subject to the provisions of the letter agreement dated January 9, 1998 between
Parent and the Company the ("Confidentiality Agreement").
SECTION 6.3 Efforts.
(a) Subject to the terms and conditions herein provided for,
and subject to Section 6.10 hereof, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts to obtain all necessary opinions, waivers, consents and approvals and
effect all necessary registrations and filings. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall take all such necessary action. Without limiting the
foregoing, each of the Company, Parent and the Purchaser shall, and the Company
shall cause each of its subsidiaries to, make all necessary filings with
Governmental Entities as promptly as practicable in order to facilitate prompt
consummation of the transactions contemplated by the Offer and this Agreement.
In addition, each of Parent, the Purchaser and the Company will use its
reasonable best efforts (including, without limitation, payment of any required
fees) and will cooperate fully with each other to (i) comply as promptly as
practicable with all governmental requirements applicable to the transactions
contemplated by the Offer and this Agreement, including the making of all
filings necessary or proper under applicable laws and regulations to consummate
and make effective the transactions contemplated by the Offer and this
Agreement, including, but not limited to, cooperation in the preparation and
filing of the Offer Documents, the Schedule 14D-9 and any actions or filings
related thereto, the Proxy Statement or other foreign filings and any amendments
to any thereof, and (ii) obtain promptly all consents, waivers, approvals,
authorizations or permits of, or registrations or filings with or notifications
to (any of the foregoing being a "Consent"), any Governmental Entity necessary
for the consummation of the transactions contemplated by the Offer and this
Agreement. Subject to the Confidentiality Agreement, Parent and the Company
shall furnish to one and other (and to the Purchaser) such necessary informa-
-23-
tion and reasonable assistance as Parent, the Purchaser or the Company may
reasonably request in connection with the foregoing. In addition, if at any time
prior to the Effective Time any event or circumstance relating to either the
Company or Parent or the Purchaser or any of their respective subsidiaries,
should be discovered by the Company or Parent, as the case may be, and which
should be set forth in an amendment to the Offer Documents or Schedule 14D-9,
the discovering party will promptly inform the other party of such event or
circumstance.
(b) Without limiting Section 6.3(a), Parent, the Purchaser
and the Company shall each (i) promptly make or cause to be made the filings
required of such party under the HSR Act with respect to the Offer and the
Merger; (ii) take any and all steps necessary to avoid or eliminate each and
every impediment under any antitrust, competition, or trade regulation law that
may be asserted by any Governmental Entity with respect to the Offer or the
Merger so as to enable consummation thereof to occur as soon as reasonably
possible, including without limitation, proposing, negotiating, committing to
and effecting, by consent decree, hold separate order, or otherwise, the sale,
divestiture or disposition of such assets or businesses of Parent, the Purchaser
or the Company as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying consummation of the Offer or the Merger; and (iii) use its best
efforts to avoid the entry of, or to have vacated or terminated, any decree,
order, or judgment that would restrain, prevent or delay the consummation of the
Offer or the Merger, including without limitation defending through litigation
on the merits any claim asserted in any court by any party. Each party hereto
shall promptly notify the other parties of any communication to that party from
any Governmental Entity and permit the other parties to review in advance any
proposed communication to any Governmental Entity. Parent and the Company shall
not (and shall cause their respective affiliates and representatives not to)
agree to participate in any meeting with any Governmental Entity in respect of
any filings, investigation or other inquiry unless it consults with the other
party in advance and, to the extent permitted by such Governmental Entity, gives
the other party the opportunity to attend and participate thereat. Subject to
the Confidentiality Agreement, each of the parties hereto will coordinate and
cooperate fully with the other parties hereto in exchanging such information and
providing such assistance as such other parties may reasonably request in
connection with the foregoing and in seeking early termination of any applicable
waiting periods under the HSR Act or in connection with other Consents. Each of
the Company, Parent and the Purchaser agrees to respond promptly to and comply
fully with any request for additional information or documents under the HSR
Act. Subject to the Confidentiality Agreement, the Company will provide Parent
and the Purchaser, and Parent and the Purchaser will provide the Company, with
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof) between such party or any of its representatives,
on the one hand, and any Governmental Entity or members of its staff, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby.
