AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 31, 1999 (the
"Agreement"), by and among AlliedSignal Inc., a Delaware corporation (the
"Purchaser"), AlliedSignal Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Purchaser (the "Merger Sub"), and TriStar Aerospace
Co., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Purchaser, the Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders for the Purchaser to acquire the Company on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that the Merger Sub shall
make a cash tender offer to acquire all of the issued and outstanding shares of
common stock, par value $.01 per share, of the Company (the "Company Common
Stock"), for $9.50 per share of Company Common Stock (all issued and outstanding
shares of Company Common Stock, being hereinafter referred to as the "Shares"),
net to the seller in cash, in accordance with the terms and subject to the
conditions provided for herein and in the offering documents relating to the
Offer (as defined below);
WHEREAS, the Board of Directors of each of the Purchaser, the Merger Sub
and the Company have resolved to approve and adopt this Agreement and the Merger
(as defined below) following the Offer pursuant to which the Merger Sub shall
merge with and into the Company and each Share (other than Shares held by the
Purchaser or the Merger Sub or any subsidiary of the Purchaser or the Merger
Sub) shall be converted into the right to receive the Merger Consideration (as
defined below) upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the Board of Directors of the Company has unanimously (i)
determined that each of the Offer and the Merger (as defined below) is
advisable, fair to and in the best interests of the Company and its stockholders
and (ii) resolved to recommend acceptance of the Offer and approval and adoption
by the stockholders of the Company of this Agreement and the Merger on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Purchaser, the Merger Sub and the Company hereby agree as follows:
ARTICLE 1
THE OFFER
1.1 The Offer.
(a) Provided that none of the conditions set forth in Annex I to this
Agreement shall have occurred, the Merger Sub shall, not later than one business
day after execution of this Agreement, publicly announce the transactions
contemplated hereby, and not later than five business days after execution of
this Agreement, commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase all
Shares at a price of $9.50 per Share, net to the seller in cash (the "Offer,"
which term shall include any amendments to such Offer not prohibited by this
Agreement) and, subject to a minimum number of Shares which, when added to the
Shares, if any, beneficially owned by the Purchaser, its affiliates or the
Merger Sub (excluding Shares beneficially owned by the Purchaser by virtue of
the Shareholders Agreement (as defined below)) would constitute at least a
majority of the outstanding Shares (on a fully-diluted basis) being validly
tendered and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition") and the conditions set forth in Annex I of this Agreement, shall use
its best efforts to consummate the Offer. The Offer shall be made by means of an
offer to purchase containing the Minimum Condition and the conditions set forth
in Annex I and no other conditions. Simultaneously with the commencement of the
Offer, the Merger Sub shall file with the Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer (together with all amendments and supplements thereto, the "Schedule
14D-1"). The Schedule 14D-1 will include, as exhibits, the offer to purchase and
a form of letter of transmittal (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Company and its counsel shall
be given a reasonable opportunity to review and make comments with respect to
the Schedule 14D-1 and the Offer Documents and all amendments and supplements
thereto prior to their filing with the Commission or dissemination to
stockholders of the Company.
(b) The Merger Sub shall, and the Purchaser shall cause the Merger Sub
to, accept for payment and as promptly as practicable pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn, subject
to the satisfaction or waiver of the conditions set forth in Annex I hereto (the
"Offer Conditions"). The Purchaser shall make available to the Merger Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
properly tendered pursuant to the Offer.
(c) The Merger Sub will not, without the prior written consent of the
Company (i) decrease the amount or change the form of consideration payable in
the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) impose
additional conditions to the Offer, (iv) change any Offer Condition or amend any
other term of the Offer if any such change or amendment would be adverse in any
respect to the holders of Shares (other than the Purchaser or the Merger Sub),
(v) except as provided below, extend the Offer if all of the Offer Conditions
have been satisfied or (vi) amend or waive the Minimum Condition. Subject to the
terms and
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conditions hereof, the Offer shall expire at midnight, New York City time, on
the date that is twenty (20) business days after the Offer is commenced (within
the meaning of Rule 14d-2 under the Exchange Act) (the "Scheduled Expiration
Date"); provided however, that without the consent of the the Company, the
Merger Sub may (x) extend the Offer, if on the Scheduled Expiration Date of the
Offer any of the Offer Conditions shall not have been satisfied or waived, for
one (1) or more periods but in no event past 45 business days from the date the
Offer is commenced unless the waiting, review and investigation periods
applicable to the transactions contemplated by this Agreement under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"Xxxx-Xxxxx-Xxxxxx Act") have not terminated or expired or the consents referred
to in paragraph (h) of Annex I have not been obtained in which case not past the
date set forth in Section 8.1(b), (y) extend the Offer for such period as may be
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer or (z) extend the Offer for one (1)
or more periods (each such period to be for not more than three (3) business
days and such extensions to be for an aggregate period of not more than five (5)
business days beyond the latest expiration date that would otherwise be
permitted under clause (x) or (y) of this sentence) if on such expiration date
there shall not have been tendered that number of Shares which would equal more
than ninety percent of the issued and outstanding Shares. The Merger Sub agrees
that if all of the Offer Conditions are not satisfied on the Scheduled
Expiration Date, then, provided that all such conditions are and continue to be
reasonably probable of being satisfied by the date that is 35 business days from
the date the Offer is commenced, the Merger Sub shall extend the Offer for one
or more periods of not more than five (5) business days each if requested to do
so by the Company; provided that the Merger Sub shall not be required to extend
the Offer beyond the date that is 35 business days from the date the Offer is
commenced or, if earlier, the date of termination of this Agreement in
accordance with the terms hereof.
1.2 Company Action.
(a) The Company hereby consents to the Offer and represents that its
Board of Directors has unanimously (i) approved the Offer and the Merger, has
determined that this Agreement and the Offer are fair to and advisable and in
the best interest of the Company and its stockholders and has resolved to
recommend acceptance of the Offer to the Company's stockholders, and that the
stockholders tender their Shares in the Offer and, if applicable, vote to
approve and adopt this Agreement and the Merger; provided, however, that such
recommendation may be withdrawn or modified to the extent permitted in this
Agreement, and (ii) taken all action necessary to render Section 203 of the
Delaware Law (as defined below) inapplicable to the Offer, the Merger, this
Agreement and the Tender and Option Agreement, dated as of the date hereof,
among the Purchaser, the Merger Sub and each of the persons listed on Schedule A
thereto (the "Shareholders Agreement") or any of the transactions contemplated
hereby or thereby. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board of Directors described in the first
sentence of this Section 1.2. The Company represents that it has received the
opinion of Xxxxxxx, Xxxxx & Co., dated as of the date hereof, to the effect that
the $9.50 per Share in cash to be received by the holders of Shares (other than
the Purchaser or any subsidiary thereof) in the Offer and the Merger is fair
from a financial point of view to such holders.
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(b) Simultaneously with, or as promptly as possible after, the
commencement of the Offer, the Company shall file with the Commission and mail
to the holders of Shares a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9"), which shall reflect the recommendation of the Board of Directors
referred in clause (a)(i) of Section 1.2; provided that prior to the filing of
such Schedule 14D-9, the Company shall have provided the Merger Sub's counsel
with a reasonable opportunity to review and make comments with respect to such
Schedule 14D-9. Such recommendation shall not be withdrawn or adversely modified
except by resolution of the Board of Directors adopted in the exercise of
applicable fiduciary duties upon the advice of outside legal counsel and in
accordance with this Agreement.
(c) Each of the Purchaser and the Merger Sub will take all steps
necessary to ensure that the Offer Documents, and the Company will take all
steps necessary to ensure that the Schedule 14D-9, to be filed with the
Commission and to be disseminated to holders of the Shares, comply with, and are
filed in each case as and to the extent required by, applicable Federal and
state securities laws. The Company agrees to provide the Merger Sub and its
counsel with copies of any written comments that the Company or its counsel may
receive from the Commission or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments, and each of the Purchaser and the
Merger Sub agrees to provide the Company and its counsel with copies of any
written comments that the Purchaser, the Merger Sub or their counsel may receive
from the Commission or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(d) The Company shall promptly furnish the Merger Sub with mailing
labels containing the names and addresses of the record holders and, if
available, of non-objecting beneficial owners of Shares and lists of securities
positions of Shares held in stock depositories, each as of the most recent
practicable date, and shall from time to time furnish the Merger Sub with such
additional information, including updated or additional lists of the
stockholders, mailing labels and lists of securities positions, and other
assistance as the Merger Sub may reasonably request in order to be able to
communicate the Offer to the stockholders of the Company. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
the Purchaser and the Merger Sub and each of their affiliates shall use such
lists, labels and additional information only in connection with the Offer and
Merger and treat all information in such labels, lists and additional
information as "Confidential Material" in accordance with the Confidentiality
Agreement, dated April 5, 1999, and amended on October 7, 1999, between the
Purchaser and the Company (the "Confidentiality Agreement").
1.3 Directors. Promptly upon the payment for any Shares by the Merger Sub
pursuant to the Offer as a result of which the Purchaser, the Merger Sub and any
of their affiliates beneficially own (excluding Shares held by the Company) at
least a majority of the outstanding Shares and from time to time thereafter, the
Company shall increase the size of its Board of Directors to seven (7) members
and the Merger Sub shall be entitled to designate members of the Company's Board
of Directors such that the Merger Sub, subject to compliance with Section
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14(f) of the Exchange Act, will have a number of representatives on the Board of
Directors, rounded up to the next whole number, equal to the product obtained by
multiplying seven (7) by the percentage of Shares beneficially owned by the
Purchaser and any of its subsidiaries. The Company shall, upon request by the
Merger Sub, promptly increase the size of the Board of Directors to the extent
permitted by its Certificate of Incorporation and/or use its best efforts to
secure the resignations of such number of directors as is necessary to enable
the Merger Sub's designees to be elected to the Board of Directors and shall use
its best efforts to cause the Merger Sub's designees to be so elected; provided,
however, that, in the event that the Merger Sub's designees are appointed or
elected to the Company's Board of Directors, until the Effective Time (as
defined below) the Company's Board of Directors shall have at least one director
who is a director on the date hereof and who is neither an officer of the
Company nor a stockholder, affiliate or associate (within the meaning of the
Federal securities laws) of the Purchaser (one or more of such directors, the
"Continuing Directors"); provided, further, that if no Continuing Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a stockholder,
affiliate or associate of the Purchaser, and such Person shall be deemed to be a
Continuing Director for the purposes of this Agreement. At the request of the
Merger Sub, the Company shall take, at its expense, all action necessary to
effect any such election, including the mailing to its stockholders of the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, in form and substance reasonably satisfactory to the
Merger Sub and its counsel. The Purchaser and the Merger Sub will supply to the
Company and be solely responsible for any written information so provided by it
or its affiliates with respect to its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14-f-1.
