SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 18, 1997
SNYDER COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-12145 52-1983617
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
TWO DEMOCRACY CENTER, 6903 ROCKLEDGE DRIVE
15TH FLOOR, BETHESDA, MARYLAND 20817
(Address of Principal Executive Offices) (Zip Code)
(301) 468-1010
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of Brann Holdings Limited. On March 19, 1997, Snyder
Communications, Inc. (the "Company" or the "Registrant") commenced a private
offer (the "Offer") to acquire the capital stock of Brann Holdings Limited, a
United Kingdom company ("Brann"). Shareholders of Brann representing all of the
outstanding ordinary share capital of Brann have accepted the Offer for an
aggregate of 2,350,152 shares of common stock, par value $0.001 per share, of
the Company (the "Common Stock").
The Offer also included the redemption of all of Brann's outstanding
redeemable preference shares for $5,035,000 (including accrued dividends) in
cash. Holders of all of the outstanding preference shares of Brann have accepted
the Offer. In addition, holders of options to purchase certain capital stock of
Brann will be granted options to acquire 389,730 unregistered shares of Common
Stock of the Company.
Brann shareholders who have accepted the terms of the Offer are party
to a registration rights agreement, dated as of March 21, 1997 (the
"Registration Rights Agreement"), pursuant to which such shareholders will have
the right to demand registration of one-half of the shares of Common Stock
received in the Offer commencing after publication of financial results of the
Company for the first full calendar month following the closing of the
acquisition, and to demand registration of the remaining shares commencing on
the first anniversary of the publication of such results.
ITEM 5. OTHER EVENTS
Merger Agreement with American List Corporation. On March 18, 1997, the
Company and its wholly-owned subsidiary, Snyder Z Acquisition, Inc., ("Merger
Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement")
with American List Corporation ("American List") pursuant to which the Company,
Merger Sub and American List will consummate a merger (the "Merger") in which
Merger Sub will be merged with and into American List. Upon consummation of the
Merger, American List will become a wholly-owned subsidiary of the Company.
Upon consummation of the Merger, each share of common stock, par value
$0.01 per share, of American List issued and outstanding immediately prior to
the effective time of the Merger, will by virtue of the Merger be converted into
the number of shares of Common Stock equal to the Exchange Ratio. The Exchange
Ratio will be determined in the following manner: (i) if the Average Final
Closing Price (as
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defined below) equals or exceeds $32.00, the Exchange Ratio will be 1.00; (ii)
if the Average Final Closing Price equals or exceeds $28.00 but is less than
$32.00, the Exchange Ratio will equal the quotient (rounded to four decimal
places) of $32.00 divided by the Average Final Closing Price; (iii) if the
Average Final Closing Price equals or exceeds $26.00 and is less than $28.00,
the Exchange Ratio will be 1.14; and (iv) if the Average Final Closing Price is
less than $26.00, the Exchange Ratio will equal the quotient (rounded to four
decimal places) of $29.71 divided by the Average Final Closing Price. The
Company has the right to terminate the Merger Agreement if the Final Average
Closing Price is less than $24.00. American List has the right to terminate the
Merger Agreement if the Average Final Closing Price is less than $20.00.
"Average Final Closing Price" means the average of the closing prices
(or, if the Common Stock should not trade on any Trading Day, the average of the
high bid and low asked prices therefor on such day), regular way, per share of
Common Stock, as reported on the New York Stock Exchange ("NYSE") Composite Tape
during the twenty consecutive Trading Days ending on (and including) the third
Trading Day prior to the effective time of the Merger. "Trading Day" means a day
on which the NYSE is open for trading.
Consummation of the Merger is subject to certain customary closing
conditions, including compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the preparation and mailing of definitive
proxy materials and the approval of the holders of common stock of American
List.
In connection with the Merger, on March 18, 1997, the Company and
certain stockholders of American List, holding approximately 21% of the common
stock of American List, entered into a stockholders agreement (the "Stockholders
Agreement"), pursuant to which such stockholders have agreed to vote their
shares at the meeting of holders of common stock of American List for adoption
of the Merger Agreement and against certain other transactions which would
impede or delay consummation of the Merger. The affirmative vote of the holders
of a majority of the outstanding common stock of American List is necessary to
adopt the Merger Agreement.
Certain affiliates of American List have each agreed not to transfer,
sell or otherwise dispose of any of the Common Stock except pursuant to an
effective registration statement under the Securities Act, or as permitted by,
and in accordance with, Rule 145, if applicable, or another applicable exemption
under the Securities Act; and not to transfer, sell or otherwise dispose of any
shares of common
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stock of American List, or sell or otherwise reduce their risk (within the
meaning of the Securities and Exchange Commission's Financial Reporting Release
No. 1., "Codification of Financial Reporting Policies," Section 201.01 [47 F.R.
21028] (May 17, 1982) with respect to any Common Stock, in each case until after
such time as consolidated financial statements which reflect at least 30 days of
post-merger combined operations of the Company and American List have been
published by the Company, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission. In addition, the Company
agreed not to register shares of the Company's Common Stock held by certain of
its affiliates prior to the publication of such financial statements and certain
affiliates of the Company agreed not to require such registration or make
certain other dispositions until such publication, in each case subject to
certain enumerated limitations.
The foregoing descriptions of and references to all of the
above-mentioned agreements and transactions are qualified in their entirety by
reference to the complete texts of the agreements and documents which are filed
herewith as Exhibits to this Current Report on Form 8- K, and which texts are
incorporated herein by reference.
The information set forth in the press releases attached hereto as
Exhibits 99.1 to 99.3 is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Businesses Acquired
It is impractical to provide the required financial statements
for Brann Holdings Limited at the date hereof. The Registrant undertakes to file
such required financial statements by means of an amendment to this Current
Report on Form 8-K as soon as practicable, but no later than June 4, 1997.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma
financial information required pursuant to Article 11 of Regulation S-X at the
date hereof. The Registrant undertakes to file such required pro forma financial
information by means of an amendment to this Current Report on Form 8-K as soon
as practicable, but no later than June 4, 1997.
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(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of March
18, 1997, among American List Corporation, Snyder Communications, Inc. and
Snyder Z Acquisition, Inc.
2.2 Recommended Offer by Snyder Communications, Inc.
for Brann Holdings Limited, dated March 21, 1997.
10.1 Stockholders Agreement, dated March 18, 1997, by
and among Snyder Communications, Inc. and each of the other parties signature
thereto.
10.2 Employment Agreement between Martin Lerner,
American List Corporation and Snyder Communications, Inc., dated March 18, 1997.
10.3 Affiliate Letters from certain affiliates of
American List Corporation to Snyder Communications, Inc., dated March
18, 1997.
10.4 Lock-up letter from certain affiliates of Snyder
Communications, Inc. to Snyder Communications, Inc. and J. Morton
Davis, dated March 18, 1997.
10.5 Registration Rights Agreement, dated as of March
21, 1997, among Snyder Communications, Inc. and the Shareholders of Brann
Holdings Limited listed on the signature pages thereto.
99.1 Press Release, dated March 19, 1997.
99.2 Press Release, dated March 19, 1997.
99.3 Press Release, dated March 19, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SNYDER COMMUNICATIONS, INC.
Date: March 31, 1997 By: /s/ Michele D. Snyder
----------------------
Name: Michele D. Snyder
Title: Vice Chairman and Chief
Operating Officer
Date: March 31, 1997 By: /s/ A. Clayton Perfall
-----------------------
Name: A. Clayton Perfall
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
2.1 Agreement and Plan of Merger, dated
as of March 18, 1997, among American List
Corporation, Snyder Communications, Inc.
and Snyder Z Acquisition, Inc.
2.2 Recommended Offer by Snyder Communications,
Inc. for Brann Holdings Limited, dated March
21, 1997.
10.1 Stockholders Agreement, dated March 18,
1997, by and among Snyder Communications,
Inc. and each of the other parties
signature thereto.
10.2 Employment Agreement between Martin Lerner,
American List Corporation and Snyder
Communications, Inc., dated March 18, 1997.
10.3 Affiliate Letters from certain affiliates of
American List Corporation to Snyder
Communications, Inc., dated March 18, 1997.
10.4 Lock-up letter from certain affiliates of Snyder
Communications, Inc. to Snyder Communications,
Inc. and J. Morton Davis, dated March 18, 1997.
10.5 Registration Rights Agreement, dated as of March
21, 1997, among Snyder Communications, Inc. and
the Shareholders of Brann Holdings Limited listed
on the signature pages thereto.
99.1 Press Release, dated March 19, 1997.
99.2 Press Release, dated March 19, 1997.
99.3 Press Release, dated March 19, 1997.
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C:\DATA\WP\74807\0003\1819\RPT4027P.590
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 18, 1997
AMONG
AMERICAN LIST CORPORATION,
SNYDER COMMUNICATIONS, INC.
AND
SNYDER Z ACQUISITION, INC.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE 1 THE MERGER....................................................... 2
SECTION 1.1. The Merger................................................. 2
SECTION 1.2. Effective Time............................................. 2
SECTION 1.3. Closing of the Merger...................................... 2
SECTION 1.4. Effects of the Merger...................................... 2
SECTION 1.5. Certificate of Incorporation and Bylaws.................... 3
SECTION 1.6. Directors.................................................. 3
SECTION 1.7. Officers................................................... 3
SECTION 1.8. Conversion of Shares....................................... 3
SECTION 1.9. Exchange of Certificates................................... 4
SECTION 1.10. Stock Options.............................................. 7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.......................................................... 8
SECTION 2.1. Organization and Qualification; Subsidiaries............... 8
SECTION 2.2. Capitalization of the Company and Its Subsidiaries......... 9
SECTION 2.3. Authority Relative to This Agreement; Consents and
Approvals.................................................. 11
SECTION 2.4. SEC Reports; Financial Statements.......................... 11
SECTION 2.5. Information Supplied....................................... 12
SECTION 2.6. Consents and Approvals; No Violations...................... 13
SECTION 2.7. No Default................................................. 13
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes............. 14
SECTION 2.9. Litigation................................................. 14
SECTION 2.10. Compliance with Applicable Law............................. 15
SECTION 2.11. Employee Plans............................................. 15
SECTION 2.12. Environmental Laws and Regulations......................... 16
SECTION 2.13. Tax Matters................................................ 16
SECTION 2.14. Intangible Property........................................ 18
SECTION 2.15. Opinion of Financial Adviser............................... 19
SECTION 2.16. Brokers.................................................... 19
SECTION 2.18. Material Contracts......................................... 19
SECTION 2.19. Pooling of Interests....................................... 20
SECTION 2.20. Disclosure................................................. 21
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION........................................ 21
SECTION 3.1. Organization............................................... 21
SECTION 3.2. Capitalization of Parent and Its Subsidiaries.............. 22
SECTION 3.3. Authority Relative to This Agreement....................... 23
SECTION 3.4. SEC Reports; Financial Statements.......................... 23
SECTION 3.5. Information Supplied....................................... 24
SECTION 3.6. Consents and Approvals; No Violations...................... 24
SECTION 3.7. No Default................................................. 25
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes............. 25
SECTION 3.9. Litigation................................................. 26
SECTION 3.10. Compliance with Applicable Law............................. 26
SECTION 3.11. Environmental Laws and Regulations......................... 27
SECTION 3.12. Tax Matters................................................ 27
SECTION 3.13. Intangible Property........................................ 29
SECTION 3.14. Brokers.................................................... 29
SECTION 3.15. Pooling of Interests....................................... 29
SECTION 3.16. Disclosure................................................. 29
ARTICLE 4 COVENANTS........................................................ 30
SECTION 4.1. Conduct of Business of the Company......................... 30
SECTION 4.2. Conduct of Business of Parent.............................. 33
SECTION 4.3. Preparation of S-4 and the Proxy Statement................. 33
SECTION 4.4. Other Potential Acquirors.................................. 34
SECTION 4.5. Letters of Accountants..................................... 35
SECTION 4.6. Meeting.................................................... 35
SECTION 4.7. Stock Exchange Listing..................................... 36
SECTION 4.8. Access to Information...................................... 36
SECTION 4.9. Additional Agreements; Best Efforts........................ 36
SECTION 4.10. Consents................................................... 37
SECTION 4.11. Public Announcements....................................... 37
SECTION 4.12. Indemnification; Directors' and Officers' Insurance........ 38
SECTION 4.13. Notification of Certain Matters............................ 39
SECTION 4.14. Pooling.................................................... 39
SECTION 4.15. Tax-Free Reorganization Treatment.......................... 40
SECTION 4.16. Employment Benefits........................................ 40
SECTION 4.17. Company Affiliates......................................... 41
SECTION 4.18. SEC Filings................................................ 41
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SECTION 4.19. Guarantee of Performance................................... 41
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER......................... 42
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger..................................................... 42
SECTION 5.2. Conditions to the Obligations of the Company............... 42
SECTION 5.3. Conditions to the Obligations of Parent and
Acquisition................................................ 43
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER................................... 45
SECTION 6.1. Termination................................................ 45
SECTION 6.2. Effect of Termination...................................... 46
SECTION 6.3. Fees and Expenses.......................................... 46
SECTION 6.4. Amendment.................................................. 47
SECTION 6.5. Extension; Waiver.......................................... 47
ARTICLE 7 MISCELLANEOUS.................................................... 48
SECTION 7.1. Nonsurvival of Representations and Warranties.............. 48
SECTION 7.2. Entire Agreement; Assignment............................... 48
SECTION 7.3. Validity................................................... 48
SECTION 7.4. Notices.................................................... 48
SECTION 7.5. Governing Law.............................................. 49
SECTION 7.6. Descriptive Headings....................................... 49
SECTION 7.7. Parties in Interest........................................ 49
SECTION 7.8. Severability............................................... 50
SECTION 7.9. Specific Performance....................................... 50
SECTION 7.10. Brokers.................................................... 50
SECTION 7.11. Counterparts............................................... 50
</TABLE>
EXHIBIT A - Employment Agreements
EXHIBIT B - Stockholders Agreement
EXHIBIT C - Affiliate Letter
EXHIBIT D - Tax Certificate of Company
EXHIBIT E - Tax Certificate of Parent and Acquisition
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TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C> <C>
CROSS REFERENCE
TERM IN AGREEMENT PAGE
AA.......................................... Section 4.5....................... 35
Acquisition................................. Preamble.......................... 1
Affiliate Letter............................ Recitals.......................... 1
Average Final Closing Price................. Section 1.8(a).................... 4
Certificate of Merger....................... Section 1.2....................... 2
Certificates................................ Section 1.9(b).................... 5
Claim....................................... Section 4.12(a)................... 38
Closing..................................... Section 1.3....................... 2
Closing Date................................ Section 1.3....................... 2
Code........................................ Recitals ......................... 1
Company..................................... Preamble ......................... 1
Company Affiliate........................... Recitals ......................... 1
Company Board............................... Section 2.3(a).................... 11
Company Disclosure Schedule................. Section 2.1(b).................... 9
Company Option(s)........................... Section 1.10(a)................... 7
Company Permits............................. Section 2.10...................... 15
Company Plan................................ Section 1.10(a)................... 7
Company SEC Reports......................... Section 2.4....................... 12
Company Securities.......................... Section 2.2(a).................... 10
Contracts................................... Section 2.18(a)................... 20
Current Premium............................. Section 4.12(b)................... 38
DGCL........................................ Section 1.1....................... 2
Effective Time.............................. Section 1.2....................... 2
Employment Agreements....................... Recitals.......................... 1
Environmental Claim......................... Section 2.12(a)................... 16
Environmental Laws.......................... Section 2.12(a)................... 16
ERISA....................................... Section 2.11...................... 15
Exchange Act................................ Section 2.2(c).................... 10
Exchange Agent.............................. Section 1.9(a).................... 4
Exchange Fund............................... Section 1.9(a).................... 5
Financial Adviser........................... Section 2.15...................... 19
GAAP........................................ Section 2.4....................... 12
Governmental Entity......................... Section 2.6....................... 13
HSR Act..................................... Section 2.6....................... 13
Lien........................................ Section 2.2(b).................... 10
Material Adverse Effect..................... Sections 2.1(a),3.1(a) ...........8,21
Merger...................................... Section 1.1....................... 2
Non-Disclosure Agreement.................... Section 2.14...................... 19
NYSE........................................ Section 1.8(b).................... 4
Parent...................................... Preamble.......................... 1
Parent Common Stock......................... Section 1.8(a).................... 3
Parent Options.............................. Section 1.10(a)................... 7
Parent Permits.............................. Section 3.10...................... 26
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Parent SEC Reports.......................... Section 3.4....................... 23
Parent Securities........................... Section 3.2(a).................... 22
Proxy Statement............................. Section 2.5....................... 12
S-4......................................... Section 2.5....................... 12
SEC......................................... Section 2.4....................... 11
Secretary of State.......................... Section 1.2....................... 2
Securities Act.............................. Recitals.......................... 1
Share(s).................................... Section 1.8(a).................... 3
Stockholders Agreement...................... Recitals.......................... 1
Subsidiary.................................. Section 2.1(a).................... 9
Superior Proposal........................... Section 4.4(b).................... 35
Surviving Corporation....................... Section 1.1....................... 2
Taxes....................................... Section 2.13(b)................... 18
Third Party ................................ Section 6.1(d).................... 46
Third Party Acquisition..................... Section 6.1(d).................... 46
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</TABLE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 18, 1997, is
among AMERICAN LIST CORPORATION, a Delaware corporation (the "Company"), SNYDER
COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and SNYDER Z
ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition").
WHEREAS, the Boards of Directors of the Company, Parent and
Acquisition each have, in light of and subject to the terms and conditions set
forth herein, (i) determined that the Merger (as defined in Section 1.1) is fair
to their respective stockholders and in the best interests of such stockholders
and (ii) approved the Merger in accordance with this Agreement;
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, concurrently with the execution hereof and as a
condition to Parent's and Acquisition's willingness to enter into this Agreement
(i) the Company and Martin Lerner, the President and Chief Executive Officer of
the Company, Donald Damore, the Vice President-Finance of the Company, and
Charles A. Caccia, the Vice President-Marketing of the Company, respectively,
have entered into Employment Agreements (the "Employment Agreements") attached
hereto as Exhibits A-1, A-2 and A-3 and (ii) certain holders of Shares (as
defined in Section 1.8(a)) are entering into a Stockholders Agreement, a copy of
which is attached hereto as Exhibit B (the "Stockholders Agreement");
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a "pooling-of-interests"; and
WHEREAS, the Company has delivered to Parent a 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 Parent a letter in the form attached hereto as Exhibit C (each, an
"Affiliate Letter") relating to (i) the transfer, prior to the Effective Time
(as defined in Section 1.8(a)), of the Shares beneficially owned by such Company
Affiliate on the date hereof, and (ii) the transfer
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of the shares of Parent Common Stock (as defined in Section 1.8(a)) to be
received by such Company Affiliate in the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time and upon the terms
and subject to the conditions of this Agreement and the Merger Agreement and in
accordance with the Delaware General Corporation Law (the "DGCL"), Acquisition
shall be merged with and into the Company (the "Merger"). Following the Merger,
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition shall cease.
