Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------- ------------------------------------- --------------
....................................... Chief Executive Officer and Chairman June 28, 1996
Walter A. Forbes of the Board (Principal Executive
Officer)
....................................... Senior Vice President and Chief June 28, 1996
Cosmo Corigliano Financial Officer (Principal
Financial and Accounting Officer)
....................................... Director June 28, 1996
Bartlett Burnap
....................................... Director June 28, 1996
T. Barnes Donnelley
....................................... Director June 28, 1996
Stephen A. Greyser
....................................... Director June 28, 1996
Christopher K. McLeod
....................................... Director June 28, 1996
Burton C. Perfit
....................................... Director June 28, 1996
Robert P. Rittereiser
....................................... Director June 28, 1996
Stanley M. Rumbough, Jr.
....................................... Director June 28, 1996
E. Kirk Shelton
II-5
EXHIBIT 2(C)
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IDEON GROUP, INC.,
CUC INTERNATIONAL INC.
AND
IG ACQUISITION CORP.
DATED
AS OF
APRIL 19, 1996
- --------------------------------------------------------------------------------
2(C)-1
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER............................................................................ 2c-6
SECTION 1.1 The Merger........................................................ 2c-6
SECTION 1.2 Effect on Shares.................................................. 2c-7
SECTION 1.3 Exchange of Certificates.......................................... 2c-7
SECTION 1.4 Dividends; Transfer Taxes......................................... 2c-8
SECTION 1.5 No Fractional Shares.............................................. 2c-8
SECTION 1.6 Return of Exchange Fund........................................... 2c-9
SECTION 1.7 Adjustment of Conversion Number................................... 2c-9
SECTION 1.8 No Further Ownership Rights in Shares............................. 2c-9
SECTION 1.9 Closing of Company Transfer Books................................. 2c-9
SECTION 1.10 Stock Options..................................................... 2c-9
SECTION 1.11 Restricted Stock.................................................. 2c-10
ARTICLE II
CLOSING............................................................................... 2c-10
SECTION 2.1 Closing........................................................... 2c-10
ARTICLE III
THE SURVIVING CORPORATION............................................................. 2c-10
SECTION 3.1 Certificate of Incorporation...................................... 2c-10
SECTION 3.2 Bylaws............................................................ 2c-10
SECTION 3.3 Directors and Officers............................................ 2c-10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................... 2c-11
SECTION 4.1 Corporate Existence and Power..................................... 2c-11
SECTION 4.2 Corporate Authorization........................................... 2c-11
SECTION 4.3 Governmental Authorization........................................ 2c-12
SECTION 4.4 Non-Contravention................................................. 2c-12
SECTION 4.5 Capitalization.................................................... 2c-12
SECTION 4.6 Subsidiaries...................................................... 2c-13
SECTION 4.7 SEC Documents..................................................... 2c-13
SECTION 4.8 Financial Statements; No Undisclosed Liabilities.................. 2c-13
SECTION 4.9 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus.............................................. 2c-14
SECTION 4.10 Absence of Certain Changes........................................ 2c-14
SECTION 4.11 Litigation........................................................ 2c-15
SECTION 4.12 Taxes............................................................. 2c-16
SECTION 4.13 Employee Matters.................................................. 2c-16
SECTION 4.14 Labor Matters..................................................... 2c-17
SECTION 4.15 Compliance with Laws.............................................. 2c-18
SECTION 4.16 Finders' Fees..................................................... 2c-18
SECTION 4.17 Environmental Matters............................................. 2c-18
SECTION 4.18 Property.......................................................... 2c-18
SECTION 4.19 Intangible Property............................................... 2c-19
SECTION 4.20 Material Contracts................................................ 2c-19
SECTION 4.21 Accounting Matters................................................ 2c-19
SECTION 4.22 Vote Required..................................................... 2c-20
SECTION 4.23 Fairness Opinion.................................................. 2c-20
SECTION 4.24 Disclosure........................................................ 2c-20
2(C)-2
PAGE
----
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUBSIDIARY......................... 2c-20
SECTION 5.1 Corporate Existence and Power..................................... 2c-20
SECTION 5.2 Corporate Authorization........................................... 2c-20
SECTION 5.3 Governmental Authorization........................................ 2c-20
SECTION 5.4 Non-Contravention................................................. 2c-21
SECTION 5.5 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus.............................................. 2c-21
SECTION 5.6 Finders' Fees..................................................... 2c-21
SECTION 5.7 No Vote Required.................................................. 2c-21
SECTION 5.8 Share Ownership................................................... 2c-22
SECTION 5.9 Capitalization.................................................... 2c-21
SECTION 5.10 Accounting Matters................................................ 2c-22
SECTION 5.11 Ownership of Merger Subsidiary; No Prior Activities; Assets of
Merger Subsidiary................................................. 2c-22
SECTION 5.12 SEC Documents..................................................... 2c-22
SECTION 5.13 Financial Statements.............................................. 2c-22
SECTION 5.14 Absence of Certain Changes or Events.............................. 2c-23
SECTION 5.15 Litigation........................................................ 2c-23
SECTION 5.16 Authorization for Buyer Common Stock.............................. 2c-23
SECTION 5.17 Taxes............................................................. 2c-24
SECTION 5.18 Disclosure........................................................ 2c-24
ARTICLE VI
COVENANTS OF THE COMPANY.............................................................. 2c-24
SECTION 6.1 Conduct of the Company............................................ 2c-24
SECTION 6.2 Stockholder Meeting; Proxy Material............................... 2c-26
SECTION 6.3 Access to Information; Confidential Agreement..................... 2c-26
SECTION 6.4 No Solicitation................................................... 2c-27
SECTION 6.5 Conveyance Taxes.................................................. 2c-28
ARTICLE VII
COVENANTS OF BUYER.................................................................... 2c-28
SECTION 7.1 Obligations of Merger Subsidiary.................................. 2c-28
SECTION 7.2 Voting of Shares.................................................. 2c-28
SECTION 7.3 Director and Officer Liability.................................... 2c-28
ARTICLE VIII
COVENANTS OF BUYER, MERGER SUBSIDIARY AND THE COMPANY................................. 2c-31
SECTION 8.1 Reasonable Best Efforts........................................... 2c-31
SECTION 8.2 Certain Filings................................................... 2c-31
SECTION 8.3 Public Announcements.............................................. 2c-31
SECTION 8.4 Conveyance Taxes.................................................. 2c-31
SECTION 8.5 Further Assurances................................................ 2c-31
SECTION 8.6 Employee Matters.................................................. 2c-31
SECTION 8.7 Company Proxy Statement and Registration Statement................ 2c-32
SECTION 8.8 Tax-Free Reorganization Treatment................................. 2c-32
SECTION 8.9 Notification of Certain Matters................................... 2c-32
SECTION 8.10 Blue Sky Permits.................................................. 2c-32
SECTION 8.11 NYSE Listing...................................................... 2c-33
SECTION 8.12 Pooling Letter.................................................... 2c-33
SECTION 8.13 Pooling........................................................... 2c-33
SECTION 8.14 SEC Filings....................................................... 2c-33
SECTION 8.16 Affiliates........................................................ 2c-33
2(C)-3
PAGE
----
ARTICLE IX
CONDITIONS TO THE MERGER.............................................................. 2c-34
SECTION 9.1 Conditions to the Obligations of Each Party....................... 2c-34
SECTION 9.2 Conditions to the Obligations of the Company...................... 2c-34
SECTION 9.3 Conditions to the Obligations of Buyer and Merger Subsidiary...... 2c-35
ARTICLE X
TERMINATION........................................................................... 2c-36
SECTION 10.1 Termination....................................................... 2c-36
SECTION 10.2 Effect of Termination............................................. 2c-37
ARTICLE XI
DEFINED TERMS......................................................................... 2c-38
ARTICLE XII
MISCELLANEOUS......................................................................... 2c-40
SECTION 12.1 Notices........................................................... 2c-40
SECTION 12.2 Survival of Representations and Warranties........................ 2c-41
SECTION 12.3 Amendments; No Waivers............................................ 2c-41
SECTION 12.4 Expenses.......................................................... 2c-41
SECTION 12.5 Successors and Assigns............................................ 2c-42
SECTION 12.6 Governing Law..................................................... 2c-42
SECTION 12.7 Severability...................................................... 2c-42
SECTION 12.8 Third Party Beneficiaries......................................... 2c-42
SECTION 12.9 Entire Agreement.................................................. 2c-42
SECTION 12.10 Counterparts; Effectiveness....................................... 2c-43
COMPANY DISCLOSURE SCHEDULE
SCHEDULE 4.1 Corporate Existence and Power
SCHEDULE 4.3 Governmental Authorization
SCHEDULE 4.4 Non-Contravention
SCHEDULE 4.5 Capitalization
SCHEDULE 4.6 Subsidiaries
SCHEDULE 4.8 Financial Statements
SCHEDULE 4.10 Absence of Certain Changes
SCHEDULE 4.11 Litigation
SCHEDULE 4.12 Taxes
SCHEDULE 4.13(a) Employee Matters
SCHEDULE 4.14 Labor Matters
SCHEDULE 4.15 Compliance With Laws
SCHEDULE 4.17 Environmental Matters
SCHEDULE 4.19 Intangible Property
SCHEDULE 4.20 Material Contracts
SCHEDULE 6.1 Conduct of the Company
SCHEDULE 6.1(p) Conduct of the Company
SCHEDULE 7.3 Directors and Officers' Liability
SCHEDULE 8.6 Employee Matters
EXHIBIT 1 Form of Affiliate Letter
EXHIBIT 2 Buyer Tax Certificate
EXHIBIT 3 Company Tax Certificate
2(C)-4
PAGE
----
BUYER DISCLOSURE SCHEDULE
SCHEDULE 5.1 Corporate Existence and Power
SCHEDULE 5.9 Capitalization
SCHEDULE 5.14 Absence of Certain Changes or Events
SCHEDULE 5.15 Litigation
SCHEDULE 5.17 Taxes
SCHEDULE 6.2 Buyer Transactions
2(C)-5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 19, 1996 (this "Agreement"),
by and among Ideon Group, Inc., a Delaware corporation (the "Company"), CUC
International Inc., a Delaware corporation ("Buyer"), and IG Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of Buyer ("Merger
Subsidiary").
WHEREAS, the respective Boards of Directors of Buyer, Merger Subsidiary and
the Company have determined that it is fair to, and in the best interests of
their respective stockholders to consummate the acquisition of the Company by
Buyer upon the terms and subject to the conditions set forth herein; and
WHEREAS, the respective Boards of Directors of the Company, Buyer and Merger
Subsidiary have approved and declared advisable this Agreement and the merger of
Merger Subsidiary with and into the Company, upon terms and subject to the
conditions set forth herein, whereby each issued and outstanding share of common
stock, par value $.01 per share, of the Company (the "Shares"), not owned
directly or indirectly by Buyer or Merger Subsidiary, will be converted into the
number of shares of common stock, par value $.01 per share of Buyer ("Buyer
Common Stock"), determined pursuant to Section 1.2(a) hereof; and
WHEREAS, it is intended that the Merger (as defined herein) shall be
recorded for accounting purposes as a pooling-of-interests; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Company has delivered to Buyer a letter (the "Company Affiliate
Letter") identifying all persons (each, a "Company Affiliate") who are at the
date hereof, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), and each Company
Affiliate has delivered to Buyer a letter substantially in the form attached
hereto as Exhibit 1 (each, an "Affiliate Letter") relating to (i) the transfer
prior to the Effective Time (as defined in Section 1.1(b)), of the Shares
beneficially owned by such Company Affiliate on the date hereof, and (ii) the
transfer of the shares of Buyer Common Stock to be received by such Company
Affiliate in the Merger (as defined in Section 1.1(a)); and
WHEREAS, Buyer, Merger Subsidiary and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I.
THE MERGER
SECTION 1.1. The Merger. (a) Subject to the terms and conditions of this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time, Merger Subsidiary shall be merged (the "Merger")
with and into the Company, whereupon the separate existence of Merger Subsidiary
shall cease, and the Company shall be the surviving corporation (the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware.
2(C)-6
(b) The Company, Buyer and Merger Subsidiary will cause a certificate of
merger (the "Certificate of Merger") with respect to the Merger to be executed
and filed with the Secretary of State of the State of Delaware (the "Secretary
of State") as provided in the DGCL. The Merger shall become effective on the
date the Certificate of Merger has been duly filed with the Secretary of State
or at such date as is agreed between the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities, liabilities and duties of the Company and
Merger Subsidiary.
SECTION 1.2. Effect on Shares. At the Effective Time:
(a) Conversion of Shares; Merger Consideration. Subject to the provisions of
Section 1.5 and Section 1.7 hereof, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by the Company
as treasury stock or by any Subsidiary of the Company or owned by Buyer, Merger
Subsidiary or any other Subsidiary of Buyer) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive that number of duly authorized, validly issued, fully paid and
nonassessable shares of Buyer Common Stock (the "Merger Consideration")(such
applicable number being hereinafter referred to as the "Conversion Number"),
equal to the quotient obtained by dividing (x) $13.50 by (y) the Average Stock
Price (as hereinafter defined); provided, however, that if the Average Stock
Price is $22 or less the Conversion Number shall be 0.6136 and if the Average
Stock Price is $36 or more the Conversion Number shall be 0.3750. The "Average
Stock Price" shall mean the average closing price per share of Buyer Common
Stock on the New York Stock Exchange (the "NYSE") as reported on the NYSE
Composite Tape during the fifteen consecutive trading day period (the
"Measurement Period") ending on the second calendar day immediately preceding
the Company Stockholder Meeting (as defined herein); provided, however, that if
such second calendar day is not a trading day, the Measurement Period shall end
on the next calendar day immediately preceding such second calendar day that is
a trading day.
(b) Cancellation of Shares. Each Share held by the Company as treasury stock
or owned by Buyer, Merger Subsidiary or any other Subsidiary of Buyer
immediately prior to the Effective Time shall automatically be canceled and
retired and cease to exist, and no payment shall be made with respect thereto.
All Shares to be converted into Buyer Common Stock pursuant to this Section 1.2
shall, by virtue of the Merger and without any action on the part of the holders
thereof, cease to be outstanding, be canceled and retired and cease to exist;
and each holder of a certificate representing prior to the Effective Time any
such Shares shall thereafter cease to have any rights with respect to such
Shares, except the right to receive (i) certificates representing shares of
Buyer Common Stock into which such Shares have been converted, (ii) any
dividends and other distributions in accordance with Section 1.4 hereof and
(iii) any cash, without interest, to be paid in lieu of any fractional share of
Buyer Common Stock in accordance with Section 1.5 hereof.