Notwithstanding anything in this Agreement to the contrary, if the Merger
Sub's designees are elected to the Company's Board of Directors, after the
acceptance for payment and purchase of Shares pursuant to the Offer and prior to
the Effective Time (i) the affirmative vote of a majority of the Continuing
Directors shall be required to amend or terminate this Agreement on behalf of
the Company, amend the Company's certificate of incorporation, or the Company's
By-laws, exercise or waive any of the Company's rights or remedies hereunder,
extend the time for performance of the Purchaser or the Merger Sub's obligations
hereunder, or take any other action by the Company in connection with this
Agreement required to be taken by the Company's Board of Directors, and any such
actions when so taken shall be deemed to constitute the action of the full Board
of Directors of the Company and any committee specifically designated by the
Company Board of Directors to approve the actions contemplated hereby, and (ii)
neither the Merger Sub nor the Purchaser shall, directly or indirectly, cause
the Company to breach its obligations hereunder.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the Delaware General Corporation Law, as
amended (the "Delaware Law"), the Merger Sub (or another direct or indirect
wholly-owned subsidiary of the Purchaser) shall be
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merged with and into the Company (the "Merger"), the separate existence of the
Merger Sub (except as may be continued by operation of law) shall cease, and the
Company shall continue as the surviving corporation under the corporate name it
possesses immediately prior to the Effective Time. The Company, in its capacity
as the corporation surviving the Merger, sometimes is referred to herein as the
"Surviving Corporation." Notwithstanding the foregoing, the Merger Sub may
revise the structure of the Merger (including merging the Company into the
Merger Sub or merging the Company with or into another direct or indirect
wholly-owned subsidiary of the Purchaser) provided that any such restructuring
does not adversely affect the stockholders of the Company and does not cause the
Company to breach its representations and warranties hereunder.
2.2 Effect of the Merger. The Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, both public and private, of the
Merger Sub and the Company (collectively, the "Constituent Corporations"); shall
be vested with all property, whether real, personal, or mixed, and all debts due
on whatever account, including subscriptions to shares, and all other choses in
action, and all and every other interest belonging to or due to each of the
Constituent Corporations; and shall be responsible and liable for all the
obligations and liabilities of each of the Constituent Corporations, all with
the effect set forth in the Delaware Law.
2.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver, if possible, of the conditions set forth in Article 7,
and in no event later than five business days after such satisfaction or waiver,
the parties hereto will cause an Agreement or Certificate of Merger to be filed
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with, the relevant provisions of applicable law
using the procedures permitted in Section 253 (if possible) or Section 251 of
the Delaware Law. The Merger shall be effective at the time of the filing of the
Agreement or Certificate of Merger with the Secretary of State of the State of
Delaware (the "Effective Time").
2.4 Certificate of Incorporation and By-Laws; Directors and Officers. The
Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation immediately after the
Effective Time and shall thereafter continue to be its Certificate of
Incorporation and By-Laws until amended as provided therein and under the
Delaware Law. The directors and officers of the Merger Sub holding office
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation immediately after the Effective Time.
2.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time, other than Shares to be cancelled pursuant to Section 2.5(b)
hereof, shall automatically be cancelled and extinguished and, other than Shares
with respect to which appraisal rights are
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properly exercised ("Dissenting Shares"), be converted into and become a right
to receive in cash the highest price per share paid pursuant to the Offer (the
"Merger Consideration").
(b) Each Share issued and outstanding immediately prior to the
Effective Time and held in the treasury of the Company or owned by the Purchaser
or any subsidiary thereof shall automatically be cancelled and retired and no
payment shall be made with respect thereto.
(c) Each share of the Merger Sub's Common Stock, par value $.01 per
share, issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) The holders of Dissenting Shares, if any, shall be entitled to
payment for such shares only to the extent permitted by and in accordance with
the provisions of Section 262 of the Delaware Law; provided, however, that if,
in accordance with such Section of the Delaware Law, any holder of Dissenting
Shares shall (i) subsequently withdraw his demand for payment for such shares,
or (ii) fail to maintain a petition for appraisal as provided in such Section;
or if neither any holder of Dissenting Shares nor the Surviving Corporation has
filed suit as provided in Section 262 of the Delaware Law, such holder or
holders (as the case may be) shall forfeit such right to payment of such Shares,
and such Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration.
2.6 Company Stock Options. Each holder of then outstanding options,
warrants or other rights to acquire Shares ("Options") granted under any
employee or non-employee compensation plan, agreement or arrangement of the
Company (the "Stock Plans") that are fully vested at the Effective Time in
accordance with the respective Stock Plan shall be entitled, at the Effective
Time, to receive payment with respect thereto in accordance with the provisions
of Section 6.3(a) hereof.
2.7 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, the Merger Sub shall designate a bank
or trust company reasonably satisfactory to the Company to act as agent for the
holders of Shares (the "Exchange Agent") to receive the Merger Consideration,
and at or immediately following the Effective Time, the Purchaser shall take all
steps necessary to cause the Merger Sub to have sufficient funds to be able to
provide the Exchange Agent with the funds necessary to make the payments
contemplated by this Article II.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each person who was, at the Effective Time, a holder of record of Shares
entitled to receive the Merger Consideration pursuant to Section 2.5(a) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates previously representing Shares to be
exchanged pursuant to the Merger (the "Certificates") shall pass, only upon
proper delivery of such Certificates to the Exchange Agent) and instructions for
use thereof in effecting the
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surrender of the Certificates. Upon surrender to the Exchange Agent of the
Certificates, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be requested, the Exchange Agent shall promptly deliver to the
persons entitled thereto the Merger Consideration payable in respect of the
Shares represented by the Certificates, and the Certificates shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other than
Certificates representing Shares held in the treasury of the Company, by the
Merger Sub or any subsidiary of the Purchaser and Dissenting Shares) evidencing
Shares shall, after the Effective Time, be deemed to evidence only the right to
receive the Merger Consideration.
(c) If delivery of the Merger Consideration in respect of cancelled
Shares is to be made to a person other than the person in whose name a
surrendered Certificate or instrument is registered, it shall be a condition to
such delivery or payment that the Certificate or instrument so surrendered shall
be properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such delivery or payment shall have paid any transfer and
other taxes required by reason of such delivery or payment in a name other than
that of the registered holder of the Certificate or instrument surrendered or
shall have established to the satisfaction of the Surviving Corporation or the
Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
Shares thereafter on the records of the Company. From and after the Effective
Time, holders of Certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by law. No
interest shall be paid or accrue on any portion of the Merger Consideration.
(e) Notwithstanding anything to the contrary in this Section 2.7, none
of the Exchange Agent, the Surviving Corporation or any party hereto shall be
liable to a holder of Shares for any amount properly paid to a public official
pursuant to any applicable property, escheat or similar law.
2.8 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting of such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
shall pay in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to this Agreement.
2.9 Taking of Necessary Action; Further Action. The Purchaser, the Merger
Sub and the Company, respectively, shall use all reasonable efforts to take all
such action as may be reasonably necessary or appropriate in order to effectuate
the Offer and the Merger as promptly as possible and to carry out the
transactions provided for herein or contemplated hereby. If at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all
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assets, property, rights, privileges, immunities, powers and franchises of
either of the Constituent Corporations, the officers and directors of the
Surviving Corporation are fully authorized in the name of either of the
Constituent Corporations or otherwise to take, and shall take, all such action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE
MERGER SUB
The Purchaser and the Merger Sub hereby agree and represent and warrant to
the Company as follows:
3.1 Organization and Qualification. Each of the Purchaser and the Merger
Sub has been duly incorporated and is validly existing as a corporation in good
standing under the laws of Delaware and has the requisite corporate power to
carry on its respective business as now conducted. Each of the Purchaser and the
Merger Sub is duly qualified as a foreign corporation in good standing in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, assets, revenues, operations or financial condition of the Purchaser
and its subsidiaries, taken as a whole. As of the date of this Agreement, the
Purchaser and the Merger Sub have no obligations or liabilities, and none of
such parties are parties to any litigation, which in any case if paid or
adversely determined would have a material effect on their ability to consummate
the transactions contemplated by this Agreement. The Merger Sub is a
wholly-owned subsidiary of the Purchaser. The Certificate of Incorporation and
By-Laws of the Merger Sub contain no provisions which would have a material
adverse effect on the Merger Sub's ability to consummate the transactions
contemplated by this Agreement.
3.2 Authority Relative to this Agreement. Each of the Purchaser and the
Merger Sub has the requisite corporate power and authority to enter into this
Agreement and the Shareholders Agreement, as applicable, and to carry out its
respective obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Shareholders Agreement, as applicable, by the Purchaser
and the Merger Sub, as applicable, and the consummation by the Purchaser and the
Merger Sub, as applicable, of the transactions contemplated hereby and thereby
have been duly authorized by the respective Boards of Directors of the Purchaser
and the Merger Sub, as applicable, by the Purchaser as the sole stockholder of
the Merger Sub, and no other corporate proceedings, including the vote of the
stockholders of the Purchaser, on the part of the Purchaser or the Merger Sub
are necessary to authorize this Agreement or the Shareholders Agreement, as
applicable, or commence the Offer and consummate the transactions contemplated
hereby and thereby. This Agreement and the Shareholders Agreement, as
applicable, have been duly executed and delivered by the Purchaser and the
Merger Sub and constitute valid and binding obligations of each such company, as
applicable, enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting or relating to the enforcement of creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether
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enforcement is sought in a proceeding at law or in equity). Neither the
Purchaser nor the Merger Sub is subject to or obligated under any provision of
(a) its Certificate of Incorporation or By-Laws, or (b) any contract, indenture,
instrument, or other agreement, or (c) any license, franchise or permit, or (d)
any law, regulation, order, judgment or decree, which would be breached,
violated or defaulted or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets could be created by its
execution, delivery and performance of this Agreement or the Shareholders
Agreement, as applicable, and the consummation by it of the transactions
contemplated hereby and thereby, other than any such breaches, violations,
defaults, rights of termination or acceleration, or encumbrances, which will
not, individually or in the aggregate, have a material adverse effect on the
ability of the Merger Sub to consummate the Offer or the Merger. Other than in
connection with or in compliance with the provisions of the Delaware Law, the
Exchange Act, the Xxxx-Xxxxx-Xxxxxx Act, no authorization, consent or approval
of, or filing with, any public body, court or authority is necessary on the part
of the Purchaser or the Merger Sub for the consummation by the Purchaser and the
Merger Sub of the transactions contemplated by this Agreement or the
Shareholders Agreement, as applicable, other than filings with such foreign
jurisdictions in which subsidiaries of the Company are organized which may
require filings to be made in connection with the transfer of control of such
subsidiaries, and the Purchaser and the Merger Sub each agrees to make any and
all such filings on or prior to the Effective Time if any of such parties are
required to make such filings under applicable law.