SECTION 1.2. Effective Time. Subject to the terms and conditions
set forth in this Agreement, the Company, Parent and Acquisition 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."
SECTION 1.3. Closing of the Merger. The closing of the Merger
(the "Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Article 5 (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.
SECTION 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and
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all debts, liabilities and duties of the Company and Acquisition shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation and Bylaws. The
Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with applicable law. The Bylaws of the Company in effect
at the Effective Time shall be the Bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 1.6. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 1.7. Officers. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
SECTION 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value
$0.01 per share, of the Company (individually a "Share" and collectively, the
"Shares") issued and outstanding immediately prior to the Effective Time (other
than (i) Shares held by any subsidiary of the Company and (ii) Shares held by
Parent, Acquisition or any other Subsidiary of Parent) shall, by virtue of the
Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be converted into and shall represent the right to receive the
number of fully paid and nonassessable shares of common stock, $0.001 par value
per share, of Parent ("Parent Common Stock") equal to the Exchange Ratio. The
"Exchange Ratio" shall be determined prior to the Closing Date based on the
Average Final Closing Price (as defined below) in the following manner:
(i) if the Average Final Closing Price equals or
exceeds $32.00, the Exchange Ratio shall be 1.00;
(ii) if the Average Final Closing Price equals or exceeds
$28.00 but is less than $32.00, the Exchange Ratio shall equal
the quotient
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(rounded to four decimal places) of $32.00 divided by the Average
Final Closing Price;
(iii) if the Average Final Closing Price equals or exceeds
$26.00 and is less than $28.00, the Exchange Ratio shall be 1.14;
and
(iv) if the Average Final Closing Price is less than
$26.00, the Exchange Ratio shall equal the quotient (rounded to
four decimal places) of $29.71 divided by the Average Final
Closing Price (provided, in the event the Final Average Closing
Price is less than $24.00, that this Agreement shall not have
been terminated pursuant to Section 6.1(c)(iv) or 6.1(d)(v)).
As used herein, "Average Final Closing Price" shall mean the average of the
closing prices (or, if the Parent Common Stock should not trade on any Trading
Day (as hereinafter defined), the average of the high bid and low asked prices
therefor on such day), regular way, per share of Parent Common Stock, as
reported on the New York Stock Exchange ("NYSE") Composite Tape during the
twenty consecutive Trading Days ending on (and including) the third Trading Day
prior to the Effective Time. "Trading Day" means a day on which the NYSE is open
for trading. The multiple of Parent Common Stock represented by the Exchange
Ratio shall be the Merger Consideration.
(b) At the Effective Time, each outstanding share of the common
stock, par value $0.01 per share, of Acquisition shall be converted into one
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(c) At the Effective Time, each Share held by Parent, Acquisition
or any subsidiary of Parent, Acquisition or the Company immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Acquisition, the Company or the holder thereof, be canceled, retired and
cease to exist and no payment shall be made with respect thereto.
SECTION 1.9. Exchange of Certificates.
(a) As of the Effective Time, Parent shall make available to
American Stock Transfer Company or another bank or trust company designated by
Parent and reasonably acceptable to the Company (the "Exchange Agent"), for the
benefit of the holders of Shares, for exchange in accordance with this Article
I, through
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the Exchange Agent: (i) certificates representing the appropriate number of
shares of Parent Common Stock and (ii) cash to be paid in lieu of fractional
shares of Parent Common Stock (such shares of Parent Common Stock and such cash
are hereinafter referred to as the "Exchange Fund").
(b) As soon as reasonably practicable and in any event within
five (5) business days 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 "Certificates")
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 1.8: (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent and
Acquisition (provided that the Company shall have the right to consent, which
consent shall not be unreasonably withheld, to any such other appointment made
prior to the Effective Time), together with such letter of transmittal, duly
executed, the holder of such Certificate shall receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock and,
if applicable, a check representing the cash consideration to which such holder
may be entitled on account of a fractional share of Parent Common Stock, which
such holder has the right to receive pursuant to the provisions of this Article
I, and the Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.9, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Section 1.9.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect
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to the shares of Parent Common Stock represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
1.9(f) until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.9(f) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) In the event that any certificate for Shares shall have been
lost, stolen or destroyed, the Exchange Agent shall issue in exchange therefor,
upon the making of an affidavit of that fact by the holder thereof such shares
of Parent Common Stock and cash in lieu of fractional shares, if any, as may be
required pursuant to this Agreement; provided, however, that Parent may, in its
discretion, require the delivery of a suitable bond or indemnity.
(e) All shares of Parent Common Stock issued upon the surrender
for exchange of Shares in accordance with the terms hereof (including any cash
paid pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article I.
(f) No fractions of a share of Parent Common Stock shall be
issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fraction of a share of Parent Common Stock shall, upon surrender
of his or her certificate or certificates, be entitled to receive an amount of
cash (without interest) determined by multiplying the Average Final Closing
Price by the fractional share interest to which such holder would otherwise be
entitled. The parties acknowledge that payment of the cash consideration in lieu
of issuing fractional shares was not separately bargained for consideration but
merely represents a mechanical rounding off for purposes of
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simplifying the corporate and accounting problems which would otherwise be
caused by the issuance of fractional shares.
(g) Any portion of the Exchange Fund which remains undistributed
to the stockholders of the Company for one year after the Effective Time shall
be delivered to Parent, upon demand, and any stockholders of the Company who
have not theretofore complied with this Article I shall thereafter look only to
Parent for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(h) Neither Parent nor the Company shall be liable to any holder
of Shares, or Parent Common Stock, as the case may be, for such shares (or
dividends or distributions with respect thereto) or cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 1.10. Stock Options. (a) All options (individually, a
"Company Option" and collectively, the "Company Options") outstanding at the
Effective Time under the 1992 Stock Option Plan of the Company (the "Company
Plan") shall remain outstanding following the Effective Time. At the Effective
Time, such Company Options shall, by virtue of the Merger and without any
further action on the part of the Company or the holder of such Company Options,
be assumed by Parent in such manner that Parent (a) is a corporation (or a
parent or a subsidiary corporation of such corporation) "assuming a stock option
in a transaction to which Section 424(a) applied" within the meaning of Section
424 of the Code; or (b) to the extent that Section 424 of the Code does not
apply to any such Company Options, would be such a corporation (or a parent or a
subsidiary corporation of such corporation) were Section 424 applicable to such
option. At the Effective Time, (i) all references in the Company Plan to the
Company shall be deemed to refer to Parent and (ii) as soon as practicable, but
in no event later than 30 days following the Effective Time, Parent shall issue
to each holder of a Company Option a document evidencing the assumption of such
option by Parent in accordance herewith. Each Company Option assumed by Company
(as assumed, the "Parent Options") shall be exercisable upon the same terms and
conditions including, without limitation, vesting, as under the Company Plan and
the applicable option agreement issued thereunder, except that (x) each such
Company Option shall be exercisable for that whole number of shares of Parent
Common Stock (rounded down to the nearest whole share) into which the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time would be converted under Section 1.8 of this Agreement;
and (y) the option price per share of
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Parent Common Stock shall be an amount equal to the option price per share of
the Company Common Stock subject to such Company Option in effect immediately
prior to the Effective Time divided by the Exchange Ratio (the option price per
share, as so determined, being rounded upward to the nearest full cent). The
date of grant of each Parent Option shall be the date on which the corresponding
Company Option was granted. A cash payment shall be made for any fractional
share based upon the last reported sale price per share of Parent Common Stock
on the Trading Day immediately preceding the date of exercise.
(b) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Parent Options in accordance with this Section 1.10. As soon as
practicable after the Effective Time, Parent shall file a registration statement
on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Parent Common Stock subject to the Parent Options and shall use its best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as the Parent Options remain outstanding.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition as follows:
SECTION 2.1. Organization and Qualification; Subsidiaries.
(a) The Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not have
a Material Adverse Effect (as defined below) on the Company. The Company has
heretofore delivered to Acquisition or Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company. When used in connection with the Company or its Subsidiaries, the term
"Material Adverse Effect" means any change or effect (i) that is
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or is reasonably likely to be materially adverse to the properties, business,
results of operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as whole, other than any change or effect arising out of
general economic conditions not specifically related to any businesses in which
the Company is engaged or (ii) that may impair the ability of the Company to
consummate the transactions contemplated hereby. For the purposes of this
Agreement, "Subsidiary" shall mean, when used with reference to any other
entity, any entity more than fifty percent (50%) of the outstanding voting
securities or interests (including membership interests) of which are owned
directly or indirectly by such former entity.
(b) Except as set forth in Section 2.1(b) of the Disclosure
Schedule previously delivered by the Company to Parent (the "Company Disclosure
Schedule"), the Company has no Subsidiaries and does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Each of the Company and its Subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company.
The Company has heretofore delivered to Parent accurate and
complete copies of the Certificate of Incorporation and Bylaws, as currently in
effect, of each of the Company's Subsidiaries.
SECTION 2.2. Capitalization of the Company and Its Subsidiaries.
(a) The authorized capital stock of the Company consists of:
20,000,000 Shares, of which, as of March 17, 1997, 4,411,678 Shares were issued
and outstanding. All of the Shares have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of March 17, 1997, 84,730 Shares
were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plan. Since December 11, 1996, no shares of the
Company's capital stock have been issued other than pursuant to Company Stock
Options already in existence on such date, and, since October 16, 1996, no stock
options have been granted. Except as set forth above, there are outstanding (i)
no shares of capital stock or other voting
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securities of the Company, (ii) no securities of the Company or its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) except as set forth in Section 2.2(a)(iii) of
the Company Disclosure Schedule, no options or other rights to acquire from the
Company or its Subsidiaries, and no obligations of the Company or its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company, and (iv) except as set forth in Section 2.2(a)(iv) of the Disclosure
Schedule no equity equivalents, interests in the ownership or earnings of the
Company or its Subsidiaries or other similar rights (including stock
appreciation rights) (collectively, "Company Securities"). There are no
outstanding obligations of the Company or its Subsidiaries to repurchase, redeem
or otherwise acquire any Company Securities. Except as set forth in Section
2.2(a) of the Company Disclosure Schedule, there are no stockholder agreements
(other than the Stockholders Agreement), voting trusts or other agreements or
understandings to which the Company is a party or to which it is bound relating
to the voting or registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of each of the Company's
Subsidiaries is owned directly by the Company, free and clear of any Lien (as
defined below) or any other limitation or restriction (including any restriction
on the right to vote or sell the same, except as may be provided as a matter of
law). There are no securities of the Company or its Subsidiaries convertible
into or exchangeable for, no options or other rights to acquire from the Company
or its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in, or
any other securities of, any Subsidiary of the Company. There are no outstanding
contractual obligations of the Company or its Subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any Subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including, without limitation, any
security) any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
(c) The Shares constitute the only class of securities of the
Company or its Subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
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SECTION 2.3. Authority Relative to This Agreement; Consents and
Approvals.
(a) The Company has all necessary corporate power and authority
to execute and deliver this Agreement and, subject to stockholder approval, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of the Company (the
"Company Board") and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then outstanding
Shares). This Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The Company Board has duly and validly approved, and taken
all corporate actions required to be taken by the Board for the consummation of,
the transactions, including the Merger, contemplated hereby and resolved to
recommend that the stockholders of the Company approve and adopt this Agreement;
provided, however, that such approval and recommendation may be withdrawn,
modified or amended in the event that the Company Board by majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of independent legal counsel, that it is required to do so in order
to comply with its fiduciary duties to stockholders under applicable law.
SECTION 2.4. SEC Reports; Financial Statements. The Company has
filed all required forms, reports and documents with the Securities and Exchange
Commission (the "SEC") since January 1, 1994, each of which has complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act, each as in effect on the dates such forms, reports and documents
were filed. The Company has heretofore delivered to Parent, in the form filed
with the SEC (including any amendments thereto), (i) its Annual Reports on Form
10-K for each of the fiscal years ended February 28, 1994, February 28, 1995 and
February 29, 1996, (ii) all definitive proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held since
January 1, 1992 and (iii) all other reports or
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registration statements filed by the Company with the SEC since January 1, 1992,
including all exhibits included or incorporated by reference therein (the
"Company SEC Reports"). None of such forms, reports or documents, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein (but excluding Exhibits), contained, when
filed (subject to the amendments filed in connection therewith in the case of
the Company's registration statement on Form S-1 filed in 1996), any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated in the notes thereto), the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Since February 29, 1996, there has
not been any change, or any application or request for any change, by the
Company or any of its Subsidiaries in accounting principles, methods or policies
for financial accounting or tax purposes (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
SECTION 2.5. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (the "S-4") will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the proxy statement relating to the meeting of the
Company's stockholders to be held in connection with the Merger (the "Proxy
Statement") will, at the date mailed to stockholders and at the times of the
meeting of stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, 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,
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or a supplement to, the S-4 or the Proxy Statement, the Company shall promptly
so advise Parent and such event shall be so described, and such amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
meeting of the Company's stockholders to vote on the Merger, will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
SECTION 2.6. Consents and Approvals; No Violations. Except as set
forth in Section 2.6 of the Company Disclosure Schedule and except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing and recordation of the
Certificate of Merger as required by the DGCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on the Company. Neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of the
Company or any of its Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iii) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on the Company.
SECTION 2.7. No Default. None of the Company or its
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of
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(i) its Certificate of Incorporation or Bylaws (or similar governing documents),
(ii) any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is now a party or by which any of them or any of their respective properties or
assets may be bound or (iii) any order, writ, injunction, decree, law, statute,
rule or regulation applicable to the Company, its Subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Company.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports and except as set forth in Section 2.8 of the Company Disclosure
Schedule, (i) as of November 30, 1996, none of the Company or its Subsidiaries
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, and whether due or to become due or asserted or
unasserted, which is required to be and which is not fully reflected in,
reserved against or otherwise described in the consolidated balance sheet of the
Company (including the notes thereto) as of such date or which could reasonably
be expected to have a Material Adverse Effect on the Company and (ii) since
November 30, 1996, the business of the Company and its Subsidiaries has been
carried on only in the ordinary and usual course, none of the Company or its
Subsidiaries has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and there
have been no events, changes or effects with respect to the Company or its
Subsidiaries having or which could reasonably be expected to have, a Material
Adverse Effect on the Company.
SECTION 2.9. Litigation. Except as publicly disclosed by the
Company in the Company SEC Reports or in Section 2.9 of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries or any of their respective properties or assets which (a) if
adversely determined, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company 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
hereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by the Company,
none of the Company 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
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on the Company or would prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 2.10. Compliance with Applicable Law. Except as publicly
disclosed by the Company in the Company SEC Reports, the Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which could not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as publicly disclosed by the Company in the Company SEC Reports, the Company and
its Subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply could not reasonably be expected to have a
Material Adverse Effect on the Company. Except as publicly disclosed by the
Company in the Company SEC Reports or as otherwise disclosed to Parent on the
date hereof, the businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity except that no representation or warranty is made in this Section 2.10
with respect to Environmental Laws (as defined in Section 2.12(a)) and except
for violations or possible violations which do not, and, insofar as reasonably
can be foreseen, in the future will not, have a Material Adverse Effect on the
Company. Except as publicly disclosed by the Company in the Company SEC Reports,
no investigation or review by any Governmental Entity with respect to the
Company or its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than, in each case,
those which the Company reasonably believes will not have a Material Adverse
Effect on the Company.
SECTION 2.11. Employee Plans. Except as set forth in Section 2.11
of the Company's Disclosure Schedule (the "Company Employee Plans"), copies of
the governing documents for which have been provided to Parent, there are no
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by the Company or its Subsidiaries. The Company Employee Plans are in compliance
with the applicable provisions of ERISA and the Code, except for instances of
non-compliance that could not reasonably be expected to have a Material Adverse
Effect on the Company.
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SECTION 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by the Company in the Company
SEC Reports, (i) each of the Company and its Subsidiaries is in compliance with
all applicable federal, state and local laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) (collectively, "Environmental Laws"), except for non-compliance that
could not reasonably be expected to have a Material Adverse Effect on the
Company, which compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof; (ii) none of the Company or its Subsidiaries
has received written notice of, or, to the knowledge of the Company, is the
subject of, any action, cause of action, claim, investigation, demand or notice
by any person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that could reasonably be expected
to have a Material Adverse Effect on the Company; and (iii) to the knowledge of
the Company, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by the Company in the Company
SEC Reports, there are no Environmental Claims which could reasonably be
expected to have a Material Adverse Effect on the Company that are pending or,
to the knowledge of the Company, threatened against the Company or its
Subsidiaries or, to the knowledge of the Company, against any person or entity
whose liability for any Environmental Claim the Company or either of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
SECTION 2.13. Tax Matters. (a) Except as disclosed in writing to
Parent and Acquisition:
(i) The Company and its Subsidiaries have timely filed, or been
included in, all material federal, state, local and foreign Tax Returns (as
defined below) to be filed by them.
(ii) Except to the extent adequately reserved for in accordance
with GAAP, all income and franchise Taxes (as defined below) and material other
Taxes due and payable by the Company and any of its Subsidiaries have been
timely paid in full. The consolidated financial statements contained in the most
recent Company SEC
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Reports reflect an adequate reserve for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(iii) No material deficiencies for any Taxes have been proposed,
asserted or assessed in writing against the Company or any of its Subsidiaries
that have not been fully paid or adequately provided for in the appropriate
financial statements of the Company and its Subsidiaries. No material issues
relating to Taxes have been raised in writing by any governmental authority
during any presently pending audit or examination.
(iv) The Company and its Subsidiaries have withheld all material
Taxes required to have been withheld and paid by them on their behalf in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, and such withheld Taxes have either
been duly paid to the proper governmental authority or set aside in accounts for
such purpose.
(v) None of the Company or any of its Subsidiaries has taken or
agreed to take any action that would prevent or impede the Merger from
qualifying as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
(vi) None of the Company or any of its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
(vii) None of the Company or any of its Subsidiaries has made any
payments, nor is any of them obligated to make any payments, and is not a party
to any agreement that could obligate it to make any payments that will not be
deductible under Section 280G of the Code or would constitute compensation in
excess of the limitation set forth in Section 162(m) of the Code.
(viii) None of the Company or any of its Subsidiaries is a party
to any Tax allocation or sharing agreement or arrangement (whether or not in
writing), except among themselves.
(ix) None of the Company or any of its Subsidiaries has executed
or entered into a closing agreement that could affect its Tax liability for any
period after the Closing Date pursuant to Section 7121 of the Code or any
similar provision of state, local or foreign law.
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(x) None of the Company or any of its Subsidiaries has agreed to
or is making adjustments pursuant to Section 481(a) of the Code that could
affect its Tax liability for any period after the Closing Date by reason of
change in accounting method initiated by the Company or any of its Subsidiaries
nor to the knowledge of the Company has the IRS proposed any such adjustment or
change in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company or any of its Subsidiaries.
(b) For purposes of this Agreement, the following definitions
shall apply:
"Tax" or "Taxes" means any federal, state, local or foreign net or gross income,
franchise, profits, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium (including taxes under Section 59A of the
Code), capital stock, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax, governmental fee or like assessment or charge of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not,
imposed by any governmental authority or arising under any tax law (including by
reason of several and/or transferee liability).