SECTION 6.4 Public Announcements. The Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree to consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the Offer, the Merger and the other transactions
contemplated hereby, agree to provide to the other party for
-24-
review a copy of any such press release or statement, and shall not issue
any such press release or make any such public statement prior to such
consultation and review, unless required by applicable law or any listing
agreement with a securities exchange.
SECTION 6.5 Employee Benefit Arrangements.
(a) Parent agrees that the Company will honor, and, from and
after the Effective Time, Parent will cause the Surviving Corporation to honor,
in accordance with their respective terms as in effect on the date hereof, the
employment, severance and bonus agreements and arrangements to which the Company
is a party which are set forth on Sections 4.7 and 6.5 of the Company Disclosure
Schedule.
(b) Parent agrees that (i) for a period of two years
following the Effective Time, the Surviving Corporation shall provide employees
of the Company and its subsidiaries (A) compensation (including bonus and
incentive awards) programs and plans and (B) employee benefit and welfare plans,
programs, contracts, agreements and policies (including insurance and pension
plans), fringe benefits and vacation policies which are not materially less
favorable in the aggregate to such employee than those generally in effect on
the date of this Agreement with respect to similarly situated employees of the
Company. While nothing in the foregoing sentence shall require Parent or the
Surviving Corporation to maintain any stock option or other stock incentive plan
using Company Shares following the Effective Time, it is understood that if
Parent or the Purchaser or any affiliate of Parent maintains a stock option or
other stock incentive plan, employees of the Company shall be considered for
participation in such plan or plans following the Effective Time on a basis no
less favorable than the participation of employees of Parent and its affiliates
with comparable positions.
SECTION 6.6 Indemnification; Directors' and Officers'
Insurance.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers, directors, employees and agents of the Company
and its subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, expenses or liabilities arising out of or related to actions or
omissions or alleged actions or omissions occurring at or prior to the Effective
Time (i) to the full extent permitted by California law or, if the protections
afforded thereby to an Indemnified Person are greater, (ii) to the same extent
and on the same terms and conditions (including with respect to advancement of
expenses) provided for in the Company's Restated Articles of Incorporation and
By-Laws and agreements (including indemnification agreements to which directors
or officers of the Company or its subsidiaries are parties) in effect at the
date hereof and identified in Section 6.6 of the Company Disclosure Schedule (to
the extent consistent with applicable law), which provisions and agreements will
survive the Merger and continue in full force and effect after the Effective
Time. Without limiting the foregoing, (i) Parent shall, and shall cause the
Surviving Corporation to, periodically advance reasonable legal and other
expenses (including of counsel selected by the Indemnified Party and reasonably
acceptable to Parent) as incurred by an Indemnified Party with respect to the
foregoing to the full extent permitted under applicable law, and (ii) any
determination required to be made with respect to whether an Indem-
-25-
nified Party shall be entitled to indemnification shall, if requested by
such Indemnified Party, be made by independent legal counsel selected by the
Surviving Corporation and reasonably satisfactory to such Indemnified Party.
Notwithstanding the foregoing, Parent shall not, in connection with any one
action or proceeding for which it is obligated to indemnify the Indemnified
Parties hereunder or separate but substantially similar actions or proceedings
arising out of the same general allegations be liable for fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all Indemnified Parties (except in the event that one or more of
the Indemnified Parties shall have an actual or potential conflict of interest
that would make it reasonably advisable to retain separate counsel). Parent
shall be entitled to participate in the defense of any such action or proceeding
and counsel selected by the Indemnified Party shall, to the extent consistent
with their professional responsibilities, cooperate with Parent and any counsel
designated by Parent.
(b) Parent agrees that the Company, and, from and after the
Effective Time, the Surviving Corporation, shall cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company;
provided that the Surviving Corporation may substitute therefor other policies
of at least the same coverage amounts and which contain terms and conditions not
less advantageous to the beneficiaries of the current policies and provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; and provided, further,
that the Surviving Corporation shall not be required to pay an annual premium in
excess of 250% of the last annual premium paid by the Company prior to the date
hereof and if the Surviving Corporation is unable to obtain the insurance
required by this Section 6.6(b) it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
(c) Parent shall guarantee the obligations of the Surviving
Corporation under this Section 6.6.