3.3 Offer Documents; Proxy Information. The Offer Documents shall in all
material respects conform with the requirements of the Exchange Act and the
rules and regulations thereunder (except that the foregoing representation shall
not apply with respect to the accuracy of information relating to the Company
which has been excerpted or derived from public sources or furnished in writing
by the Company specifically for inclusion in the Offer Documents). As of their
respective dates, and on the date they are first published, sent or given to
holders of Shares, the Offer Documents, taken as a whole, shall not contain any
misstatement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances in which they were made, not misleading. The Purchaser and
the Merger Sub agree to correct the Schedule 14D-1 and the other Offer Documents
if and to the extent that any of them shall become false or misleading in any
material respect, and the Purchaser and the Merger Sub further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
law. The information supplied by the Purchaser for inclusion in the proxy
statement to be sent to the stockholders of the Company in connection with the
meeting of the Company's stockholders to consider the Merger, or the information
statement to be sent to such stockholders, as appropriate, shall not, on the
date the proxy statement or information statement (including any amendments or
supplements thereto) is first mailed to stockholders, at the time of such
stockholders' meeting, if any, or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for such stockholders'
meeting which has become false or misleading.
10
3.4 Financing. The Purchaser and the Merger Sub have available financing in
an amount sufficient to consummate the Offer and the Merger.
3.5 No Violation of the Margin Rules. None of the transactions contemplated
by this Agreement will violate or result in the violation of Section 7 of the
Exchange Act or any regulation promulgated pursuant thereto, including, without
limitation, Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
3.6 No Prior Activities. Except for obligations incurred in connection with
its incorporation or organization or the negotiation and consummation of this
Agreement or the Shareholders Agreement and the transactions contemplated hereby
or thereof, the Merger Sub has neither incurred any obligation or liability nor
engaged in any business or activity of any type or kind whatsoever or entered
into any agreement or arrangement with any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser and the Merger
Sub, except as set forth in the Disclosure Schedule which was dated and
delivered to the Purchaser and the Merger Sub on the date hereof, as follows:
4.1 Organization and Qualification. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
Delaware. The Company is duly qualified as a foreign corporation in good
standing in each jurisdiction in which the character of its properties owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect, individually or in the aggregate, on the business, liabilities,
revenues, operations, results of operations or financial condition of the
Company and its subsidiaries, taken as a whole ("Company Material Adverse
Effect"), other than changes (and the effects of changes) in general economic
conditions and any change, circumstance or effect relating generally to the
industries in which the Company operates and not specifically relating to the
Company or its subsidiaries. The Company has full corporate power and authority
to own its properties and conduct its business as presently owned and conducted.
The copies of the Certificate of Incorporation and By-Laws of the Company
previously delivered to the Merger Sub are true, correct and complete as of the
date hereof.
4.2 Subsidiaries. Each subsidiary of the Company, all of which are listed
in either Exhibit 21.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1998 (the "Form 10-K Report") or the Disclosure
Schedule, has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified as a foreign corporation in good standing in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Company Material Adverse Effect, and has full
corporate power and authority to own its
11
properties and conduct its business as presently owned and conducted. The
Company owns, directly or indirectly, all of the outstanding shares of capital
stock of each such subsidiary free and clear of all liens, claims, charges or
encumbrances except as disclosed in Schedule 4.2; there are no irrevocable
proxies with respect to such shares; and all such shares are validly issued,
fully paid and nonassessable. Except for the capital stock of such subsidiaries
or otherwise as disclosed in Schedule 4.2 or the Form 10-K Report, the Company
does not own, directly or indirectly, any investment in (a) any partnership,
limited liability company or joint venture or (b) any equity or debt investment
having either a fair market or face value or cost in excess of $100,000. Except
as disclosed in Schedule 4.2, neither the Company nor any of its subsidiaries is
obligated to make any payments in the form of earn-outs, deferred purchase price
or other consideration in respect of the purchase price payable in connection
with the acquisition of any subsidiary or business.
4.3 Capitalization. The authorized capital stock of the Company consists of
40,000,000 Shares and 10,000,000 shares of preferred stock, $.01 par value
("Preferred Stock"). As of the date hereof, 17,277,054 Shares, and no shares of
Preferred Stock, are issued and outstanding. All issued and outstanding Shares
are duly authorized and issued, and are fully paid and nonassessable. As of the
date hereof, (a) 4,491,074 Shares are reserved for issuance pursuant to
outstanding stock options and (b) 1,458,926 shares are reserved for future
grants pursuant to the Stock Plans. Schedule 4.3 sets forth a complete and
correct list of the Company's outstanding stock options, including for each the
name of the option holder, the date of grant, the plan under which the option
(or any portion thereof) was granted, and the next occurring date and the number
of Shares as to which any portion of the option becomes exercisable. Except as
otherwise described in Schedule 4.3, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
the Company or any of its subsidiaries to issue or sell any shares of, or make
any payments based on the value or appreciation of any, capital stock of the
Company or any of its subsidiaries or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock of the Company,
any of its subsidiaries or any other person. The holders of outstanding Shares
are not entitled to any contractual or statutory preemptive or other similar
rights. Upon consummation of the Merger in accordance with the terms of this
Agreement, the Merger Sub will own the entire equity interest in the Company,
and there will be no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of the Company or of
any of its subsidiaries.
4.4 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and unanimously authorized by the Board of Directors of
the Company and, except for the approval of its stockholders (if required) as
set forth in Section 6.1, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting or relating to the enforcement of creditors' rights and remedies
generally and subject, as to enforceability, to
12
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Neither the Company nor any of its subsidiaries
is subject to or obligated under any provision of (a) its Certificate or
Articles of Incorporation or By-Laws, (b) except as set forth in the Disclosure
Schedule, any material contract, (c) any license, franchise or permit, or (d)
any law, regulation, order, judgment or decree, which would be breached or
violated or in respect of which a right of termination or acceleration or any
encumbrance on any of its or any of its subsidiaries' assets could be created by
the Company's execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby, other than,
in the case of clause (c) or (d), any such breaches, violations, rights or
encumbrances which will not, individually or in the aggregate, have a Company
Material Adverse Effect. Other than in connection with or in compliance with the
provisions of the Delaware Law, the Exchange Act and the Xxxx-Xxxxx-Xxxxxx Act,
no authorization, consent or approval of, or filing with, any public body, court
or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
4.5 Commission Filings. The Company has heretofore delivered to the Merger
Sub copies of the Company's (a) Form 10-K Report, (b) quarterly reports or Form
10-Q for each fiscal quarter of the Company during the Company's fiscal year
ended September 30, 1999, and (c) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) during 1998 and 1999, in
each case as filed with the Commission. The Company has heretofore made
available to the Merger Sub all other reports, registration statements and other
documents filed by the Company with the Commission under the Exchange Act and
the Securities Act. All such documents described in the first two sentences of
this section are collectively referred to herein as the "Commission Filings."
Except as set forth on the Disclosure Schedule, the Company has not filed any
Form 8-K Reports with the Commission since September 30, 1998. The Company has
timely filed all reports, registration statements and other documents required
to be filed with the Commission under the rules and regulations of the
Commission, and all Commission Filings complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be.
As of their respective dates, the Commission Filings (including in all cases any
exhibits or schedules thereto or documents incorporated therein by reference)
did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.6 Financial Statements and Related Data. The audited consolidated
financial statements of the Company included in the Form 10-K Report have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and changes in
financial position for the periods then ended. The unaudited consolidated
financial statements of the Company included in the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1999 and the unaudited consolidated
financial statements of the Company for the fiscal year ended September 30, 1999
(attached hereto as Schedule 4.6) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved
13
(except that such financial statements are unaudited, subject to normal year end
adjustments, none of which will be material, and do not contain all of the
footnote disclosure required by generally accepted accounting principles) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the date thereof and the
consolidated results of their operations and changes in financial position for
the period then ended.
4.7 Absence of Certain Changes or Events. Except as contemplated by this
Agreement, or reflected in any financial statement or note thereto referred to
in Section 4.6 or reflected in the Disclosure Schedule, or reflected in any
Commission Filing filed prior to the date hereof, since September 30, 1998,
there has not been (a) any change having a Company Material Adverse Effect; (b)
any damage, destruction or loss, whether covered by insurance or not, having a
Company Material Adverse Effect; (c) any entry by the Company or any subsidiary
into any commitment or transaction material to the Company and its subsidiaries
taken as a whole, which is not in the ordinary course of business; (d) any
change by the Company in accounting principles or methods except insofar as may
be required by a change in generally accepted accounting principles; (e) any
declaration, payment or setting aside for payment of any dividends or purchase
or redemption of any securities of the Company or (f) any entering into or
modification of any employment or severance contract with any executive officer
of the Company or any of its subsidiaries or any increase in compensation
payable by the Company or any of its subsidiaries to any of their executive
officers or any increase, which individually or in the aggregate exceeds
$200,000, under any bonus, pension or benefit plan.
4.8 Litigation. Except as previously disclosed in the Commission Filings
filed prior to the date hereof or as set forth on Schedule 4.8(a), no action,
suit, claim, proceeding, investigation, compliance review, or other legal or
administrative proceeding is pending or, to the knowledge of any of the persons
listed on Schedule 4.8(b) (the "Company's Knowledge"), threatened at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators (a
"Claim") which is Material (as defined in this Section 4.8) against (i) the
Company, (ii) or any of its subsidiaries or (iii) against any of the officers or
directors of the Company or any of its subsidiaries with respect to the Company
or its subsidiaries or the business or property of the Company or its
subsidiaries; nor does a state of facts exist which could give rise to such a
Claim. For purposes of this Section 4.8, a Claim is "Material" if such a Claim
(i) seeks damages in an amount exceeding applicable insurance coverage by $1
million, (ii) seeks damages in an unspecified amount and such damages could
exceed applicable insurance coverage by $1 million or (iii) seeks equitable or
other relief which could have a Company Material Adverse Effect.
4.9 Liabilities. Except as disclosed in Schedule 4.9, the financial
statements described in Section 4.6 or in any Commission Filings prior to the
date hereof, neither the Company nor any of its subsidiaries has any material
obligation or liability (whether accrued, absolute, contingent, unliquidated or
otherwise, whether or not known to the Company, whether due or to become due)
other than liabilities incurred since September 30, 1999 in the ordinary course
of business
14
consistent with past practice, which in the aggregate are not material to the
Company and its subsidiaries, taken as a whole.