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.
SECTION 2.14. Intangible Property. The Company and it
Subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and its Subsidiaries as currently conducted or as contemplated to be conducted,
and the Company is unaware of any assertion or claim challenging the validity of
any of the foregoing which, individually or in the aggregate, would have a
Material Adverse Effect on the Company. The conduct of the business of the
Company and its Subsidiaries as heretofore and currently conducted has not and
does not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, service mark or copyright of any
third
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party that, individually or in the aggregate, would have a Material Adverse
Effect on the Company. To the knowledge of the Company, there are no
infringements of any proprietary rights owned by or licensed by or to the
Company or any subsidiary which, individually or in the aggregate, would have a
Material Adverse Effect on the Company.
Each person listed in Section 2.14 of the Company's Disclosure
Schedule has executed a confidentiality, non-disclosure agreement and/or
invention assignment agreement (each, a "Non-Disclosure Agreement"). Such
Non-Disclosure Agreements constitute valid and binding agreements enforceable in
accordance with their respective terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 2.15. Opinion of Financial Adviser. Prudential Securities
Incorporated (the "Financial Adviser") has delivered to the Board its written
opinion, dated the date of this Agreement, to the effect that, as of such date,
the Merger Consideration is fair to the holders of Shares from a financial point
of view, a signed, true and complete copy of which opinion has been delivered to
Parent, and as of the date hereof such opinion has not been withdrawn or
modified.
SECTION 2.16. Brokers. No broker, finder or investment banker
(other than Prudential Securities Incorporated, a true and correct copy of whose
engagement agreement has been provided to Parent) is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its affiliates or stockholders (including
the Company Affiliates).
SECTION 2.17. [Intentionally Omitted]
SECTION 2.18. Material Contracts.
(a) Section 2.18(a) of the Company Disclosure Schedule lists all
of the following contracts to which the Company or any of its Subsidiaries is a
party or by which any of their respective properties or assets are bound: (i)
employment, consulting, non-competition, severance, golden parachute or
indemnification contract (including, without limitation, any contract to which
the Company or any of its
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Subsidiaries is a party involving employees of the Company or any of its
Subsidiaries); (ii) licensing, merchandising or distribution agreements; (iii)
contracts granting a right of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets of the Company (by merger,
purchase or sale of assets or stock or otherwise) entered into since January 1,
1992; (vi) contracts or agreements with any Governmental Entity; (vii) other
contracts which materially affect the business, properties or assets of the
Company and its Subsidiaries taken as a whole which are not otherwise disclosed
in this Agreement or were entered into other than in the ordinary course of
business; and (viii) all commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 4.1 hereof, the "Contracts"). The Company has delivered
or otherwise made available to Parent true, correct and complete copies of the
Contracts listed in Section 2.18(a) of the Company Disclosure Schedule, together
with all amendments, modifications and supplements thereto and all side letters
to which the Company is a party affecting the obligations of any party
thereunder.
(b) Except as set forth in Section 2.18(b) of the Company
Disclosure Schedule:
(i) Each of the Contracts is valid and enforceable in accordance
with its terms, and there is no default under any Contract so listed either by
the Company or, to the knowledge of the Company, by any other party thereto
which could have a Material Adverse Effect, and no event has occurred that with
the lapse of time or the giving of notice or both would constitute a default
thereunder by the Company or, to the knowledge of the Company, any other party
which could have a Material Adverse Effect.
(ii) No party to any such Contract has given notice to the
Company of or made a claim against the Company with respect to any material
breach or material default thereunder.
(c) With respect to those Contracts that were assigned or
subleased to the Company by a third party, all necessary consents to such
assignments or subleases have been obtained.
SECTION 2.19. Pooling of Interests. The representations of the
Company in its letter dated March 18, 1997 to Grant Thornton are to its
knowledge true and correct.
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SECTION 2.20. Disclosure. No representation or warranty by the
Company contained in this Agreement and no statement contained in any
certificate delivered by the Company to Acquisition or Parent 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 or therein not
misleading when taken together in light of the circumstances in which they were
made.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows:
SECTION 3.1. Organization.
(a) Each of Parent, Acquisition and each other Subsidiary of
Parent is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
would not have a Material Adverse Effect (as defined below) on Parent. When used
in connection with Parent or Acquisition or any other Subsidiary of Parent, the
term "Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the properties, business, results
of operations or condition (financial or otherwise) of Parent and its
Subsidiaries, taken as a whole, other than any change or effect arising out of
general economic conditions not specifically related to any businesses in which
Parent and its Subsidiaries are engaged or (ii) that may impair the ability of
Parent and/or Acquisition to consummate the transactions contemplated hereby.
(b) Except as set forth in Section 3.1(b) of the Parent
Disclosure Schedule, the Parent has no Subsidiaries and does not own, directly
or indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the Certificate of Incorporation and Bylaws, as currently in
effect,
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of Parent and Acquisition. Each of Parent and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent.
SECTION 3.2. Capitalization of Parent and Its Subsidiaries.
(a) The authorized capital stock of Parent consists of (i)
120,000,000 shares of Parent Common Stock, of which, as of March 17, 1997,
35,051,062 shares of Parent Common Stock were issued and outstanding and (ii)
5,000,000 shares of preferred stock, $0.001 par value per share, none of which
is issued or outstanding. All of the shares of Parent Common Stock have been
validly issued, and are fully paid, nonassessable and free of preemptive rights.
As of March 17, 1997, 4,649,000 shares of Parent Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding options. Except as described in the Parent SEC Reports,
as set forth above or as described in Section 3.2(a) of the Parent Disclosure
Schedule, as of the date hereof, there are outstanding (i) no shares of capital
stock or other voting securities of Parent, (ii) no securities of Parent or its
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of Parent, (iii) no options or other rights to acquire from
Parent or its Subsidiaries and no obligations of Parent or its Subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent, and (iv) no
equity equivalents, interests in the ownership or earnings of Parent or its
Subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Parent Securities"). There are no outstanding obligations of
Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Parent Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which Parent is a party or to which it is bound
relating to the voting of any shares of capital stock of Parent.
(b) All of the outstanding capital stock of Parent's Subsidiaries
(including Acquisition) is owned by Parent, directly or indirectly, free and
clear of any Lien or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of Parent or its Subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Parent or its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the
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issuance or sale, directly or indirectly, of any capital stock or other
ownership interests in, or any other securities of, any Subsidiary of Parent.
There are no outstanding contractual obligations of Parent or its Subsidiaries
to repurchase, redeem or otherwise acquire any outstanding shares of capital
stock or other ownership interests in any subsidiary of Parent.
(c) The Parent Common Stock constitutes the only class of equity
securities of Parent or its Subsidiaries registered or required to be registered
under the Exchange Act.
SECTION 3.3. Authority Relative to This Agreement. Each of Parent
and Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition, and no other corporate proceedings on the part of
Parent or Acquisition are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Acquisition and constitutes a
valid, legal and binding agreement of each of Parent and Acquisition,
enforceable against each of Parent and Acquisition in accordance with its terms.
SECTION 3.4. SEC Reports; Financial Statements. Parent has filed
all required forms, reports and documents with the SEC since September 30, 1996,
each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed. Parent has heretofore
delivered to the Company, in the form filed with the SEC (including any
amendments thereto), all reports or registration statements filed by Parent with
the SEC since September 24, 1996, including all exhibits included or
incorporated by reference therein (the "Parent SEC Reports"). None of such
forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein (but
excluding Exhibits), contained, when filed (subject to amendments filed in
connection therewith in the case of Parent's registration statement on form S-1
filed in 1996), any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC Reports
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complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Since September 30, 1996, there has not been any change,
or any application or request for any change, by the Company or any of its
Subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes.
SECTION 3.5. Information Supplied. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) the Proxy Statement will, at the
date mailed to stockholders and at the times of the meeting of stockholders to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event with respect to Parent, 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 S-4 or the Proxy Statement, Parent shall
promptly so advise the Company and such event shall be so described, and such
amendment or supplement (which the Company shall have a reasonable opportunity
to review) shall be promptly filed with the SEC. The S-4 will comply as to form
in all material respects with the provisions of the Securities Act and the rules
and regulations thereunder.
SECTION 3.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the HSR Act, and the filing and
recordation of the Certificate of Merger as required by the DGCL, no filing with
or notice to, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution and delivery by Parent or
Acquisition of this Agreement or the consummation by Parent or Acquisition of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such
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filings or give such notice would not have a Material Adverse Effect on Parent.
Neither the execution, delivery and performance of this Agreement by Parent or
Acquisition nor the consummation by Parent or Acquisition of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective Certificate of Incorporation or Bylaws (or similar
governing documents) of Parent or Acquisition or any of Parent's Subsidiaries,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Parent
or Acquisition or any of Parent's Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or Acquisition or any of Parent's Subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on Parent.
SECTION 3.7. No Default. None of Parent or any of its
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or any of its Subsidiaries is now a party or by which any of
them or any of their respective properties or assets may be bound or (iii) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent, its Subsidiaries or any of their respective properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on Parent.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by Parent in the Parent SEC
Reports, as of September 30, 1996, none of Parent or its Subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which is
not fully reflected in, reserved against or otherwise described in the
consolidated balance sheet of Parent and its consolidated Subsidiaries
(including the notes thereto) as of such date or which could reasonably be
expected to have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, since September 30, 1996, the
business of Parent and its Subsidiaries has been carried on only in the ordinary
and
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usual course, none of Parent or its Subsidiaries has incurred any liabilities of
any nature, whether or not accrued, contingent or otherwise, and whether due or
to become due or asserted or unasserted, which could reasonably be expected to
have, and there have been no events, changes or effects with respect to Parent
or its Subsidiaries having or which could reasonably be expected to have, a
Material Adverse Effect on Parent.
SECTION 3.9. Litigation. Except as publicly disclosed by Parent
in the Parent SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or any of its Subsidiaries or any of their respective properties or assets which
(a) if adversely determined, could reasonably be expected to have a Material
Adverse Effect on Parent or (b) as of the date hereof, questions the validity of
this Agreement or any action to be taken by Parent in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as publicly disclosed by Parent in the Parent SEC Reports, none of Parent
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 expect to have a Material Adverse Effect on Parent or would
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. Except as publicly
disclosed by Parent in the Parent SEC Reports, Parent and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Parent Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which could not reasonably
be expected to have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, Parent and its Subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure so
to comply could not reasonably be expected to have a Material Adverse Effect on
Parent. Except as publicly disclosed by Parent, the businesses of Parent and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity except that no representation or warranty
is made in this Section 3.10 with respect to Environmental Laws and except for
violations or possible violations which do not, and, insofar as reasonably can
be foreseen, in the future will not, have a Material Adverse Effect on Parent.
Except as publicly disclosed by Parent in the Parent SEC Reports, no
investigation or review by any Governmental Entity with respect to Parent or its
Subsidiaries is pending or, to the best knowledge of Parent, threatened, nor, to
the best knowledge of Parent, has any Governmental Entity indicated an intention
to conduct the same, other than, in each
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case, those which Parent reasonably believes will not have a Material Adverse
Effect on Parent.
SECTION 3.11. Environmental Laws and Regulations.
(a) Except as publicly disclosed by Parent in the Parent SEC
Reports, (i) each of Parent and its Subsidiaries is in compliance with all
Environmental Laws, except for non-compliance that could not reasonably be
expected to have a Material Adverse Effect on Parent, which compliance includes,
but is not limited to, the possession by Parent and its Subsidiaries of all
material permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (ii)
none of Parent or its Subsidiaries has received written notice of, or, to the
knowledge of Parent, is the subject of, any Environmental Claim that could
reasonably be expected to have a Material Adverse Effect on Parent; and (iii) to
the knowledge of Parent, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
(b) Except as publicly disclosed by Parent in the Parent SEC
Reports, there are no Environmental Claims which could reasonably be expected to
have a Material Adverse Effect on Parent that are pending or, to the knowledge
of Parent, threatened against Parent or its Subsidiaries or, to the knowledge of
Parent, against any person or entity whose liability for any Environmental Claim
Parent or its Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
SECTION 3.12. Tax Matters. Except as disclosed in writing to the
Company:
(i) Parent and its Subsidiaries have timely filed, or been
included in, all material federal, state, local and foreign Tax Returns to be
filed by them.
(ii) Except to the extent adequately reserved for in accordance
with GAAP, all income and franchise Taxes and material other Taxes due and
payable by Parent and any of its Subsidiaries have been timely paid in full. The
consolidated financial statements contained in the most recent Parent SEC
Reports reflect an adequate reserve for all Taxes payable by Parent and any of
its Subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.
(iii) No material deficiencies for any Taxes have been proposed,
asserted or assessed in writing against Parent or any of its Subsidiaries that
have not
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been fully paid or adequately provided for in the appropriate financial
statements of Parent and its Subsidiaries. No material issues relating to Taxes
have been raised in writing by any governmental authority during any presently
pending audit or examination.
(iv) Parent and its Subsidiaries have withheld all material Taxes
required to be withheld and paid by them on their behalf in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and such withheld Taxes have either been duly
paid to the proper governmental authority or set aside in accounts for such
purpose.
(v) None of Parent or any of its Subsidiaries has taken or agreed
to take any action that would prevent or impede the Merger from qualifying as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code").
(vi) None of Parent or any of its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
(vii) None of Parent or any of its Subsidiaries has made any
payments, nor is any of them obligated to make any payments, and is not a party
to any agreement that could obligate it to make any payments that will not be
deductible under Section 280G of the Code or would constitute compensation in
excess of the limitation set forth in Section 162(m) of the Code.
(viii) None of Parent or any of its Subsidiaries is a party to
any Tax allocation or sharing agreement or arrangement (whether or not in
writing), except among themselves.
(ix) None of Parent or any of its Subsidiaries has executed or
entered into a closing agreement that could affect its Tax liability for any
period after the Closing Date pursuant to Section 7121 of the Code or any
similar provision of state, local, or foreign law.
(x) None of Parent or any of its Subsidiaries has agreed to or is
making adjustments pursuant to Section 481(a) of the Code that could affect its
Tax liability for any period after the Closing Date by reason of change in
accounting method initiated by Parent or any of its Subsidiaries nor to the
knowledge of Parent has the IRS proposed any such adjustment or change in
accounting method, or has any
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application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of
Parent or any of its Subsidiaries.
SECTION 3.13. Intangible Property. Parent and its Subsidiaries
own or possess adequate licenses or other valid rights to use all material
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, service marks, trade secrets, applications for trademarks
and for service marks, know-how and other proprietary rights and information
used or held for use in connection with the business of Parent and its
Subsidiaries as currently conducted or as contemplated to be conducted, and
Parent is unaware of any assertion or claim challenging the validity of any of
the foregoing which, individually or in the aggregate, would have a Material
Adverse Effect on Parent. The conduct of the business of Parent and its
Subsidiaries as heretofore and currently conducted has not and does not conflict
in any way with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, service mark or copyright of any third party that,
individually or in the aggregate, would have a Material Adverse Effect on
Parent. To the knowledge of Parent there are no infringements of any proprietary
rights owned by or licensed by or to Parent or any Subsidiary which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent.
SECTION 3.14. Brokers. No broker, finder or investment banker
(other than Donaldson, Lufkin & Jenrette) is entitled to any brokerage, finder's
or other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Acquisition.
SECTION 3.15. Pooling of Interests. The assurances of Parent in
its letter dated March 14, 1997 to AA are to Parent's knowledge true and
correct.
SECTION 3.16. Disclosure. No representation or warranty by Parent
contained in this Agreement and no statement contained in any certificate
delivered by Parent 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 or therein not misleading when taken
together in light of the circumstances in which they were made.
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ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business of the Company. Except as
contemplated by this Agreement or as set forth in Section 4.1 of the Company's
Disclosure Schedule, during the period from the date hereof to the Effective
Time, the Company will, and will cause each of its Subsidiaries to, conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, neither the Company nor any of its Subsidiaries
will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or Bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or equity equivalents (including,
without limitation, any stock options or stock appreciation rights), except for
the issuance of Shares upon the exercise of options outstanding under the
Company's 1992 Stock Option Plan and listed in Section 2.2(a) of the Company's
Disclosure Schedule, in accordance with the terms of such Plan and options as in
effect on the date hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to stockholders in
their capacity as such or redeem or otherwise acquire any of its securities or
any securities of any of its Subsidiaries, except for the regular quarterly
dividend on the Shares not in excess of $ .30 per share per quarter;
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(d) 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);
(e) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any Subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue
any debt securities; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other person except in the ordinary course of business consistent with
past practice and in amounts not material to the Company and its Subsidiaries,
taken as a whole, and except for obligations of the wholly owned subsidiary of
the Company; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to a Subsidiary of the Company or
customary loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of such
loan or advance); (iv) pledge or otherwise encumber shares of capital stock of
the Company or its Subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(g) except as may be required by law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee in any manner, or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material to
the Company and its Subsidiaries taken as a whole, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice;
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(i) except as may be required as a result of a change in law or
in generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(j) 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 or as required
by GAAP;
(k) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the ordinary
course of business consistent with past practice, enter into any contract or
agreement or amend any of the Contracts or the agreements referred to in Section
2.16, provided that in no event shall the Company or any of its Subsidiaries
amend, modify or extend any of the agreements set forth in Section 2.18(a) of
the Company's Disclosure Schedule; (iii) authorize any new capital expenditure
or expenditures which, individually, is in excess of $30,000 or, in the
aggregate, are in excess of $100,000; or (iv) enter into or amend any contract,
agreement, commitment or arrangement providing for the taking of any action that
would be prohibited hereunder;
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of claims, liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its Subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(m) settle or compromise any pending or threatened suit, action
or claim relating to the transactions contemplated hereby;
(n) make or revoke any material tax election or settle or
compromise any tax liability material to the Company and its Subsidiaries taken
as a whole; or
(o) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through 4.1(n) or any action which would
make any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect.
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SECTION 4.2. Conduct of Business of Parent. Except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, Parent will not, without the prior written consent of Company:
(a) amend its Certificate of Incorporation (except to increase
its authorized capital stock) or Bylaws;
(b) combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities, or
(unless a proportionate adjustment shall be made to Merger Consideration) split
its shares of capital stock;
(c) adopt a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization of Parent; or
(d) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through 4.2(c) or any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect.
SECTION 4.3. Preparation of S-4 and the Proxy Statement. Parent
will, as promptly as practicable, prepare and file with the SEC the S-4,
containing a proxy statement/prospectus and a form of proxy, in connection with
the registration under the Securities Act of the shares of Parent Common Stock
issuable upon conversion of the Shares and the other transactions contemplated
hereby. The Company will, as promptly as practicable, prepare and file with the
SEC the Proxy Statement that will be the same proxy statement/prospectus
contained in the S-4 and a form of proxy, in connection with the vote of the
Company's stockholders with respect to the Merger. Parent and the Company will,
and will cause their accountants and lawyers to, use their best efforts to have
or cause the S-4 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, it being understood and
agreed that Schulte Roth & Zabel LLP, counsel to the Company, will render the
tax opinion referred to in Section 5.2(d) on (i) the date the preliminary Proxy
Statement is filed with the SEC and (ii) the date the S-4 is filed with the SEC.