(d) This Section 6.6 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of Parent and the Surviving Corporation, and shall be enforceable by the
Indemnified Parties.
SECTION 6.7 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (i) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (A) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (B)
to cause any covenant, condition or agreement under this Agreement not to be
complied with or satisfied and (ii) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder. Each of the Company, Parent and the Purchaser shall give prompt
notice to the other parties hereof of any notice or other communication from any
third party alleging that the consent of
-26-
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
SECTION 6.8 Rights Agreement. Subject to the provisions of Sections
4.16 and 6.10, the Company covenants and agrees that it will not (i) redeem the
Rights, (ii) amend the Rights Agreement, or (iii) take any action which would
allow any Person (as defined in the Rights Agreement) other than Parent or the
Purchaser to acquire beneficial ownership of 10% or more of the Common Shares
without causing a Distribution Date (as such term is defined in the Rights
Agreement) to occur.
SECTION 6.9 State Takeover Laws. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer and the Merger, of any state
takeover law.
SECTION 6.10 No Solicitation. (a) The Company represents and
warrants to, and covenants and agrees with, Parent and Purchaser that neither
the Company nor any of its subsidiaries has any agreement, arrangement or
understanding with any potential third party acquiror that, directly or
indirectly, would be violated, or require any payments, by reason of the
execution, delivery and/or consummation of this Agreement. The Company shall,
and it shall cause its subsidiaries and its and their officers, directors,
employees, investment bankers, attorneys and other agents and representatives
to, immediately cease any existing discussions or negotiations with any person
other than Parent or Purchaser (a "Third Party") heretofore conducted with
respect to any Acquisition Transaction (as hereinafter defined). The Company
shall not, and it shall cause its subsidiaries and its and their officers,
directors, employees, investment bankers, attorneys and other agents and
representatives not to, directly or indirectly, (w) solicit, initiate, continue,
facilitate or encourage (including by way of furnishing or disclosing non-public
information) any inquiries, proposals or offers from any Third Party with
respect to, or that could reasonably be expected to lead to, any acquisition or
purchase of a material portion of the assets (other than in the ordinary course
of business) or business of, or any significant equity interest in (including by
way of a tender offer), or any merger, consolidation or business combination
with, or any recapitalization or restructuring, or any similar transaction
involving, the Company or any of its subsidiaries (the foregoing being referred
to collectively as an "Acquisition Transaction"), or (x) negotiate, explore or
otherwise communicate in any way with any Third Party with respect to any
Acquisition Transaction, (y) enter into, approve or recommend any agreement,
arrangement or understanding requiring the Company to abandon, terminate or fail
to consummate the Offer and/or the Merger or any other transaction contemplated
hereby, or (z) withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Parent, the approval or recommendation by the Company Board
of the Offer, the Merger or this Agreement; provided, however, that nothing
herein shall prevent the Company Board from taking, and disclosing to the
Company's shareholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with respect to any tender offer. The Company
will promptly notify Parent of the receipt of any proposal relating to an
Acquisition Transaction. Notwithstanding anything to the contrary in the
foregoing, the Company may, in response to an unsolicited written proposal with
respect to an Acquisition Transaction involving
-27-
the acquisition of all of the Shares (or all or substantially all of the
assets of the Company and its subsidiaries) from a Third Party (i) furnish or
disclose non-public information to such Third Party and (ii) negotiate, explore
or otherwise communicate with such Third Party, in each case only if (a) after
being advised (x) by its outside counsel with respect to its fiduciary
obligations and (y) with respect to the financial terms of any such proposed
Acquisition Transaction, the Board of Directors of the Company determines in
good faith by a majority vote that taking such action is necessary in the
exercise of its fiduciary obligations under applicable law (the proposal with
respect to an Acquisition Transaction meeting the requirements of this clause
(a), a "Superior Proposal") and (b) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party an executed
confidentiality agreement (which the Company is hereby expressly permitted to
negotiate with such party) with terms no less favorable in the aggregate to
Company than those contained in the Confidentiality Agreement, but which
confidentiality agreement shall not provide for any exclusive right to negotiate
with the Company or any payments by the Company and need not contain any
"standstill" or similar provisions. In addition, the Company Board may approve
or recommend (and, in connection therewith withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger) a Superior Proposal
and may terminate this Agreement solely to enter into a definitive agreement
with respect to a Superior Proposal provided, however, that Company shall not,
and shall cause its affiliates not to, enter into a definitive agreement with
respect to a Superior Proposal unless the Company concurrently terminates this
Agreement in accordance with the terms hereof and pays any Termination Fee
required under Section 8.3(b) and agrees to pay any other amounts required under
such Section 8.3(b).