4.10 Environmental Matters. The Company and its subsidiaries have obtained
all material permits, licenses and other authorizations which are required under
applicable federal, state, local and foreign laws or regulations relating to
public health and safety, worker health and safety, pollution or protection of
the environment, including those relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes
(collectively, "Environmental Laws"), except where its failure to obtain the
same would not have a Company Material Adverse Effect. The Company and its
subsidiaries have complied and are in compliance with all terms and conditions
of any and all permits, licenses, and authorizations required by Environmental
Laws, and with all other applicable limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law, or any notice or demand letter
issued, entered, promulgated or approved thereunder, except where the failure to
comply would not have a Company Material Adverse Effect.
4.11 Employee Benefit Plans.
(a) Schedule 4.11(a) hereto sets forth a list of all "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and all other material employee benefit or
compensation arrangements or policies (whether or not written, whether U.S. or
foreign, and whether or not subject to ERISA), including, without limitation,
any such arrangements providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation, bonus
pay, incentive pay, stock purchase plan, stock options (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company, any subsidiary of the Company or any Company ERISA
Affiliate (as defined in this Section 4.11) or with respect to which the
Company, any subsidiary of the Company or any Company ERISA Affiliate has or may
have any liability, contingent or otherwise (the "Company Employee Benefit
Plans").
(b) The Company has made available to the Purchaser a complete and
current copy of each Company Employee Benefit Plan document or a written
description of any unwritten Company Employee Benefit Plan; any employee
handbook applicable to employees of the Company or any subsidiary; and with
respect to any Company Employee Benefit Plan, any related trust agreement or
insurance contract; the most recent summary plan description, the most recent
IRS determination letter (including IRS determination upon termination of any
Company Employee Benefit Plan), and the two most recent (i) Forms 5500 and
attached schedules; (ii) audited financial statements and (iii) participant
account and valuation reports.
(c) None of the Company Employee Benefit Plans is a "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA (a "Multiemployer Plan"), and
neither the Company nor any subsidiary of the Company or Company ERISA Affiliate
presently contributes to or has contributed to such a plan.
15
(d) Except as set forth on Schedule 4.11(d) or as provided in Part 6 of
Title I of ERISA, none of the Company, any subsidiary of the Company or any
Company ERISA Affiliate maintain or contribute to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and none of the Company, any subsidiary of the
Company or any Company ERISA Affiliate have represented, promised or contracted
(whether in oral or written form) to any employee or former employee that such
benefits would be provided.
(e) Except as provided for in the Options set forth in Schedule 5.1(b),
the execution of, and performance of the transactions contemplated in, this
Agreement will not, either alone or upon the occurrence of subsequent events,
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any individual. There are no
severance agreements, severance policies, employment agreements or other
promises applicable to the Company, any subsidiary of the Company or any Company
ERISA Affiliate in the event of a change of control of the Company. Except as
previously disclosed in writing to the Purchaser, no payment or benefit which
will or may be made by the Company, the Purchaser, the Merger Sub or any of
their subsidiaries or affiliates with respect to any employee of the Company,
any subsidiary of the Company or any Company ERISA Affiliate will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended.
(f) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of the Code, and each trust maintained pursuant thereto, has
been determined to be so qualified and exempt from federal income taxation under
Section 501 of the Code by the IRS, and, to the Company's Knowledge, nothing has
occurred with respect to the operation or organization of any such Company
Employee Benefit Plan that would cause the loss of such qualification or
exemption or the imposition of any liability, penalty or tax under ERISA or the
Code. No Company Employee Benefit Plan is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA, and neither the Company nor any subsidiary of
the Company or any Company ERISA Affiliate maintains or has maintained such a
plan in the last five years.
(g) Except as set forth on Schedule 4.11(g), no Company Employee
Benefit Plan covers employees other than employees of the Company, any
subsidiary of the Company or any Company ERISA Affiliate. None of the Company,
any subsidiary of the Company or any Company ERISA Affiliate has communicated to
present or former employees of the Company, any subsidiary of the Company or
Company ERISA Affiliate, or formerly adopted or authorized, any additional
employee benefit plan or program or any change in or termination of any existing
Company Employee Benefit Plan.
(h) (i) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Company Employee Benefit Plans to any funds or trusts established thereunder
or in connection therewith have been
16
made by the due date thereof (including any permitted extensions), and have been
properly accrued and reflected on the Company's financial statements, (ii) each
of the Company, any subsidiary of the Company and any Company ERISA Affiliate
have complied in all material respects with any notice, reporting and
documentation requirements of ERISA and the Code, (iii) there are no pending
actions, claims (other than routine claims for benefits) or lawsuits which have
been asserted, instituted or, to the Company's Knowledge, threatened, in
connection with any of the Company Employee Benefit Plans, and (iv) the Company
Employee Benefit Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA and the Code
(including rules and regulations thereunder) and other applicable federal and
state laws and regulations.
(i) Schedule 4.11(i) sets forth a complete list of all amounts
outstanding relating to bonuses payable to employees and any obligation to pay
bonuses to employees relating to the Company's performance, the employees'
performance or the transactions contemplated hereby.
(j) No compensation paid to any employees of the Company or its
subsidiaries will result in any material nondeductibility under Section 162(m)
of the Code.
(k) The Company has provided, or will promptly provide, all notices to
holders of Options required under any Stock Plan or otherwise in connection with
the Offer and the other transactions contemplated hereby.
(l) No Company Employee Benefit Plan is currently under governmental
investigation or audit, and to the Company's Knowledge, no such investigation or
audit is threatened.
(m) With respect to Company Employee Benefit Plans that are not U.S.
plans ("Foreign Plans"), if any, (i) each Foreign Plan covers only employees of
a single company and no other employee and covers only employees who are in a
single country; (ii) each Foreign Plan and the manner in which it has been
administered satisfy in all material respects all applicable laws and
regulations, (iii) all contributions to each Foreign Plan required through the
Effective Date will be made by the Company or a subsidiary; and (iv) each
Foreign Plan is either fully funded (or fully insured) based upon generally
accepted local actuarial and accounting practice and procedure or appropriate
liabilities for each Foreign Plan are fully reflected on the Company's financial
statements dated September 30, 1999.
For purposes of this Agreement, "Company ERISA Affiliate" means any
business or entity which is a member of the same "controlled group of
corporations," under "common control" or a member of an "affiliated service
group" with the Company within the meanings of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company under Section 414(o) of
the Code, or is under "common control" with the Company, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under
any of the foregoing Sections.
17
4.12 Labor and Employment Matters.
(a) (i) Except as set forth on Schedule 4.12(a)(i), there are no
controversies pending or, to the Company's Knowledge, threatened, between the
Company or any of its subsidiaries and any group of their respective employees;
(ii) neither the Company nor, to the Company's Knowledge, any of its
subsidiaries, is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its subsidiaries
nor to the Company's Knowledge, except as set forth on Schedule 4.12(a)(ii),
have there been any activities or proceedings of any labor union to organize any
such employees during 1998 or 1999; (iii) neither the Company nor any of its
subsidiaries has breached or otherwise failed to comply with any provision of
any such agreement or contract and there are no grievances outstanding against
any such parties under any such agreement or contract; (iv) there are no unfair
labor practice complaints pending against the Company or any of its subsidiaries
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any of its subsidiaries; and (v)
to the Company's Knowledge, there are no strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries. No consent of any union which is a party to any
collective bargaining agreement with the Company is required to consummate the
transactions contemplated by this Agreement. The Company is in and has been in
compliance with all federal, state and local laws relating to employment
(including employment discrimination), wages and hours, working conditions,
occupational safety, workers compensation and the payment of social security and
other payroll related taxes, except where noncompliance would not reasonably be
expected to have a Company Material Adverse Effect and neither the Company nor
its subsidiaries have received any written notice alleging a failure to comply
in any material respect with any such laws, rules or regulations.
(b) Except as set forth on Schedule 4.12(b), within the 90 days prior
to the date hereof, (i) neither the Company nor any subsidiary has effectuated
(x) a "plant closing" (as defined in the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 'SS'2101, et seq., the "WARN Act") affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility, or (y) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility, (ii) neither the Company nor any
subsidiary has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar foreign, state or local law, and (iii) no employee of the Company or any
subsidiary has suffered an "employment loss" (as defined in the WARN Act).
(c) The Executive Employment Agreement, dated as of September 19, 1996,
by and between the Company and P. Xxxxxxx Xxxxxxxxxx (the "Executive"), as
amended by the letter agreement dated October 31, 1999 (a copy of such amendment
is set forth on Schedule 4.12(c)), has been duly executed and delivered by the
Company and the Executive and constitutes a valid and binding obligation of the
Executive, enforceable in acccordance with its terms subject to applicable
bankruptcy, insolvency, moratorium and similar laws affecting or relating to the
enforcement of creditors' rights and remedies generally and subject, as to
enforceability, to
18
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.13 Offer Documents. Neither the Schedule 14D-9 nor any of the information
supplied by the Company for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, the Offer Documents or any such amendments
or supplements are filed with the SEC or are first published, sent or given to
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In the event that the
Merger Sub has not designated a majority of the members of the Company's Board
of Directors pursuant to the terms of Section 1.3 hereof and a stockholder vote
is required, all information supplied by the Company for inclusion in any proxy
or information statement filed with the Commission and sent or given to
stockholders pursuant to Section 6.2 hereof 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 therein, in light of
the circumstances under which they were made, not false or misleading at the
time of filing with the Commission, mailing to stockholders, any meeting of
stockholders or the Effective Time. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information which is
supplied in writing by the Purchaser or the Merger Sub specifically for
inclusion and which is contained in any of the foregoing documents or which is
excerpted or derived from public sources.
4.14 Intellectual Property; Year 2000.
(a) The Company and its subsidiaries own the entire right, title and
interest in and to or have the right to use (pursuant to valid and defensible
license arrangements), all Intellectual Property (as defined below) used or held
for use in, or otherwise necessary for, the operation of their respective
businesses, except as set forth in Schedule 4.14(a) or as would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Schedule 4.14(a), there are no pending, or to the
Company's Knowledge, threatened proceedings or litigation or other adverse
claims affecting or relating to any such Intellectual Property, nor, to the
Company's Knowledge, any reasonable basis upon which a claim may be asserted by
or against the Company or any of its subsidiaries for infringement of any such
Intellectual Property that, in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect. As used herein, "Intellectual Property"
means all industrial and intellectual property rights, including proprietary
technology, patents, patent applications, trademarks, trademark applications and
registrations, servicemarks, servicemark applications and registrations, trade
dress, copyrights, internet domain names, software, know-how, licenses, trade
secrets, proprietary processes, formulae and customer lists.