(c) Capital Stock of Merger Subsidiary. Each share of common stock of Merger
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into and become one share of common stock, par value $0.01, of the
Surviving Corporation with the same rights, powers and privileges as the shares
so converted and shall constitute the only outstanding shares of capital stock
of the Surviving Corporation.
SECTION 1.3 Exchange of Certificates. (a) Prior to the Effective Time, Buyer
shall appoint a commercial bank having capital of not less than $500,000,000 (or
such other Person or Persons as shall be acceptable to Buyer and the Company) to
act as exchange agent hereunder (the "Exchange Agent"). At the Effective Time,
Buyer shall deposit with the Exchange Agent, certificates (the "Buyer
Certificates") representing Buyer Common Stock which immediately prior to the
Effective Time represent a number of shares of Buyer Common Stock required to be
issued pursuant to Section 1.2(a) in exchange for the outstanding Shares
(together with cash as required to (i) pay any dividends or distributions with
2(C)-7
respect thereto in accordance with Section 1.4 hereof and (ii) make payments in
lieu of fractional Shares pursuant to Section 1.5 hereof, being hereinafter
referred to as the "Exchange Fund"). The Exchange Fund shall not be used for any
other purpose except as provided for in this Agreement.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Share Certificates") (i) a
form of a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Share Certificates shall pass, only
upon actual delivery thereof to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of the Share Certificates in exchange for the
property described in the next sentence. Upon surrender for cancellation to the
Exchange Agent of Share Certificate(s) held by any record holder of a Share
Certificate, together with such letter of transmittal duly executed, such holder
shall be entitled to receive in exchange therefor (x) a Buyer Certificate
representing the number of whole shares of Buyer Common Stock into which the
Shares represented by the surrendered Share Certificate(s) shall have been
converted at the Effective Time pursuant to this Article I, (y) cash in lieu of
any fractional share of Buyer Common Stock in accordance with Section 1.5 hereof
and (z) certain dividends and other distributions in accordance with Section 1.4
hereof; and the Share Certificate(s) so surrendered shall forthwith be
cancelled.
(c) Subject to the provisions of Section 1.4 and Section 1.5 hereof, each
Share Certificate which immediately prior to the Effective Time represented
Shares to be converted in the Merger shall, from and after the Effective Time
until surrendered in exchange for Buyer Certificate(s) in accordance with this
Section 1.3, be deemed for all purposes to represent the number of shares of
Buyer Common Stock into which such Shares shall have been so converted.
SECTION 1.4 Dividends; Transfer Taxes. No dividends or other distributions
that are declared on or after the Effective Time on Buyer Common Stock, or are
payable to the holders of record thereof who became such on or after the
Effective Time, shall be paid to any Person entitled by reason of the Merger to
receive Buyer Certificates representing Buyer Common Stock, and no cash payment
in lieu of any fractional share of Buyer Common Stock shall be paid to any such
person pursuant to Section 1.5 hereof, until such Person shall have surrendered
its Share Certificate(s) as provided in Section 1.3 hereof. Subject to
applicable law, there shall be paid to each Person receiving a Buyer Certificate
representing such shares of Buyer Common Stock: (i) at the time of such
surrender or as promptly as practicable thereafter, the amount of any dividends
or other distributions theretofore paid with respect to the shares of Buyer
Common Stock represented by such Buyer Certificate and having a record date on
or after the Effective Time and a payment date prior to such surrender, and (ii)
at the appropriate payment date or as promptly as practicable thereafter, the
amount of any dividends or other distributions payable with respect to such
shares of Buyer Common Stock and having a record date on or after the Effective
Time but prior to such surrender and a payment date on or subsequent to such
surrender. In no event shall the Person entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or other
distributions. Buyer shall make available to the Exchange Agent the cash
necessary for this purpose. If any cash or Buyer Certificate representing shares
of Buyer Common Stock is to be paid to or issued in a name other than that in
which the Share Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Share Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of such Buyer Certificate and
the distribution of such cash payment in a name other than that of the
registered holder of the Share Certificate so surrendered, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. "Person" means an individual, a corporation, limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
SECTION 1.5 No Fractional Shares. No certificates or scrip representing
fractional shares of Buyer Common Stock shall be issued upon the surrender for
exchange of Share Certificates pursuant to
2(C)-8
this Article I; no dividend or other distribution by Buyer and no stock split,
combination or reclassification shall relate to any such fractional share; and
no such fractional share shall entitle the record or beneficial owner thereof to
vote or to any other rights of a stockholder of Buyer. In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
thereto upon the surrender of Share Certificate(s) for exchange pursuant to this
Article I will be paid an amount in cash (without interest) rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price on
the NYSE of Buyer Common Stock (as reported on the NYSE Composite Tape) on the
date on which the Effective Time shall occur (or, if Buyer Common Stock shall
not trade on the NYSE on such date, the first day of trading in Buyer Common
Stock on the NYSE, thereafter) by (ii) the fractional share to which such holder
would otherwise be entitled. Buyer shall make available to the Exchange Agent
the cash necessary for this purpose.
SECTION 1.6 Return of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former holders of the Shares for one year after the
Effective Time shall be delivered to Buyer, upon its request, and any such
former holders who have not theretofore surrendered to the Exchange Agent their
Share Certificate(s) in compliance with this Article I shall thereafter look
only to Buyer for payment of their claim for shares of Buyer Common Stock, any
cash in lieu of fractional shares of Buyer Common Stock and any dividends or
distributions with respect to such shares of Buyer Common Stock. Neither Buyer
nor the Company shall be liable to any former holder of Shares for any such
shares of Buyer Common Stock held in the Exchange Fund (and any cash, dividends
and distributions payable in respect thereof) which is delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
SECTION 1.7 Adjustment of Conversion Number. In the event of any stock
split, combination, reclassification or stock dividend with respect to Buyer
Common Stock, any change or conversion of Buyer Common Stock into other
securities or any other dividend or distribution with respect to Buyer Common
Stock (other than quarterly cash dividends issued in the ordinary course
consistent with past practice) and any distribution by Buyer of shares of
capital stock of any of its affiliates, or if a record date with respect to any
of the foregoing should occur, prior to the Effective Time, appropriate and
proportionate adjustments shall be made to the Conversion Number, and thereafter
all references in this Agreement to the Conversion Number shall be deemed to be
the Conversion Number as so adjusted.
SECTION 1.8 No Further Ownership Rights in Shares. All certificates
representing shares of Buyer Common Stock delivered upon the surrender for
exchange of any Share Certificate in accordance with the terms hereof (including
any cash paid pursuant to Section 1.4 or Section 1.5 hereof) shall be deemed to
have been delivered (and paid) in full satisfaction of all rights pertaining to
the Shares previously represented by such Share Certificate.
SECTION 1.9 Closing of Company Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed, and no transfer of Shares
shall thereafter be made. Subject to the last sentence of Section 1.6 hereof, if
after the Effective Time, Share Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged as provided in this Article
I.
SECTION 1.10 Stock Options. (a) Not later than the Effective Time, each
outstanding employee or director stock option (an "Option") to purchase Shares
granted under any employee or director stock option or compensation plan or
arrangement of the Company (other than any "stock purchase plan" within the
meaning of Section 423 of the Code) immediately prior to the Effective Time in
effect on the date hereof ("Company Stock Plans") whether or not then vested or
exercisable, shall become and represent an option to purchase the number of
shares of Buyer Common Stock (a "Substitute Option"), rounded up to the nearest
whole share, determined by multiplying (i) the number of Shares subject to such
Option immediately prior to the Effective Time by (ii) the Conversion Number, at
an exercise price per share of Buyer Common Stock (increased to the nearest
whole cent) equal to the exercise price per Share immediately prior to the
Effective Time divided by the Conversion Number; provided, however, that in the
case of any Option to which Section 421 of the Code applies by reason of its
2(C)-9
qualification as an incentive stock option under Section 422 of the Code, the
conversion formula shall be adjusted if necessary to comply with Section 424(a)
of the Code. After the Effective Time, except as provided above in this Section
1.10, each Substitute Option shall be exercisable upon the same terms and
conditions as were applicable to the related Option immediately prior to the
Effective Time. Buyer shall register under the Securities Act on Form S-8 or
another appropriate form (and use its best efforts to maintain the effectiveness
thereof and maintain the current status of the prospectuses contained therein)
all Substitute Options and all shares of Buyer Common Stock issuable pursuant to
all Substitute Options. At or prior to the Effective Time, Buyer shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Buyer Common Stock for delivery in connection with the Substitute Options.
(b) Notwithstanding the foregoing, each Option held by any director of the
Company at the Effective Time, shall be converted at the Effective Time into the
right to receive that number of duly authorized, validly issued, fully paid and
nonassessable shares of Buyer Common Stock determined by multiplying (i) the
number of Shares such holder could have purchased had such holder exercised such
Option in full immediately prior to the Effective Time by (ii) a fraction, the
numerator of which shall be the excess, if any, of (A) the Conversion Number
multiplied by the Average Stock Price over (B) the applicable exercise price of
such Option and the denominator of which shall be the Average Stock Price.
SECTION 1.11 Restricted Stock. Any unvested shares of restricted stock of
the Company, however granted, shall to the extent required in the plan,
agreement or instrument pursuant to which such restricted stock was granted,
vest and become free of all restrictions immediately prior to the Effective Time
and shall be convertible into Buyer Common Stock pursuant to Section 1.2 hereof.
ARTICLE II.
CLOSING
SECTION 2.1 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., New York City time, on a date to be specified by the
parties, which shall be no later than the third business day after satisfaction
or waiver of all of the conditions set forth in Article IX hereof (the "Closing
Date"), at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153 unless another time, date or place is agreed to in writing
by the parties hereto.
ARTICLE III.
THE SURVIVING CORPORATION
SECTION 3.1 Certificate of Incorporation. The certificate of incorporation
of the Company (the "Company Certificate of Incorporation") in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 3.2 Bylaws. The by-laws of the Company (the "Company By-laws") in
effect at the Effective Time shall be the by-laws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 3.3 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of Merger Subsidiary at the Effective Time shall
be the initial directors of the Surviving Corporation and the officers of the
Company at the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected and
appointed or qualified.
2(C)-10
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary that:
SECTION 4.1 Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and except as set forth on Schedule 4.1 of the disclosure schedule
delivered by the Company in connection herewith (the "Company Disclosure
Schedule"), has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, "Licenses") required to
carry on its business as now conducted except where the failure to have any such
License would not have a Material Adverse Effect (as defined below). The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not
have a Material Adverse Effect. As used herein, the term "Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of the Company and its
Subsidiaries (as defined in Section 4.6 hereof), or Buyer and Merger Subsidiary,
as the case may be, in each case taken as a whole, that is not a result of
general changes in the economy or the industries in which such entities operate.
The Company has heretofore delivered or made available to Buyer true and
complete copies of the Company Certificate of Incorporation and Company By-laws
as currently in effect.
SECTION 4.2 Corporate Authorization. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company's corporate powers and,
except for any required approval by the Company's stockholders in connection
with the consummation of the Merger, have been duly authorized by all necessary
corporate action. This Agreement, assuming due and valid authorization,
execution and delivery by the parties hereto, constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except that (i) enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. To the extent permitted under any Option
or option plan, restricted stock plan, agreement or instrument or any
employment, executive, severance or similar agreement to which the Company or
any of its Subsidiaries is a party, such that none of the execution, delivery
and performance by the Company of this Agreement or the consummation of the
transactions contemplated hereby (including, without limitation, the election of
the members of the Board of Directors of Merger Subsidiary as the initial
directors of the Surviving Corporation at the Effective Time pursuant to Section
3.3) will constitute a "change of control" or "change in control" thereunder or
result in an alteration of the benefits and burdens (including, without
limitation, by means of acceleration) thereunder, the necessary majority of
members of the Board of Directors has approved the execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby.
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SECTION 4.3 Governmental Authorization. Except as set forth in Schedule 4.3
of the Company Disclosure Schedule, the execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any governmental body, agency, official or authority (each, a
"Governmental Entity") other than: (i) the filing of a certificate of merger in
accordance with the DGCL; (ii) compliance with any applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (iii)
compliance with any applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (iv) compliance with the applicable
requirements of state blue sky laws; (v) compliance with the applicable
requirements of any applicable takeover laws; and (vi) such other actions by or
in respect of, or filings with, any Governmental Entity the failure of which to
obtain or make would not have a Material Adverse Effect and which would not
materially impair or materially delay the ability of the Company to consummate
the transactions contemplated hereby.
SECTION 4.4 Non-Contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the Company Certificate of Incorporation or Company By-laws, (ii) except as
set forth in Schedule 4.4 of the Company Disclosure Schedule and assuming
compliance with the matters referred to in Section 4.3 hereof, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary of the Company, (iii) except as set forth in Schedule 4.4 of
the Company Disclosure Schedule, with or without the giving of notice or passage
of time or both, constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary of the Company or to a loss of any benefit to which
the Company or any Subsidiary of the Company is entitled under any provision of
any agreement, contract or other instrument binding upon the Company or any
Subsidiary of the Company or any license, franchise, permit or other similar
authorization held by the Company or any Subsidiary of the Company, or (iv)
result in the creation or imposition of any Lien (as defined below) on any asset
of the Company or any Subsidiary of the Company, excluding from the foregoing
clauses (ii), (iii) or (iv), such violations, breaches, defaults or Liens which
would not have a Material Adverse Effect, and which will not materially impair
or materially delay the ability of the Company to consummate the transactions
contemplated hereby. For purposes of this Agreement, "Lien" means, with respect
to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
SECTION 4.5 Capitalization. The authorized capital stock of the Company
consists of 90,000,000 Shares and 10,000,000 shares of preferred stock (the
"Preferred Stock"). As of March 31, 1996, there were (i) 27,981,831 Shares
issued and outstanding; (ii) 6,964,169 Shares held in the Company's treasury;
and (iii) no shares of Preferred Stock issued and outstanding. As of March 31,
1996, there were (i) 1,713,900 outstanding Options pursuant to the 1994 Long
Term Stock-Based Incentive Plan with an exercise price range of a minimum
exercise price of $7.625 and a maximum exercise price of $20.75; (ii) 108,700
outstanding Options pursuant to the Employees Stock Option Plan with a minimum
exercise price of $9.875 and a maximum exercise price of $19.125; (iii) 300,000
outstanding Options granted to outside directors with an exercise price range of
a minimum exercise price of $9.00 and a maximum exercise price of $13.00; (iv)
8,333 outstanding Options pursuant to the 1991 Employee Stock Option Plan with
an exercise price of $9.00; (v) 10,000 outstanding Options pursuant to the 1992
Employee Stock Option Plan with an exercise price of $8.875 and (vi) 30,000
outstanding Options pursuant to the Directors Stock Plan with an exercise price
of $15.875. Schedule 4.5 of the Company Disclosure Schedule accurately sets
forth information regarding the exercise price, date of grant and number of
granted Options for each holder of Options as of March 31, 1996. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in this Section
4.5, and except for changes since March 31, 1996 resulting from the exercise of
employee Options outstanding on such date, there are outstanding (i) no shares
of capital stock or other voting securities of the Company, (ii) no securities
of the Company or of any Subsidiary of the Company convertible into or
exchangeable for shares of
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capital stock or voting securities of the Company, and (iii) except as set forth
on Schedule 4.5 of the Company Disclosure Schedule, no options or other rights
to acquire from the Company, and no obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (the items in clauses (i),
(ii) and (iii) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any Subsidiary of the
Company to repurchase, redeem or otherwise acquire any Company Securities.