Each of the Company
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and, if applicable, Parent will use its best efforts to cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable date.
SECTION 4.4. Other Potential Acquirors. (a) The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any acquisition of
all or any material portion of the assets of, or any equity interest in, the
Company or its Subsidiaries or any business combination with the Company or its
Subsidiaries. The Company may, directly or indirectly, furnish information and
access, in each case only in response to unsolicited requests therefor, to any
corporation, partnership, person or other entity or group pursuant to
confidentiality agreements, and may participate in discussions and negotiate
with such entity or group concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction involving the Company or any Subsidiary
or division of the Company, if such entity or group has submitted a written
proposal to the Company Board relating to any such transaction and the Company
Board determines in its good faith judgment, after consultation with and based
upon the advice of independent legal counsel, that it is required to do so to
comply with its fiduciary duties to stockholders under applicable law. The
Company Board shall provide a written notice to Parent and Acquisition
describing in reasonable detail the material terms and conditions of any such
proposal as promptly as reasonably practicable following prompt consideration
thereof by the Company Board and shall keep Parent and Acquisition advised
thereafter of material developments with respect thereto as promptly as
reasonably practicable. Except as set forth above, neither the Company nor any
of its affiliates shall, nor shall the Company authorize or permit any of its or
their respective officers, directors, employees, representatives or agents to
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Acquisition, any affiliate or associate of Parent and Acquisition or any
designees of Parent and Acquisition) concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
Subsidiary or division of the Company; provided, however, that nothing herein
shall prevent the Company Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that
nothing herein shall prevent the Company Board from making such disclosure to
the Company's stockholders as, in the good faith judgment of the Company Board,
after consultation with and based upon the advice of independent legal counsel,
is required to comply with its fiduciary duties to stockholders under applicable
law.
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(b) Except as set forth in this Section 4.4, the Company Board
shall not approve or recommend, or cause the Company to enter into any agreement
with respect to, any Third Party Acquisition (as defined in Section 6.1).
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that it is necessary to do so in order to comply with
its fiduciary duties to stockholders under applicable law, the Company Board may
approve or recommend a Superior Proposal (as defined below) or cause the Company
to enter into an agreement with respect to a Superior Proposal, but in each case
only after a reasonable period following delivery of a written notice to Parent
and Acquisition containing the information specified in Section 4.4(a) hereof
including the identity of the person making such Superior Proposal. In addition,
if the Company proposes to enter into an agreement with respect to any Third
Party Acquisition, it shall concurrently with entering into such an agreement
pay, or cause to be paid, to Parent the fee required by Section 6.3(a) hereof.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Company Board 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.
SECTION 4.5. Letters of Accountants. The Company shall use its
best efforts to cause to be delivered to Parent a letter of Grant Thornton LLP,
the Company's independent auditors, and Parent shall use its best efforts to
cause to be delivered to the Company a letter of Arthur Andersen LLP ("AA"),
Parent's independent auditors, in each case dated a date within two business
days before the date on which the S-4 shall become effective and addressed to
the recipients thereof, in form and substance reasonably satisfactory to such
recipients and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
SECTION 4.6. Meeting. The Company shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and related matters. The Company and Acquisition will,
through their respective Boards of Directors recommend to their respective
stockholders approval of such matters; provided, however, that the Company Board
may withdraw its recommendation if the Company Board by a majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of independent legal counsel, that it is required to do so to comply
with its fiduciary duties to stockholders
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under applicable law. The Company and Parent shall coordinate and cooperate with
respect to the timing of such meetings and shall use their best efforts to hold
such meetings on the same day and as soon as practicable after the date hereof.
SECTION 4.7. Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
SECTION 4.8. Access to Information.
(a) Between the date hereof and the Effective Time, the Company
will give Parent and Acquisition and their authorized representatives reasonable
access to all employees, plants, offices, warehouses and other facilities and to
all books and records of the Company and its Subsidiaries, will permit Parent
and Acquisition to make such inspections as Parent and Acquisition may
reasonably require and will cause the Company's officers and those of its
Subsidiaries to furnish Parent and Acquisition with such financial and operating
data and other information with respect to the business, properties and
personnel of the Company and its Subsidiaries as Parent or Acquisition may from
time to time reasonably request, provided that no investigation pursuant to this
Section 4.8(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company.
(b) Between the date hereof and the Effective Time, Parent shall
furnish to the Company and its authorized representatives reasonable access to
such material information relating to the business and financial condition of
Parent as the Company may reasonably request, provided that such information
shall not include detail with respect to employee compensation and benefit
matters or information subject to confidentiality restrictions binding on
Parent.
(c) Each of the parties will hold and will cause its consultants
and advisors to hold in confidence all documents and information concerning the
other parties hereto furnished in connection with the transactions contemplated
by this Agreement pursuant to the terms of that certain Confidentiality
Agreement entered into between the Company and Parent dated February 5, 1997.
SECTION 4.9. Additional Agreements; Best Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use best
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efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) cooperation in the
preparation and filing of the Proxy Statement and the S-4, any filings that may
be required under the HSR Act, and any amendments to any thereof; (ii)
contesting any legal proceeding relating to the Merger; and (iii) the execution
of any additional instruments, including the Certificate of Merger, necessary to
consummate the transactions contemplated hereby. Subject to the terms and
conditions of this Agreement, Parent and Acquisition agree to use all reasonable
efforts to cause the Effective Time to occur as soon as practicable after the
shareholder vote or votes with respect to the Merger. In case at any time after
the Effective Time any further action is necessary to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 4.10. Consents. Parent, Acquisition and the Company each
will use all reasonable efforts to obtain consents of all third parties and
Governmental Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement.
SECTION 4.11. Public Announcements. Parent, Acquisition and the
Company, as the case may be, will consult with one another before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Merger. Immediately following the execution and delivery hereof the Company will
announce the suspension of its previously announced stock purchase program.
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SECTION 4.12. Indemnification; Directors' and Officers'
Insurance.
(a) Parent and Acquisition agree that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company and its Subsidiaries as provided in their
respective Certificates of Incorporation or Bylaws (or other similar governing
instruments) or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect for a period of six (6) years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim (a "Claim") asserted or made within such period shall continue
until the disposition of such Claim. To the maximum extent permitted by the
DGCL, such indemnification shall be mandatory rather than permissive and the
Surviving Corporation shall advance expenses in connection with such
indemnification to the fullest extent permitted under applicable law, provided
that the person to whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification); provided, however, the indemnification provided hereunder
shall not be greater than the indemnification permissible pursuant to the
Company's or its Subsidiaries' respective Certificates of Incorporation and
Bylaws (or other similar governing instruments), as in effect as of the date
hereof.
(b) Parent shall cause the Surviving Corporation to maintain in
effect for not less than three years from the Effective Time policies of the
directors' and officers' liability and fiduciary insurance substantially on the
terms pursuant to which Parent's directors currently are insured with respect to
claims arising from facts or events occurring prior to the Effective Time to the
extent required to cover the types of actions and omissions with respect to
which Parent's directors are currently insured (provided that the Surviving
Corporation shall not be required to pay an annual premium for such insurance in
excess of 200% of the premiums paid as of the Effective Date for such insurance
("Current Premium"), and if such premiums for such insurance would at any time
exceed 200% of the Current Premium, the Parent shall cause Surviving Corporation
to maintain policies of insurance which, in Parent's good faith determination,
provide the maximum coverage available at an annual premium equal to 200% of the
Current Premium).
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in
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each such case, to the extent necessary, proper provision shall be made so that
the successors and assigns of Parent assume the obligations set forth in this
section.
(d) The provisions in this Section 4.12 (i) are intended to be
for the benefit of, and shall be enforceable by, each person entitled to
indemnification hereunder, and each such person's heirs and representatives and
(ii) are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
SECTION 4.13. Notification of Certain Matters. The Company shall
give prompt notice to Parent and Acquisition, and Parent and Acquisition 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, Parent or Acquisition, as the case may be, to
comply with or satisfy 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 contract
material to the financial condition, properties, businesses or results of
operations of it and its Subsidiaries taken as a whole to which it or any of its
Subsidiaries is a party or is subject, (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 change in their respective financial condition,
properties, businesses, results of operations or prospects, taken as a whole,
other than changes resulting from general economic conditions; provided,
however, that the delivery of any notice pursuant to this Section 4.13 shall not
cure such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 4.14. Pooling. The Company and Parent each agrees that it
will not take any action which could prevent the Merger from being accounted for
as a "pooling-of-interests" for accounting purposes and the Company will bring
to the attention of Parent, and Parent will bring to the attention of the
Company, any actions, or agreements or understandings, whether written or oral,
to act that could be reasonably likely to prevent Parent from accounting for the
Merger as a "pooling-of-interests." Concurrently herewith, AA has delivered to
Parent a letter to the effect that Parent qualifies for pooling-of-interests
accounting and Grant Thornton has delivered to
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the Company a letter to the effect that the Company qualifies for
pooling-of-interests accounting. Parent shall use commercially reasonable
efforts to have AA deliver updating confirmation of AA's letter to Parent, and
the Company shall use commercially reasonable efforts to have Grant Thornton
deliver updating confirmation of Grant Thornton's letter to the Company, in each
case upon the filing of the S-4 and upon the mailing of the Proxy Statement. The
Company and Parent each shall use commercially reasonable efforts to cause their
respective accountants to cooperate fully with the other in connection with the
delivery of such confirmations.
SECTION 4.15. Tax-Free Reorganization Treatment. The Company, and
Parent and Acquisition shall each execute and deliver to Schulte Roth & Zabel
LLP, counsel to the Company, and to Weil, Gotshal & Manges LLP, counsel to
Parent and Acquisition, a certificate substantially in the form attached hereto
as Exhibits D and E, respectively, at such time or times as reasonably requested
by such law firms in connection with their delivery of opinions with respect to
the transactions contemplated hereby, and shall provide a copy of such
certificate to the Company and to Parent and Acquisition, respectively. None of
the Company, Parent or Acquisition 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 untrue) any of the representations in Exhibits D
and E.
SECTION 4.16. Employment Benefits. Parent shall, for a period of
at least one year following the Closing, use commercially reasonable best
efforts to continue to provide to employees of the Surviving Corporation the
Company's Oxford health plan as currently in effect or, if the continuation of
such plan is not possible or commercially practicable, benefits at least as
favorable as those currently provided under the Oxford plan. With respect to any
employee benefit plans provided to employees of the Company by the Parent after
the Closing Date (the "Parent Employee Plans"), Parent shall grant all employees
of the Surviving Company who become participants in such plans credit for all
services with the Company prior to the Closing Date for purposes of eligibility
and vesting for which such services were recognized by the Company. To the
extent the Parent Employee Plans provide medical or dental welfare benefits
after the Closing Date, Parent shall cause all pre-existing condition exclusions
and actively at work requirements to be waived to the extent allowable under the
Company Employee Plans and Parent shall provide that any expenses incurred on or
before the Closing Date shall be taken into account under the Parent Employee
Plans to the extent satisfied under the Company Employee Plans for purposes of
satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions for such employees and their covered dependents. On and after the
Closing Date, Parent shall
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cause the medical or dental welfare benefit plans covering employees of the
Company to provide continuation coverage (within the meaning of Section 4980B of
the Code) to employees of the Company who terminated prior to the Closing Date
and their dependents.
SECTION 4.17. Company Affiliates. (a) The Company has identified
to Parent each Company Affiliate and each Company Affiliate has delivered to
Parent on or prior to the date hereof, a written agreement (i) that such Company
Affiliate will not sell, pledge, transfer or otherwise dispose of any shares of
Parent Common Stock issued to such Company Affiliate pursuant to the Merger,
except in compliance with Rule 145 promulgated under the Securities Act or an
exemption from the registration requirements of the Securities Act and (ii) that
such Company Affiliate will not thereafter sell or in any other way reduce such
Company Affiliate's risk relative to any shares of Parent Common Stock received
in the Merger (within the meaning of the SEC's Financial Reporting Release No.
1, "Codification of Financing Reporting Policies," ss. 201.01 47 F.R. 21028
(April 15, 1982)), until such time as financial results (including combined
sales and net income) covering at least 30 days of post-merger operations have
been published, except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC.
(b) Parent shall use its best efforts to publish no later than 30
days after the end of the first calendar month after the Effective Time in which
there are at least 30 days of financial results for post-merger operations, the
financial results required by Section 4.17(a) above.
SECTION 4.18. SEC Filings. Each of Parent 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 4.19. Guarantee of Performance. Parent hereby guarantees
the performance by Acquisition of its obligations under this Agreement and the
indemnification obligations of the Surviving Corporation pursuant to Section
4.12(a) hereof.
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ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger is
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(d) the S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a stop
order and Parent shall have received all state securities laws or "blue sky"
permits and authorizations necessary to issue shares of Parent Common Stock in
exchange for the Shares in the Merger;
(e) Parent shall have received an opinion from AA stating that
the Merger will be accounted for under GAAP as a "pooling-of-interests," and
such opinion shall not have been withdrawn or modified in any material respect;
and
(f) the Employment Agreements shall be in full force and effect.
SECTION 5.2. Conditions to the Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) the representations of Parent and Acquisition contained in
this Agreement or in any other document delivered pursuant hereto shall be true
and correct
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in all material respects at and as of the Effective Time with the same effect as
if made at and as of the Effective Time, and at the Closing Parent and
Acquisition shall have delivered to the Company a certificate to that effect;
(b) each of the obligations of Parent and Acquisition to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and at the Closing Parent and Acquisition shall have
delivered to the Company a certificate to that effect;
(c) the shares of Parent Common Stock issuable to the Company
stockholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been authorized
for listing on the NYSE upon official notice of issuance;
(d) the opinion of Schulte Roth & Zabel LLP, counsel to the
Company, to the effect that (i) the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code; (ii) each of Parent, Acquisition, and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; and (iii) no
gain or loss will be recognized by shareholders of the Company with respect to
shares of Parent Common Stock received in the Merger in exchange for Shares,
except with respect to cash received in lieu of fractional shares;
(e) Parent shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, in the reasonable
opinion of the Company, individually or in the aggregate, have a Material
Adverse Effect on Parent; and
(f) there shall have been no events, changes or effects with
respect to Parent or its Subsidiaries having or which could reasonably be
expected to have a Material Adverse Effect on Parent.
SECTION 5.3. Conditions to the Obligations of Parent and
Acquisition. The respective obligations of Parent and Acquisition to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
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(a) the representations of the Company contained in this
Agreement or in any other certificate delivered pursuant hereto shall be true
and correct in all material respects at and as of the Effective Time with the
same effect as if made at and as of the Effective Time, and at the Closing the
Company shall have delivered to Parent and Acquisition a certificate to that
effect;
(b) each of the obligations of the Company to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time and
at the Closing the Company shall have delivered to Parent and Acquisition a
certificate to that effect;
(c) each Company Affiliate and each stockholder that is a party
to the Stockholders Agreement shall have performed his or its respective
obligations under the applicable Affiliate Letter and/or the Stockholders
Agreement (if applicable), and Parent shall have received a certificate signed
by each of them to such effect;
(d) the Company shall have obtained the consent or approval of
each person whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company or any Subsidiary of the Company
under any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument, except for those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of Parent,
individually or in the aggregate, have a Material Adverse Effect on the Company;
and
(e) there shall have been no events, changes or effects with
respect to the Company or its Subsidiaries having or which could reasonably be
expected to have, a Material Adverse Effect on the Company.
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ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time, but prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States governmental
authority shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become nonappealable or
(ii) the Merger has not been consummated by August 15, 1997; provided that no
party may terminate this Agreement pursuant to this clause (ii) if such party's
failure to fulfill any of its obligations under this Agreement shall have been
the reason that the Effective Time shall not have occurred on or before said
date;
(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth in
this Agreement, or if any representation or warranty of Parent or Acquisition
shall have become untrue, in either case such that the conditions set forth in
Section 5.2(a) would be incapable of being satisfied by August 15, 1997 (or as
otherwise extended), (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder having
a Material Adverse Effect on the Parent or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Parent or Acquisition,
as the case may be, has not cured such breach within twenty business days after
notice by the Company thereof, provided that the Company has not breached any of
its obligations hereunder, (iii) the Company enters into a definitive agreement
relating to a Superior Proposal in accordance with Section 4.4(b), provided that
such termination under this clause (iii) shall not be effective unless the
Company has complied with all of the provisions of such Section 4.4(b) and until
payment of the fee required by Section 6.3(a) hereof; or (iv) the Average Final
Closing Price shall be less than $20.00.
(d) by Parent and Acquisition if (i) there shall have been a
breach of any representation or warranty on the part of the Company set forth in
this Agreement,
45
<PAGE>
or if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 5.3(a) would be
incapable of being satisfied by August 15, 1997 (or as otherwise extended), (ii)
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 Parent or Acquisition thereof, provided that neither Parent or Acquisition
has breached any of their respective obligations hereunder, (iii) the Company
enters into a definitive agreement relating to any Third Party Acquisition (as
defined below), (iv) the Company Board shall have withdrawn, modified or changed
its approval or recommendation of this Agreement or the Merger, shall have
recommended to the Company's stockholders a Third Party Acquisition, or shall
have adopted any resolution to effect any of the foregoing, (v) the Average
Final Closing Price shall be less than $24.00, or (vi) the Company shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders.
"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 Parent, Acquisition or any
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
more than 20% of the total assets of the Company and its Subsidiaries, taken as
a whole; or (iii) the acquisition by a Third Party of 20% or more of the
outstanding Shares.
SECTION 6.2. Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 6.1, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders, other than the provisions of this Section 6.2 and Sections 4.8(c),
6.3 and 7.10 hereof. Nothing contained in this Section 6.2 shall relieve any
party from liability for any breach of this Agreement.
SECTION 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant
to Section 6.1(c)(iii), Section 6.1(d)(iii) or Section 6.1(d)(iv), Parent and
Acquisition would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate Parent and Acquisition for
such damages, the Company shall pay to Parent as liquidated damages, which
amount shall be payable as
46
<PAGE>
the amount of $5,000,000 (less any amounts previously paid to Parent,
Acquisition and their affiliates pursuant to Section 6.3(b)) immediately upon
demand or, in case of any termination pursuant to Section 6.1(c)(iii) or
6.1(d)(iii), at the time specified in Section 4.4(b). It is specifically agreed
that the amount to be paid pursuant to this Section 6.3(a) represents liquidated
damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to Sections
6.1(d)(i), (ii), (iii), (iv) or (vi), the Company shall reimburse Parent,
Acquisition and their affiliates (not later than ten business days after
submission of statements therefor) for all actual documented out-of-pocket fees
and expenses, actually and reasonably incurred by any of them or on their behalf
in connection with the Merger and the consummation of all transactions
contemplated by this Agreement (including, without limitation, fees payable to
investment bankers, counsel to any of the foregoing, and accountants), in an
aggregate amount not to exceed $1,000,000.