(b) The officers and employees of the Company or its subsidiaries and
the consultants to the Company or its subsidiaries listed on Schedule 4.14(b)
have executed agreements containing provisions regarding protection of
proprietary information and confidentiality, true and complete copies of which
have previously been provided to the Purchaser by the Company, and other
employees, consultants and contractors have executed such an
19
agreement. All computer software included in the Company's or its Subsidiaries'
products (i) has been either created by employees of the Company or its
subsidiary within the scope of their employment or otherwise on a work-for-hire
basis or by consultants or contractors who have created such software themselves
and have assigned, except as otherwise specifically set forth in the agreements
with the consultants listed on Schedule 4.14(b) (true and complete copies of
such agreements have heretofore been delivered to the Purchaser) all right,
title and interest they have in such software to the Company or its subsidiary
or (ii) is licensed to the Company or its subsidiary pursuant to valid and
binding agreements.
(c) The computer systems of the Company and its subsidiaries are Year
2000 Compliant in all material respects. All inventory, products and material
independently developed applications of the Company and its subsidiaries that
are, consist of, include or use computer software are Year 2000 Compliant in all
material respects. The Company has contacted its principal vendors of hardware
and software and other persons with whom the Company has material business
relationships and all such vendors and other persons have notified the Company
that their hardware and software are Year 2000 compliant to the extent affecting
the Company in any material respect. To the Company's Knowledge, any failure on
the part of the customers of, and suppliers to, the Company and its subsidiaries
to be Year 2000 Compliant by December 31, 1999 will not have or be likely to
have a Company Material Adverse Effect. The term "Year 2000 Compliant," with
respect to a computer system or software program, means that such computer
system or program: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on dates
or portions of dates; (ii) has the ability to provide date recognition for any
data element without limitation and respond to two digit year date input in a
way that resolves the ambiguity as to century in a disclosed, defined and
predetermined manner; (iii) has the ability to function automatically into and
beyond the year 2000 without human intervention; (iv) has the ability to
interpret data, dates and time correctly into and beyond the year 2000; (v) has
the ability not to produce noncompliance in existing data, nor otherwise corrupt
such data, into and beyond the year 2000; (vi) has the ability to process
correctly after January 1, 2000, data containing dates before that date; (vii)
has the ability to store and provide output of date information in ways that are
unambiguous as to century; (viii) has the ability to function accurately and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; and (ix) has
the ability to recognize all "leap year" dates, including February 29, 2000.
4.15 Taxes. Each of the Company and its subsidiaries has timely filed (or
there has been timely filed on its behalf) all federal, and all material state,
local and foreign, tax returns and reports, that it was required to file. All
such tax returns and reports were correct and complete in all material respects.
All taxes owed by any of the Company and its subsidiaries have been paid except
where the failure to pay would not reasonably be expected to have a Company
Material Adverse Effect. Each of the Company and its subsidiaries has withheld
and paid all taxes required to have been withheld and paid in connection with
amounts paid to any employee, independent contractor, creditor, stockholder, or
other third party except where the failure to withhold or pay would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
20
Internal Revenue Service (the "IRS") nor any other taxing authority or agency is
now asserting or, to the Company's Knowledge, threatening to assert against the
Company or any of its subsidiaries any deficiency or claim for material
additional taxes or interest thereon or penalties in connection therewith. As of
the date hereof, neither the Company nor any of its subsidiaries has granted, or
been requested to grant, any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any federal, state,
local or foreign income tax. The accruals and reserves for taxes reflected in
the balance sheet of the Company as of September 30, 1999 have been estimated in
accordance with past practice and are adequate to cover all taxes accruable
through such date (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting principles. Neither the Company
nor any of its subsidiaries has made an election under Section 341(f) of the
Code. The Company is not, and has not been during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c) of the Code.
4.16 Brokers, Advisors. No broker, finder or investment banker (other than
Xxxxxxx, Xxxxx & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to the Merger Sub a complete and correct copy of all
agreements between the Company and Xxxxxxx, Sachs & Co. pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
4.17 Product Liabilities. There are no material product warranty, product
liability or similar claims pending, or to the Company's Knowledge, threatened,
against the Company or any of its subsidiaries.
4.18 Related Party Transactions. Except as set forth in the Schedule 4.18,
or disclosed in the Commission Filings filed before the date hereof, no current
or former stockholder, director, officer or key employee of the Company or any
of its subsidiaries nor any "Associate" (as defined in Rule 405 promulgated
under the Securities Act) of any such person, is presently or has been, directly
or indirectly through his affiliation with any other person or entity, a party
to any material transaction with the Company or any of its subsidiaries
providing for the furnishing of services (except as an employee) by or to, or
rental of real or personal property from or to, or otherwise requiring cash
payments by or to any such person. In addition, except as set forth in the
Schedule 4.18 or disclosed in the Commission Filings filed before the date
hereof, during such periods there was no relationship or transaction involving
the Company or any of its subsidiaries which is described in Item 404 of
Regulation S-K promulgated under the Securities Act.
4.19. Suppliers and Customers. Schedule 4.19 sets forth a list of (a) the
ten (10) largest suppliers of materials or services to the Company during the
twelve month period ending September 30, 1999 (the "Major Suppliers") and (b)
the ten (10) largest customers of products or services of the Company during the
twelve month period ending September 30, 1999 (the "Major Customers"). Except as
set forth on Schedule 4.19, no Major Supplier or Major Customer of the Company
has during the last twelve months decreased materially or, to the Company's
Knowledge, threatened to decrease or limit materially its purchase of products
from, or provision
21
of services or supplies to, as applicable, the Company. To the Company's
Knowledge, there is no termination, cancellation or limitation of, or any
material modification or change in, the business relationships of the Company
with any Major Supplier or Major Customer that would reasonably be expected to
have a Company Material Adverse Effect. Except as set forth on Schedule 4.19, to
the Company's Knowledge, there will not be any such change in relations with
Major Suppliers or Major Customers of the Company or triggering of any right of
termination, cancellation or penalty or other payment in connection with or as a
result of transactions contemplated by this Agreement which would reasonably be
expected to have a Company Material Adverse Effect.
4.20 Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries has at any time made or committed to make any payments for illegal
political contributions or made any bribes, kickback payments or other illegal
payments. Neither the Company nor any of its subsidiaries has made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for governmental office (or any person that the Company or its
subsidiaries knows or has reason to know, will offer anything of value to any
governmental official, political party or candidate for political office), such
that the Company or its subsidiaries have violated the Foreign Corrupt Practices
Act of 1977, as amended from time to time, and all applicable rules and
regulations promulgated thereunder. There is not now nor has there ever been any
employment by the Company or any of its subsidiaries of any governmental or
political official in any country while such official was in office.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, prior to the Effective Time, unless the Merger Sub
shall otherwise agree in writing or except as set forth on Schedule 5.1 or as
otherwise expressly contemplated or permitted by this Agreement:
(a) The business of the Company and its subsidiaries shall be conducted
only in, and the Company and its subsidiaries shall maintain their facilities
in, the ordinary course of business and consistent with past practice;
(b) The Company shall not directly or indirectly do or permit to occur
any of the following: (i) issue, sell, pledge, dispose of or encumber (or permit
any of its subsidiaries to issue, sell, pledge, dispose of or encumber) any
shares of, or any options, warrants, conversion privileges or rights of any kind
to acquire any shares of, any capital stock of the Company or any of its
subsidiaries (other than shares issuable upon exercise of the outstanding (as of
the date hereof) options to acquire Shares in accordance with their terms in
effect on the date hereof); (ii) amend or propose to amend the Certificate or
Articles of Incorporation or By-Laws of it or any of its subsidiaries; (iii)
split, combine or reclassify any outstanding Shares, or declare, set aside or
pay any dividend or other distribution payable in cash, stock, property or
otherwise with respect to the Shares (except the declaration and payment of
dividends by a wholly-owned subsidiary of
22
the Company to its parent); (iv) redeem, purchase or acquire or offer to acquire
(or permit any of its subsidiaries to redeem, purchase or acquire or offer to
acquire) any Shares or other securities of the Company or any of its
subsidiaries other than as contemplated by Section 2.5 and other than for the
repurchase by the Company, pursuant to existing agreements, of any outstanding
Shares upon termination of an employment, director or consulting relationship
with the Company; (v) enter into any material contract; or (vi) enter into or
modify any agreement, commitment or arrangement with respect to any of the
foregoing;
(c) Neither the Company nor any of its subsidiaries shall (i) sell,
pledge, lease, dispose of or encumber any material assets other than in the
ordinary course of business consistent with past practice; (ii) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or enterprise or
material assets thereof; (iii) incur any indebtedness for borrowed money or
issue any debt securities for borrowings except in the ordinary course of
business and consistent with past practice; (iv) guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person (other than a subsidiary of the Company or
the Company) except in the ordinary course of business consistent with past
practice and in amounts immaterial to the Company; or (v) enter into or modify
any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(d) Neither the Company nor any of its subsidiaries shall (i) enter
into or modify any employment, severance or similar agreements or arrangements
with, or grant any Options (or accelerate any Options), bonuses, salary
increases, severance or termination pay to, any officers or directors; or (ii)
in the case of employees who are not officers or directors, take any action to
grant or accelerate any Options, or take any other action other than in the
ordinary course of business consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the grant or creation of any
bonuses, salary increases, severance or termination pay, employment or similar
agreements or with respect to any increase of benefits in effect on the date of
this Agreement;
(e) Except as may be required by applicable law, none of the Company,
any of its subsidiaries or any Company ERISA Affiliate shall adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust fund
or arrangement for the benefit or welfare of any employee;
(f) The Company will not (i) call any meeting (other than any meeting
contemplated by Section 6.1) of its stockholders or (ii) waive or modify any
provision of, or terminate any, confidentiality or standstill agreement entered
into by the Company with any person;
(g) The Company shall use its commercially reasonable efforts to cause
its current insurance (or reinsurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the
23
cancelled, terminated or lapsed policies for substantially similar premiums are
in full force and effect;
(h) The Company (i) shall use its commercially reasonable efforts, and
cause each of its subsidiaries to use commercially reasonable efforts, to
preserve intact their respective business organizations and goodwill, keep
available the services of its officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with it or its subsidiaries; (ii) shall confer on
a regular and frequent basis with representatives of the Merger Sub to report
financial matters and, to the extent not prohibited by applicable law,
operational matters and the general status of ongoing operations; (iii) shall
not take any action, and shall not permit any of its subsidiaries to take any
action, which would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in any respect
(or untrue in any material respect if such representation or warranty is not
qualified by "material," "Company Material Adverse Effect, a specified dollar
limitation or the like) at any time prior to the Effective Time; and (iv) shall
notify the Merger Sub of any emergency or other change in the normal course of
its or any of its subsidiaries' business or in the operation of its or any of
its subsidiaries' properties and of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing has
or would be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, or would be material to any party's ability to
consummate the transactions contemplated by this Agreement;
(i) Neither the Company nor any of its subsidiaries shall adopt a plan
of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or reorganization;
(j) Neither the Company nor any of its subsidiaries shall make any
material tax election or settle or compromise any material federal, state,
local, or foreign tax liability, except in the ordinary course of business and
consistent with past practice;
(k) The Company shall not modify or accelerate the exercisability of
any stock options, rights or warrants presently outstanding; and
(l) The Company shall postpone the holding of its Annual Meeting of
Stockholders (the "Company Annual Meeting") indefinitely pending consummation of
the Merger unless the Company is otherwise required to hold the Company Annual
Meeting by Delaware Law.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Action of Stockholders. The Company shall take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and
By-Laws to convene a meeting of its stockholders as promptly as practicable
following consummation of the Offer to
24
consider and vote upon the Merger, if a stockholder vote is required. If a
stockholders' meeting is convened, the Board of Directors shall recommend that
the stockholders of the Company vote to approve the Merger; provided, however,
that such recommendation may be withdrawn, modified or amended to the extent
that the Board of Directors of the Company concludes, in good faith after
consultation with its outside financial advisor, upon advice of outside legal
counsel, that it is inconsistent with such Board's fiduciary duties under
applicable law not to do so. In the event that proxies are to be solicited from
the Company's stockholders, the Company shall, if and to the extent requested by
the Merger Sub, use its reasonable efforts to solicit from stockholders of the
Company proxies in favor of such approval and shall take all other reasonable
action necessary or, in the opinion of the Merger Sub, helpful to secure a vote
or consent of stockholders in favor of the Merger. At any such meeting, the
Merger Sub shall vote or cause to be voted all of the Shares then owned by the
Merger Sub or any subsidiary of the Merger Sub in favor of the Merger and the
Company shall vote all Shares in favor of the Merger for which proxies in the
form distributed by the Company shall have been given and with respect to which
no contrary direction shall have been made.