(b) The Company shall promptly (but in any event within one
business day of the Company becoming aware of same) advise Parent of the receipt
by the Company, any of its subsidiaries or any of the Company's bankers,
attorneys or other agents or representatives of any written inquiries or
proposals relating to an Acquisition Transaction and any actions taken pursuant
to Section 6.10(a), and shall promptly (but in any event within one business day
of the Company becoming aware of same) provide Parent with a copy of any such
written inquiry or proposal. The Company shall keep Parent reasonably informed
of the status and content of and material developments (including the calling of
meetings of the Company Board to take action with respect to such Acquisition
Transaction) with respect to any discussions regarding any Acquisition
Transaction with a Third Party. The Company agrees that it will not enter into
any agreement with respect to a Superior Proposal unless and until Parent has
been given notice of the identity of the parties making such Superior Proposal,
the material terms thereof and material developments referred to in the
preceding sentence at least two business days prior to the entering into such
agreement.
SECTION 6.11 Parent Agreements. Whenever this Agreement requires
the Purchaser to take any action, such requirement will be deemed to include an
undertaking on the part of Parent to cause the Purchaser to take such action,
and Parent agrees to cause the Purchaser to otherwise comply with all of its
obligations under this Agreement. Parent hereby covenants and agrees to duly
incorporate the Purchaser under the laws of the State of California before the
close of business, Los Angeles time, on Tuesday, February 3, 1998. Parent
further agrees to
-28-
cause the Purchaser, on or before February 3, 1998, to execute a written
instrument reasonably acceptable to the Company pursuant to which the Purchaser
agrees to be bound by the provisions hereby and to perform all of its
obligations hereunder as though it were a party hereto, it being understood that
any actions contemplated hereby (and representations and warranties made herein)
which are to be taken (or made) by the Purchaser shall not be taken (or made)
prior to the time the Purchaser executes such written instrument. The Company
and Parent agree that upon execution of such written instrument by the
Purchaser, the Purchaser, shall for all purposes be considered a party to this
Agreement, and the Company and Parent further agree that, notwithstanding the
fact that the Purchaser will not have executed this Agreement on the date
hereof, this Agreement is for all purposes a valid and binding agreement of each
of the Company and Parent.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. The stockholders of the Company
shall have duly approved the transactions contemplated by this Agreement, if
required by applicable law or the Restated Certificate of Incorporation of the
Company.
(b) Purchase of Common Shares. If, and only if, the Minimum
Condition shall have been satisfied prior to the Expiration Date, the Purchaser
shall have accepted for payment and paid for Common Shares in an amount
sufficient to meet the Minimum Condition and otherwise pursuant to the Offer in
accordance with the terms hereof; provided, however, that this condition shall
be deemed to be satisfied with respect to the obligation of Parent and the
Purchaser to effect the Merger if the Purchaser fails to accept for payment or
pay for Common Shares pursuant to the Offer in violation of the terms of the
Offer or of this Agreement.
(c) Injunctions; Illegality. No statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or other
Governmental Entity which prohibits the consummation of the Merger; provided,
however, that the Company, Parent and the Purchaser shall use their reasonable
best efforts to have any such order, decree or injunction vacated.
(d) HSR Act. Any waiting period (and any extension thereof)
under the HSR Act applicable to the Merger shall have expired or terminated.