Except as set forth on Schedule 4.5 of the Company Disclosure Schedule, there
are no stockholder agreements, voting trusts or understandings to which the
Company is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company. Except as otherwise
provided in Section 1.11 of this Agreement, the Company has not taken any action
that would result in any Options or shares of restricted stock that are unvested
becoming vested in connection with or as a result of the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
No Subsidiary of the Company owns any capital stock of the Company.
SECTION 4.6 Subsidiaries. (a) Each Subsidiary of the Company that is
actively engaged in any business or owns any material assets (an "Active
Subsidiary") (i) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, (ii) except
as set forth in Schedule 4.6 of the Company Disclosure Schedule, has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and
(iii) is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except with respect to (ii) and (iii) above to the extent the failure of this
representation and warranty to be true would not have a Material Adverse Effect.
For purposes of this Agreement, "Subsidiary" means with respect to any Person,
any corporation or other legal entity of which such Person owns, directly or
indirectly, more than 50% of the outstanding stock or other equity interests,
the holders of which are entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity. All
Active Subsidiaries, their respective jurisdictions of incorporation and the
ownership interest of the Company and its Subsidiaries in such Active
Subsidiaries are identified on Schedule 4.6 of the Company Disclosure Schedule.
(b) Each outstanding share of capital stock of each Subsidiary of the
Company has been duly and validly authorized and issued, is fully paid and
nonassessable and is owned by the Company and/or one or more of its Subsidiaries
free and clear of any Liens. There are no subscriptions, options, warrants,
calls, rights, convertible securities or other agreements or commitments of any
character relating to the issuance, transfer, sale, delivery, voting or
redemption (including any rights of conversion or exchange under any outstanding
security or other instrument) for, any of the capital stock or other equity
interests of any of such Subsidiaries. There are no agreements requiring the
Company or any of its Subsidiaries to make contributions to the capital of, or
lend or advance funds to, any of the Subsidiaries of the Company.
SECTION 4.7 SEC Documents. The Company has filed all required reports, proxy
statements, forms and other documents with the SEC since January 1, 1994
("Company SEC Documents"). As of their respective dates, (i) the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the Securities and Exchange Commission (the "SEC") promulgated
thereunder applicable to such Company SEC Documents, and (ii) none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 4.8 Financial Statements; No Undisclosed Liabilities. The
consolidated financial statements of the Company included in the Company SEC
Documents (i) comply as to form in all material respects with all applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in conformity with generally accepted
accounting principles ("GAAP"), applied on a consistent basis (except in the
case of unaudited statements, as
2(C)-13
permitted by Form 10-Q of the SEC) during the periods involved (except as may be
indicated in the related notes and schedules thereto) and (iii) 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 cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in Schedule 4.8 of the Company Disclosure Schedule and
except as set forth in the Company SEC Documents filed and publicly available
prior to the date of this Agreement, and except for liabilities and obligations
incurred in the ordinary course of business since the date of the most recent
consolidated balance sheet included in the Company SEC Documents filed and
publicly available prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto.
SECTION 4.9 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus. None of the information to be supplied by the Company for
inclusion or incorporation by reference in the Form S-4 Registration Statement
(as hereinafter defined) or the Company Proxy Statement (as hereinafter defined)
will (i) in the case of the Form S-4 Registration Statement, at the time it
becomes effective, at the Effective Time or at the Company Stockholder Meeting
(as hereinafter defined), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii) in the case of the
Company Proxy Statement, at the time of the mailing of the Company Proxy
Statement and at the time of the Company Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event with respect to
the Company, its officers and directors or any of its Subsidiaries should occur
which is required to be described in an amendment of, or a supplement to, the
Company Proxy Statement or the Form S-4 Registration Statement, such event shall
be so described, and such amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the stockholders of the
Company. The Company Proxy Statement will (with respect to information relating
to the Company) comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder.
SECTION 4.10 Absence of Certain Changes. Except as disclosed in the Company
SEC Documents filed by the Company or as set forth in Schedule 4.10 of the
Company Disclosure Schedule, the Company and its Subsidiaries have conducted
their business in the ordinary course of business and there has not been since
January 1, 1996:
(a) any event, occurrence or facts which has had or reasonably could be
expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend (other
than regular quarterly dividends) or other distribution with respect to any
shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any Subsidiary of the Company of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary of the Company;
(c) any amendment of any term of any outstanding security of the Company
or any Subsidiary of the Company;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money other than
in the ordinary course of business;
(e) any creation or assumption by the Company or any Subsidiary of the
Company of any Lien on any asset other than in the ordinary course of
business and other than Liens which do not have and could not reasonably be
expected to have a Material Adverse Effect;
2(C)-14
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than advances to employees in the ordinary
course of business and loans, advances or capital contributions to or
investments in wholly-owned Subsidiaries of the Company made in the ordinary
course of business;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary of the Company which has had or could reasonably be expected to
have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary of the Company relating to
its assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Company or any Subsidiary of the
Company of any contract or other right, in either case, that have had or
could reasonably be expected to have a Material Adverse Effect, other than
transactions and commitments in the ordinary course of business and those
contemplated by this Agreement;
(i) any change, or any application or request to the SEC for any change,
in any method of accounting or accounting practice by the Company or any
Subsidiary of the Company, except for any such change required by reason of
a concurrent change in generally accepted accounting principles;
(j) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary of the Company, (ii)
employment, consulting, indemnification, severance, termination, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or
any Subsidiary of the Company entered into, (iii) increase in benefits
payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of the Company or any
Subsidiary of the Company, in each case, other than in the ordinary course
of business; or
(k) any authorization of any of, or commitment or agreement to take any
of, the foregoing actions except as otherwise expressly permitted by this
Agreement.
SECTION 4.11 Litigation. Except as set forth in either the Company SEC
Documents or in Schedule 4.11 of the Company Disclosure Schedule, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of the Company threatened against, the Company, any Subsidiary of the Company or
any of their respective properties before any court or arbitrator or any
Governmental Entity, which, (a) if determined or resolved adversely to the
Company or any Subsidiary of the Company in accordance with the plaintiff's
demands, could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or (b) as of the date hereof, questions the validity
of this Agreement or any action to be taken by the Company in connection with
the consummation of the transactions contemplated by this Agreement. Except as
set forth in the Company SEC Documents, as of the date of this Agreement, none
of the Company or its Subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen, could
reasonably be expected to have a Material Adverse Effect or would prevent or
materially delay the consummation of the transactions contemplated hereby.
Except as set forth in the Company SEC Documents, Schedule 4.11 of the Company
Disclosure Schedule sets forth a complete list of (x) all actions, suits,
investigations or proceedings pending against, or to the knowledge of the
Company, threatened against any former or current director or officer of the
Company or any Subsidiary of the Company and (y) to the knowledge of the
Company, all material actions, suits, investigations, or proceedings pending or
threatened against any former or current employee of the Company or any
Subsidiary of the Company, in the case of each of (x) and (y), based on, or
arising out of the fact that, such person is or was a director, officer or
employee, as the case may be, of the Company or any Subsidiary of the Company,
as well as such matters as have been completed and in respect of which the
Company has any remaining indemnification or other monetary obligations.
2(C)-15
SECTION 4.12 Taxes. (a) Except as set forth on Schedule 4.12 of the Company
Disclosure Schedule: (i) the Company and each of its Subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable extension
periods) with the appropriate Governmental Entity all income and other material
Tax Returns (as defined herein) with respect to Taxes (as defined herein) of the
Company and each of its Subsidiaries; (ii) all material Taxes with respect to
the Company and its Subsidiaries have been paid in full or have been provided
for in accordance with GAAP on the Company's most recent balance sheet which is
part of the Company SEC Documents; (iii) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any federal,
state, local or foreign income or other material Tax Returns required to be
filed by or with respect to the Company and its Subsidiaries; (iv) none of the
Tax Returns of or with respect to the Company or any of its Subsidiaries is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with respect
to the Company or any of its Subsidiaries which has not been abated or paid in
full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return" shall
mean any report, return, documents, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction with respect to
Taxes.
SECTION 4.13 Employee Matters. (a) Schedule 4.13(a) contains a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b)(1) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA"), for the benefit of any employee or former employee of the
Company, whether formal or informal and whether legally binding or not (the
"Plans"). Schedule 4.13(a) identifies each of the Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans").
(b) With respect to each of the Plans, the Company has heretofore delivered
or made available to Buyer true and complete copies of each of the following
documents:
(i) a copy of the Plan or a description of all material terms thereof
(including all amendments thereto);
(ii) a copy of the annual report, if required under ERISA, with respect
to each such Plan for the last three years;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each such Plan for the last three years; and
(iv) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be qualified
under Section 401 of the Code.
(c) No material liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate since the effective date of ERISA that has not
been satisfied in full, and no condition exists that presents a material risk to
the Company or an ERISA Affiliate of incurring a material
2(C)-16
liability under such Title, other than liability for premiums due the Pension
Benefit Guaranty Corporation ("PBGC"), which payments have been or will be made
when due.
(d) With respect to each of the ERISA Plans that is subject to Title IV of
ERISA, the present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits.
(e) Neither the Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has engaged in
a transaction or has taken or failed to take any action in connection with which
the Company, any ERISA Affiliate, any of the ERISA Plans, any such trust, any
trustee or administrator thereof, or any party dealing with the ERISA Plans or
any such trust could be subject to either a material civil penalty assessed
pursuant to Section 409 or Section 502(i) of ERISA or a material tax imposed
pursuant to Section 4975, Section 4976 or Section 4980B of the Code.
(f) Full payment has been made, or will be made in accordance with Section
404(a)(6) of the Code, of all amounts which the Company or any ERISA Affiliate
is required to pay under the terms of each of the ERISA Plans and Section 412 of
the Code.
(g) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code.
(h) The Company has not taken any action that would result in the
acceleration of any benefits under any Plan in connection with or as a result of
the execution, delivery and performance by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby.
SECTION 4.14 Labor Matters. Except to the extent set forth in Schedule 4.14
of the Disclosure Schedule (i) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending or threatened, to the knowledge of the
Company, against the Company and during the past three years there has not been
any such action; (ii) to the knowledge of the Company, there is no current union
organizing activities among the Company's employees nor does any question
concerning representation exist concerning such employees; (iii) there is no
unfair labor practice charge or complaint against the Company pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency; (iv) there is no grievance pending
relating to any collective bargaining agreement or other grievance procedure;
(v) to the knowledge of the Company, no charges with respect to or relating to
the Company are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices; (vi) the Company and its Subsidiaries have complied with the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), and other state or
local laws substantially similar in effect to the WARN Act, where the failure to
be in compliance with such state or local laws would have a Material Adverse
Effect; and (vii) there are no collective bargaining agreements, employment
contracts or severance agreements with any union or any employees of the
Company.
2(C)-17
SECTION 4.15 Compliance with Laws. Except as set forth in Schedule 4.11 (as
applicable) and Schedule 4.15 of the Company Disclosure Schedule, the Company
and its Subsidiaries, and their respective businesses, are in compliance with
all Licenses, laws, statutes, ordinances or regulations, including, but not
limited to, Environmental Laws (as defined in Section 4.17 below), except where
such violations would not have a Material Adverse Effect.
SECTION 4.16 Finders' Fees. Except for Lazard Freres & Co., L.L.C., there is
no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf, of the Company or any Subsidiary
of the Company who would be entitled to any fee or commission from the Company,
any Subsidiary of the Company, Buyer or any of Buyer's affiliates upon
consummation of the transactions contemplated by this Agreement. An executed,
true and complete copy of such engagement letter has been delivered to Buyer.
SECTION 4.17 Environmental Matters. (a) Except as set forth in the Company
SEC Documents or in Schedule 4.17 of the Company Disclosure Schedule:
(i) since January 1, 1995, the Company has not received any written
communication from any person or entity (including any Governmental Entity)
stating that it or its Subsidiaries may be a potentially responsible party
under Environmental Law (as defined in Section 4.17(c) hereof) with respect
to any actual or alleged environmental contamination; neither the Company
nor its Subsidiaries nor, to the Company's knowledge, any Governmental
Entity is conducting or has conducted any environmental remediation or
environmental investigation which could reasonably be expected to result in
liability for the Company or its Subsidiaries under Environmental Law; and
the Company and its Subsidiaries have not received any request for
information under Environmental Law from any Governmental Entity with
respect to any actual or alleged environmental contamination, except, in
each case, for communications, environmental remediation and investigations
and requests for information which would not, individually or in the
aggregate, have a Material Adverse Effect; and
(ii) since January 1, 1995, the Company and its Subsidiaries have not
received any written communication from any person or entity (including any
Governmental Entity) stating or alleging that the Company or its
Subsidiaries may have violated any Environmental Law, or that the Company or
its Subsidiaries has caused or contributed to any environmental
contamination that has caused any property damage or personal injury under
Environmental Law, except, in each case, for statements and allegations of
violations and statements and allegations of responsibility for property
damage and personal injury which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) (i) The Company has made available to Buyer each material environmental
investigation, study, audit, test, review and other analysis in the possession
of the Company or its Subsidiaries prepared in the last five years conducted in
relation to the business of the Company or any property or facility now or
previously owned, operated or leased by the Company or any Subsidiary of the
Company; and (ii) the Company has made available to Buyer each consent decree,
consent order or similar document currently in force and to which it is a party
relating to any property currently owned, leased or operated by the Company or
its Subsidiaries.
(c) For purposes of this Section 4.17, "Environmental Law" means all
applicable state, federal and local laws, regulations and rules, including
common law, judgments, decrees and orders relating to pollution, the
preservation of the environment, and the release of material into the
environment.