Notwithstanding anything else herein or in this Section 6.1, if the
Purchaser, the Merger Sub and any other subsidiaries of the Purchaser shall
acquire in the aggregate a number of the outstanding Shares, pursuant to the
Offer or otherwise, sufficient to enable the Merger Sub or the Company to cause
the Merger to become effective under applicable law without a meeting of
stockholders of the Company, the parties hereto shall, at the request of the
Purchaser and subject to Article 7, take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after the
consummation of such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the Delaware Law.
6.2 Proxy Statement. If a stockholder vote is required, the Company and the
Merger Sub shall cooperate with each other and use all reasonable efforts to
prepare, and the Company and the Merger Sub shall file with the Commission as
soon as reasonably practicable following consummation of the Offer and use their
reasonable efforts to have cleared by the Commission, a proxy statement or
information statement, as appropriate, with respect to the approval of the
Merger by the Company's stockholders. The information provided and to be
provided by the Purchaser, the Merger Sub and the Company, respectively, for use
in the proxy statement or information statement shall not contain an untrue
statement of material fact and shall not omit to state any material fact
required to be stated therein or necessary in order to make such information not
misleading.
6.3 Employee Benefits and Options.
(a) Option Termination. The Purchaser, the Merger Sub and the Company
hereby acknowledge and agree that neither the Purchaser nor the Surviving
Corporation shall assume or continue any outstanding Options under the Stock
Plans, or substitute any additional options, warrants or other rights for such
outstanding Options. At the Effective Time, all Options (whether vested or
unvested) shall be canceled, and holders of fully vested options at the
Effective Time shall be entitled to receive from the Surviving Corporation, in
cancellation of such vested options, an amount in cash equal to the excess of
(a) the product of the number of Shares covered
25
by such vested Options multiplied by the Merger Consideration, over (b) the
product of the number of Shares covered by such vested Options multiplied by the
per-Share exercise, purchase or conversion price payable upon exercise, purchase
or conversion of the same, less applicable withholding of taxes. The Company
shall take all action necessary to effectuate the foregoing, including obtaining
any necessary consents of the holders of Options.
(b) Employment Matters. The Purchaser shall cause the Surviving
Corporation to honor, without modification adverse to the employee party
thereto, all employment, consulting, termination and severance agreements in
effect prior to the date hereof between the Company or any of its subsidiaries
and any current or former officer, director, consultant or employee of the
Company, all of which, the Company hereby represents and warrants, have been
disclosed on Schedules 4.11(a), 4.11(g) and 4.14(b).
(c) Benefit Plans. The Surviving Corporation shall (i) to the extent it
is permitted to do so under that benefit plan, waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the employees of the
Company or any of its subsidiaries under any benefit plan that such employees
may be eligible to participate in after the Effective Time, and (ii) provide
each employee of the Company and its subsidiaries with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any benefit plans that
such employees are eligible to participate in after the Effective Time, but
excluding in the case of each of (i) and (ii), limitations or restrictions under
benefit plans of the Company in effect as of the Effective Time that are not met
as of the Effective Time.
6.4 Expenses. If (a) this Agreement is terminated by the Company pursuant
to Section 8.1(e)(iii) or Section 6.6, or (b) this Agreement is terminated by
the Merger Sub pursuant to Section 8.1(c), (c) the Offer is terminated by the
Merger Sub pursuant to paragraph (a) of Annex I hereto, or (d) this Agreement is
terminated pursuant to its terms for any reason other than a material breach of
this Agreement by the Purchaser or the Merger Sub, and in case of this clause
(d) (x) within six months thereafter a definitive agreement is entered into
between the Company and any person other than the Merger Sub or any affiliate of
the Merger Sub, for the acquisition or disposition of (i) all or substantially
all of the assets of the Company, or (ii) securities of the Company constituting
(or convertible into) 35% or more of the currently outstanding Shares, or for a
merger, consolidation or other reorganization of the Company, at a price
equivalent to a price per Share in excess of $9.50 and is closed concurrently
therewith or at any time thereafter or (y) within six months thereafter any
person or "group" (as that term is used in Section 13(d)(3) of the Exchange Act)
other than the Merger Sub or any affiliate of the Merger Sub shall have
acquired, beneficial ownership of 35% or more of the outstanding Shares, the
Company shall pay to the Purchaser upon demand (by wire transfer of immediately
available federal funds to an account designated by the Purchaser for such
purpose) the amount of $5,500,000 (the "Fee") to compensate the Purchaser and
the Merger Sub for taking actions to consummate this Agreement, to reimburse
them for the time and expense relating thereto and for other direct and indirect
costs (including lost opportunity costs) in connection with the transactions
contemplated herein. Payment of such amount by the Company shall constitute a
full and complete discharge of all
26
obligations or liabilities of the Company under this Section 6.4. The Company
acknowledges that the provisions set forth in this Section 6.4 are an integral
part of this Agreement that have been negotiated in order to induce the
Purchaser and the Merger Sub to enter into this Agreement.
In addition to any damages caused by conduct which constitutes a breach by
any of the Purchaser or the Merger Sub or the Company of any of their
obligations under this Agreement, the breaching party agrees, jointly and
severally, to pay to the nonbreaching party all costs and expenses (including
attorneys' fees and expenses) incurred by the nonbreaching party in connection
with the enforcement by the nonbreaching party of its rights hereunder.
6.5 Additional Agreements. Subject to its fiduciary duties and the
terms and conditions provided herein, each of the parties agrees to use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including using best efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, including but
not limited to filings under the Xxxx-Xxxxx-Xxxxxx Act and submissions of
information requested by governmental authorities. Nothing in this Agreement
shall require that the Purchaser or the Merger Sub divest, sell or hold separate
any of their respective assets or properties or the assets or properties of the
Company, nor shall anything in this Agreement require that the Purchaser or the
Merger Sub take any action that could affect the normal and regular operations
of the Purchaser or the Company after the Effective Date. The Company shall, and
shall cause its officers, directors, affiliates and agents to, immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any acquisition of or sale
of any equity interest in or substantial assets of the Company or any of its
subsidiaries. For purposes of this Section 6.5, best efforts shall not include
the obligation to make any payment to any third party as a condition to
obtaining such party's consent or approval; provided, however, that the
Purchaser and the Merger Sub shall be obligated to pay all filing and related
fees required by the Xxxx-Xxxxx-Xxxxxx Act.
6.6 No Solicitation. The Company shall not, and shall not authorize or
permit any of its officers, directors, employees or agents to directly or
indirectly, solicit, encourage, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Merger Sub, any of its
affiliates or representatives) (collectively, a "Person") concerning any merger,
consolidation, tender offer, exchange offer, sale of all or substantially all of
the Company's assets, sale of shares of capital stock or similar business
combination transaction involving the Company or any principal operating or
business unit of the Company or its subsidiaries (an "Acquisition Proposal").