(c) Upon the termination of this Agreement pursuant to Sections
6.1(c)(i) or (ii), Parent shall reimburse the Company and its affiliates (not
later than ten business days after submission of statements therefor) for all
actual documented out-of-pocket fees and expenses, actually and reasonably
incurred by any of them or on their behalf in connection with the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, fees payable to investment bankers, counsel to any of the
foregoing, and accountants, in an aggregate amount not to exceed $1,000,000).
(d) Except as specifically provided in this Section 6.3, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby. The cost of printing the S-4 and the Proxy
Statement shall be borne equally by the Company and Parent.
SECTION 6.4. Amendment. This Agreement may be amended by action
taken by the Company, Parent and Acquisition at any time before or after
approval of the Merger by the stockholders of the Company (if required by
applicable law) but, after any such approval, no amendment shall be made which
requires the approval of such stockholders under applicable law without such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of the parties hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the
Effective Time, each party hereto (for these purposes, Parent and
Acquisition shall together be
47
<PAGE>
deemed one party and the Company shall be deemed the other party) may (i)
extend the time for the performance of any of the obligations or other acts
of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto or (iii) waive compliance
by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto to any such
extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise; provided, however, that Acquisition may assign any or all of its
rights and obligations under this Agreement to any Subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
48
<PAGE>
if to Parent or Acquisition: SNYDER COMMUNICATIONS, INC.
Two Democracy Center
6903 Rockledge Drive, 15th Fl.
Bethesda, MD 20817
Attention: Chief Executive Officer
Facsimile: (301) 571-7930
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Norman D. Chirite, Esq.
Facsimile: (212) 310-8007
if to the Company to: AMERICAN LIST CORPORATION
330 Old Country Road
Mineola, NY 11501
Attention: Chief Executive Officer
Facsimile: (516) 248-6364
with a copy to: Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY
Attention: Marc Weingarten, Esq.
Facsimile: (212) 593-5955
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 7.5. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law thereof.
SECTION 7.6. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.12, 4.16 and 7.2,
nothing in
49
<PAGE>
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 7.8. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 7.9. Specific Performance. The parties hereto acknowledge
that irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and, subject to Section 7.8, shall be in addition to any other
remedies, which any party may have under this Agreement or otherwise.
SECTION 7.10. Brokers. The Company agrees to indemnify and hold
harmless Parent and Acquisition, and Parent and Acquisition agree to indemnify
and hold harmless the Company, from and against any and all liability to which
Parent and Acquisition, on the one hand, or the Company, on the other hand, may
be subjected by reason of any brokers, finders or similar fees or expenses with
respect to the transactions contemplated by this Agreement to the extent such
similar fees and expenses are attributable to any action undertaken by or on
behalf of the Company, or Parent or Acquisition, as the case may be.
SECTION 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
50
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed on its behalf as of the day and year first above written.
AMERICAN LIST
CORPORATION
ATTEST: By: /s/ Martin Lerner
-------------------------
Name: Martin Lerner
Title: President and Chief
Executive Officer
By: /s/ Deborah Freedman
---------------------
Name: Deborah Freedman
Title: Associate
Schulte Roth & Zabel LLP
SNYDER COMMUNICATIONS,
INC.
ATTEST: By: /s/ Michele D. Snyder
--------------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
By: /s/ David B. Pauken
---------------------
Name: David B. Pauken
Title: Assistant Secretary/
Chief Accounting Officer
SNYDER Z ACQUISITION, INC.
ATTEST: By: /s/ Michele D. Snyder
---------------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
By: /s/ David B. Pauken
--------------------
Name: David B. Pauken
Title: Assistant Secretary
51
C:\DATA\WP\74807\0003\209\AGR3207M.020
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt as to the action you should take, you are recommended to seek your own
financial advice from your stockbroker, bank manager, solicitor, accountant or
other independent financial adviser duly authorised under the Financial Services
Act 1986 immediately.
IF YOU HAVE SOLD OR OTHERWISE TRANSFERRED all your Brann
Shares or your Brann Options, please send this document and the accompanying
Form of Acceptance and reply-paid envelope as soon as possible to the purchaser
or transferee. However, this document and the accompanying Form of Acceptance
should not be forwarded or transmitted in or into the United States, Canada,
Australia or the Republic of Ireland.
- --------------------------------------------------------------------------------
RECOMMENDED OFFER
BY
SNYDER COMMUNICATIONS, INC.
FOR
BRANN HOLDINGS LIMITED
- --------------------------------------------------------------------------------
The Offer is not being made, directly or indirectly, and this document should
not be sent, in or into the United States, Canada, Australia or the Republic of
Ireland or by use of the mails of, or by any means of instrumentality of
interstate or foreign commerce of, or any facilities of a national securities
exchange of, any of these jurisdictions, including, without limitation, the
post, facsimile transmission, telex and telephone. The shares of Common Stock of
Snyder offered to holders of shares of Brann Holdings Limited hereunder have not
been registered under the U.S. Securities Act of 1933 and, may not be offered or
sold in the United States or to U.S. persons in the absence of registration or
an exemption from registration from such laws.
A letter from the Chairman of Brann containing the recommendation of the
directors of Brann is set out on pages 5 to 7 of this document.
ACCEPTANCES SHOULD BE DISPATCHED AS SOON AS POSSIBLE, AND IN ANY EVENT SO AS TO
BE RECEIVED NO LATER THAN 3.00 PM ON 31 MARCH 1997. THE PROCEDURE FOR ACCEPTANCE
IS SET OUT ON PAGES 14 TO 15 AND IN THE ACCOMPANYING FORM OF ACCEPTANCE.
THE PROVISIONS OF THE CITY CODE ON TAKEOVERS AND MERGERS DO NOT APPLY TO THE
OFFER AND THIS DOCUMENT.
This document is issued by Snyder Communications, Inc. and its contents have
been approved for the purposes of section 57 of the Financial Services Act 1986
by Merrill Lynch International Limited. Merrill Lynch International Limited,
which is regulated by The Securities and Futures Authority Limited, is acting
for Snyder in relation to the Offer and is not advising any other person.
Accordingly, Merrill Lynch International will not be responsible to anyone other
than Snyder for providing protections afforded to its customers or for providing
advice in relation to the Offer or any other matter. Merrill Lynch International
makes no representation or warranty as to the fairness of the Offer or as to the
value of the shares of Common Stock of Snyder being offered by Snyder as
consideration under the Offer.
- --------------------------------------------------------------------------------
<PAGE>
DEFINITIONS
"BRANN" or "COMPANY" Brann Holdings Limited
"BRANN GROUP" or "GROUP" Brann and its subsidiary
undertakings
"BRANN 'A' ORDINARY SHAREHOLDERS" the holders of Brann 'A' Ordinary
Shares
"BRANN OPTIONS" Options over Brann Ordinary Shares
on the terms and conditions of the
share option scheme for the
management of the Group
"BRANN 'A' ORDINARY SHARES" the existing unconditionally issued
or allotted and fully paid 'A'
ordinary shares of(pound)1 each in
Brann and any further such shares
which are unconditionally issued
and allotted before the date on
which the Offer expires (or such
earlier date as the Purchaser may
decide)
"BRANN ORDINARY SHAREHOLDERS" the holders of Brann Ordinary
Shares
"BRANN ORDINARY SHARES" the existing unconditionally issued
or allotted and fully paid ordinary
shares of (pound)1 each in Brann
and any further shares in the
capital of Brann which are
unconditionally issued and allotted
before the end of the Offer Period
"BRANN PREFERENCE SHAREHOLDERS" the holders of Brann Preference
Shares
"BRANN PREFERENCE SHARES" the existing unconditionally issued
or allotted and fully paid
preference shares of(pound)0.90
each in Brann and any further such
shares which are unconditionally
issued and allotted before the date
on which the Offer expires (or such
earlier date as the Purchaser may
decide)
"BRANN SHARES" Brann Ordinary Shares, Brann 'A'
Ordinary Shares and Brann
Preference Shares
"BRANN SHAREHOLDERS" the holders of Brann Shares
"FORM OF ACCEPTANCE" the form of acceptance and
authority relating to the Offer
dispatched with this document
"OFFER" the Offer made by the Purchaser to
Brann Ordinary Shareholders, Brann
"A" Ordinary Shareholders, and
Brann Preference Shareholders to
acquire Brann Ordinary Shares,
Brann "A" Ordinary Shares and Brann
Preference Shares on the terms and
subject to the conditions set out
in this document and to Brann
Optionholders to surrender Brann
Options for Snyder Options.
"OFFER PERIOD" the period commencing on the date
of this Offer and ending on the
close of business on 31 March 1997
2
<PAGE>
"OPTIONHOLDERS" the holders of Brann Options
"POOLING CONFIRMATION DATE" the date on which all requirements
for "pooling" accounting treatment
in the US for the acquisition of
Brann by Snyder are met (expected
to be no later than 30 May, 1997)
"PURCHASER" or "SNYDER" Snyder Communications, Inc.
"REGISTRATION PERIOD" the period commencing on the date
of publication of financial results
of the Company for the first full
calendar month following the
closing of the Offer (provided that
the holders of Snyder Shares have
complied with all of their
undertakings relating to the
characterisation of the acquisition
as a "pooling of interests" under
generally accepted accounting
principles as applied in the United
States) (the "POOLING DATE"), and
ending at the earlier of (i) such
time as no holder owns any Synder
Shares or (ii) the Rule 144
Eligibility Date.
"REGISTRATION RIGHTS AGREEMENT" the Registration Rights Agreement
between Snyder and holders of
Snyder Shares.
"RULE 144 ELIGIBILITY DATE" the date on which all Snyder Shares
issued by Snyder in the Offer may
first be sold under Rule 144 of the
Securities Act by the holders
thereof within three months of such
date within the volume limitations
of Rule 144(e), assuming for this
purpose that the average weekly
trading volume in the four full
weeks prior to such date will be
the average weekly trading volume
during the following three month
period; and provided further,
however, that for purposes of Rule
144(d), the holding period
applicable to the Snyder Shares
issued by Snyder in the Offer shall
be computed without regard to any
transfers of such shares by any
holder as permitted by the
Registration Rights Agreement.
"SECURITIES ACT" the United States Securities Act of
1933, as amended.
"SNYDER OPTIONS" options over unregistered shares of
Snyder on the terms described
herein, to be granted to certain
holders of Brann Options
"SNYDER OPTION PLAN" the option plan of Snyder entitling
option holders to receive
registered shares of Snyder Common
Stock
"SNYDER SHARES" unregistered shares of Common Stock
of Snyder
"US" or "UNITED STATES" the United States of America, its
territories and possessions, any
state of the United States and
District of Columbia
3
<PAGE>
"$" United States Dollars
"WIDER BRANN GROUP" Brann and any of its subsidiaries
or subsidiary undertakings and any
associated company and any company
of which 20 per cent. or more of
the voting capital is held by any
member of the Brann Group and any
partnership, joint venture, firm or
company in which any member of
Brann Group is or may be interested
"WIDER SNYDER GROUP" Snyder or any of its subsidiaries,
or any partnership, joint venture,
firm or company in which Snyder or
any of its subsidiaries is
interested
4
<PAGE>
21 March 1997
To: Brann Ordinary Shareholders, Brann 'A' Ordinary Shareholders, Brann
Preference Shareholders and to Brann Optionholders .
Dear Shareholder,
RECOMMENDED OFFER FOR BRANN HOLDINGS LIMITED
On 19 March 1997, the Board of Snyder announced a private offer to acquire all
of the issued and to be issued ordinary share capital of Brann.
The purpose of this letter is to explain the background to the offer by Snyder
for the entire share capital of Brann and the reasons why your board unanimously
recommends you accept it.
THE OFFER FOR THE ORDINARY SHARES AND 'A' ORDINARY SHARES
The formal Offer to Ordinary Shareholders and 'A' Ordinary Shareholders is set
out in the letter from the Purchaser on pages 8 to 15 of this document. The
Offer is:
FOR EVERY 250 BRANN ORDINARY SHARES 1,526 SNYDER SHARES
FOR EVERY 250 BRANN 'A' ORDINARY SHARES 2,054 SNYDER SHARES
and so in proportion for any other number of Brann shares held, except that
fractions of Snyder Shares will be rounded down to the nearest whole Snyder
Share and any fractional entitlements ignored. Based on the average closing
price for a Snyder share of US$26.575 on the New York Stock Exchange for the
five business days ending on and including 19 March 1997, the Offer would value
the fully diluted issued ordinary share capital of Brann at approximately
(pounds)48.4 million (using an exchange rate of US$1.60 as at 19.3.97).
As at 20 March 1997, the latest practicable date before the dispatch of this
document, the value of a Snyder share was $26.750.
THE OFFER FOR THE BRANN PREFERENCE SHARES
The terms of the Offer to Brann Preference Shareholders is the payment of
(pounds)1.0178 per Brann Preference Share, in cash, to include all accrued
preference dividends.
THE OFFER TO OPTIONHOLDERS
The formal Offer to Optionholders is set out in the letter from the Purchaser on
pages 8 to 15 of this document.
The terms of the Offer are that any holder of Brann Options who does not
exercise his Brann Options within the Offer Period will receive Snyder Options
in consideration for the surrender of his Brann Options. The terms of the Snyder
Options are specified in more detail in the letter from the Purchaser.
5
<PAGE>
The Offer is:
FOR EVERY 250 BRANN SHARES UNDER OPTION AN OPTION OVER 1,526 SNYDER SHARES
Optionholders are entitled to exercise their Brann Options on or before 31 March
1997. In order to do so, Optionholders must give written notice to the Board of
their intention to exercise and must pay the subscription price for the Brann
Shares being acquired. The Offer extends to any Brann Shares acquired by
Optionholders in this manner.
Optionholders should note that by exercising their Brann Options they will
trigger an income tax charge, as explained in paragraph 13(b) of the Purchaser's
letter, and also will be responsible for immediate payment of the exercise
price. However, they will not be able to freely dispose of their Snyder Shares
until they have been registered according to the Registration Rights Agreement,
the terms of which are summarised in Part D of Appendix 1 to this document.
Optionholders should note, therefore, that by choosing instead to accept the
Offer to Optionholders they will defer any such income tax charge and financing
costs until they can exercise their new Snyder Options, by which time the Snyder
Shares acquired may be tradeable.
BACKGROUND TO AND REASONS FOR ACCEPTING THE OFFER
Snyder is a fast growing, innovative and ambitious US company which is rapidly
building a reputation for delivering outsourced marketing services to US Fortune
500 companies. Like Brann, their focus is on targeted solutions that improve
their clients' market share.
The two companies share a view of the services and processes that will be
required and our key skills and techniques are fascinatingly complementary.
Brann is particularly strong in the area of customer retention and development.
Snyder has a range of powerful techniques in the customer acquisition area. Our
strong feeling is that this is an ideal partnership. We both have much to offer
to each other, and much to learn.
MANAGEMENT AND EMPLOYEES
Snyder has given assurances to the board of Brann that the existing rights of
Brann employees will be safeguarded. The Purchaser will make appropriate
proposals for the directors and management of Brann to participate in Snyder
Options consistent with the Snyder Option Plan.
ACTION TO BE TAKEN
The procedure for acceptance of the Offer is set out on pages 14 to 15 of this
document and in the accompanying Form of Acceptance. To accept the Offer you
must complete the Form of Acceptance in accordance with the instructions printed
thereon and return it by post or by hand, to Mr I Robb of Brann Holdings Limited
at Phoenix Way, Cirencester, Gloucestershire, GL7 1RY as soon as possible, but
in any event so as to be received no later than 3.00 pm on 31 March 1997.
Your attention is drawn to the letter from the Purchaser on pages 8 to 16 of
this document.
6
<PAGE>
IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings to accept the Offer have been received by directors and
senior managers of Brann in respect of their holdings totaling 233,800 Brann
Ordinary Shares and 133,000 Brann 'A' Ordinary Shares, approximately 97 per cent
of the Ordinary and "A" Ordinary share capital of Brann (on a fully diluted
basis).
RECOMMENDATION
For the reasons set out above, your board considers that the Offer is in the
best interests of Brann and its shareholders. Your board considers the terms and
conditions of the Offer to be fair and reasonable and, accordingly, your
directors unanimously recommend that you accept the Offer as they have done in
respect of their own shares representing in approximately 25 per cent of the
Ordinary and "A" Ordinary share capital of Brann.
Yours sincerely
/s/CJ Gater
_______________________
FOR AND ON BEHALF OF
BRANN HOLDINGS LIMITED
7
<PAGE>
SNYDER COMMUNICATIONS, INC
Two Democracy Centre
6903 Rockledge Drive
Bethesda, MD 20817 USA
21 March 1997
To Brann Ordinary Shareholders, Brann 'A' Ordinary Shareholders, Brann
Preference Shareholders and to Brann Optionholders.
Dear Sir or Madam,
RECOMMENDED OFFER FOR BRANN HOLDINGS LIMITED
On 19 March 1997, the Board of Snyder announced the terms of a private offer to
acquire all of the issued and to be issued ordinary share capital of Brann.
1 INTRODUCTION
This letter sets out the terms of a recommended offer to be made by Snyder to
acquire Brann.
Your attention is drawn to the letter from Mr C Gater on pages 5 to 7 of this
document, from which you will see that the directors of Brann consider the terms
and conditions of the Offer to be fair and reasonable and unanimously recommend
that you accept the Offer.
2 THE RECOMMENDED OFFER FOR THE ORDINARY SHARES AND 'A' ORDINARY SHARES
We hereby offer to acquire, on the terms and subject to the conditions set out
or referred to in this document and in the Form of Acceptance, all of the Brann
Ordinary Shares and 'A' Ordinary Shares in issue and to be issued on the
following basis:
for every 250 Brann Ordinary Shares 1,526 Snyder Shares
for every 250 Brann 'A' Ordinary Shares 2,054 Snyder Shares
and so in proportion for any other number of Brann Shares, except that fractions
will be rounded down to the nearest whole Snyder Share and any fractional
entitlements ignored. The Snyder Shares issued pursuant to the Offer will be
issued credited as fully paid and will rank pari passu in all respects with the
issued and outstanding Snyder Common Stock. Based on the average closing price
for a Snyder share of US$26.575 on the New York Stock Exchange for the five
business days ending on, and including, 19 March 1997, the Offer would value the
fully diluted issued ordinary share capital of Brann at approximately
(pounds)48.4 million (using an exchange rate of US$1.6 to (pounds)1).
Brann Shareholders have irrevocably undertaken to accept the Offer in respect of
their holding totalling 233,800 Brann Ordinary Shares and 133,000 Brann 'A'
Ordinary Shares, representing in approximately 97 per cent. of Brann (on a fully
diluted basis).
Acceptances of the Offer should be dispatched as soon as possible, and in any
event so as to be received no later than 3.00 pm on 31 March 1997. Your
attention is drawn to paragraph 14 of this letter, which sets out the procedure
for acceptance of the Offer, and to the conditions and
8
<PAGE>
further terms of the Offer set out in the Appendix to this document and in the
Form of Acceptance.
The Brann Shares are to be acquired fully paid and free from all liens,
equities, charges and encumbrances and other interests and together with all
rights attaching to them, including without limitation, the right to receive and
retain in full all dividends and other distributions declared, made or paid on
or after 21 March 1997.