SECTION 4.18 Property. The Company and its Subsidiaries, as the case may be,
have good and valid title to, or in the case of leased property, have valid
leasehold interests in all properties and assets necessary to conduct the
business of the Company as currently conducted, except to the extent the failure
of this representation and warranty to be true would not have a Material Adverse
Effect. There are no developments affecting any of such properties or assets
pending or, to the knowledge of the Company threatened, which, could reasonably
be expected to have a Material Adverse Effect.
2(C)-18
SECTION 4.19 Intangible Property. (a) The Company and its Subsidiaries own
or possess adequate licenses or other valid rights to use all trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
trade secrets and applications for trademarks and for service marks, which are
material to the Company's business and operations (collectively, "Intangible
Property") used or held for use in connection with the business of the Company
and the Subsidiaries of the Company as currently conducted. All material
trademarks are validly registered or registrations have been applied for.
(b) The Company, except as set forth in Schedule 4.19(b) of the Company
Disclosure Schedule, is unaware of any assertion or claim challenging the
validity of any Intangible Property. Except as set forth in Schedule 4.19(b) of
the Company Disclosure Schedule, the conduct of the business of the Company and
its Subsidiaries as currently conducted does not conflict with any trademark,
trademark right, trade name or trade name right of any third party in a manner
that could reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, there are no material infringements of any Intangible
Property.
SECTION 4.20 Material Contracts. Except as set forth on Schedule 4.13(a),
Schedule 4.20 or Schedule 7.3 of the Company Disclosure Schedule, the Company
SEC Documents list all Material Contracts (as defined below) of the Company (and
all material amendments thereto) and all agreements or commitments to enter into
a Material Contract, and except as set forth on Schedule 4.20 of the Company
Disclosure Schedule or in the Company SEC Documents, to the knowledge of the
Company, each Material Contract is valid, binding and enforceable and in full
force and effect, except where such failure to be valid, binding and enforceable
and in full force and effect would not have a Material Adverse Effect, and there
are no defaults thereunder, except those defaults that would not have a Material
Adverse Effect. For purposes of this Agreement, "Material Contracts" shall mean
(i) all contracts, agreements or understandings with customers of the Company
and its Subsidiaries in the last fiscal year where each customers' contracts,
agreements or understandings in the aggregate account for more than $5 million
of (x) SafeCard Services, Incorporated's ("SafeCard") net annual billings or (y)
each Subsidiaries' of the Company, other than SafeCard's, annual revenues; (ii)
all the acquisition, merger, asset purchase or sale agreements entered into by
the Company in the last two fiscal years with a transaction value in excess of
$10 million; (iii) all indemnification, termination, severance, or "golden
parachute" agreements; and (iv) any other agreement within the meaning set forth
in Item 601(b)(10) Regulation S-K of Title 17, Part 229 of the Code of Federal
Regulations. Except as set forth on Schedule 4.20 of the Company Disclosure
Schedule, no party to any such Material Contract has (i) given written notice to
the Company or any Subsidiary of the Company of or made a claim in writing
against the Company or any Subsidiary of the Company with respect to any breach
or default thereunder, in any such case in which such breach or default could
reasonably be expected to have a Material Adverse Effect on the Company or (ii)
given written or, to the knowledge of the senior executive officers of the
Company, oral notice to the Company or any Subsidiary of the Company that it
does not intend to renew or it intends to terminate any of its business
relationships with the Company or any Subsidiary of the Company.
SECTION 4.21 Accounting Matters. Neither the Company nor, to the best of the
Company's knowledge, any of its affiliates has taken or agreed to take any
action that would prevent Buyer from accounting for the transactions to be
effected pursuant to this Agreement as a pooling of interests in accordance with
GAAP and applicable SEC regulations. The Company has not knowingly and willfully
failed to bring to the attention of Buyer any actions, or agreements or
understandings, whether written or oral, to act that would be reasonably likely
to prevent Buyer from accounting for the Merger as a pooling of interests. The
representations and warranties of the Company in the Company Affiliate Letter
are true and correct.
SECTION 4.22 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock necessary or required under this
Agreement or under applicable law to approve the Merger, this Agreement and the
transactions contemplated hereby.
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SECTION 4.23 Fairness Opinion. The Board of Directors of the Company has
received the written opinion of Lazard Freres & Co. L.L.C., to the effect that,
as of such date, the consideration to be received by holders of Shares pursuant
to the Merger is fair from a financial point of view to such holders. An
executed, true and complete copy of such opinion has been delivered to Buyer
and, as of the date hereof, such opinion has not been modified in any material
respect or withdrawn.
SECTION 4.24 Disclosure. No representation or warranty by the Company
contained in this Agreement and no statement contained in any certificate
delivered by the Company to Buyer or Merger Subsidiary pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein and therein not
misleading when taken together in light of the circumstances in which they were
made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and warrant to the Company that:
SECTION 5.1 Corporate Existence and Power. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and except as set
forth on Schedule 5.1 of the disclosure schedule delivered by Buyer and Merger
Subsidiary in connection herewith (the "Buyer Disclosure Schedule"), has all
corporate powers and all Licenses required to carry on its business as now
conducted except where the failure to have any such License would not,
individually or in the aggregate, have a Material Adverse Effect. Each of Buyer
and Merger Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of Buyer and Merger Subsidiary has heretofore delivered or made available
to the Company true and complete copies of Buyer's and Merger Subsidiary's
Certificate of Incorporation and By-laws as currently in effect.
SECTION 5.2 Corporate Authorization. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby are within the
corporate powers of Buyer and Merger Subsidiary and have been duly authorized by
all necessary corporate action. This Agreement, assuming due and valid
authorization, execution and delivery by the other parties hereto, constitutes a
valid and binding agreement of each of Buyer and Merger Subsidiary enforceable
against Buyer and Merger Subsidiary in accordance with its terms, except that
(i) enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 5.3 Governmental Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental
Entity other than: (i) the filing of a certificate of merger in accordance with
the DGCL; (ii) compliance with any applicable requirements of the HSR Act; (iii)
compliance with any applicable requirements of the Securities Act and Exchange
Act; (iv) compliance with the applicable requirements of any applicable takeover
laws; and (v) such other actions by or in respect of, or filings with, any
Governmental Entity the failure of which to obtain or make would not have a
Material Adverse Effect and which would not materially impair or delay the
ability of Buyer or Merger Subsidiary to consummate the transactions
contemplated hereby.
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SECTION 5.4 Non-Contravention. The execution, delivery and performance by
Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer and
Merger Subsidiary of the transactions contemplated hereby do not and will not
(i) contravene or conflict with the Certificate of Incorporation or By-laws of
Merger Subsidiary or Buyer, (ii) assuming compliance with the matters referred
to in Section 5.3 hereof, contravene or conflict with or constitute a violation
of any provision of law, regulation, judgment, injunction, order or decree
binding upon or applicable to Buyer or Merger Subsidiary, (iii) with or without
the giving of notice or passage of time or both, constitute a default under or
give rise to a right of termination, cancellation or acceleration of any right
or obligation of Buyer or Merger Subsidiary or to a loss of any benefit to which
Buyer or Merger Subsidiary is entitled under any provision of any agreement,
contract or other instrument binding upon Buyer or Merger Subsidiary or any
license, franchise, permit or other similar authorization held by Buyer or
Merger Subsidiary, or (iv) result in the creation or imposition of any Lien on
any asset of Buyer or Merger Subsidiary excluding from the foregoing clauses
(ii), (iii) or (iv) such violations, breaches, defaults or Liens which would not
have a Material Adverse Effect, and which will not materially impair or
materially delay the ability of Buyer and Merger Subsidiary to consummate the
transactions contemplated hereby.
SECTION 5.5 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus. None of the information to be supplied by Buyer and Merger
Subsidiary for inclusion or incorporation by reference in the Form S-4
Registration Statement will (i) in the case of the Form S-4 Registration
Statement at the time it becomes effective, at the Effective Time or at the
Company Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii) in the case of the
Company Proxy Statement, at the time of the mailing of the Company Proxy
Statement and at the time of the Company Stockholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event with respect to Buyer and Merger Subsidiary, their respective officers
and directors or any of Buyer's Subsidiaries should occur which is required to
be described in an amendment of, or a supplement to, the Form S-4 Registration
Statement or the Company Proxy Statement, such event shall be so described, and
such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The S-4
Registration Statement will (with respect to information relating to Buyer and
Merger Subsidiary) comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder.
SECTION 5.6 Finders' Fees. Except for Goldman, Sachs & Co., whose fees will
be paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission in connection with
or upon consummation of the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Buyer or Merger Subsidiary.
SECTION 5.7 No Vote Required. No vote or special meeting of the stockholders
of Buyer or Merger Subsidiary is necessary or required by this Agreement or
under applicable law to approve the Merger, this Agreement or the transactions
contemplated hereby.
SECTION 5.8 Share Ownership. As of the date hereof, Buyer and Merger
Subsidiary do not own any Shares.
SECTION 5.9 Capitalization. The authorized capital stock of Buyer consists
of 400,000,000 shares of Buyer Common Stock, and 1,000,000 shares of preferred
stock, par value $.01 par value per share (the "Buyer Preferred Stock"). As of
March 29, 1996, there were issued and outstanding (i) 190,460,240 shares of
Buyer Common Stock; (ii) no shares of Buyer Preferred Stock; and (iii) options
to purchase an aggregate of 21,056,064 shares of Buyer Common Stock with
exercise prices ranging from $.36 to $35.75. All of the outstanding shares of
capital stock of Buyer have been duly authorized and validly issued and are
fully paid and nonassessable. Schedule 5.9 of the Buyer Disclosure Schedule
accurately sets forth, as of the date of this Agreement, certain information
regarding the outstanding
2(C)-21
options, and such information is true and correct. Except as set forth in this
Section 5.9 or as disclosed on Schedule 5.9 of the Buyer Disclosure Schedule or
in the Buyer SEC Documents, and except for changes since March 29, 1996
resulting from the exercise of employee stock options outstanding on such date,
as of the date of this Agreement, there are outstanding (i) no shares of capital
stock or other voting securities of Buyer, (ii) no securities of Buyer or of any
Subsidiary of Buyer convertible into or exchangeable for shares of capital stock
or voting securities of Buyer, and (iii) no options or other rights to acquire
from Buyer, and no obligation of Buyer to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Buyer Securities"). There are no outstanding
obligations of Buyer or of any Subsidiary of Buyer to repurchase, redeem or
otherwise acquire any Buyer Securities. There are no stockholder agreements,
voting trusts or understandings to which Buyer is a party or to which it is
bound relating to the voting of any shares of capital stock of Buyer.
SECTION 5.10 Accounting Matters. Neither Buyer, nor Merger Subsidiary, nor,
to the best of Buyer's or Merger Subsidiary's knowledge, any of its affiliates
has taken or agreed to take any action that would prevent Buyer or Merger
Subsidiary from accounting for the transactions to be effected pursuant to this
Agreement as a pooling of interests in accordance with GAAP and applicable SEC
regulations. Buyer has not knowingly and willfully failed to bring to the
attention of the Company any actions, or agreements or understandings, whether
written or oral, to act that would be reasonably likely to prevent Buyer from
accounting for the Merger as a pooling of interests.
SECTION 5.11 Ownership of Merger Subsidiary; No Prior Activities; Assets of
Merger Subsidiary. (a) Merger Subsidiary was formed solely for the purpose of
the Merger and engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital stock of
Merger Subsidiary is and will be directly owned 100% by Buyer. Further, there
are not as of the date hereof and there will not be at the Effective Time any
outstanding or authorized options, warrants, calls, rights, commitments or any
other agreements of any character which Merger Subsidiary is a party to, or may
be bound by, requiring it to issue, transfer, sell, purchase, redeem or acquire
any shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire, any
shares of capital stock of Merger Subsidiary.
(c) As of the date hereof and the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated hereby, Merger Subsidiary has not and will not
have incurred, directly or indirectly through any Subsidiary or affiliate, any
obligations or liabilities or engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
Person or entity.
SECTION 5.12 SEC Documents. Buyer has filed all required reports, proxy
statements, forms and other documents with the SEC since January 1, 1994 ("Buyer
SEC Documents"). As of their respective dates (i) the Buyer SEC Documents
complied in all material respects with the requirements of the Securities Act,
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Buyer SEC Documents, and (ii) none
of the Buyer SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
SECTION 5.13 Financial Statements. The consolidated financial statements of
Buyer included in the Buyer SEC Documents (i) comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared in
conformity with GAAP applied on a consistent basis (except in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) during the periods
involved (except as may be indicated in the related notes and schedules thereto)
and (iii) fairly present in all material respects the
2(C)-22
consolidated financial position of Buyer and its consolidated subsidiaries as of
the dates thereof, and the results of its operations and its cash flows for the
periods then ended (subject, in the case of the unaudited statements, to normal
year-end audit adjustments and except that, in the case of financial statements
included therein which were later restated to account for one or more business
combinations accounted for as poolings-of-interest, such original financial
statements do not reflect such restatements).
SECTION 5.14 Absence of Certain Changes or Events. Except as disclosed in
the Buyer SEC Documents filed by Buyer and as set forth in Schedule 5.14 of the
Buyer Disclosure Schedule, since the date of the most recent consolidated
balance sheet included in the Buyer SEC Documents filed and publicly available
prior to date of this Agreement, the business of Buyer has been carried on only
in the ordinary and usual course and there has not been any adverse change in
its business, properties, operations or financial condition and no event has
occurred and no fact or set of circumstances has arisen which has resulted in or
could reasonably be expected to result in a Material Adverse Effect.
SECTION 5.15 Litigation. Except as set forth in either Buyer SEC Documents
or in Schedule 5.15 of the Buyer Disclosure Schedule, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of Buyer or
Merger Subsidiary threatened against, Buyer or Merger Subsidiary or any of their
respective properties before any court or arbitrator or any Governmental Entity,
which, (a) if determined or resolved adversely to Buyer or Merger Subsidiary in
accordance with the plaintiff's demands, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or (b) as of the
date of this Agreement, questions the validity of this Agreement or any action
to be taken by Buyer or Merger Subsidiary in connection with the consummation of
the transactions contemplated by this Agreement. Except as publicly disclosed by
Buyer, as of the date of this Agreement, none of Buyer or its Subsidiaries is
subject to any outstanding order, writ, injunction or decree which, insofar as
can be reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on Buyer or would prevent or materially delay the
consummation of the transactions contemplated hereby.
SECTION 5.16 Authorization for Buyer Common Stock. Buyer has taken all
necessary action to permit it to issue the number of shares of Buyer Common
Stock required to be issued pursuant to this Agreement. Shares of Buyer Common
Stock issued pursuant to Agreement will, when issued, be validly issued, fully
paid and nonassessable and no person will have any preemptive right of
subscription or purchase in respect thereof. Shares of Buyer Common Stock will,
when issued, be registered under the Securities Act and the Exchange Act and
registered or exempt from registration under any applicable state securities
laws and will, when issued, be listed on the NYSE, subject to official notice of
issuance.