Notwithstanding the foregoing, (i) if prior to the Merger Sub owning a majority
of the outstanding Shares the Company receives an unsolicited, written
indication of a willingness to make an Acquisition Proposal at a price per share
which the Company reasonably concludes is in excess of the Merger Consideration
from any Person and if the Company reasonably concludes in good faith, after
consultation with its outside financial advisor, that the Person delivering such
indication is capable of consummating such an Acquisition Proposal (based upon,
among other things, the availability of financing and the capacity to obtain
financing, the expectation of receipt
27
of required antitrust and other regulatory approvals and the identity and
background of such Person), then the Company may provide access to or furnish or
cause to be furnished information concerning the Company's business, properties
or assets to any such Person pursuant to an appropriate confidentiality
agreement and the Company may engage in discussions related thereto, and (ii)
the Company may participate in and engage in discussions and negotiations with
any Person meeting the requirement set forth in clause (i) above in response to
a written Acquisition Proposal if the Company concludes in good faith, after
consultation with its outside financial advisor, upon advice of its legal
counsel, that the failure to engage in such discussions or negotiations is
inconsistent with such Board's fiduciary duties to the Company's stockholders
under applicable laws and the Company receives from the Person making an
Acquisition Proposal an executed confidentiality agreement the terms of which
are (without regard to the terms of the Acquisition Proposal) (A) no less
favorable to the Company, and (B) no less restrictive to the Person making the
Acquisition Proposal, than those contained in the Confidentiality Agreement. In
the event that, after the Company has received a written Acquisition Proposal
(without breaching its obligations under clause (i) or (ii) above) but prior to
the Merger Sub beneficially owning a majority of the outstanding Shares, the
Board of Directors concludes in good faith, after consultation with its outside
financial advisor, upon advice of its legal counsel, that it is inconsistent
with such Board's fiduciary duties under applicable law not to do so, the
Company may concurrently with the payment of the Fee provided in Section 6.4 do
any or all of the following: (x) withdraw or modify the Board of Directors' or
recommendation of the Merger or this Agreement, (y) approve or recommend an
Acquisition Proposal, subject to this Section 6.6 and (z) terminate this
Agreement. Furthermore, nothing contained in this Section 6.6 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making such disclosure to the Company's stockholders or otherwise which, in
the judgment of the Board of Directors upon advice of legal counsel, is required
under applicable law or rules of any stock exchange. The Company shall promptly
(but in any event within two days) advise the Purchaser in writing of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the Person making such request, Acquisition Proposal or inquiry and thereafter
shall keep the Purchaser reasonably informed, on a current basis, of the status
and material terms of such proposals and the status of such negotiations or
discussions, providing copies to the Purchaser of any Acquisition Proposals made
in writing. The Company shall provide the Purchaser with one business day
advance notice of, in each and every case, its intention to provide any
information to, or enter into any confidentiality agreement with, any person or
entity making any such inquiry or proposal and the Company shall provide the
Purchaser with three business days advance notice of, in each and every case,
its intention to enter into any other agreement with any person or entity making
any such inquiry or proposal. The Company agrees not to release any third party
from, or waive any provisions of, any confidentiality or standstill agreement to
which the Company is a party and will use its best efforts to enforce any such
agreements at the request of and on behalf of the Purchaser. The Company will
inform the individuals or entities referred to in the first sentence of this
Section 6.6 of the obligations undertaken in this Section 6.6. The Company also
will promptly request each person or entity which has executed, within 12 months
prior to the date of this Agreement, a
28
confidentiality agreement in connection with its consideration of acquiring the
Company to return or destroy all confidential information heretofore furnished
to such person or entity by or on behalf of the Company. Notwithstanding
anything contained in this Agreement to the contrary, any action by the
Company's Board of Directors permitted by, and taken in accordance with, this
Section 6.6 shall not constitute a breach of this Agreement.
Notwithstanding the provisions of the Confidentiality Agreement, (i)
following any notification to the Purchaser of a written proposal that permits
the Company to negotiate with or furnish information to any third party in
accordance with Section 6.6, and until any transaction resulting from such
proposal shall have either been consummated or the Company shall have received
written notification that any such third party shall no longer seek to engage in
such transaction with or involving the Company, the Purchaser shall be entitled
to propose or present to the Company any offer in response to such third party's
offer, and (ii) if, from the date hereof until the Effective Time, any third
party shall announce its intention to commence, or shall commence, any tender
offer to acquire Shares, the Purchaser and the Merger Sub shall be entitled to
make any public announcement or proposal, or to take any other action it or they
may deem appropriate, in response to such announcement or tender offer and which
is consistent with their obligations under this Agreement.
6.7 Notification of Certain Matters. Each party shall give prompt notice to
the others of (a) the occurrence or failure to occur of any event, which
occurrence or failure would be likely to cause any representation or warranty on
its part contained in this Agreement to be untrue or inaccurate in any respect
(or untrue in any material respect if such representation or warranty is not
qualified by "material," Company Material Adverse Effect, a specified dollar
limitation or the like) at any time from the date hereof to the Effective Time,
and (b) any failure of such party, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
6.8 Access to Information. From the date hereof to the Effective Time, to
the extent not prohibited by applicable law, the Company shall, and shall cause
its subsidiaries, officers, directors, employees and agents (including lenders,
attorneys and accountants), upon reasonable notice, to afford the Purchaser and
the Merger Sub reasonable access at all reasonable times to its officers,
employees, agents, properties, books and records, and shall furnish the
Purchaser and the Merger Sub all financial, operating, personnel, compensation,
tax and other data and information as the Parent or the Merger Sub, through its
officers, employees or agents, may reasonably request. All of such information
shall be treated as "Confidential Material" pursuant to the terms of the
Confidentiality Agreement, which continues (subject to the terms of this
Agreement) in full force and effect and which shall survive termination of this
Agreement.
6.9 Stockholder Claims. The Company shall not settle or compromise any
claim brought by any present, former or purported holder of any securities of
the Company in connection with the Merger prior to the Effective Time without
the prior written consent of the Merger Sub.
29
6.10 Indemnification.
(a) The Certificate of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article VIII and IX of the Certificate of Incorporation of the Company. Such
provisions in the Certificate of Incorporation of the Company and the Surviving
Corporation shall not be amended, repealed or otherwise modified for a period of
six years from the date the Purchaser or the Merger Sub acquires a majority of
the Shares in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by law.
In addition, the Company, as the Surviving Corporation, shall maintain in full
force and effect for a period of at least six years following the Effective
Time, directors and officers liability insurance containing terms and provisions
comparable to the terms and provisions of the current policy maintained by the
Company for the benefit of existing and former officers, directors, employees
and agents of the Company but only to the extent obtainable at a cost no more
than 100% greater than that presently incurred by the Company on the date
hereof. In the event that the Surviving Corporation cannot obtain comparable
insurance at the price level contemplated by this Section 6.10(a), the Surviving
Corporation shall obtain what it believes in good faith constitutes the best
available insurance at such price level.
(b) This Section 6.10 shall survive the Effective Time, is intended to
benefit the Company, the Surviving Corporation and each of the persons referred
to in paragraph (a) of this Section and shall be binding on all successors and
assigns of the Surviving Corporation.
6.11 Consents and Amendments. The Company shall use its best efforts to
obtain, without the payment of any fee or compensation, consents to the Offer,
the Merger, and the transactions contemplated by this Agreement from the parties
to the agreements listed on Schedule 6.11.
6.12 Audit. The Company shall use reasonable commercial efforts to have
Xxxxxx Xxxxxxxx LLP ("AA") complete its audit of the Company's consolidated
financial statements for the fiscal year ended September 30, 1999 as promptly as
practicable after the date hereof. The Purchaser and the Merger Sub shall be
given reasonable access to the work papers of AA and to the staff of AA
conducting the audit and shall be provided a copy of such audit upon completion.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
any or all of which may be waived in whole or in part by the parties hereto, to
the extent permitted by applicable law:
30
(a) The Merger shall have been approved and adopted by the vote of the
stockholders of the Company to the extent required by the Delaware Law;
(b) All waiting, review and investigation periods (and any extension
thereof) applicable to the consummation of the Merger under the
Xxxx-Xxxxx-Xxxxxx Act shall have expired or been terminated;
(c) There shall have been no law, statute, rule or order, domestic or
foreign, enacted or promulgated which would make consummation of the Merger
illegal;
(d) No injunction or other order entered by a United States (state or
federal) court of competent jurisdiction shall have been issued and remain in
effect which would prohibit consummation of the Merger; provided, however, that
the parties shall use their reasonable efforts to cause such injunction or order
to be vacated or lifted;
(e) The Purchaser, the Merger Sub or their affiliates shall have
purchased Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that neither the Purchaser nor the Merger Sub may invoke this
condition if the Purchaser or the Merger Sub shall have failed to purchase
Shares so tendered and not withdrawn in violation of the terms of this Agreement
or the Offer.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of the
Company:
(a) By mutual consent of the Boards of Directors of the Purchaser and
the Company;
(b) By either the Merger Sub or the Company if the Offer shall not have
been consummated on or before 45 business days from the date the Offer is
commenced (the "Termination Date"), provided, however, that a party shall not be
entitled to terminate this Agreement pursuant to this Section 8.1(b) if it is in
material breach of its obligations under this Agreement; provided further, if
the Offer shall not have been consummated on or before the Termination Date
solely as a result of the failure of any waiting, review and investigation
period (and any extension thereof) applicable to the consummation of the Offer
or the Merger under the Xxxx-Xxxxx-Xxxxxx Act to expire or terminate or failure
to obtain the consents referred to in paragraph (h) of Annex I, the Termination
Date shall, in the sole discretion of the Merger Sub, be extended to a date that
is up to 60 business days from the date the Offer is commenced;
(c) By the Merger Sub if the Board of Directors of the Company shall
have withdrawn or adversely modified (or, upon the written request of the Merger
Sub, failed to
31
reaffirm within three business days; provided that no such additional request
may be made during such three business day period) either of its recommendations
referred to in Sections 1.2 and 6.1;
(d) By the Merger Sub if the Offer terminates or expires on account of
the failure of any of the conditions to the Offer set forth in Annex I without
the Merger Sub having purchased any Shares thereunder;
(e) By the Company if any of (i) the Offer shall not have been
commenced substantially in accordance with Section 1.1; or (ii) the Offer shall
have expired or been terminated without any Shares having been purchased
thereunder; or (iii) if a tender offer for Shares is commenced by a person or
entity, or the Company receives an Acquisition Proposal any of which the Board
of Directors determines, in the exercise of its fiduciary duties and subject to
compliance with Section 6.6, makes necessary or advisable the termination of
this Agreement; provided that the provisions of Sections 6.4 and 6.6 shall
survive termination of the Agreement pursuant to this clause (e); or
(f) By the Merger Sub if any action, suit or proceeding is commenced or
overtly threatened against the Purchaser or the Merger Sub or the Company,
before any court or governmental or regulatory authority or body, seeking to
restrain, enjoin, or otherwise prohibit the Offer, the Merger, or the completion
of any of the other transactions contemplated by this Agreement; provided that
the provisions of Section 6.4 and 6.6 shall survive termination of the Agreement
pursuant to this clause (f).
8.2 Amendment. This Agreement may not be amended except by an instrument in
writing approved by the parties to this Agreement and signed on behalf of each
of the parties hereto; provided, however, that after approval of the Merger by
the stockholders of the Company (if such approval is required), no amendment may
be made which changes the amount into which each Share will be converted or
effects any change which would adversely affect the stockholders of the Company
without the further approval of the stockholders of the Company.
8.3 Waiver. Subject to applicable law and the provisions of this Agreement,
at any time prior to the Effective Time, any party hereto may (a) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (b) waive any inaccuracies in the representations or warranties of
the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law. For the purposes of this Section 8, the Purchaser and the
Merger Sub shall be considered to be a single party.