3 THE RECOMMENDED OFFER TO BRANN PREFERENCE SHARES
We hereby offer to acquire, on the terms and subject to the conditions set out
or referred to in this document and in the Form of Acceptance, all the Brann
Preference Shares at a rate of (pound)1.0178 (inclusive of the preference
dividend accrued at the date of this offer) per share in cash.
4 THE RECOMMENDED OFFER FOR BRANN OPTIONHOLDERS
We hereby offer to grant Snyder Options to Optionholders who do not exercise
their Brann Options during the Offer Period, on the terms and subject to the
conditions set out or referred to in this document and in the Form of
Acceptance. The Snyder Options will be granted in consideration for the
surrender by Optionholders of their Brann Options on the following basis.
FOR EVERY 250 BRANN SHARES UNDER OPTION AN OPTION OVER 1,526 SHARES OF
OF SNYDER COMMON STOCK
Snyder options will be exercisable over a seven year period from the date of
grant at the current sterling exercise price of the Brann Options. The Snyder
shares into which the Snyder Options convert will be unregistered Common Stock
of Snyder. The holders of those unregistered shares will be entitled to the same
registration rights as accepting holders of Brann Ordinary Shares and Brann "A"
Ordinary Shares who receive Snyder shares. In common with other Brann employees,
holders of Brann Options will also receive appropriate proposals for
participation in the Snyder Option Plan.
Optionholders are referred to paragraph 13 of this letter dealing with the tax
implications of the various choices available to them.
5 REGISTRATION RIGHTS
The Snyder Shares being issued to accepting shareholders as consideration shares
and on exercise of Snyder Options will be unregistered shares. By accepting the
Offer, you will become a party to a registration rights agreement with Snyder
which will give you certain registration rights in respect of the Snyder Shares
you receive. Under that agreement, a prescribed number of holders will have the
right to demand registration of 50% of the Snyder Shares issued as consideration
for the Offer upon the commencement of the Registration Period (as defined in
the Registration Rights Agreement) and will have the right to demand
registration of any or all of the Snyder Shares issued as consideration for the
Offer on the first anniversary of the commencement of the Registration Period.
Certain selling restrictions and the terms of the Registration Rights Agreement
are described in Parts D and E of the Appendix to this document.
9
<PAGE>
6 INFORMATION ON SNYDER
Snyder is a rapidly growing provider of innovative and high value-added
outsourced marketing services. Snyder designs and implements marketing programs
for its clients utilising a range of complimentary marketing resources,
including field sales, teleservices, WallBoards and product sampling. Snyder's
clients are primarily US Fortune 500 companies with large annual marketing
expenditures facing significant competitive pressures to retain or expand market
share. Based on 1996 revenues, the ten largest clients of the Company, listed
alphabetically, were A T & T Communications, Inc. ("A T & T"), Gerber Products
Company, Hoechst Marion Roussel, Kellogg U.S.A., Inc., Kraft Foods, Inc., M C I
Telecommunications Corporation ("MCI"), The Prudential Insurance Company of
America, the Quaker Oats Company, Reckitt & Coleman, Inc., and Ross/Abbott Labs.
In January 1997 the Company acquired MMD, Inc., ("MMD") in a merger transaction
in which MMD became a wholly owned subsidiary of the Company. If MMD had been a
wholly owned subsidiary of the Company in 1996, the ten biggest clients of the
Company, listed alphabetically, would have been A T & T, Bayer Corporation,
Bristol Myers Squibb, Gerber Products Company, ICN Pharmaceuticals, Inc.,
Kellogg U.S.A., Inc., MCI, Novartis Consumer Health, Inc., Warner Wellcome
Consumer Health, and Wyeth-Ayerst.
Snyder enhances the value of its outsourced marketing services by identifying
and targeting high value market segments, in addition to general markets, in
order to increase market share for its clients. For example, Snyder's field
sales representatives and teleservices associates have the capability to market
services in 16 foreign languages, in addition to English, to reach both
residential and business customers in multi-cultural markets, as well as general
markets. Snyder seeks to identify and access market segments with high growth
characteristics.
As of 31 January 1997, Snyder employed approximately 2,500 field sales
representatives operating out of 51 offices in 17 states, and 530 teleservices
associates providing services from 589 call stations. As of that date, Snyder
had 12 different WallBoard programs at over 25,000 sites.
Snyder's principal executive office is located at Two Democracy Center, 6902
Rockledge Drive, Fifteenth Floor, Bethesda, Maryland 20817, USA.
7 SNYDER FINANCIAL INFORMATION
The following table sets forth selected financial data as of and for each of the
three years ended 31 December 1996. The table also sets forth pro unaudited
forma income statement data for each of the three years ended 31 December 1996,
which give pro forma effect to US Federal and state income taxes as if all
operations of the Company were subject to such taxes for all periods presented.
The financial information set out in this paragraph 7 has been extracted from
the audited Consolidated Financial Statements of Snyder.
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<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 DECEMBER
<S> <C> <C> <C>
INCOME STATEMENT DATA 1994 1995 1996
($1,000) ($1,000) ($1,000)
Revenues $11,740 $42,892 $82,840
Income before 1,390 3,433 8,912
extraordinary item
Extraordinary item (1.215)
Net income $1,390 $3,433 $6,977
Pro forma provision for 583 1,261 3,719
income taxes
Pro forma income before 892 1,927 5,684
extraordinary item
Pro forma net income $892 $1,927 $4,469
Pro forma income before $0.03 $0.07 $0.18
extraordinary item per
share
Pro forma net income per $0.03 $0.07 $0.15
share
Number of Shares used in 29,458 29,458 30,750
computing pro forma per
share amounts
</TABLE>
<TABLE>
<CAPTION>
AS OF 31 DECEMBER
<S> <C> <C> <C>
BALANCE SHEET DATA 1994 1995 1996
($1,000) ($1,000) ($1,000)
Total assets $3,673 $13,027 $66,116
Long-term debt 2,057 5,460 1,602
Equity (deficit) (1,866) (1,050) 46,937
</TABLE>
A copy of Snyder' initial public offering prospectus dated 24 September 1996
(THE "IPO PROSPECTUS") and copies of all subsequent US Securities and Exchange
Commission and other public filings are available for display at the registered
office of Brann.
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8 INFORMATION ON SNYDER COMMON STOCK
Snyder Shares were listed on the New York Stock Exchange in the USA in an
initial public offering on 25 September 1996 (the "IPO DATE") at an issue price
of $17.00. As disclosed in the IPO Prospectus, the amount of Snyder Shares
beneficially held by the directors of Snyder, the director nominees and
executive officers as a group immediately following the initial public offering
was assumed to be approximately 72.4 per cent.
The closing price of a Snyder Share on the first dealing day in each month since
the IPO date until and including 19 March 1997 (the latest practicable date
prior to the publication of this document) is indicated in the table below:
DATE PRICE IN $
1 October, 1996 19.750
1 November, 1996 20.000
2 December, 1996 24.750
2 January, 1997 27.000
3 February, 1997 29.375
3 March, 1997 26.750
19 March, 1997 26.625
Holders of Snyder Common Stock ("HOLDERS") whether registered or unregistered
are entitled to one vote per share for each share held of records on all matters
submitted to a vote of the stockholders. Holders are entitled to receive ratably
such dividends as may be declared by the Board of Directors on the Common Stock
out of funds legally available therefor. The Holders have no preemptive rights,
cumulative voting rights, or rights to convert shares of Common Stock into any
other securities, and are not subject to future calls or assessments by the
Company.
9 SNYDER DIVIDEND POLICY
Snyder currently intends to retain future earnings to finance its growth and
development and therefore does not anticipate paying any cash dividends in the
foreseeable future. Payment of any future dividends will depend upon the future
earnings and capital requirements of Snyder and other factors which the Snyder
Board of Directors considers appropriate.
10 REASONS FOR THE OFFER
Snyder is a fast growing, innovative provider of outsourced targeted marketing
to those companies which rank in the US Fortune 500. Snyder's strategy entails
providing the Fortune 500 with fully integrated, turn-key solutions to their
marketing needs. Historically, Snyder's strength has been focused on customer
acquisition on behalf of its clients.
Similarly, Brann is a fast growing, innovative provider of targeted marketing
services for the Fortune 500. Brann's strategy of fully integrated services
perfectly compliments Snyders. Somewhat different from Snyder, however, Brann's
historic strength has focused on customer retention and development.
The combination of Brann with Snyder offers a unique opportunity to marry
similar philosophies and complimentary skill sets. At the same time, Snyder
intends to put its
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considerable financial resources behind Brann to facilitate its expansion within
the UK and Continental Europe. The acquisition by Snyder of Brann will provide a
platform for such expansion.
11 ACQUISITION OF AMERICAN LIST
On 19 March 1997, Snyder announced that its wholly-owned subsidiary, Snyder Z
Acquisition, Inc. ("SNYDER ACQUISITION") had signed an Agreement and Plan of
Merger dated March 18, 1997 (the "Agreement") with American List Corporation
("AMERICAN LIST") pursuant to which Snyder Acquisition will acquire American
List. Under the terms of the Agreement Snyder will exchange one Snyder share for
each of American List's 4.5 million shares outstanding if the average trading
price of Snyder before the effective date of merger (based on the Snyder price
on the New York Stock Exchange during the 20 trading days ending on the third
trading day prior to the effective date (is at least $32) valuing the
transaction at approximately $125 million). If the price of Snyder stock is
below $32 the exchange ratio will increase in accordance with an agreed formula.
The acquisition of American List is subject to customary closing conditions
including the report of the Federal Trade Commission approval and the approval
of the holders of common stock of American List.
12 DIRECTORS, MANAGEMENT AND EMPLOYEES
Your directors will continue with Brann in their current positions after the
Offer has become unconditional. Snyder has given assurances to the board of
Brann that the existing employment rights, including pension rights, of all
directors, management and employees of Brann will be fully safeguarded.
13 UNITED KINGDOM TAXATION
The comments set out below are intended as a general guide only to the position
under current UK law and Inland Revenue practice. They summarise certain aspects
of the UK taxation treatment of acceptance of the Offer. Paragraph (a) below
relates to the position of Brann Ordinary and 'A' Ordinary Shareholders who hold
their shares beneficially as investments, and not for the purpose of a trade,
and who are resident or ordinarily resident in the UK for tax purposes.
Paragraph (b) below relates to the position of Optionholders.
(A) TAXATION ON CHARGEABLE GAINS ON BRANN SHARES
Liability to UK taxation in respect of chargeable gains arising on the
acceptance of the Offer by Brann Ordinary and 'A' Ordinary Shareholders, if the
Offer becomes wholly unconditional, will depend upon the individual
circumstances of that Brann Shareholder.
(A) General position
A Brann Shareholder who, together with persons connected with him (for
example, his spouse), does not hold more than five per cent. of Brann
Ordinary and 'A' Ordinary Shares should not be treated as making a
disposal for the purposes of UK taxation on chargeable gains to the
extent that he receives Snyder Common Stock in exchange for his Brann
Shares under the Offer. To the extent that a Brann Shareholder receives
Snyder Common Stock under the Offer any gain or loss which would
otherwise have arisen on a disposal of his Brann Shares will be "rolled
over" into the Snyder Common Stock and the Snyder Common Stock will be
treated as the same asset as his Brann Shares acquired at the same time
and for the same price as his Brann Shares.
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<PAGE>
(B) Five per cent. shareholders
A Brann Shareholder who, either alone or together with persons
connected with him, holds five per cent. or more of, or of any class
of, shares in Brann is advised that if the Inland Revenue accept that
the exchange is effected for bona fide commercial reasons and does not
form part of a scheme or arrangement to avoid tax, such Brann
Shareholder will be treated in the manner described in the preceding
paragraphs. If the Inland Revenue does not so accept, the Brann
Shareholder may be taxed as if he had received cash (i.e. the disposal
would be treated as such for the purposes of UK taxation of chargeable
gains and might therefore, depending on the Brann Shareholder's
relevant circumstances, give rise to a liability to UK taxation on
chargeable gains).
No application for clearance will be made to the Board of the Inland
Revenue pursuant to section 138 of the Taxation of Chargeable Gains Act
1992 in respect of the Offer owing to the short time scale involved.
(C) Disposals
A subsequent disposal of all or any of the Snyder Common Stock, may,
depending on individual circumstances, give rise to a liability to UK
taxation on chargeable gains.
(B) TAXATION OF BRANN OPTIONS
If an Optionholder exercises his Brann Option he will have to declare in his tax
return and, by 31 January 1998, pay income tax at his marginal tax rate on the
difference between the exercise price and the market value of the Brann Shares
acquired. For capital gains tax purposes that market value will be his tax base
cost for the Brann Shares acquired, after taking account of incidental expenses
and indexation relief.
No immediate tax liability will arise for Optionholders who choose to accept the
Offer and surrender their Brann Options in consideration for the grant of Snyder
Options. However, a small national insurance liability will arise for
Optionholders who currently earn less than the current upper earnings limit for
UK national insurance purposes ((pound)23,660).
If an Optionholder subsequently exercises his new Snyder Option, the tax
treatment will be the same as if he had exercised his existing Brann Option (see
above) except that the income tax will be deducted at source through the PAYE
system. Arrangements will be made to make this deduction in the tax month in
which the date of exercise falls.
As noted in paragraph 9 above, Snyder does not currently pay dividends. It
should be noted however that if Snyder were to pay dividends in future,
accepting Brann Shareholders would be subject to US taxation laws which
currently charge a higher marginal rate of tax on such dividends than is
currently charged on dividends payable by Brann.
ANY BRANN SHAREHOLDER OR BRANN OPTIONHOLDER WHO IS IN ANY DOUBT ABOUT HIS OR HER
OWN TAX POSITION OR WHO IS SUBJECT TO TAXATION IN ANY JURISDICTION OTHER THAN
THE UK IS STRONGLY RECOMMENDED TO CONSULT HIS OR HER INDEPENDENT PROFESSIONAL
ADVISER IMMEDIATELY.
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<PAGE>
14 PROCEDURE FOR ACCEPTANCE OF THE OFFER
THIS PARAGRAPH SHOULD BE READ TOGETHER WITH THE NOTES ON THE FORM OF ACCEPTANCE
(A) TO ACCEPT THE OFFER
To accept the Offer you should complete Boxes 1 and 3 and sign Box 2 of the
Form of Acceptance in accordance with the instructions printed on it.
(B) RETURN OF FORM OF ACCEPTANCE
TO ACCEPT THE OFFER THE FORM OF ACCEPTANCE MUST BE COMPLETED AND RETURNED. The
completed Form of Acceptance, together with your share certificate(s) for your
Brann Shares and/or other documents(s) of title, SHOULD BE RETURNED BY POST OR
BY HAND TO MR I ROBB OF BRANN HOLDINGS LIMITED AT PHOENIX WAY, CIRENCESTER,
GLOUCESTERSHIRE, GL7 1RY IN EACH CASE AS SOON AS POSSIBLE BUT IN ANY EVENT SO AS
TO BE RECEIVED NOT LATER THAN 3.00 PM ON 31 MARCH 1997. A reply-paid envelope is
enclosed for your convenience and may be used by Brann Shareholders and Brann
Optionholders for returning Forms of Acceptance within the UK. No acknowledgment
of receipt of documents will be given. The instructions printed on the Form of
Acceptance shall be deemed to form part of the terms of the Offer.
(C) SHARE CERTIFICATES NOT READILY AVAILABLE OR LOST
If your share certificate(s) and/or other document(s) of title in respect of
Brann Shares is/are not readily available or is/are lost, the Form of Acceptance
should nevertheless be completed, signed and RETURNED AS STATED ABOVE SO AS TO
ARRIVE NOT LATER THAN 3.00 PM ON 31 MARCH 1997 together with any share
certificate(s) and/or other document(s) of title that you have available,
accompanied by a letter stating that the balance will follow or that you have
lost one or more of your share certificate(s) and/or documents(s) of title. You
should then arrange for the relevant share certificate(s) and/or other
document(s) of title to be forwarded as soon as possible. No acknowledgment of
receipt of documents will be given. In the case of loss, you should write as
soon as possible to Brann's Company Secretary at Brann for a letter of indemnity
for lost share certificate(s) and/or other document(s) of title which, when
completed in accordance with the instructions given, should be returned to Mr I
Robb as set out in paragraph (b) above.
(D) VALIDITY OF ACCEPTANCES
The Purchaser reserves the right to treat as valid any acceptance of the Offer
which is not entirely in order or (as applicable) the relevant share
certificate(s) and/or other document(s) of title. In that event, no payment of
cash under the Offer will be made until the relevant share certificate(s) and/or
other document(s) of title or indemnities satisfactory to the Purchaser have
been received.
If you are in any doubt as to the procedure for acceptance, please contact Mr I
Robb, (telephone number 01285 644744) at Brann Holdings Limited, Phoenix Way,
Cirencester, Gloucestershire, GL7 1RY.
15
<PAGE>
15 SETTLEMENT
Subject to the Offer becoming or being declared unconditional in all respects,
settlement of the consideration to which any Brann Shareholder is entitled under
the Offer will be effected (i) in the case of acceptances received, complete in
all respects, by the date on which the Offer becomes or is declared
unconditional in all respects, on such date, or (ii) in the case of acceptances
received, complete in all respects, after the date on which the Offer becomes or
is declared unconditional in all respects but while it remains open for
acceptance, within two days of such receipt, by the dispatch of definitive stock
certificates for the appropriate number of Snyder Common Stock to validly
accepting Brann Shareholders or their appointed agents and electronic transfers
for same day value of the cash consideration to validly accepting Brann
Preference Shareholders.
If the Offer does not become unconditional in all respects or lapses, share
certificates and/or other documents of title will be returned by post, within 14
days of the Offer being withdrawn, or lapsing, to the person or agent whose name
and address is set out in Box 7 on the relevant Form of Acceptance or, if none
is set out, to the first-named holder at his registered address.
All communications, notices, certificates, documents of title, and remittances
to be delivered by or sent to or from Brann Shareholders (or their designated
agent(s)) will, other than the cash consideration for the Brann Preference
Shares, be delivered by or sent to or from them (or their designated agent(s))
at their risk.
16 FURTHER INFORMATION
Your attention is drawn to the further information in the Appendix, which forms
part of this document.
Yours faithfully,
A Clayton Perfall /s/A Clayton Perfall
for and on behalf of
SNYDER COMMUNICATIONS, INC.