2(C)-23
SECTION 5.17 Taxes. Except as set forth on Schedule 5.17 of the Buyer
Disclosure Schedule: (i) Buyer and each of its Subsidiaries has filed or has had
filed on its behalf in a timely manner (within any applicable extension periods)
with the appropriate Governmental Entity all income and other material Tax
Returns with respect to Taxes of Buyer and each of its Subsidiaries; (ii) all
material Taxes with respect to Buyer and its Subsidiaries have been paid in full
or have been provided for in accordance with GAAP on the Buyer's most recent
balance sheet which is part of the Buyer SEC Documents; (iii) there are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any federal, state, local or foreign income or other material Tax
Returns required to be filed by or with respect to Buyer and its Subsidiaries;
(iv) none of the Tax Returns of or with respect to Buyer or any of its
Subsidiaries is currently being audited or examined by any Governmental Entity;
and (v) no deficiency for any income or other material Taxes has been assessed
with respect to Buyer or any of its Subsidiaries which has not been abated or
paid in full.
SECTION 5.18 Disclosure. No representation or warranty by Buyer or Merger
Subsidiary contained in this Agreement and no statement contained in any
certificate delivered by Buyer or Merger Subsidiary to the Company pursuant to
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein and
therein not misleading when taken together in light of the circumstances in
which they were made.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1 Conduct of the Company. From the date hereof until the Effective
Time, the Company and its Subsidiaries shall conduct their business in the
ordinary course and shall use their reasonable efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees. Without limiting
the generality of the foregoing other than as set forth on Schedule 6.1 of the
Company Disclosure Schedule, as specifically contemplated by this Agreement or
with the written consent of Buyer or Merger Subsidiary (which consent shall not
be unreasonably withheld or delayed), from the date hereof until the Effective
Time, the Company will not (and will not cause or permit any Subsidiary to):
(a) split, combine or reclassify any shares of capital stock, declare,
set aside or pay any dividend (other than regular quarterly dividends and
any dividend of a wholly-owned Subsidiary of the Company to the Company or
another wholly-owned Subsidiary of the Company) or other distribution
(whether in cash, stock or property or any combination thereof) with respect
to any shares of capital stock of the Company, or any repurchase, redemption
or other acquisition by the Company or any Subsidiary of the Company of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary of the Company;
(b) amend any term of any outstanding security of the Company or any
Subsidiary of the Company;
(c) except for working capital purposes pursuant to the Revolving Credit
Agreement, dated as of February 8, 1996, by and among the First National
Bank of Boston, Fleet Bank of Maine, Key Bank of Maine, Bank of Scotland and
Wright Express Corporation, and, except in the ordinary course of business
consistent with past practice pursuant to the Equipment Financing Agreement,
dated as of February 7, 1996, by and between The First National Bank of
Boston and Wright Express Corporation, incur, assume or guarantee any
indebtedness for borrowed money of (x) except in the ordinary course of
business in an amount not to exceed $500,000 in the aggregate at any one
time outstanding, the Company or any Subsidiary of the Company or (y) any
other Person;
2(C)-24
(d) create, assume or suffer to exist any Lien on any material asset,
other than in the ordinary course of business;
(e) make any loan, advance or capital contribution to or invest in any
Person, other than in the ordinary course of business;
(f) cause any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary of the Company which has had or could reasonably be expected to
have a Material Adverse Effect;
(g) (x) other than in the ordinary course of business consistent with
past practice, (i) enter into any transaction, commitment, contract or
agreement by the Company or any Subsidiary of the Company relating to their
assets or business (excluding the acquisition or disposition of any assets)
or (ii) relinquish any contract or other right, that (with respect to (ii))
has had or could reasonably be expected to have a Material Adverse Effect,
other than (with respect to each of (i) and (ii)) those expressly permitted
by this Agreement or (y) enter into any transaction, commitment, contract or
agreement to acquire or dispose of any assets of the Company or any
Subsidiary of the Company in excess of $150,000 in any individual
transaction or $750,000 in the aggregate;
(h) change, or apply to the SEC for, or request from the SEC any change
of, any method of accounting or accounting practice by the Company or any
Subsidiary of the Company, except for any such change required by reason of
a concurrent change in GAAP;
(i) (A) grant any severance or termination pay to any current or former
director or executive officer, or, other than in the ordinary course of
business, to any officer or any other employee of the Company or any
Subsidiary of the Company, (B) enter into any employment, consulting,
indemnification, severance, termination, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
current or former director or executive officer, or other than in the
ordinary course of business, with any officer or any other employee of the
Company or any Subsidiary of the Company, (C) other than in the ordinary
course of business, increase the benefits payable under any existing
severance or termination pay policies or employment agreements or (D)
increase the compensation, bonus or other benefits payable to any current or
former director or executive officer, or other than in the ordinary course
of business, to any officer or any other employee of the Company or any
Subsidiary of the Company;
(j) amend its certificate of incorporation or bylaws (or other similar
governing instrument);
(k) authorize for issuance, sell, deliver or agree to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights) of the Company,
except for the issuance of stock upon the exercise of Options outstanding on
the date of this Agreement;
(l) except as may be required pursuant to GAAP, revalue in any material
respect any of its assets, including, without limitation, writing down the
value of inventory or writing-off notes or accounts receivable other than in
the ordinary course of business;
(m) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(n) make or revoke any tax election or settle or compromise any tax
liability, in each case, material to the Company and its Subsidiaries taken
as a whole or change (or make a request to any taxing authority to change)
any material aspect of its method of accounting for tax purposes;
(o) subject to Section 6.1(q) below, pay, discharge or satisfy any
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
2(C)-25
discharge or satisfaction in the ordinary course of business of liabilities
or obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or notes thereof) of the Company and its
Subsidiaries or incurred in the ordinary course of business consistent with
past practice;
(p) except as otherwise permitted by paragraph (i) or as set forth on
Schedule 6.1(p) of the Company Disclosure Schedule, settle or compromise any
pending or threatened suit, action, or proceeding;
(q) enter into any agreement or understanding, whether oral or written,
with any Halmos Entity or Halmos Assign (as each such term is defined in
Section 7.3(c)); except for agreements or understandings in the ordinary
course necessary for the continued defense or prosecution of any such
pending litigation matters set forth in Schedule 4.11 of the Company
Disclosure Schedule or as disclosed in the Company SEC Documents; or
(r) take, authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise expressly permitted by this Agreement.
SECTION 6.2 Stockholder Meeting; Proxy Material. The Company shall cause a
meeting of its stockholders (including any postponements or adjournments
thereto, the "Company Stockholder Meeting") to be duly called and held as soon
as reasonably practicable for the purpose of voting on the approval and adoption
of this Agreement and the Merger. The Board of Directors of the Company shall
recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders; provided that the Company's Board of Directors may
withdraw, modify or change such recommendation if it has determined, based upon
the advice of outside legal counsel to the Company, that such recommendation
would be reasonably likely to be inconsistent with the Board of Directors'
fiduciary duties under applicable law. The Company will (i) as promptly as
practicable following the date of this Agreement, prepare and file with the SEC,
will use its reasonable efforts to have cleared by the SEC and thereafter mail
to its stockholders as promptly as practicable, a proxy statement that will be
the same proxy statement/prospectus contained in the Form S-4 Registration
Statement (as hereinafter defined) and a form of proxy, in connection with the
vote of the Company's stockholders with respect to the Merger (such proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's stockholders,
is herein called the "Company Proxy Statement"), (ii) use its reasonable efforts
to obtain the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) otherwise comply in all material
respects with all legal requirements applicable to such meeting. The Company
may, if it withdraws, modifies or changes its recommendation in accordance with
this Section 6.2, delay the filing or mailing, as the case may be, of the
Company Proxy Statement or the holding of the Company Stockholder Meeting, in
each case only to the extent necessary to revise the Company Proxy Statement to
reflect such withdrawal, modification or change and, in the case of the Company
Stockholder Meeting, to provide the minimum notice thereof required under
applicable law, the Company Certificate of Incorporation or the Company By-laws.
In addition, the Company will upon reasonable advance notice provide Buyer with
all financial and other data regarding the Company as may be reasonably
requested by Buyer in connection with the proxy statements and registration
statements on Form S-4 relating to the transactions described in Schedule 6.2 of
the Buyer Disclosure Schedule. The Company acknowledges that such proxy
statements and registration statements may be required to include such data
concerning the Company, and that the Company Proxy Statement may be required to
contain certain financial and other data concerning the other parties to such
transactions.
SECTION 6.3 Access to Information; Confidential Agreement. (a) From the date
hereof until the Effective Time, the Company will give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to the offices, properties, books and
records of the Company and the Subsidiaries of the Company, will furnish to
Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's
2(C)-26
employees, counsel and financial advisors to cooperate with Buyer in its
investigation of the business of the Company and the Subsidiaries of the
Company; provided that all requests for information, to visit plants or
facilities or to interview the Company's employees or agents should be directed
to and coordinated with an executive officer of the Company; and provided
further that no investigation pursuant to this Section 6.3 shall affect any
representation or warranty given by the Company to Buyer hereunder and any
information received by Buyer or its representatives shall remain subject to the
Confidentiality Agreement dated February 13, 1996 between Buyer and the Company
(the "Confidentiality Agreement").
(b) The parties hereto agree that the Confidentiality Agreement shall be
hereby amended to provide that any provision therein which in any manner limits,
restricts or prohibits the voting or acquisition of Shares by Buyer or any of
its affiliates or the representation of Buyer's designees on the Company's Board
of Directors or which in any manner would be inconsistent with this Agreement or
the transactions contemplated hereby shall be amended as of the date hereof to
permit the acquisition of Shares pursuant to the Merger, the voting of Shares at
the Company Stockholder Meeting or to otherwise effect the transactions
contemplated hereby. The Confidentiality Agreement shall otherwise remain in
full force and effect.
SECTION 6.4 No Solicitation. (a) From the date of this Agreement until the
termination of this Agreement in accordance with its terms, the Company and its
Subsidiaries will not, and the Company will use its reasonable best efforts to
ensure that the respective officers, directors and employees of the Company and
its Subsidiaries, and any investment banker, financial advisor, attorney,
accountant or other representative or agent retained by it or any of its
Subsidiaries, will not (i) solicit, initiate or encourage (including by way of
furnishing information) any Acquisition Proposal (as defined below) or (ii)
participate or engage in negotiations or discussions, or disclose any nonpublic
information relating to the Company or any Subsidiary of the Company or afford
access to the properties, books or records of the Company or any Subsidiary of
the Company, regarding any Acquisition Proposal; provided that, if the Company's
Board of Directors determines, based upon the advice of outside legal counsel to
the Company, that the failure to engage in such negotiations or discussions or
provide such information would be reasonably likely to be inconsistent with the
Board of Directors' fiduciary duties under applicable law, the Company may in
response to an Acquisition Proposal and subject to compliance with Section
6.4(c), furnish information with respect to the Company and its Subsidiaries
pursuant to a confidentiality agreement and participate in negotiations
regarding such Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any inquiry, offer or proposal from any person
relating to any direct or indirect acquisition or purchase of a substantial
portion of the assets of the Company or any of its Subsidiaries or of over 20%
of any class of equity securities of the equity interest of the Company or any
of its Subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more equity interest of
any class of equity securities of the Company or any of its Subsidiaries, any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement. Nothing contained in this Section 6.4 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
making such disclosure as may be required by applicable law; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except as permitted by Section 6.2 or 6.4(b), withdraw, modify or change, or
propose to withdraw, modify or change, its recommendation of approval and
adoption of this Agreement and the Merger or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal.
(b) Except as set forth in this Section 6.2 or Section 6.4(b), neither the
Company nor the Board of Directors of the Company nor any committee thereof
shall (x) withdraw, modify or change, or propose to withdraw, modify or change,
in a manner adverse to Buyer, the recommendation by such Board of Directors or
such committee of the approval and adoption of this Agreement and the Merger,
(y)
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approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (z) cause the Company to enter into any agreement with respect to
any Acquisition Proposal. Notwithstanding the foregoing, in the event that the
Board of Directors of the Company determines, based upon the advice of outside
legal counsel to the Company, that the failure to take any of the actions
contemplated by the preceding sentence would be reasonably likely to be
inconsistent with the Board of Directors' fiduciary duties, the Board of
Directors of the Company may withdraw, modify or change its recommendation of
approval and adoption of this Agreement and the Merger, approve or recommend a
Superior Proposal or cause the Company to enter into an agreement with respect
to a Superior Proposal; but in the case of approving, recommending or causing
the Company to enter into an agreement with respect to a Superior Proposal, only
at a time that is after the second day following Buyer's receipt of written
notice (a "Notice of Superior Proposal") advising Buyer that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. In addition, if the Company enters into an
agreement with respect to a Superior Proposal and this Agreement is terminated
pursuant to Section 10.1(vi)(B) or Section 10.1(vii), the Company shall promptly
pay, or cause to be paid, to Buyer, the Buyers' Expenses (as such term is
defined in Section 12.4). For purposes of this Agreement, a "Superior Proposal"
means any bona fide Acquisition Proposal to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the shares
of the Company common stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Merger.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 6.4, the Company shall notify Buyer in writing
within one business day of any request for information or of any Acquisition
Proposal, or any inquiry with respect to or which would reasonably be expected
to result in an Acquisition Proposal, the material terms and conditions of such
request, Acquisition Proposal or inquiry. The Company will use it reasonable
best efforts to keep Buyer informed of the status and details (including
amendments or proposed amendments) of any such request, Acquisition Proposal or
inquiry.
SECTION 6.5 Conveyance Taxes. The Company shall timely pay any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes (collectively, the "Conveyance Taxes") which become payable prior to the
Effective Time in connection with the transactions contemplated hereunder that
are required to be paid in connection therewith.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.1 Obligations of Merger Subsidiary. Buyer will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
SECTION 7.2 Voting of Shares. Merger Subsidiary shall and Buyer shall cause
Merger Subsidiary to vote all Shares, if any, beneficially owned by Merger
Subsidiary or its affiliates in favor of adoption and approval of the Merger and
this Agreement at the Company Stockholder Meeting.