SECTION 7.2 Conditions to Obligations of Parent. In the event the
Offer shall not have been consummated, the obligations of Parent to effect the
Merger shall be further subject to the following conditions:
-29-
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date; provided, however,
that, with respect to representations and warranties other than Sections 4.2 and
4.3 or the first sentence of Section 4.15 and representations and warranties
otherwise qualified by Material Adverse Effect on the Company, for purposes of
this Section 7.2, such representations and warranties and statements shall be
deemed to be true and correct in all respects unless the failure or failures of
such representations and warranties and statements to be so true and correct,
individually or in the aggregate, would result in a Material Adverse Effect with
respect to the Company. Parent shall have received a certificate signed on
behalf of the Company by the chief financial officer of the Company to the
effect set forth in this paragraph.
(b) Performance of Obligations of the Company. The Company
shall have performed the obligations required to be performed by it under this
Agreement at or prior to the Closing Date, except for such failures to perform
as have not had or would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or materially adversely affect the ability of the
Company to consummate the transactions contemplated hereby.
(c) Consents, etc. Parent shall have received evidence, in
form and substance reasonably satisfactory to it, that all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties set forth in Section 4.3 of the Company
Disclosure Schedule shall have been obtained.
SECTION 7.3 Conditions to Obligation of the Company. In the event
the Offer shall not have been consummated, the obligation of the Company to
effect the Merger is further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and the Purchaser set forth in this Agreement shall be true
and correct in all respects, in each case as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date, provided,
that, for purposes of this Section 7.3, with respect to representations and
warranties other than Section 5.2 and the representations and warranties
otherwise qualified by Material Adverse Effect on Parent, such representations
and warranties shall be deemed to be true and correct in all respects unless the
failure or failures of such representations and warranties to be so true and
correct, individually or in the aggregate, would result in a Material Adverse
Effect on Parent. The Company shall have received certificates signed on behalf
of Parent, respectively, by the chief executive officer of Parent and the
Purchaser, respectively, to the effect set forth in this paragraph.
(b) Performance of Obligations of Parent and the Purchaser.
Each of Parent and the Purchaser shall have performed the obligations required
to be performed by it under this Agreement at or prior to the Closing Date
(except for such failures to perform as have not had or could not reasonably be
expected, either individually or in the aggregate, to have a Material Adverse
Effect on Parent or adversely affect the ability of Parent or the Purchaser to
consummate the transactions herein contemplated or perform its obligations
hereunder).
-30-
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company (with
any termination by Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of Parent and the Company,
by action of their respective Boards of Directors;
(b) by the Company if the Company is not in material breach
of any of its representations, warranties, covenants or agreements contained in
this Agreement and if (i) Parent or the Purchaser fails to commence the Offer as
provided in Section 1.1, or (ii)(x) at or at any time following the initial
Expiration Date as it may be extended pursuant to the terms hereof, the Minimum
Condition shall have been satisfied and all other conditions to the Offer shall
have been satisfied or waived in accordance with the terms hereof and (y) Parent
or the Purchaser shall not have accepted for payment and paid for Common Shares
pursuant to the Offer in accordance with the terms hereof and thereof;
(c) by Parent or the Company if the Merger shall not have
been consummated on or before June 30, 1998; provided, however, that neither
Parent nor the Company may terminate this Agreement pursuant to this Section
8.1(c) if such party shall have materially breached this Agreement; and
provided, further, that Parent may not terminate this Agreement pursuant to this
Section 8.1(c) if the Offer shall have theretofore been consummated;
(d) by Parent or the Company if any court of competent
jurisdiction in the United States or other United States Governmental Entity has
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; provided, however, that
the party seeking to terminate this Agreement shall have used its reasonable
best efforts to remove or lift such order, decree, ruling or other action;
(e) by the Company if, prior to the acceptance for payment of
Common Shares pursuant to the Offer,(i) there shall have occurred, on the part
of Parent or Purchaser, a material breach of any representation or warranty,
covenant or agreement contained in this Agreement which is not curable or (ii)
the Company (A) to the extent permitted by Section 6.10, enters into a
definitive agreement with respect to a Superior Proposal and (B) concurrently
pays any Termination Fee and the other amounts required under Section 8.3(b);
(f) by Parent if the Company breaches its covenant in Section
6.8, provided, however, that such breach occurs prior to the time that designees
of Parent constitute a majority of the Company Board pursuant to Section 1.3; or
-31-
(g) by Parent, prior to the purchase of Common Shares
pursuant to the Offer, if (i) there shall have occurred, on the part of the
Company, a breach of any representation, warranty, covenant or agreement
contained in this Agreement which (except in the case of a breach of the
representations and warranties in Section 4.2, Section 4.3 or the first
sentence of Section 4.15) individually, or in the aggregate if not cured would
be reasonably likely to have a Material Adverse Effect on the Company and which
is not curable or (ii) the Company Board shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to the
Purchaser its approval or recommendation of the Offer, this Agreement or the
Merger, shall have approved or recommended Superior Proposal, or shall have
resolved to effect any of the foregoing.