16
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APPENDIX
CONDITIONS AND FURTHER TERMS OF THE OFFER
PART A: CONDITIONS OF THE OFFER
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted,
withdrawn) by 3.00 pm on 31 March 1997 in respect of not less than 90
per cent. of the Brann Shares to which the Offer relates, and for this
purpose;
(i) the expression "Brann Shares to which the Offer relates"
shall be construed in accordance with sections 428 to 430F
of the Companies Act 1985; and
(ii) shares which have been unconditionally allotted shall be
deemed to carry the voting rights which they will carry upon
issue;
(b) the adoption of new Articles of Association of the Company (containing
no pre-emption rights on the transfer of shares) pursuant to a Special
Resolution validly passed at an Extraordinary General Meeting of the
Company;
(h) except as disclosed to Snyder prior to the date hereof, no member of
the wider Brann Group having, since 17 March 1997:
(i) issued or agreed to issue or authorized or proposed the issue
of additional shares of any class, or securities convertible
into or rights, warrants or options to subscribe for or
acquire, any such shares or convertible securities (save as
between Brann and wholly-owned subsidiaries of Brann and for
any Brann Shares allotted upon exercise of options granted
under the Brann Share Option Schemes) or redeemed, purchased
or reduced any part of its share capital;
(ii) declared, paid, made or proposed to declare, pay or make any
bonus in respect of shares, dividends or either distribution
other than to other members of the wider Brann Group or
accrued dividends pursuant to the Company's Articles of
Association;
(iii) authorised or proposed or announced its intention to propose
any merger or demerger or acquisition or disposal of assets or
shares (other than in the ordinary course of trading or as
between members of Brann Group);
(iv) authorised or proposed or announced its intention to propose
any material change in its share or loan capital save for any
Brann Shares allotted upon exercise of options granted under
the Brann Share Option Scheme;
(v) issued or authorised or proposed the issue of any debentures
or to an extent which is material in the context of Brann
Group taken as a whole, incurred or increased any indebtedness
(other than fluctuations in existing overdraft facilities) or
become subject to any contingent liability;
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<PAGE>
(vi) disposed of or transferred, mortgaged or encumbered any asset
or any right, title, or interest in any asset in a manner
which is material in the context of Brann Group taken as a
whole;
(vii) entered into any contract or commitment (whether in respect of
capital expenditure or otherwise) which is of a long term or
unusual nature or involves or could involve an obligation of a
nature of magnitude, in either case which is material in the
context of the Brann Group taken as a whole, other than in the
ordinary course of business or as disclosed to the Purchaser
in writing prior to the date hereof;
(viii) authorised or proposed or announced its intention to enter
into any reconstruction, amalgamation, transaction or
arrangement (otherwise that in the ordinary course of
business) which is material in the context of Brann Group
taken as a whole;
(ix) authorised or proposed or announced its intention to take any
corporate action, or had any order made, for its winding-up,
dissolution or reorganisation for the appointment of a
receiver, administrator, administrative receiver, trustee or
similar officer of all or any of its assets and revenues;
(x) entered into any agreement which consents to the restriction
to a material extentof the scope of the business of the
wider Brann Group or the wider Snyder Group;
(xi) waived or compromised any material claim which is material
in the context of Brann Group taken as a whole;
(xii) entered into or varied the terms of any service agreement with
any of the directors of Brann other than as disclosed to the
Purchaser in writing prior to the date hereof; or
(xiii) entered into any agreement or commitment or passed any
resolution with respect to any of the transactions or events
referred to in this paragraph (c);
The Purchaser reserves the right to waive, in whole or in part, all or any of
the conditions referred to above. The Purchaser shall be under no obligation to
waive or treat as satisfied any of the above conditions by a date earlier than
the latest date specified below for the satisfaction thereof, notwithstanding
that other conditions of the Offer have been waived or fulfilled and there are
at such earlier date no circumstances to indicate that any such conditions may
not be capable of fulfillment.
PART B: FURTHER TERMS OF THE OFFER
The following further terms apply to the Offer. Except where the context
otherwise requires, any reference in Parts B or C of this Appendix I and in the
Form of Acceptance:
(i) to the "Offer", shall include any revision, variation
or renewal thereof or extension thereto;
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<PAGE>
(ii) to the "Offer becoming effective" and to the "offer becoming
unconditional in all respects", means the conditions to the
Offer becoming or being declared satisfied or waived;
(iii) to "acceptances of the Offer", shall include deemed
acceptances of the Offer; and
(iv) to the Offer Document, shall mean this document and any
other document containing the Offer.
1. ACCEPTANCE PERIOD
(a) The Offer will be open for acceptance until 3.00 pm on 31 March 1997,
or such later time as the Purchaser may determine, being not later than
5 April, 1997.
(b) Acceptances shall be irrevocable.
2. GENERAL
(a) The Offer will lapse unless all the conditions have been fulfilled or
waived or, where appropriate, have been determined by the Purchaser in
its reasonable opinion to be or remain satisfied by 31 March 1997. If
the Offer lapses for any reason, the Offer shall cease to be capable of
further acceptance and the Purchaser and Brann Shareholders shall cease
to be bound by prior acceptances.
(b) Save as may otherwise be agreed, settlement of the consideration to
which any Brann Shareholder is entitled under the Offer will be
implemented in full in accordance with the terms of the Offer without
regard to any lien, right of set-off, counterclaim or other analogous
right to which the Purchaser may otherwise be, or claim to be, entitled
as against such Brann Shareholder and will be posted not later than 14
days after the date on which the Offer becomes effective or 14 days
after receipt of a valid and complete acceptance, whichever is the
later.
(c) The terms, provisions, instructions and authorities contained in or
deemed to be incorporated in the Form of Acceptance constitute part of
the terms of the Offer. Words and expressions defined in this document
will have the same meanings when used in the Form of Acceptance unless
the context otherwise requires.
(d) The Offer and all acceptances thereof or pursuant thereto and the
relevant Form of Acceptance and all contracts made pursuant thereto and
action taken or made or deemed to be taken or made under any of the
foregoing shall be governed by and construed in accordance with English
law. Execution by or on behalf of a Brann Shareholder of a Form of
Acceptance will constitute his submission, in relation to all matters
arising out of or in connection with the Offer and the Form of
Acceptance, to the jurisdiction of the Courts of England and his
agreement that nothing shall limit the rights of the Purchaser arising
out of or in connection with the Offer and the Form of Acceptance.
(e) Any omission to dispatch this document or the Form of Acceptance or any
notice required to be dispatched under the terms of the Offer to, or
any failure to receive the same by, any person to whom the Offer is
made, or should be made, shall not invalidate the Offer in any way. The
Offer extends to all Brann Shareholders to whom
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<PAGE>
this document, the Form of Acceptance and any related documents may not
be dispatched, and such persons may collect copies of those documents
from Mr I Robb at Brann Holdings Limited, Phoenix Way, Cirencester,
Gloucestershire, GL7 1RY.
(f) Without prejudice to any other provision in this Part B of this
Appendix, the Purchaser reserves the right to treat acceptances of the
Offer as valid if received by or on behalf of it at any place or places
determined by it otherwise than as set out herein or in the Form of
Acceptance.
(g) All powers of attorney, appointments of agents and authorities on the
terms conferred by or referred to in this Appendix I or in the Form of
Acceptance are given by way of security for the performance of the
obligations of the Brann Shareholder concerned and are irrevocable (in
respect of powers of attorney in accordance with section 4 of the
Powers of Attorney Act 1971) for a period of one month from the Offer.
(h) No acknowledgment of receipt of any Form of Acceptance, share
certificate(s) and/or other document(s) of title will be given. All
communications, notices, certificates, documents of title and
remittances to be delivered by or sent to or from Brann Shareholders
(or their designated agent(s)) will be delivered by or sent to or from
such Brann Shareholders (or their designated agent(s)) at their risks
other than the Preference Share consideration.
(i) If the Offer does not become effective the Form of Acceptance and
any share certificate(s) and/or other document(s) of title will be
returned by post within 14 days of the Offer lapsing, at the risk of
the person entitled thereto, to the person or agent whose name and
address outside the United States, Canada, Australia or the Republic of
Ireland is set out in the relevant Box on the Form of Acceptance or, if
none is set out, to the first-named holder at his/her registered
address outside the United States, Canada, Australia or the Republic of
Ireland. No such documents will be sent to an address in the United
States, Canada, Australia or the Republic of Ireland.
(j) The Offer described in this document was made on 19 March 1997 and is
capable of acceptance from and after that time. Copies of this
document, the Form of Acceptance and any related documents are
available from Mr I Robb at Brann Holdings Limited from that time.
(k) If sufficient acceptances are received and/or sufficient Brann Shares
arc otherwise acquired, the Purchaser intends to apply the provisions
of Sections 428-430F of the Companies Act 1985 to acquire compulsorily
any outstanding Brann Shares including any Brann Shares issued during
the period in which the Offer remains open for acceptance.
(l) The Purchaser reserves the right to notify any matter (including the
making of the Offer) to all or any Brann Shareholder(s) with registered
address(es) outside the UK or whom the Purchaser knows to be nominees
for such persons by announcement or paid advertisement in any daily
newspaper published and circulated in the UK in which case such notice
shall be deemed to have been sufficiently given notwithstanding any
failure by any such shareholders to receive such notice, and all
references in this document to notice in writing shall be construed
accordingly.
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(m) Due completion of a Form of Acceptance will constitute an instruction
to the Purchaser, on the Offer becoming unconditional in all respects,
that all mandates and other instructions or notices recorded in Brann's
records immediately prior to the Offer becoming so unconditional will,
unless and until revoked or varied, continue in full force in relation
to Snyder Common Stock allotted or issued to the relevant Brann
Shareholders pursuant to the Offer.
(n) All references in this Appendix to any statute or statutory provision
shall include a statute or statutory provision which amends,
consolidates or replaces the same (whether before or after the date
hereof).
PART C: FORM OF ACCEPTANCE
Each Brann Shareholder by whom, or on whose behalf, a Form of Acceptance is
executed and received by 31 March 1997 or by or on behalf of the Purchaser
irrevocably undertakes, represents, warrants and agrees to and with the
Purchaser (so as to bind him, his personal representatives, heirs, successors
and assigns) to the following effect:
(a) that the execution of a Form of Acceptance, whether or not any other
Boxes are completed, shall constitute:
(i) an acceptance of the Offer in respect of the relevant Brann
Shareholder's entire holding of Brann Shares (or such lesser
number as may have been inserted in Box 1 of the Form of
Acceptance), provided that if no number, or a number which
exceeds such shareholder's holding of Brann Shares is inserted
in Box 1, the acceptance will be deemed to have been made in
respect of that shareholder's entire holding of Brann Shares;
and
(ii) an undertaking to execute any further documents and give any
further assurances which may be required to enable the
Purchaser to obtain the full benefit of this Part C and/or to
perfect any of the authorities expressed to be given
hereunder,
on and subject to the terms and conditions set out or referred to in
this document and the Form of Acceptance and that each such acceptance
shall be irrevocable;
(b) that unless "Yes" has been inserted in Box 6 of the Form of
Acceptance, such Brann Shareholder has not received or sent copies or
originals of this document, the Form of Acceptance or any related
documents in, into or from the United States, Canada, Australia or the
Republic of Ireland and has not otherwise utilised in connection with
the Offer, directly or indirectly, the mails of, or any means or
instrumentality (including, without limitation, the post, facsimile
transmission, telex and telephone) of interstate or foreign commerce or
any facility of a national securities exchange of the United States,
Canada, Australia or the Republic of Ireland; was outside the United
States, Canada, Australia or the Republic of Ireland when the Form of
Acceptance was delivered; and, in respect of the Brann Shares to which
the Form of Acceptance relates, is not an agent or a fiduciary acting
on a non-discretionary basis for a principal, unless such agent or
fiduciary is an authorised employee of such principal or such principal
has given any instructions with respect to the Offer from outside the
United States, Canada, Australia or the Republic of Ireland;
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(c) that the Brann Shares in respect of which the Offer is accepted or
deemed to be accepted are sold free from all liens, equities, charges,
encumbrances and other interests and together with all rights attaching
thereto on or after 21 March 1997 including voting rights and the right
to all dividends and other distributions declared, made or paid on or
after that date;
(d) that the execution of the Form of Acceptance and such receipt will
except to the extent that any document referred to in this paragraph is
executed by a Brann Shareholder as principal, constitute, subject to
the Offer becoming effective and to the person accepting the Offer not
having validly withdrawn his acceptance, the irrevocable appointment of
the Purchaser and its directors and agents as such shareholder's
attorney and/or agent (the "attorney"), and an irrevocable instruction
to the attorney with the authority to complete and execute all or any
form(s) of transfer and to deliver such form(s) of transfer together
with the share certificate(s) and/or other document(s) of title
relating to such Brann Shares for registration within six months of the
Offer becoming effective and to do all such other acts and things as
may in the opinion of the attorney be necessary or expedient for the
purposes of, or in connection with, the acceptance of the Offer and to
vest in the Purchaser or its nominee(s) the Brann Shares as aforesaid;
(e) that the execution of the Form of Acceptance and such receipt will
constitute, subject to the Offer becoming unconditional in all respects
and to the accepting Brann Shareholder not having validly withdrawn his
acceptance, an irrevocable authority and request:
(i) to Brann or its agents to procure the registration of the
transfer of the Brann Shares in certificated form pursuant to
the Offer and the delivery of the share certificate(s) and/or
other document(s) of title in respect thereof to the Purchaser
or as it may direct;
(ii) subject to the provisions of paragraph 4 of Part C of this
Appendix, to the Purchaser or its agents to procure the
dispatch by post or by electronic transfer of the
consideration to which he is entitled under the Offer together
with any documents of title for any Snyder Common Stock to
which the accepting Brann Shareholder becomes entitled
pursuant to his acceptance of the Offer at the risk of such
Brann Shareholder to the person whose name and address is set
out in Box 7 of the Form of Acceptance or, if none is set out,
to the first-named holder at his registered address (outside
the United States, Canada, Australia and the Republic of
Ireland);
(f) that the Purchaser shall be entitled after the Offer becomes effective
or if the Offer will become effective immediately upon the outcome of
the resolution in question, to direct the exercise of any votes and any
or all other rights and privileges (including the right to requisition
the convening of a general or separate class meeting of Brann)
attaching to any Brann Shares in respect of which the Offer has been
accepted and not validly withdrawn, and the execution of the Form of
Acceptance will constitute an authority to Brann from such shareholder
to send any notice, circular, warrant or other document of
communication which may be required to be sent to him as a member of
Brann in respect of such shares to the Purchaser at its registered
office, and an authority to the Purchaser or any person nominated by
the Purchaser to sign any consent to short
22
<PAGE>
notice of a general or separate class meeting as his attorney
and/or agent and on his behalf and/or to execute a form of proxy in
respect of such Brann Shares appointing any person nominated by the
Purchaser to attend general and separate class meetings of Brann and to
exercise the votes attaching to such states on his behalf, where
relevant, such votes to be cast so far as possible to satisfy any
outstanding condition of the Offer, and will also constitute the
agreement of such shareholder not to exercise any such rights without
the consent of the Purchaser and the irrevocable undertaking of such
shareholder not to appoint a proxy for or to attend such general or
separate class meeting;
(g) that he will deliver or procure the delivery, to Mr I Robb at Brann
Holdings Limited his share certificate(s) and/or other document(s) of
title in respect of the Brann Shares, in respect of which the Offer has
been accepted and not validly withdrawn held by him or an indemnity
acceptable to the Purchaser in lieu thereof, as soon as possible and in
any event within six months of the Offer becoming effective;
(h) that he agrees to ratify each and every act or thing which may be done
or effected by the Purchaser or any of its partners, directors or
agents or Brann or its agents, as the case may be, in the proper
exercise of any of its or his powers and/or authorities hereunder;
(i) that he shall do all such acts and things as shall be necessary or
expedient to vest in the Purchaser or its nominee(s) the Brann Shares
aforesaid;
(j) that if any provision of Part A of this Appendix or this Part B shall
be unenforceable or invalid or shall not operate so as to afford the
Purchaser or any of its partners, directors or agents the benefit of
the authority expressed to be given therein, he shall with all
practicable speed do all such acts and things and execute all such
documents that may be required to enable the Purchaser and/or any of
their respective partners, directors or agents to secure the full
benefits of Part A of this Appendix I and this Part C;
(k) that the execution of the relevant Form of Acceptance will, except to
the extent that any such document is executed by a Brann shareholder as
principal, constitute the irrevocable appointment of each of the
Purchaser and its partners, directors and agents as such shareholder's
attorney and/or agent (the "ATTORNEY") to complete and execute the
Registration Rights Agreement, details of which are set out in Part D
below; and
(l) that an execution of the Form of Acceptance takes effect as a deed.
PART D: US SELLING RESTRICTIONS
The Snyder Shares have not been registered under the U.S. Securities Act of 1933
(the "Securities Act") and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except pursuant to a
registration or in transactions exempt from the registration requirements of the
Securities Act. Snyder will instruct its secretary not to register and transfer
of Snyder Shares unless Snyder shall have received an opinion of counsel
reasonably acceptable to it that foregoing legal requirements have been net.
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PART E: SUMMARY OF REGISTRATION RIGHTS AGREEMENT
The Snyder Shares to be issued will not be registered under the Securities Act
and therefore may not be offered or sold within the United States or to, or for
the benefit of, certain persons resident in the United States, except pursuant
to an effective registration under the Securities Act or in certain transactions
exempt from the registration requirements of the Securities Act. By accepting
the offer and receiving Snyder Shares you will become a party to the
Registration Rights Agreement which will give you certain registration rights
under the Securities Act with respect to your Snyder Shares. Subject to the
provisions of the Registration Rights Agreement, at any time (i) during that
portion of the Registration Period occurring between the Pooling Date and the
first anniversary date thereof, holders of at least 20% of the Snyder Shares may
require Snyder to register under the Securities Act up to 50% of the Snyder
Shares owned by such holders and any other holders of Snyder Shares that may
elect to be included in such registration and (ii) during that portion of the
Registration Period occurring after the first anniversary of the Pooling Date,
holders of at least 20% of the Snyder Shares may require Snyder to register
under the Securities Act any or all of the Snyder Shares owned by such holders
and any other holders that may elect to be included in such registration.
Holders of Snyder Shares, in the aggregate, may only exercise the foregoing
registration rights two times. In the event that Snyder Shares are to be
registered, the selling holders shall furnish Snyder with all information
required by the Securities Act to be furnished by sellers of securities for
inclusion in such filings and such selling holders shall be obligated to
indemnify Snyder for any material misstatements or omissions contained in such
materials up to the amount of each holders net proceeds from the sale of the
Snyder Shares. In connection with any registration of the Snyder Shares under
the Securities Act, Snyder shall, at its expense, keep effective and maintain
such registration for a period, not exceeding 120 days, as may be necessary for
the selling holders, and their underwriters and selling agents to dispose of
such shares.
Under the terms of the Registration Rights Agreement, any holder of registration
rights with respect to Snyder Shares may transfer such rights only (i) to a
spouse, sibling or issue or spouses of siblings or issue of such holder, (ii) to
a trust or custodial account for the sole benefit of such holder or the spouse,
siblings or issue of such holder, (iii) to a partnership, limited liability
company or other entity, the majority and controlling equity owners of which are
a shareholder or the spouse, siblings or issue of spouses or siblings or issue
of such holder or any trust referred to in clause (ii) above; (iv) to the
personal representative of the holder upon the death of such holder for the
purposes of administration of such holders' estate or upon the incompetency of
such holder for the purposes of the protection and management of such holders'
assets, such personal representative may not transfer the Snyder Shares other
than as permitted under the Registration Rights Agreement; (v) to a charitable
foundation (subject to receipt by the holder of written approval from Snyder,
such approval not to be unreasonably withheld) (vi) to Snyder or (vii) to the
extent effected in accordance with the Securities Act or in a transaction exempt
from the registration requirements of the Securities Act with respect to which
Snyder has received an opinion of counsel reasonably acceptable to it.