SECTION 7.3 Director and Officer Liability. (a) Buyer, Merger Subsidiary and
the Company agree that all rights to indemnification and all limitations on
liability existing in favor of any Indemnitee (as defined below) as provided in
the Company Certificate of Incorporation, Company By-laws or any Indemnity
Agreement (as hereinafter defined) shall survive the Merger and continue in full
force and
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effect. To the extent permitted by (i) the DGCL, (ii) the Company's Certificate
of Incorporation and the Company's By-laws or (iii) any agreement providing for
indemnification by the Company or any Subsidiary of the Company of any
Indemnitee (A) in effect on the date of this Agreement (or entered into
thereafter in accordance with the provisions of Section 6.1 of this Agreement)
and listed on Schedule 7.3 of the Company Disclosure Schedule (unless entered
into after the date hereof in accordance with Section 6.1) or (B) in effect on
the date of this Agreement and listed in the Company SEC Documents (each, an
"Indemnity Agreement"), advancement of Expenses (as hereinafter defined)
pursuant to this Section 7.3 shall be mandatory rather than permissive and the
Surviving Corporation shall advance Costs (as defined in Section 7.3(b) hereof)
in connection with such indemnification. Buyer shall, and shall cause the
Surviving Corporation to, expressly assume and honor in accordance with their
terms all Indemnity Agreements.
(b) In addition to the other rights provided for in this Section 7.3 and not
in limitation thereof (but without in any way limiting or modifying the
obligations of any insurance carrier contemplated by Section 7.3(d)), for ten
years from and after the Effective Time, Buyer shall, and shall cause the
Surviving Corporation to, to the fullest extent permitted by applicable law, (i)
indemnify and hold harmless the individuals who on or prior to the Effective
Time were officers, directors or employees of the Company or any of its
Subsidiaries, and the heirs, executors, trustees, fiduciaries and administrators
of such officers, directors or employees (collectively, the "Indemnitees," which
term shall not include any Halmos Entity or other Person described or referred
to in Section 7.3(c) hereof, even if any such Halmos Entity or other Person is
or was an officer, director or employee of the Company) against all losses,
Expenses (as hereinafter defined), claims, damages, liabilities, judgments, or
amounts paid in settlement (collectively, "Costs") in respect to any threatened,
pending or completed claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative based on, or arising out of or relating to the
fact that such person is or was a director, officer or employee of the Company
or any of its Subsidiaries and arising out of acts or omissions occurring on or
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions contemplated
hereby) (an "Indemnifiable Claim") and (ii) advance to such Indemnitees all
Expenses incurred in connection with any Indemnifiable Claim promptly after
receipt of reasonably detailed statements therefor; provided, that, except as
otherwise provided pursuant to any Indemnity Agreement, the person to whom
Expenses are to be advanced provides an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to indemnification
from Buyer or the Surviving Corporation. In the event any Indemnifiable Claim is
asserted or made within such ten year period, all rights to indemnification and
advancement of Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such Indemnifiable Claim are fully
satisfied; provided, however, that Buyer shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). Except as otherwise may be provided pursuant to any
Indemnity Agreement, the Indemnitees as a group may retain only one law firm
with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Indemnitees; provided, that, any law firm or firms so retained shall be
reasonably acceptable to Buyer. For the purposes of this Section 7.3, "Expenses"
shall include reasonable attorneys' fees and all other costs, charges and
expenses paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in any Indemnifiable Claim.
(c) Notwithstanding the foregoing, with respect to any Indemnifiable Claim
commenced or threatened by or on behalf of, (i) Peter Halmos, Steven Halmos,
Halmos Trading and Investment Company, The Halmos Foundation, Creditline
Corporation, Continuity Marketing Corporation and High Plains Capital
Corporation (collectively, the "Halmos Entities"), (ii) any heirs, executors,
successors, family members, assigns and any other Person claiming by, through or
because of, a Halmos Entity ("Halmos Assign"), (iii) a Person that directly or
indirectly, whether through the ownership of voting securities or otherwise,
controls or is controlled by or is under common control with any Halmos
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Entity, (iv) any Person in which any Halmos Entity or Halmos Assign has a 10%
ownership interest, (v) any employee or agent as of the date of this Agreement
of any Halmos Entity or (vi) any Person acting at the direct or indirect request
of any Halmos Entity or Halmos Assign, against any Indemnitee asserted at any
time after ten years after the Effective Time, Buyer shall, and shall cause the
Surviving Corporation to, indemnify and hold harmless and advance Expenses to
such Indemnitees to the extent provided in Section 7.3(b), but without any time
limit on the period for which the obligation of Buyer pursuant to this Section
7.3(c) shall be in effect.
(d) For three years from the Effective Time, Buyer will, and will cause the
Surviving Corporation to maintain in effect the Company's current directors' and
officers' liability insurance covering those Persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy of
which has been made available to Buyer), or Buyer may substitute therefor
policies for directors' and officers' liability insurance covering such Persons
for at least the same coverage with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall Buyer be required to
expend in any one year an amount in excess of $887,040 (i.e., the amount that is
200% of the annual premiums currently paid by the Company for such insurance);
provided, further, that if the annual premiums of such insurance coverage exceed
such amount, Buyer shall be obligated to cause the Surviving Corporation to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount. In the event that any Indemnitee is entitled to coverage under an
officers' and directors' liability insurance policy pursuant to this Section
7.3(d) and such policy has lapsed, terminated, been repudiated or is otherwise
in breach or default as a result of Buyer's failure to maintain and fulfill its
obligations pursuant to such policy as provided in this Section 7.3(d), Buyer
shall, and shall cause the Surviving Corporation to pay to the Indemnitee such
amounts and provide any other coverage or benefits as the Indemnitee shall have
received pursuant to such policy. Buyer agrees that, should the Surviving
Corporation fail to comply with the obligations of this Section 7.3, Buyer shall
be responsible therefor.
(e) Notwithstanding any other provisions hereof, the obligations of the
Company, the Surviving Corporation and Buyer contained in this Section 7.3 shall
be binding upon the successors and assigns of Buyer and the Surviving
Corporation. In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person or (ii) transfers all or substantially all of its properties or
assets to any Person, then, and in each case, proper provision shall be made so
that successors and assigns of the Company or the Surviving Corporation, as the
case may be, honor the indemnification obligations set forth in this Section
7.3.
(f) The obligations of the Company, the Surviving Corporation, and Buyer
under this Section 7.3 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 7.3 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 7.3 applies shall be third party beneficiaries
of this Section 7.3).
(g) Buyer shall, and shall cause the Surviving Corporation to, advance all
Expenses to any Indemnitee incurred by enforcing the indemnity or other
obligations provided for in this Section 7.3.
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ARTICLE VIII
COVENANTS OF BUYER, MERGER SUBSIDIARY
AND THE COMPANY
The parties hereto agree that:
SECTION 8.1 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 8.2 Certain Filings. The Company and Buyer shall cooperate with one
another (a) in connection with the preparation of the Proxy Statement and the
Form S-4 Registration Statement, and (b) in determining whether any action by or
in respect of, or filing with, any Governmental Entity is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (c) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company Proxy Statement
or the Form S-4 Registration Statement and seeking timely to obtain any such
actions, consents, approvals or waivers.
SECTION 8.3 Public Announcements. Buyer, Merger Subsidiary and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange or foreign securities
exchange, as determined by Buyer, Merger Subsidiary or the Company, as the case
may be, will not issue any such press release or make any such public statement
prior to such consultation.
SECTION 8.4 Conveyance Taxes. Buyer and the Company shall cooperate in the
preparation, execution and filing of all Tax Returns, questionnaires,
applications, or other documents regarding any Conveyance Taxes which become
payable in connection with the transactions contemplated hereunder that are
required to be filed on or before the Effective Time.
SECTION 8.5 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 8.6 Employee Matters. (a) For a period of one year immediately
following the Effective Time, Buyer agrees to cause the Surviving Corporation
and its Subsidiaries to provide to all active employees of the Company as of the
Effective Time who continue to be employed by the Company ("Continuing
Employees") coverage under group medical, dental, 401(k) savings, disability
insurance, life insurance, accidental death and disability, and vacation plans
or arrangements which are, in the aggregate, substantially similar to the Plans
providing such benefits to the employees immediately prior to the Effective
Time.
(b) Buyer shall, and shall cause its Subsidiaries to, honor in accordance
with their terms all agreements, contracts, arrangements, commitments and
understandings described in Schedule 8.6 of the Company Disclosure Schedule.
(c) For a period of one year immediately following the Closing Date, Buyer
agrees to cause the Surviving Corporation and its Subsidiaries to provide to all
active employees of the Company at the
2(C)-31
Closing Date which may be affected by any reduction in force subsequent to the
Closing Date the benefits set forth in the Severance Policy adopted by the Board
of Directors of the Company in connection with the July 1995 restructuring and
applied in the September 1995 and December 1995 restructurings and adopted by
resolution for any reductions in force in 1996 at the February 6, 1996 meeting
of the Board of Directors.
SECTION 8.7 Company Proxy Statement and Registration Statement. Buyer will,
as promptly as practicable, prepare and, following receipt of notification from
the SEC that it has no further comments on the Company Proxy Statement, file
with the SEC a registration statement on Form S-4 (the "Form S-4 Registration
Statement"), containing the Company Proxy Statement, and the prospectus in
connection with the registration under the Securities Act of Buyer Common Shares
issuable upon conversion of the Shares and the other transactions contemplated
hereby. Buyer will cooperate with the Company in the preparation and filing of
the Company Proxy Statement and will provide the Company with all financial and
other data concerning Buyer (including, if required, pro forma financial
statements and financial and other data regarding the other parties to the
transactions described in Schedule 6.2 of the Buyer Disclosure Schedule) as is
necessary in order for the Company to prepare the Company Proxy Statement. Buyer
and the Company will, and will cause their accountants and lawyers to, use their
best efforts to have or cause the Form S-4 Registration Statement declared
effective as promptly as practicable, including, without limitation, causing
their accountants to deliver necessary or required instruments such as opinions
and certificates, and will take any other action required or necessary to be
taken under federal or state securities laws or otherwise in connection with the
registration process.
SECTION 8.8 Tax-Free Reorganization Treatment. The Company, Buyer and Merger
Subsidiary shall execute and deliver to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Company, a certificate substantially in the form attached hereto
as Exhibit 2 or Exhibit 3, as the case may be, (the "Buyer Tax Certificate" and
the "Company Tax Certificate", as the case may be) at such time or times as
reasonably requested by such law firm in connection with its delivery of an
opinion with respect to the transactions contemplated hereby, and shall provide
a copy thereof to Buyer and the Company. Prior to the Effective Time, none of
the Company, Buyer and Merger Subsidiary shall take or cause to be taken any
action which would cause to be untrue (or fail to take or cause not to be taken
any action which would cause to be true) any of the information, representations
or covenants in Exhibit 2 or Exhibit 3, as the case may be.
SECTION 8.9 Notification of Certain Matters. The Company shall give prompt
notice to Buyer and Merger Subsidiary, and Buyer and Merger Subsidiary shall
give prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of the Company, Buyer or Merger Subsidiary, as the case may be,
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice of,
or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any material contract or agreement, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect, other than changes resulting from
general economic conditions; provided, however, that the delivery of any notice
pursuant to this Section 8.9 shall not cure such breach or noncompliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 8.10 Blue Sky Permits. Buyer shall use its best efforts to obtain,
prior to the effective date of the Form S-4 Registration Statement, all
necessary state securities laws or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Merger, and
will pay all expenses incident thereto.
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SECTION 8.11 NYSE Listing. Buyer shall use its best efforts to cause the
shares of Buyer Common Stock constituting the Merger Consideration to be listed
on the NYSE, subject to notice of official issuance thereof.
SECTION 8.12 Pooling Letter. (a) Buyer shall use its best efforts to cause
Ernst & Young LLP, its independent auditors, to deliver to Buyer a letter to the
effect that pooling of interests accounting (under Accounting Principles Board
Opinion No. 16) is appropriate for the Merger, provided that the Merger is
consummated in accordance with the terms and conditions of this Agreement, and
the Company shall use its best efforts to cause its independent auditors, Price
Waterhouse LLP, to cooperate fully with Ernst & Young LLP (including, without
limitation, by delivering to the Company a letter substantially similar to Ernst
& Young LLP's letter to Buyer) in connection with the delivery to Buyer of such
letter.
(b) The Company shall use its best efforts to cause Price Waterhouse LLP to
deliver to the Company a letter to the effect that pooling of interests
accounting (under Accounting Principles Board Opinion No. 16) is appropriate for
the Merger, provided that the Merger is consummated in accordance with the terms
and conditions of this Agreement, and Buyer shall use its best efforts to cause
Ernst & Young LLP to cooperate fully with Price Waterhouse LLP (including,
without limitation, by delivering to Buyer a letter substantially similar to
Price Waterhouse LLP's letter to the Company) in connection with the delivery to
the Company of such letter.
SECTION 8.13 Pooling. The Company and Buyer each agrees that it will not
knowingly take any action which could prevent the Merger from being accounted
for as a pooling of interests for accounting purposes (under Accounting
Principles Board Opinion No. 16) and the Company will bring to the attention of
Buyer, and Buyer will bring to the attention of the Company, any actions, or
agreements or understandings, whether written or oral, that could be reasonably
likely to prevent Buyer from accounting for the Merger as a pooling of
interests. The Company will use its reasonable best efforts to inform all
Company Affiliates and other relevant employees as to those actions that should
or should not be taken by such persons so that the Merger will be accounted for
as a pooling of interests.
SECTION 8.14 SEC Filings. Each of Buyer and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its Subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
SECTION 8.15 Affiliate Agreements. Buyer and Merger Subsidiary shall have
received the Affiliate Letters from the Company Affiliates.
SECTION 8.16 Affiliates. Promptly upon the Company obtaining knowledge of
persons who, to the best knowledge of the Company, following the date of this
Agreement until the Effective Time, become "affiliates" of the Company for
purposes of Rule 145 of the Securities Act, the Company shall use its reasonable
best efforts to identify any such person in writing to Buyer, and will use its
reasonable best efforts to cause such persons prior to the mailing of the
Company Proxy Statement, or if thereafter as soon as reasonably practicable, to
deliver to Buyer an Affiliate Letter; provided, however, that the Company will
not affirmatively, without the prior written consent of Buyer, take any action,
by hiring or appointing a new officer or director or otherwise, so as to cause
any person to become an "affiliate" unless such person executes an Affiliate
Letter prior thereto.
2(C)-33
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of Each Party. The obligations of
the Company, Buyer and Merger Subsidiary to consummate the Merger are subject to
the satisfaction on or prior to the Effective Time of the following conditions,
except to the extent permitted by applicable law, that such conditions may be
waived:
(i) Stockholder Approval. The Merger shall have been duly approved by a
majority of the votes cast by stockholders of the Company entitled to vote
thereon in accordance with applicable law and the Company Certificate of
Incorporation and Company By-laws.