SECTION 8.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of the last
sentence of Section 6.2 and the provisions of this Section 8.2 and Section 8.3,
which shall survive any such termination. Nothing contained in this Section 8.2
shall relieve any party from liability for any breach of this Agreement.
SECTION 8.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, except as
otherwise specifically provided herein, all costs and expenses incurred in
connection with the Offer, this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
(b) In the event that this Agreement is terminated pursuant
to Section 8.1(e)(ii), 8.1(f) or 8.1(g)(ii), then the Company shall promptly pay
all documented fees and expenses of Parent and the Purchaser related to this
Agreement, the transactions contemplated hereby and any related financing
(subject to a maximum of $2.0 million), and in the event this Agreement is
terminated pursuant to 8.1(e) (ii) or 8.1(g)(ii), then the Company shall
promptly pay Parent a termination fee of $15 million (the "Termination Fee"),
provided that in no event shall more than one Termination Fee be payable by the
Company.
(c) in the event that (i) any person shall have publicly
disclosed a proposal regarding an Acquisition Transaction and (ii) following
such disclosure (and provided that neither Parent nor the Purchaser is in
material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement), either (x) June 30, 1998 occurs without
(A) the Minimum Condition being satisfied (other than as a result of a material
breach hereof by Parent or the Purchaser that has not been cured) or (B) the
Company's stockholders having approved and adopted the Merger Agreement or (y)
the Agreement is terminated pursuant to Sections 8.1(f) or 8.1(g)(ii), and (iii)
not later than six months after any such termination the Company shall have
entered into an agreement for an Acquisition Transaction, or an Acquisition
Transaction shall have been consummated, then the Company shall promptly, but in
no event later than immediately prior to, and as a condition of, entering into
such definitive agreement, or, if there is no such definitive agreement then
immediately upon consummation of the Acquisition
-32-
Transaction, pay Parent a Termination Fee of $15 million which amount shall
be payable by wire transfer of same day funds to an account designated by the
Parent.
(d) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.4 Amendment. Subject to Section 1.3(c), this Agreement
may be amended by the Company, Parent and the Purchaser at any time before or
after any approval of this Agreement by the stockholders of the Company but,
after any such approval, no amendment shall be made which decreases the Merger
Price or which adversely affects the rights of the Company's stockholders
hereunder without the approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
SECTION 8.5 Extension; Waiver. Subject to Section 1.3(c), at any
time prior to the Effective Time, Parent and the Purchaser, on the one hand, and
the Company, on the other hand, may (i) extend the time for the performance of
any of the obligations or other acts of the other, (ii) waive any inaccuracies
in the representations and warranties contained herein of the other or in any
document, certificate or writing delivered pursuant hereto by the other, or
(iii) waive compliance by the other with any of the agreements or conditions.
Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 2.9, Section 3.2, the last sentence of Section 6.2, Section 6.5 and
Section 6.6 shall survive the Effective Time indefinitely (except to the extent
a shorter period of time is explicitly specified therein).
SECTION 9.2 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) and the Confidentiality Agreement constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof.
(b) Neither this Agreement nor any of the rights, interests
or obligations hereunder will be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party (except that Parent may assign its rights and the Purchaser may assign its
rights, interest and obligations to any affiliate or direct or indirect
subsidiary of Parent without the consent of the Company provided that no such
assignment
-33-
shall relieve Parent of any liability for any breach by such assignee).