8.4 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, (a) this Agreement shall become void and there shall be
no liability or further
32
obligation on the part of the Purchaser, the Merger Sub or the Company or their
respective stockholders, officers or directors, except as set forth in Section
6.4, in the last sentence of Section 1.2(d) hereof, in the confidentiality
obligations of Section 6.8 hereof and in Sections 6.6, 8.1(e) and 8.1(f) hereof,
and except to the extent that such termination results from the breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement; provided, further, that if the Purchaser has received
the Fee provided by Section 6.4, the Purchaser shall not assert or pursue in any
manner, directly or indirectly, any claim or cause of action against the Company
or any of its officers or directors based in whole or in part upon its or their
receipt, consideration, recommendation or approval of an Acquisition Proposal or
the exercise of the right of the Company to terminate this Agreement under
Section 8.1(e) provided that the Company complied in all material respects with
Section 6.6 and (b) the Merger Sub shall terminate the Offer, if still pending,
without purchasing any Shares thereunder.
ARTICLE 9
GENERAL PROVISIONS
9.l Public Statements. Except as required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange or quotation system, as applicable, neither the Purchaser nor the
Merger Sub, on the one hand, nor the Company, on the other hand, shall make any
public announcement or statement with respect to the Offer, the Merger, this
Agreement or the transactions contemplated hereby, without the approval of the
Company or the Merger Sub, respectively. The parties hereto agree to consult
with each other prior to issuing each public announcement or statement with
respect to the Offer, the Merger, this Agreement or the transactions
contemplated hereby.
9.2 Notices. All notices and other communications hereunder shall be in
writing and sent by hand delivery, facsimile transmission (with confirmation of
receipt), or nationally recognized overnight courier service (with proof of
delivery), to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice):
33
(a) if to the Purchaser:
AlliedSignal Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Senior Vice President and General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Merger Sub:
AlliedSignal Acquisition Corp.
c/o AlliedSignal Inc.
0000 Xxxx 000xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Vice President and General Counsel - Aerospace
Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to the Company:
TriStar Aerospace Co.
0000 Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: P. Xxxxxxx Xxxxxxxxxx
President and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
34
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Simeon Gold, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9.3 Interpretation. When a reference is made in this Agreement to
subsidiaries of the Merger Sub or the Company, the word "subsidiaries" means any
"majority-owned subsidiary" (as defined in Rule 12b-2 under the Exchange Act) of
the Merger Sub or the Company, as the case may be; provided, however, that the
Company shall in no event and at no time be considered a subsidiary of the
Merger Sub for purposes of this Agreement. As used herein, the term "person"
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or other entity. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. References to Sections and Articles
refer to sections and articles of this Agreement unless otherwise stated.
9.4 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated as long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify the Agreement to preserve each party's anticipated
benefits under the Agreement.
9.5 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein including the Confidentiality Agreement, except
as expressly provided in Section 6.6 hereof): (a) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof;
(b) is not intended to confer upon any other person any rights or remedies
hereunder; (c) shall not be assigned by operation of law or otherwise, except
that the Merger Sub may assign all or any portion of their rights under this
Agreement to any direct or indirect wholly-owned subsidiary of the Purchaser,
but no such assignment shall relieve either the Purchaser or the Merger Sub of
their obligations hereunder, and except that this Agreement may be assigned by
operation of law to any corporation with or into which the Merger Sub may be
merged; and (d) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof. This
Agreement may be executed in two or more counterparts which together shall
constitute a single agreement.
35
9.6 Survival of Representations and Warranties. The representations and
warranties of the parties set forth herein shall be deemed to be continuing as
if made as of the date of any determination hereunder; provided, however, that
such representations and warranties shall terminate as of the Effective Time or
the time the Purchaser or the Merger Sub acquires more than 90% of the then
outstanding Shares, if earlier, or upon the termination of this Agreement
pursuant to Section 8.1.
9.7 Specific Performance. The parties hereto each acknowledge that, in view
of the uniqueness of the subject matter hereof, the parties hereto would not
have an adequate remedy at law for money damages if this Agreement were not
performed in accordance with its terms, and therefore agree that the parties
hereto shall be entitled to specific enforcement of the terms hereof in addition
to any other remedy to which the parties hereto may be entitled at law or in
equity.
36
IN WITNESS WHEREOF, the Purchaser, the Merger Sub, and the Company have
caused this Agreement and Plan of Merger to be executed as of the date first
written above by their respective officers thereunder duly authorized.
ALLIEDSIGNAL INC.
By:/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Its: President - Aerospace Services
ALLIEDSIGNAL ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Assistant Secretary
TRISTAR AEROSPACE CO.
By:/s/ Xxxxxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Its: President and Chief Executive Officer
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Agreement and Plan of Merger
(the "Agreement") or the Offer, the Merger Sub shall not be required to commence
or continue the Offer or accept for payment, purchase or pay for any Shares
tendered, or may postpone the acceptance, purchase or payment for Shares, or may
amend (to the extent permitted by the Agreement) or terminate the Offer (1) if
the Minimum Condition is not satisfied as of the expiration of the Offer; (2)
any applicable waiting, review and investigation periods under the
Xxxx-Xxxxx-Xxxxxx Act in respect of the Offer shall not have expired or been
terminated prior to the expiration of the Offer; or (3) if, at any time on or
after October 31, 1999 and prior to the expiration date of the Offer (or, in
respect of paragraph (h), the latest date permitted in accordance with Rule
14d-1(c) of the Securities Exchange Act of 1934, as amended) any of the
following events shall have occurred (each of paragraphs (a) through (h)
providing a separate and independent condition to the Merger Sub's obligations
pursuant to the Offer):
(a) The Company or any subsidiary of the Company, or their respective
Boards of Directors, shall have authorized, recommended or proposed, or shall
have announced an intention to authorize, recommend or propose, or shall have
entered into an agreement or agreement in principle with respect to, any merger,
consolidation or business combination (other than the Merger), any acquisition
or disposition of a material amount of assets or securities or any material
change in its capitalization, or the Company's Board of Directors shall have
withdrawn or adversely modified (including by amendment to the Schedule 14D-9),
or upon request of the Merger Sub, failed to reaffirm its favorable
recommendations with respect to the Offer and the Merger as provided in the
Agreement, or any corporation, entity, "group" or "person" (as defined in the
Exchange Act) other than the Purchaser or the Merger Sub, shall have acquired
beneficial ownership of 35% or more of the outstanding Shares;
(b) there shall have been any statute, rule, injunction or other order
promulgated, enacted, entered or enforced by any court or governmental agency or
other regulatory or administrative agency or commission, domestic or foreign
(other than the routine application to the Offer, the Merger or other subsequent
business combination of waiting, review and investigation periods under the
Xxxx-Xxxxx-Xxxxxx Act), (i) making the purchase of some or all of the Shares
pursuant to the Offer or the Merger illegal, or resulting in a material delay in
the ability of the Merger Sub to purchase some or all of the Shares, (ii)
invalidating or rendering unenforceable any material provision of the Agreement,
(iii) imposing material limitations on the ability of the Merger Sub effectively
to acquire or hold or to exercise full rights of ownership of the Shares
acquired by it, including but not limited to, the right to vote the Shares
purchased by it on all matters properly presented to the stockholders of the
Company, (iv) imposing material limitations on the ability of any of Purchaser,
the Merger Sub, or the Company to continue effectively all or any material
portion of its respective business as heretofore conducted or to continue to own
or operate effectively all or any material portion of its respective assets as
heretofore owned or operated, (v) imposing material limitations on the ability
of the Merger Sub to continue effectively all or any material portion of the
business of the Company and its
subsidiaries (taken as a whole) as heretofore conducted or to own or operate
effectively all or any material portion of the assets of the Company and its
subsidiaries (taken as a whole) as heretofore operated, or (vi) to the effect
that the Offer or the Merger is violative of any applicable law which would
reasonably be expected to result in any of the consequences described in clauses
(i) through (v) above;
(c) there shall have been any law, statute, rule or regulation, domestic or
foreign, enacted or promulgated that, directly or indirectly, results or may be
anticipated to result in any of the consequences referred to in paragraph (b)
above, or any action, suit or proceeding shall have been commenced before any
court or governmental or regulatory authority or body seeking to restrain,
enjoin or otherwise prohibit the Offer, the Merger, or the completion of the
transactions contemplated by the Agreement;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on any national securities exchange or in
the over the counter market in the United States for a period of in excess of
six and one-half trading hours in any twenty-four consecutive hour period
(excluding suspensions resulting solely from physical damage or interference
with such exchanges not related to market conditions), (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or any
other event which might materially adversely affect, the extension of credit by
banks or other lending institutions in the United States, or (iv) in the case of
any of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(e) except as set forth in the Commission Filings filed before October 31,
1999 or the Disclosure Schedule, any change shall have occurred or be threatened
which individually or in the aggregate has had or is continuing to have a
Company Material Adverse Effect;
(f) (i) any of the representations and warranties of the Company in the
Agreement shall not be true and correct in all respects as if made on the date
of any determination hereunder except for those representations or warranties
that address matters only as of a specified date or only with respect to a
specified period of time which need only be true and accurate as of such date or
with respect to such period; provided, however, any representation or warranty
not qualified by "material", "Company Material Adverse Effect," a specified
dollar limitation or the like need only be true and correct in all material
respects on the date of any determination hereunder, or (ii) the Company shall
have breached in any respect or shall not have performed in all respects each
covenant and complied with each agreement to be performed and complied with by
it under the Agreement unless the Company gives prompt notice to the Merger Sub
of such breach or nonperformance, such breach or nonperformance is capable of
being fully and completely cured at no more than an inconsequential cost or
expense to the Company or its subsidiaries and such breach or nonperformance is
so cured within three business days following such breach or nonperformance;
(g) the Company and the Merger Sub shall have reached an agreement or
understanding regarding termination of the Offer or the Agreement shall have
been terminated in accordance with its terms; or
(h) all governmental consents (including consents of foreign governmental
entities) required to be obtained in connection with the purchase of Shares
pursuant to the Offer shall not have been obtained or any governmental agency
shall have announced an intention to seek to prohibit or interfere with the
purchase of Shares pursuant to the Offer;
which, in the good faith judgment of the Merger Sub, in any such case, and
regardless of the circumstances giving rise to any such condition, make it
inadvisable to proceed with acceptance for payment or purchase of or payment for
the Shares.
The foregoing conditions are for the sole benefit of the Merger Sub and
Purchaser and may be asserted by the Merger Sub and Purchaser regardless of the
circumstances giving rise to such conditions, or may be waived by the Merger Sub
in whole at any time or in part from time to time in their sole discretion. The
failure by the Merger Sub 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 and may be asserted at any time and from
time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