(ii) Listing of Buyer Common Stock. The shares of Buyer Common Stock
issuable in accordance with the Merger shall have been approved for listing
on the NYSE, subject to official notice of issuance.
(iii) Registration Statement. The Form S-4 Registration Statement shall
have become effective in accordance with the provisions of the Securities
Act, and no order suspending such effectiveness shall have been issued and
remain in effect.
(iv) HSR Act. Any applicable waiting period under the HSR Act relating
to the Merger shall have expired.
(v) No Injunction. No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the consummation of
the Merger or any transactions contemplated hereby.
(vi) Pooling. Buyer shall have received a letter from Ernst & Young LLP
and the Company shall have received a letter from Price Waterhouse LLP each
to the effect that pooling of interests accounting (under Accounting
Principles Board Opinion No. 16) is appropriate for the Merger, provided
that the Merger is consummated in accordance with the terms of this
Agreement; provided, further, that the foregoing shall not be a condition to
the Company's obligations if either Price Waterhouse LLP or Ernst & Young
LLP is unable to deliver such letter as a result of the Company having
breached the Company's representation set forth in Section 4.21 or the
Company's covenants set forth in Sections 8.12, 8.13 or 8.16 or the Company
or any of its affiliates having taken or failed to take any other action, in
any such case that would prevent, in the opinion of such firm, Buyer from
accounting for the Merger as a pooling of interests.
SECTION 9.2 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the satisfaction on or prior
to the Effective Time of the following conditions, except to the extent
permitted by applicable law, that such conditions may be waived:
(i) Performance of Obligations Buyer and Merger Subsidiary. Each of
Buyer and Merger Subsidiary will have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement
which are required to be performed by it at or prior to the Effective Time.
(ii) Representations and Warranties. The representations and warranties
of Buyer and Merger Subsidiary set forth in this Agreement shall be true and
correct in all material respects (i) on and as of the date hereof and (ii)
on and as of the Closing Date with the same effect as thought such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of a
specific date or time which need only be true and correct as of such date
and time).
2(C)-34
(iii) Closing Certificate. The Company shall have received a certificate
signed by the chief executive officer of Buyer, dated the Closing Date, to
the effect that, to the best of such officer's knowledge, the conditions set
forth in Section 9.2(i) and 9.2(ii) hereof have been satisfied.
(iv) Tax Opinion. The Company shall have received an opinion of Skadden,
Arps, Slate, Meagher & Flom, counsel to the Company, in form and substance
reasonably satisfactory to the Company, dated as of the Effective Time,
substantially to the effect that on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts then existing, the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code, and, accordingly, for United
States federal income tax purposes, that:
(A) no gain or loss will be recognized by the Company, Buyer or
Merger Subsidiary as a result of the Merger;
(B) no gain or loss will be recognized by a stockholder of the
Company whose Shares are exchanged solely for Buyer Common Stock pursuant
to the Merger (except with respect to cash received by a holder of Shares
in lieu of a fractional share interest in Buyer Common Stock);
(C) the tax basis of the Buyer Common Stock received by a holder of
Shares in the Merger will be the same as the tax basis of the Shares
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest in Buyer Common Stock for which cash is
received); and
(D) the holding period of the shares of Buyer Common Stock received
by a holder of Shares in the Merger will include the period during which
such Shares surrendered in exchange therefor were held, provided that
such Shares were held as capital assets at the Effective Time of the
Merger.
In rendering such opinion, such firm may require and rely upon
representations contained in the Buyer Tax Certificate, the Company Tax
Certificate and such other certificates from such other persons as such firm may
require.
SECTION 9.3 Conditions to the Obligations of Buyer and Merger
Subsidiary. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction on or prior to the Effective Time of the
following conditions, except to the extent permitted by applicable law, that
such conditions may be waived:
(i) Performance of Obligations the Company. The Company will have
performed in all material respects its agreements and covenants contained in
or contemplated by this Agreement which are required to be performed by it
at or prior to the Effective Time.
(ii) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific
date or time which need only be true and correct as of such date and time).
(iii) Closing Certificate. Buyer and Merger Subsidiary shall have
received a certificate signed by the chief executive officer of the Company,
dated the Closing Date, to the effect that, to the best of such officer's
knowledge, the conditions set forth in Section 9.3(i) and 9.3(ii) hereof
have been satisfied.
(iv) Affiliate Agreements. Each Company Affiliate shall have performed
his or its respective obligations under the applicable Affiliate Letter.
2(C)-35
ARTICLE X
TERMINATION
SECTION 10.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and Buyer;
(ii) by either the Company or Buyer, if the Merger has not been
consummated by December 31, 1996 (as such date may be extended by mutual
agreement or pursuant to the proviso to this sentence, the "Outside
Termination Date"); provided, however, that the right to terminate this
Agreement under this paragraph shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure to meet the date requirements of this
paragraph;
(iii) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating
the Merger is entered and such judgment, injunction, order or decree shall
become final and nonappealable;
(iv) by the Company if (A) there shall have been a breach of any
representation or warranty on the part of Buyer or Merger Subsidiary set
forth in this Agreement, or if any representation or warranty of Buyer or
Merger Subsidiary shall have become untrue, in either case such that the
condition set forth in Section 9.2(ii) would be incapable of being satisfied
by the Outside Termination Date or (B) there shall have been a breach by
Buyer or Merger Subsidiary of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on Buyer or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and Buyer or Merger Subsidiary, as the case may be, has not cured such
breach within twenty business days after notice by the Company thereof;
(v) by Buyer and Merger Subsidiary if (A) there shall have been a
breach of any representation or warranty on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue, in either case such that the condition set forth
in Section 9.3(ii) would be incapable of being satisfied by the Outside
Termination Date or (B) there shall have been a breach by the Company of its
covenants or agreements hereunder having a Material Adverse Effect on the
Company or materially adversely affecting (or materially delaying) the
consummation of the Merger, and the Company has not cured such breach within
twenty business days after notice by Buyer or Merger Subsidiary thereof;
(vi) by Buyer or Merger Subsidiary, if (A) the Board of Directors of
the Company or any committee thereof shall have withdrawn, modified or
changed in a manner adverse to Buyer or Merger Subsidiary its recommendation
of the Merger or this Agreement or approved or recommended a Superior
Proposal or (B) the Company shall have entered into a definitive agreement
with respect to an Acquisition Proposal;
(vii) by the Company, upon entering into a definitive agreement in
accordance with Section 6.4(b), provided (x) it has complied with all
provisions of Section 6.4, including the notice provisions therein, and (y)
that it makes simultaneous payment of Buyer's Expenses (as defined in
Section 12.4); or
(viii) by Buyer, Merger Subsidiary or the Company, if the Company's
stockholders do not approve the Merger at the Company Stockholder Meeting.
The party desiring to terminate this Agreement pursuant to this Section 10.1
(other than with respect to Section 10.1(i)) shall give written notice of such
termination to the other party.
2(C)-36
SECTION 10.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 10.1 hereof, this Agreement shall become void and of no effect with
no liability on the part of any party hereto; provided that (i) the agreements
contained in Sections 4.16, 5.6, 10.2 and 12.4, hereof shall survive the
termination hereof; (ii) the Confidentiality Agreement shall remain in full
force and effect and Section 6.3(b) hereof shall have no binding effect
whatsoever; and (iii) nothing contained in this Section 10.2 shall relieve any
party from liability for any breach of this Agreement.
ARTICLE XI
DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Active Subsidiary" shall have the meaning set forth in Section 4.6(a).
"Affiliate Letter" shall have the meaning set forth in the Introduction.
"Agreement" shall have the meaning set forth in the Introduction.
"Acquisition Proposal" shall have the meaning set forth in Section 6.4.(a).
"Affiliates" shall have the meaning set forth in Section 8.9.
"Average Stock Price" shall have the meaning set forth in Section 1.2(a).
"blue sky" shall have the meaning set forth in Section 8.10.
"Buyer" shall have the meaning set forth in the Introduction.
"Buyer Certificates" shall have the meaning set forth in Section 1.3(a).
"Buyer Common Stock" shall have the meaning set forth in the Introduction.
"Buyer Disclosure Schedule" shall have the meaning set forth in Section 5.1.
"Buyer Preferred Stock" shall have the meaning set forth in Section 5.9.
"Buyer's Expenses" shall have the meaning set forth in Section 12.4(d).
"Buyer SEC Documents" shall have the meaning set forth in Section 5.12.
"Buyer Securities" shall have the meaning set forth in Section 5.9.
"Buyer Tax Certificate" shall have the meaning set forth in Section 8.8.
"Buyer's Accountants" shall have the meaning set forth in Section 8.12(a).
"Certificate of Merger" shall have the meaning set forth in Section 1.1(b).
"Closing" shall have the meaning set forth in Section 2.1.
"Closing Date" shall have the meaning set forth in Section 2.1.
"Code" shall have the meaning set forth in the Introduction.
2(C)-37
"Company" shall have the meaning set forth in the Introduction.
"Company Affiliate" shall have the meaning set forth in Section the
Introduction.
"Company Affiliate Letter" shall have the meaning set forth in the
Introduction.
"Company By-laws" shall have the meaning set forth Section 3.2.
"Company Certificate of Incorporation" shall have the meaning set forth in
Section 3.1.
"Company Disclosure Schedule" shall have the meaning set forth in Section
4.1.
"Company Proxy Statement" shall have the meaning set forth in Section
6.2(i).
"Company SEC Documents" shall have the meaning set forth in Section 4.7.
"Company Securities" shall have the meaning set forth in Section 4.5.
"Company Stock Plans" shall have the meaning set forth in Section 1.10.
"Company Stockholder Meeting" shall have the meaning set forth in Section
6.2.
"Company Tax Certificate" shall have the meaning set forth in Section 8.8.
"Company's Accountants" shall have the meaning set forth in Section 8.12(a).
"Company's Expenses" shall have the meaning set forth in Section 12.4(e).
"Confidentiality Agreement" shall have the meaning set forth in Section
6.3(a).
"Continuing Employees" shall have the meaning set forth in Section 8.6(a).
"Conversion Number" shall have the meaning set forth in Section 1.2(a).
"Conveyance Taxes" shall have the meaning set forth in Section 6.5.
"Costs" shall have the meaning set forth in Section 7.3(b).
"DGCL" shall have the meaning set forth in Section 1.1(a).
"Effective Time" shall have the meaning set forth in Section 1.1(b).
"employee pension benefit plan" shall have the meaning set forth in Section
4.13(a).
"employee welfare benefit plan" shall have the meaning set forth in Section
4.13(a).
"Environmental Law" shall have the meaning set forth in Section 4.17(c).
"ERISA" shall have the meaning set forth in Section 4.13(a).
"ERISA Affiliate" shall have the meaning set forth in Section 4.13(a).
"ERISA Plans" shall have the meaning set forth in Section 4.13(a).
"Exchange Act" shall have the meaning set forth in Section 4.3.
"Exchange Agent" shall have the meaning set forth in Section 1.3(a).
"Exchange Fund" shall have the meaning set forth in Section 1.3(a).
"Expenses" shall have the meaning set forth in Section 7.3(b).
"Form S-4 Registration Statement" shall have the meaning set forth in
Section 8.7.
2(C)-38
"GAAP" shall have the meaning set forth in Section 4.8.
"Governmental Entity" shall have the meaning set forth in Section 4.3.
"Halmos Entities" shall have the meaning set forth in Section 7.3(c)(i).
"Halmos Assign" shall have the meaning set forth in Section 7.3(c)(iii).
"HSR Act" shall have the meaning set forth in Section 4.3.
"Indemnifiable Claim" shall have the meaning set forth in Section 7.3(b).
"Indemnitees" shall have the meaning set forth in Section 7.3(b).
"Indemnity Agreement" shall have the meaning set forth in Section 7.3(a).
"Intangible Property" shall have the meaning set forth in Section 4.19(a).
"Licenses" shall have the meaning set forth in Section 4.1.
"Lien" shall have the meaning set forth in Section 4.4.
"Material Adverse Effect" shall have the meaning set forth in Section 4.1.
"Material Contracts" shall have the meaning set forth in Section 4.20.
"Measurement Period" shall have the meaning set forth in Section 1.2(a).
"Merger" shall have the meaning set forth in Section 1.1(a).
"Merger Consideration" shall have the meaning set forth in Section 1.2(a).
"Merger Subsidiary" shall have the meaning set forth in the Introduction.
"Notice of Superior Proposal" shall have the meaning set forth in Section
6.4(b).
"NYSE" shall have the meaning set forth in Section 1.2(a).
"Option" shall have the meaning set forth in Section 1.10.
"Outside Termination Date" shall have the meaning set forth in Section
10.1(ii).
"PBGC" shall have the meaning set forth in Section 4.13(c).
"Person" shall have the meaning set forth in Section 1.4.
"Plans" shall have the meaning set forth in Section 4.13(a)
"Preferred Stock" shall have the meaning set forth in Section 4.5.
"SafeCard" shall have the meaning set forth in Section 4.20.
"SEC" shall have the meaning set forth in Section 4.7.
"Secretary of State" shall have the meaning set forth in Section 1.1(b).
"Securities Act" shall have the meaning set forth in the Introduction.
"Share Certificates" shall have the meaning set forth in Section 1.3(b).
"Shares" shall have the meaning set forth in the Introduction.
"single employer" shall have the meaning set forth in Section 4.13(a).
2(C)-39
"Subsidiary" shall have the meaning set forth in Section 4.6(a).
"Substitute Option" shall have the meaning set forth in Section 1.10.
"Surviving Corporation" shall have the meaning set forth in Section 1.1(a).
"Tax Return" shall have the meaning set forth in Section 4.12(b)(ii).
"Taxes" shall have the meaning set forth in Section 4.12(b)(i).
"Third Party" shall have the meaning set forth in Section 12.4(e).
"Third Party Acquisition" shall have the meaning set forth in Section
12.4(e).
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
if to Buyer or Merger Subsidiary, to:
CUC International, Inc.
707 Summer Street
Stamford, CT 06901
Telecopy: (203) 348-1982
Attention: Amy N. Lipton, Esq.
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopy: (212) 310-8007
Attention: Howard Chatzinoff, Esq.
if to the Company, to:
Ideon Group, Inc.
7596 Centurion Parkway
Jacksonville, Florida 32256
Telecopy: (904) 218-1850
Attention: Mr. Eugene Miller, Chairman of
the Board and Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: Roger S. Aaron, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 11.1
and the appropriate telecopy confirmation is received or (ii) if given by any
other means, when delivered at the address specified in this Section 12.1.
2(C)-40
SECTION 12.2 Survival of Representations and Warranties. The representations
and warranties contained herein and in any certificate or other writing
delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement. All covenants and agreements contained herein
which by their terms are to be performed in whole or in part subsequent to the
Effective Time shall survive the Merger in accordance with their terms. Nothing
contained in this Section 12.2 shall relieve any party from liability for any
willful breach of this Agreement.