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION 9.3 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.4 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or telecopier to
the respective parties as follows:
If to Parent or the Purchaser:
DH Holdings Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: General Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Pacific Scientific Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
-34-
and a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.6 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.8 Parties in Interest. Except with respect to Sections
2.9, 6.5 and 6. 6 (which are intended to be for the benefit of the persons
identified therein, and may be enforced by such persons), this Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
SECTION 9.9 Certain Definitions. As used in this
Agreement:
(a) the term "affiliate," as applied to any person, shall
mean any other person directly or indirectly controlling, controlled by, or
under common control with, that person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act); and
-35-
(c) the term "Subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.10 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. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions 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
remedy to which they are entitled at law or in equity.
-36-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
DH HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ACC ACQUISITION CORP.
By:
Name:
Title:
PACIFIC SCIENTIFIC COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman and Chief Executive
Officer
-37-
ANNEX I
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, the Purchaser 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 Exchange Act, pay for any tendered Shares and may
terminate or, subject to the terms of the Merger Agreement, amend the Offer, if
(i) there shall not be validly tendered and not properly withdrawn prior to the
Expiration Date that number of Shares which represents at least 90% of the total
number of outstanding Shares on the date of purchase (not taking into account
the Rights) (the "Minimum Condition"), (ii) any applicable waiting period under
the HSR Act or under any applicable foreign statutes or regulations shall not
have expired or been terminated prior to the Expiration Date, or (iii) at any
time on or after the date of the Merger Agreement and prior to the time of
acceptance for payment or payment for any Shares, any of the following events
shall occur:
(a) an order shall have been entered in any action or
proceeding before any United States federal or state court or governmental
agency or other United States regulatory or administrative agency or
commission (an "Order"), or a preliminary or permanent injunction by a
United States court of competent jurisdiction shall have been issued and
remain in effect (an "Injunction"), which, in either case, would have the
effect of (i) making the purchase of, or payment for, some or all of the
Shares pursuant to the Offer or Merger Agreement illegal, (ii) otherwise
preventing consummation of the Offer or Merger, or (iii) imposing material
limitations on the ability of the Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including the right to
vote the Shares purchased by it on all matters properly presented to the
shareholders of the Company; provided, however, that in order to invoke
this condition, Parent and the Purchaser shall have used their best
efforts to prevent such Order or Injunction or ameliorate the effects
thereof; and provided, further, that, if the Order or Injunction is a
temporary restraining order or preliminary injunction of a court of
competent jurisdiction, the Purchaser may not, by virtue of this condition
alone amend or terminate the Offer, but may only extend the Offer and
thereby postpone acceptance for payment or purchase of Shares; or
(b) there shall have been any United States or foreign
federal or state statute, rule or regulation enacted or promulgated after
the date of the Offer that would reasonably be expected to result in any
of the material adverse consequences referred to in paragraph (a) above;
or
(c) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on the New York Stock
Exchange, (ii) a declaration of a general banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) the
commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States
(other than in connection with actual or potential United States military
activities in the Republic of Iraq as have been generally discussed in
print and other news media during the four weeks preceding the date
hereof), (iv) any limitation by any United States Governmental Entity on
the extension of credit generally to banks and other financial
institutions, or (v)
in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(d) the Company shall have breached or failed to perform in
any material respect any of its obligations, covenants or agreements
contained in the Merger Agreement or any of the representations and
warranties of the Company set forth in the Merger Agreement that are (i)
qualified as to materiality or Material Adverse Effect or (ii) are set
forth in Sections 4.2 and 4.3 or the first sentence of Section 4.15 of the
Merger Agreement shall not be true and correct or any such representations
and warranties that are not so qualified as to materiality or Material
Adverse Effect shall not be true in any material respect, in each case as
if made at such time or
(e) the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) the Company Board shall have publicly withdrawn or
modified in any manner adverse to the Purchaser its recommendation that
shareholders accept the Offer.
The foregoing conditions (including those set forth in clauses (i)
and (ii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and, except for the Minimum
Condition, which may not be waived without the prior written consent of the
Company, may be waived by Parent or the Purchaser, in whole or in part, at any
time and from time to time, in their reasonable discretion, in each case,
subject to the terms of the Merger Agreement. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings
set forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
A-2