SECTION 12.3 Amendments; No Waivers. (a) Except as may otherwise be provided
herein, any provision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Buyer and Merger Subsidiary
or in the case of a waiver, by the party against whom the waiver is to be
effective; provided that after the adoption of this Agreement by the
stockholders of the Company, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company or (ii) any of the terms or conditions of this Agreement if such
alteration or change could adversely affect the holders of any shares of capital
stock of the Company.
(b) 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.
SECTION 12.4 Expenses. (a) Except as provided below in this Section 12.4,
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Buyer,
Buyer's Expenses (as hereinafter defined), in the event that the Company shall
enter into a definitive agreement with respect to a Superior Proposal and this
Agreement shall be terminated pursuant to Section 10.1(vi)(B) or Section
10.1(vii). In addition, in the event that this Agreement shall be terminated
pursuant to Section 10.1(vi) or Section 10.1(vii) and, (i) within twelve months
thereafter, the Company enters into an agreement with respect to a Third Party
Acquisition (which is consummated within twelve months after such termination),
or a Third Party Acquisition occurs and is completed, (ii) after the date hereof
and prior to the date of termination, (x) the Company or its agents had engaged
in negotiations with a Third Party with respect to a Third Party Acquisition,
(y) the Company or its agents furnished information to a Third Party with
respect to a Third Party Acquisition or (z) a Third Party submitted to the
Company a proposal (which shall include price and other material terms and
conditions) for a Third Party Acquisition and (iii) with respect to (x) and (y)
above, the relevant Third Party makes or announces (before or after such
termination) a proposal with respect to a Third Party Acquisition; then the
Company shall pay, or cause to be paid, in same day funds, to Buyer, (A) a
termination fee in the amount of $7,000,000, which termination fee shall be paid
on the date of consummation of a Third Party Acquisition (if and only if a Third
Party Acquisition shall be consummated within twelve months after the date of
termination), and (B) to the extent not previously paid by the Company to Buyer
pursuant to the first sentence of this Section 12.4(b), Buyers' Expenses. It is
expressly agreed that the amount to be paid pursuant to this Section 12.4(b)
represents liquidated damages and not a penalty.
(c) The cost of printing the Form S-4 Registration Statement and the Company
Proxy Statement shall be borne equally by the Company and Buyer.
(d) The Company shall pay or cause to be paid (not later than ten business
days after submission of statements therefor) in same day funds to Buyer,
Buyer's Expenses in the event this Agreement shall be terminated pursuant to
Section 10.1(v). Buyer shall pay or cause to be paid (not later than ten
business days after submission of statements therefor) in same day funds to the
Company, Company's Expenses in the event this Agreement shall be terminated
pursuant to Section 10.1(iv). If Buyer or Merger Subsidiary shall submit a
request for reimbursement hereunder, Buyer or Merger Subsidiary
2(C)-41
will provide the Company in due course with invoices or other reasonable
evidence of such expenses upon request. If the Company shall submit a request
for reimbursement hereunder, the Company will provide Buyer in due course with
invoices or other reasonable evidence of such expenses upon request.
(e) For purposes of this Section 12.4, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) or entity other than Buyer,
Merger Subsidiary or any affiliate thereof (a "Third Party"); (ii) the
acquisition by a Third Party of more than 35% of the total assets of the Company
and its Subsidiaries, taken as a whole; or (iii) the acquisition by a Third
Party of 35% or more of the outstanding shares of Company Common Stock. For
purposes of this Section 12.4, "Buyer's Expenses" shall mean documented
out-of-pocket fees and expenses reasonably and actually incurred or paid by or
on behalf of Buyer in connection with the Merger and the consummation of any of
the transactions contemplated by this Agreement, including, reasonable fees and
expenses of counsel, accountants, experts, financial advisors and consultants to
Buyer, in an aggregate amount not to exceed $1,000,000. For purposes of this
Section 12.4, "Company's Expenses" shall mean documented out-of-pocket fees and
expenses reasonably and actually incurred or paid by or on behalf of the Company
in connection with the Merger and the consummation of any of the transactions
contemplated by this Agreement, including, reasonable fees and expenses of
counsel, accountants, experts, financial advisors and consultants to the
Company, in an aggregate amount not to exceed $1,000,000.
SECTION 12.5 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 12.6 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware without regard to
conflicts of laws.
SECTION 12.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein is not affected in any manner materially
adverse to any party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner.
SECTION 12.8 Third Party Beneficiaries. No provision of this Agreement other
than Section 7.3 and Section 8.6 hereof is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
SECTION 12.9 Entire Agreement. This Agreement, including any exhibits or
schedules hereto and the Confidentiality Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all other prior agreements or undertaking with respect thereto, both
written and oral.
SECTION 12.10 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
2(C)-42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
IDEON GROUP, INC.
By: /s/ EUGENE MILLER
..................................
Name: Eugene Miller
Title: Chairman and CEO
CUC INTERNATIONAL INC.
By: /s/ CHRISTOPHER K. MCLEOD
..................................
Name: Christopher K. McLeod
Title: Executive Vice President
IG ACQUISITION CORP.
By: /s/ CHRISTOPHER K. MCLEOD
..................................
Name: Christopher K. McLeod
Title: Vice President
2(C)-43
EXHIBIT 5
ROBERT T. TUCKER
ATTORNEY AT LAW
61 PURCHASE ST. (914) 967-8105
RYE, N.Y. 10580 FAX: (914) 967-8161
June 28, 1996
CUC International Inc.
707 Summer Street
Stamford, CT 06901
Ladies and Gentlemen:
I refer to the Registration Statement (the "Registration Statement")
on Form S-4 being filed by CUC International Inc. ("CUC") under the
Securities Act of 1933, as amended (the "Securities Act") with the Securities
and Exchange Commission (the "Commission"), relating to the registration
of up to 17,170,469 shares of common stock par value $ .01 per share of CUC
(the "Shares") to be issued to the shareholders of Ideon Group, Inc.
("Ideon") in connection with the merger of CUC's wholly owned subsidiary,
IG Acquisition Corp. ("Merger Sub"), into and with Ideon, all as set
forth in the Agreement and Plan of Merger dated April 19, 1996, among
CUC, Ideon and Merger Sub (the "Merger Agreement").
I have examined copies of (i) the Registration Statement; (ii) the Restated
Certificate of Incorporation and By-Laws of the Company, each as amended
to date; (iii) certain resolutions of the Board of Directors of the Company
relating to the issuance of the Shares pursuant to the terms of the
Agreement and Plan of Merger; and (iv) the Agreement and Plan of Merger.
I have also examined originals, photostatic or certified copies, of such
records of the Company, certificates of officers of the Company and of
public officials and such other documents as I have deemed relevant and
necessary as the basis for the opinions set forth below. In such
examinations, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity
to original documents of all copies submitted to me as certified, conformed
or photostatic copies, and the authenticity of all originals of such copies.
Page 2
Based upon the foregoing, I am of the opinion that the issuance of the
Shares has been duly authorized by CUC and that the Shares, when issued and
delivered to the Shareholders of Ideon in accordance with the Merger
Agreement, will be legally issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion with the Commission as
an Exhibit to the Registration Statement and to the reference to the
undersigned under the caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Robert T. Tucker
------------------------------------
Robert T. Tucker
RTT/kau
Exhibit 8
[FORM OF TAX OPINION TO BE DELIVERED BY SASM&F TO
THE COMPANY AT THE EFFECTIVE TIME]
___________ ___, 1996
Ideon Group, Inc.
7596 Centurion Parkway
Jacksonville, Floria 32256
Re: Merger of IG Acquisition Corp., a wholly-owned
subsidiary of CUC International Inc., with and into
Ideon Group, Inc.
---------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Ideon Group, Inc., a
Delaware corporation ("Ideon"), in connection with the merger
(the "Merger") of IG Acquisition Corp., a Delaware corporation
("Sub") and a wholly-owned subsidiary of CUC International Inc.,
a Delaware corporation ("CUC"), with and into Ideon with Ideon
surviving as a wholly-owned subsidiary of CUC, pursuant to the
terms and provisions of the Agreement and Plan of Merger, dated
as of April 19, 1996 by and among Ideon, CUC and Sub (the "Merger
Agreement"). This opinion is being furnished to you pursuant to
Section 9.2(iv) of the Merger Agreement. Unless otherwise
defined herein, all capitalized terms used herein shall have the
meanings assigned to them in the Joint Proxy Statement and
Prospectus relating to the Merger, dated June 28, 1996
(the "Proxy Statement-Prospectus").
In rendering our opinion, we have examined and relied upon
the accuracy and completeness of the facts, information, covenants and
representations contained in originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement, the Proxy
Statement-Prospectus, and such other documents as we have deemed
relevant for purposes of this opinion. In addition, as to certain
facts material to our opinion, we
Ideon Group, Inc.
__________ ___, 1996
Page 2
have relied upon statements and representations of officers of
Ideon, CUC and others. Our opinion is conditioned on, among
other things, the accuracy and completeness as of the Effective
Time, of such facts, information, covenants and representations
referred to above.
We have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of
such documents. In rendering our opinion, we have also assumed
that (i) the transactions contemplated by the Merger Agreement
will be consummated (A) in accordance with the Merger Agreement
and that none of the terms and conditions contained therein has
been waived or modified in any respect and (B) as described in
the Proxy Statement-Prospectus and (ii) the Merger qualifies as a
statutory merger under the laws of the State of Delaware. A
change in any of the facts set forth or assumed herein could
affect our conclusions.
In rendering our opinion, we have considered the
applicable provisions of the Code, Treasury regulations
promulgated thereunder by the Treasury Department (the
"Regulations"), pertinent judicial authorities, rulings of the
United States Internal Revenue Service and such other authorities
as we have considered relevant. It should be noted that such
Code, Regulations, judicial decisions, administrative
interpretations and such other authorities are subject to change
at any time and, in some circumstances, with retroactive effect.
A change in any of the authorities upon which our opinion is
based could affect our conclusions.
Ideon Group, Inc.
__________ ___, 1996
Page 3
Opinion
-------
Based solely upon and subject to the foregoing, we are
of the opinion that for United States federal income tax
purposes:
1. The Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and Ideon, CUC
and Sub will each be a party to such reorganization within the
meaning of Section 368(b) of the Code;
2. No gain or loss will be recognized by Ideon, CUC
or Sub as a result of the Merger;
3. No gain or loss will be recognized by the
shareholders of Ideon upon the exchange of their Shares solely
for shares of Buyer Common Stock pursuant to the Merger, except
with respect to cash, if any, received in lieu of fractional
shares of Buyer Common Stock;
4. The tax basis of the Buyer Common Stock received
by a holder of Shares in the Merger will be the same as the tax
basis of the Shares surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest in Buyer
Common Stock for which cash is received); and
5. The holding period for shares of Buyer Common
Stock received in exchange for Shares pursuant to the Merger will
include the holding period of the Shares exchanged therefor,
provided such Shares were held as capital assets by the
shareholder at the Effective Time.
Ideon Group, Inc.
__________ ___, 1996
Page 4
We express no opinion with respect to the matters
addressed in this opinion other than as set forth above. This
opinion is provided solely for the use of Ideon (in connection
with Section 9.2(iv) of the Merger Agreement), and is not to be
used, circulated, quoted or otherwise referred to for any other
purpose without our prior written consent in each instance;
provided, however, that this opinion may be referred to in the
- -------- -------
sections of the Proxy Statement-Prospectus entitled "The Merger--
Certain Federal Income Tax Considerations." This opinion may not
be relied upon or otherwise used by either CUC or Sub.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
Exhibit 15.1
Letter Re: Unaudited Interim Financial Information
June 27, 1996
Board of Directors and Shareholders'
CUC International Inc.
We are aware of the incorporation by reference in the Proxy Statement of Ideon
Group, Inc. that is made a part of the Registration Statement (Form S-4) and
Prospectus of CUC International Inc. for the registration of 17,170,469 shares
of its common stock of our report dated May 22, 1996 relating to the unaudited
condensed consolidated interim financial statements of CUC International Inc.
that are included in its Forms 10-Q for the quarter ended April 30, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Stamford, Connecticut
Exhibit 15.2
[PRICE WATERHOUSE LETTERHEAD]
June 28, 1996
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
We are aware that CUC International Inc. has included our report dated
April 29, 1996, of Ideon Group, Inc. (issued pursuant to the provisions of
Statement on Auditing Standards No. 71), in the Prospectus constituting
part of CUC International Inc.'s Registration Statement on Form S-4 (related
to Ideon Group, Inc.) to be filed on or about June 18, 1996. We are also aware
of our responsibilities under the Securities Act of 1933.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
Exhibit 23.3
ACCOUNTANTS' CONSENT
The Board of Directors
Davidson & Associates, Inc.
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the proxy
statement/prospectus relating to Ideon Group, Inc. and CUC International, Inc.
and the Form S-4 of CUC International, Inc. which includes such proxy
statement, dated June, 1996.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Long Beach, California
June 26, 1996
Exhibit 23.4
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 19, 1996, incorporated by reference in the
Proxy Statement of Ideon Group, Inc. that is made a part of the Registration
Statement (Form S-4) and Prospectus of CUC International Inc.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Stamford, Connecticut
June 27, 1996
Exhibit 23.5(a)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in this Registration Statement
of CUC International, Inc. on Form S-4 of our report dated March 13, 1995,
appearing in the Annual Report on Form 10-K of Advance Ross Corporation
for the year ended December 31, 1994, and to the reference to us under the
heading "Experts" in the Proxy Statement of Ideon Group, Inc., which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
June 27, 1996
Exhibit 23.5(b)
INDEPENDENT AUDITORS' CONSENT
================================================================================
We consent to the incorporation by reference in this Registration Statement of
CUC International Inc. on Form S-4 of our report dated February 13, 1996, on the
consolidated financial statements of Sierra On-Line, Inc. and subsidiaries for
the year ended March 31, 1995, appearing in the Quarterly Report on Form 10-Q/A
(filed with the Securities and Exchange Commission on May 15, 1996) for the
quarterly period ended December 31, 1995, of Sierra On-Line, Inc., and to the
reference to us under the heading "Experts" in the Proxy Statement of Ideon
Group, Inc., which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Seattle, Washington
June 28, 1996
EXHIBIT 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of CUC
International Inc. (related to Ideon Group, Inc.) of our report dated
February 2, 1996, appearing on page 39 of the Ideon Group, Inc. Annual
Report on Form 10-K for the year ended December 31, 1995. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
June 28, 1996