No stockholders shall transfer, sell or otherwise dispose of or reduce its risk
(as defined by the SEC's Financial Property Release No.1, ("Codification of
Financial Reporting Policies") with respect to the Snyder shares until after
such time as consolidated financial statements which reflect at least 30 days
post-merger combined operations of Snyder and Brann have been published by
Snyder.
24
STOCKHOLDERS AGREEMENT
AGREEMENT, dated March 18, 1997 (this "Agreement"), by and among
SNYDER COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and each of the
other parties signatory hereto (each, a "Stockholder" and, collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, SNYDER Z ACQUISITION,
INC., a Delaware corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub"), and AMERICAN LIST CORPORATION, a Delaware corporation (the
"Company"), are entering into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement;" capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement) pursuant to which Merger Sub will be merged with and
into the Company (the "Merger");
WHEREAS, each of the Stockholders Beneficially Owns (as defined
herein) the number of shares, par value $.01 per share, of common stock of the
Company (the "Shares" or "Company Common Stock") set forth opposite such
Stockholder's name on Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each Stockholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time and termination of the
Merger Agreement in accordance with its terms, at any meeting of the holders of
Company Common Stock, however called, or in connection with any written consent
of the holders of Company Common Stock, such Stockholder shall vote (or cause to
be voted) the Shares held of record or Beneficially Owned (as defined below) by
such Stockholder, whether heretofore owned or hereafter acquired, (i) in favor
of approval
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of the Merger Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (B) a sale,
lease, transfer or disposition of any assets outside the ordinary course of
business or any assets which in the aggregate are material to the Company and
its Subsidiaries taken as a whole, or a reorganization, recapitalization,
dissolution or liquidation of the Company; (C) (1) any change in a majority of
the persons who constitute the board of directors of the Company; (2) any change
in the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-Laws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action which, in the
case of each of the matters referred to in clauses (C) (1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder shall
not enter into any agreement or understanding with any Person (as defined below)
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as within the meanings of Section 13(d)(3) of the Exchange Act. For
purposes of this Agreement, "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the Beneficial
Owner of the number of Shares set forth opposite such Stockholder's name on
Schedule I
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hereto. On the date hereof, the Shares set forth opposite such Stockholder's
name on Schedule I hereto constitute all of the Shares owned of record or
Beneficially Owned by such Stockholder. Such Stockholder has (i) sole voting
power and sole power to issue instructions with respect to the matters set forth
in Section 1 hereof, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of the Shares set
forth opposite such Stockholder's name on Schedule I hereto and denoted by
footnote 1, with no limitations, qualifications or restrictions on such rights
or (ii) shared voting power and shared power to issue instructions with respect
to the matters set forth in Section 1 hereof, shared power of disposition,
shared power of conversion, shared power to demand appraisal rights and shared
power to agree to all of the matters set forth in this Agreement, in each case
shared with another Stockholder party to this Agreement and in each case with
respect to all of the Shares set forth opposite such Stockholder's name on
Schedule 1 hereto and denoted by footnote 2.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholder agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which such
Stockholder is Trustee who is not a party to this Agreement and whose consent is
required for the execution and delivery of this Agreement or the consummation by
such Stockholder of the transactions contemplated hereby. If such Stockholder is
married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, such Stockholder's spouse, enforceable against
such person in accordance with its terms.
(c) No Conflicts. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such
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<PAGE>
Stockholder with any of the provisions hereof shall (1) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(2) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) No Finder's Fees. Other than existing financial advisory and
investment banking arrangements between the Company and Prudential Securities
Incorporated, no broker, investment banker, financial adviser or other person is
entitled to any broker's, finder's, financial adviser's or other similar fee or
commission in connection with the transactions contemplated by the Merger
Agreement based upon arrangements made by or on behalf of such Stockholder or
any of its affiliates or, to the knowledge of such Stockholder, the Company or
any of its affiliates.
(e) Other Potential Acquirors. Such Stockholder (i) shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or its
Subsidiaries or any business combination with the Company or its Subsidiaries,
in his, her or its capacity as such, and (ii) from and after the date hereof
until termination of the Merger Agreement, unless and until the Company is
permitted to take such actions under Section 4.4 of the Merger Agreement, shall
not, in such capacity, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
such transaction or acquisition, or agree to or endorse any such transaction or
acquisition, or authorize or permit any of such Stockholder's agents to do so.
Such Stockholder shall provide a written notice to Parent and Merger Sub
describing in reasonable detail the material terms and conditions of any such
proposal as promptly as reasonably practicable following receipt thereof by such
Stockholder (in its capacity as such) and shall keep Parent and Acquisition
advised thereafter of material developments with respect thereto as promptly as
reasonably practicable.
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<PAGE>
(f) Restriction on Transfer, Proxies and Non-Interference. Such
Stockholder shall not, directly or indirectly: (i) except as contemplated by the
Merger Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition of,
any or all of such Stockholder's Shares or any interest therein; (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty of such Stockholder contained
herein untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this Agreement.
(g) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
3. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful and
commercially reasonable action as may be necessary or desirable to consummate
and make effective the transactions contemplated by this Agreement.
4. Stop Transfer; Restrictive Legend. (a) Each Stockholder agrees
with, and covenants to, Parent that such Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Common Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the term "Shares" shall be deemed to refer to and include the
Shares as well as all such stock dividends and distributions and any shares into
which or for which any or all of the Shares may be changed or exchanged.
(b) Upon the written request of Parent, all certificates
representing any of such Stockholder's Shares shall contain the following
legend:
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"The securities represented by this certificate, including
certain voting and transfer rights with respect thereto, are
subject to the terms of a Stockholders Agreement, dated March 18,
1997, among SNYDER COMMUNICATIONS, INC., the Issuer and the
parties listed on the signature pages thereto, a copy of which is
on file in the principal office of the Issuer."
5. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earliest of (a) termination of the Merger Agreement in
accordance with its terms, (b) the Effective Time or (c) at the election of the
Stockholders, if the Company's Board of Directors would have the right to
terminate the Merger Agreement under Section 6.1(c)(iv) thereof.
6. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director.
Each Stockholder signs solely in his or her capacity as the record and/or
beneficial owner of such Stockholder's Shares.
7. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any
6
<PAGE>
direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any Stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to any Stockholder: At the addresses set forth
on Schedule I hereto
with a copy to: Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY
Attention: Marc Weingarten, Esq.
Telephone: (212) 758-0404
Facsimile: (212) 593-5955
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If to Parent
or Merger Sub: Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive, 15th Floor
Bethesda, MD 20817
Telephone: (301) 468-1010
Facsimile: (301) 571-7930
Attention: Chief Executive Officer
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Norman D. Chirite, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
8
<PAGE>
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
(l) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
9
<PAGE>
IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
-------------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
/s/ Martin Lerner
-----------------------------
MARTIN LERNER
D.H. BLAIR INVESTMENT BANKING
CORP.
By: /s/ J. Morton Davis
-------------------------
Name: J. Morton Davis
Title: Chairman & Chief
Executive Officer
10
<PAGE>
Schedule I to
Stockholders Agreement
Name and Address Number of Shares Owned
1
Martin Lerner 223,525*
D.H. Blair Investment Banking Corp. 711,021 1
1 Stockholder has sole power with respect to such shares. See Section 2(a)(i)
of this Agreement.
*Excludes 3,564 shares by spouse as to which beneficial ownership is disclaimed.
11
C:\DATA\WP\74807\0003\209\AGR3207K.200
American List Corporation
330 Old Country Road
Mineola, NY 11501
March 18, 1997
Mr. Martin Lerner
48 Doral Drive
Manhasset, NY 11030
Dear Mr. Lerner:
As you are aware, AMERICAN LIST CORPORATION (the "Company") has
entered into an Agreement and Plan of Merger dated as of March 18, 1997 with
SNYDER COMMUNICATIONS, INC. ("SNC") and its wholly owned subsidiary SNYDER Z
ACQUISITION, INC. ("Acquisition"), pursuant to which Acquisition will be merged
with and into the Company and the surviving corporation of such merger (the
"Merger") shall be the Company, which shall be a wholly owned subsidiary of SNC.
Effective upon consummation of the Merger, the Company desires to continue to
employ you, and you agree to continue to be employed by the Company, on the
terms and conditions set forth in this letter.
1. The Company will employ you to serve as its President
effective beginning on the consummation of the Merger (the "Effective Date") and
ending on the second anniversary of the Effective Date, and thereafter to
perform such consulting and advisory services as may be requested from time to
time pursuant to this letter agreement during the period beginning on the second
anniversary of the Effective Date and ending on the fifth anniversary of the
Effective Date (the period from the Effective Date until such fifth anniversary
being the "Term"), subject to the terms and conditions of this letter agreement.
As President, you will be the highest ranking executive officer of the Company
and will be responsible for running the day-to-day operations of the Company.
You will report to the Board of Directors of the Company (the "Board") and to
either the Chief Executive Officer of SNC or such other senior executive officer
of SNC as may be designated by the Chief Executive Officer. Effective on the
Effective Date, any employment agreement between you and the Company will
terminate and be of no further force or effect with no further payment
obligation by the Company thereunder. During the Term, you will render business
services solely in
1
<PAGE>
the performance of your duties as President of the Company, and will use your
best efforts to promote the interests and welfare of the Company and SNC. During
the Term, your office and the Company's principal place of business will
continue to be located on Long Island, New York unless you otherwise consent.
You shall be entitled to sick leave and holidays in accordance with the policy
of the Company as to its executive employees. The Company shall reimburse you
for all reasonable out-of-pocket costs incurred or paid by you in connection
with, or related to, the performance of his duties, responsibilities or services
under this Agreement, upon presentation by you of documentation, expense
statements, vouchers, and/or such other supporting information as the Company
may reasonably request.
2. (a) The Company will pay you a salary at the rate of $100,000
per year for each year of the Term with payments made in installments in
accordance with the Company's regular practice for compensating executive
personnel. In addition, as an inducement to enter into this employment
agreement, the Company will pay you on the Effective Date the sum of $2,000,000.
All such payments shall be subject to applicable tax withholding requirements.
You shall also be entitled to those insurance, retirement and other benefits
generally provided to the Company's other executive personnel. In particular,
you will be entitled to four weeks of vacation per year.
(b) On the Effective Date, as an inducement
to enter into this employment agreement and in consideration of your services
hereunder and including your obligations pursuant to Sections 5 and 6 hereof,
SNC will grant to you options to acquire 250,000 shares of SNC's common stock
under the SNC 1996 Stock Incentive Plan (the "Plan") at an exercise price equal
to the closing sale price of SNC's common stock on the New York Stock Exchange
on the trading day immediately prior to the Effective Date. Pursuant to such
options, you will be eligible, subject to the Plan, to acquire 100,000 shares on
the date that is six months following the Effective Date; with respect to the
remaining 150,000 shares, you will be eligible, subject to the Plan, to acquire
one-fifth of such shares on the first anniversary of the Effective Date and an
additional one-fifth of such shares on each of the four subsequent anniversaries
of the Effective Date, such that on the fifth anniversary of the Effective Date
you will be eligible to acquire all such shares (to the extent not previously
exercised). If your employment is terminated for any reason other than death,
then that portion of the option granted to you under this Section 2(b) which is
vested at the time of such termination
2
<PAGE>
may be exercised by you within 90 days of such termination, and any vested
portion which is not timely exercised shall be forfeited by you and your estate.
Except as provided in the next sentence, any options which have not vested as of
the date of termination of your employment with the Company for any reason,
including death or disability, shall terminate and be forfeited by you. If your
termination is involuntary and is not a termination for "cause" as defined
below, all of your remaining unvested options shall vest and become exercisable
as of the date of your termination.
(c) Subject to earlier termination as provided in the Plan or
this letter agreement, all options granted pursuant to Section 2(b) shall expire
on the tenth anniversary of the Effective Date.
(d) In addition to the options to be granted to you as described
herein, on or promptly following the Closing Date SNC shall grant options to
purchase up to 100,000 shares of its common stock under the SNC 1996 Stock
Incentive Plan to employees of the Company and in the amounts identified by you,
subject to the reasonable approval of the Board. In the event the Company
terminates its Profit Sharing Plan or Pension Plan (the "Company Plans"), at
your request the Company shall provide additional compensation to its employees
participating therein (other than yourself, Andrew Bleth, Don Damore and Charles
Caccia) in an amount as requested by you and subject to Board review, but not
exceeding the difference between the pre-tax compensation attributable to the
Plans and the pre-tax compensation attributable to any successor or replacement
plans or benefits furnished in lieu thereof. In addition, the Company shall
review with you, subject to your approval not to be unreasonably withheld, any
successor or replacement health plan to the Oxford plan provided in accordance
with the first sentence of Section 4.16 of the Merger Agreement.
3. The Company may terminate your employment under this letter
agreement in the event of your death, permanent disability, or discharge for
"cause" (as hereinafter defined). For purposes of this letter agreement, "cause"
means (a) your continued and deliberate failure to perform your assigned duties,
in a manner substantially consistent with the manner prescribed by the Board or
the Chief Executive Officer of SNC in accordance herewith (other than any such
failure resulting from your incapacity due to physical or mental illness), which
failure continues for ten days following your receipt of written notice from the
Board or the Chief Executive Officer of SNC
3
<PAGE>
specifying the manner in which you are in default of your duties, (b) your
engagement in serious misconduct that is materially and demonstrably injurious
to the Company or SNC or the reputation of either, (c) your conviction of
commission of a felony involving a crime of moral turpitude whether or not such
felony was committed in connection with the business of SNC or the Company, or
(d) the circumstances described below relating to death and disability, in which
case such provisions shall become applicable.
The Company may also terminate your employment under this letter
agreement at any time without reason or cause. Unless otherwise provided in this
letter agreement, the Company shall pay your base salary and benefits through
the date of termination. In addition, if your termination is involuntary and is
not for "cause", you shall be entitled to receive your salary provided herein
and continuation of your health insurance benefits through the fifth anniversary
of the Effective Date.
You will be given reasonable (and, in any event in the case of a
termination pursuant to clause (a) of Section 3 above, at least five business
days') prior written notice of any intention by the Company to terminate you for
"cause" and an opportunity to respond to the Company's reasons for such proposed
action. Any termination by the Company shall only be taken by action of the
Board.
4. If, prior to the expiration or termination of the Term, you
are unable to perform your duties by reason of disability or impairment of
health for at least six consecutive calendar months, the Company may terminate
your employment under this letter agreement by giving 60 days written notice to
you to that effect, but only if at the time such notice is given such disability
or impairment is still continuing. Following the expiration of such 60 day
period, the Term shall terminate with the payment of your salary for the month
in which notice is given. If there is a dispute between us as to whether you are
disabled or the duration of any disability, either of us may request that you be
examined by a medical doctor selected by our mutual agreement, and the written
medical opinion of such doctor shall be conclusive and binding upon each of us
as to whether you have become disabled and the date when such disability arose.
The cost of any such medical examination shall be borne by the Company.
If you should die prior to the expiration of the Term, the
Company will pay to your estate your salary through the end of the month in
which your death occurred,
4
<PAGE>
at which time the Term shall terminate without further notice. Nothing in this
letter agreement shall impair or otherwise affect any rights and interests you
may have under any compensation plan or arrangement of the Company which may be
adopted by the Board.
5. Except as provided specifically in this Section 5, you agree
that for a period commencing on the Effective Date and running through the third
anniversary of termination or expiration of your employment (the "Non-
competition Term"), you will not, except as otherwise provided in this letter
agreement, engage or participate, directly or indirectly, as principal, agent,
employee, employer, consultant, stockholder, partner or in any other capacity
whatsoever, in the conduct or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business then conducted by the Company or SNC. For the purposes of this letter
agreement, a business shall be considered to be competitive with the business of
the Company or SNC only if such business is engaged in providing services or
products (a) similar to any service or product currently provided by the Company
or SNC or provided by the Company or SNC during the Term, (b) similar to any
service or product which evolves from or results form enhancements in the
ordinary course during the Non-competition Term to the services or products
provided by the Company or SNC as of the Effective Date or by the Company or SNC
during the Term, (c) similar to any future service or product of the Company of
SNC as to which you materially and substantially participated in, and (d) to
customers and clients of the type served by the Company or SNC during the
Non-competition Term.
During the Non-competition Term, you will not, for your benefit
or for the benefit of any person or entity other than the Company or SNC,
solicit, or assist any person or entity other than the Company or SNC to
solicit, any officer, director, executive or employee of the Company or SNC to
leave his or her employment.
You acknowledge that the markets served by the Company and SNC
are national in scope and are not dependent on the geographic location of
executive personnel or the businesses by which there are employed, the length of
the Non-competition Term is linked to the Term, and that the above covenants are
manifestly reasonable on their face, and we expressly agree that such
restrictions have been designed to be reasonable and no greater than is required
for the protection of the Company.
5
<PAGE>
Nothing in this letter agreement shall be deemed to prohibit you
from owning equity or debt investments in any corporation, partnership or other
entity which is competitive with the Company, provided that such investments (a)
are passive investments and constitute five percent or less of the outstanding
equity securities of such entity the equity securities of which are traded on a
national securities exchange or other public market, or (b) are approved by the
Board.
You agree that the Company's remedies at law for breach or threat
of breach by you of the provisions in this Section 5 or Section 6 below will be
inadequate, and that the Company shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and to enforce specifically
such provisions, in addition to any other remedy to which the Company may be
entitled at law or equity.
6. Without the prior written consent of the Company, you agree
not to use or disclose, for your own benefit or for the benefit of any person or
entity other than the Company or SNC, any of the Company's or SNC's trade
secrets or other confidential information. The term "trade secrets or other
confidential information" includes, by way of example, business secrets or
methods, business policies, manuals of instructions, computer programs
(including documentation of such programs), research, lists, names of customers,
personnel information, proprietary information about costs, profits, markets,
sales, pricing information, or supplier lists or other information of a similar
nature to the extent not available to the public, and plans for future
development, whether or not patented, copyrighted or otherwise protected under
applicable law. After termination or expiration of this letter agreement, you
shall not use or disclose the Company's or SNC's trade secrets or other
confidential information unless such information becomes a part of the public
domain other than through a breach of this letter agreement or is disclosed to
you by a third party who is entitled to receive and disclose such information.
7. All notices, consents and other communications required or
permitted to be given under this letter agreement shall be in writing and
delivered by hand delivery, by overnight courier or by facsimile (and if by
facsimile, with a copy to follow within one business day by hand delivery or
overnight courier), expense prepaid, if to you at the address of the then
principal office of the Company, and if to the Company or SNC, to the Chief
6
<PAGE>
Executive Officer of SNC, Two Democracy Center, 6903 Rockledge Drive, Bethesda,
Maryland 20817, facsimile 301- 571-7330. Any notice so given shall be deemed
received when delivered by hand or overnight courier or when the sender's
facsimile machine indicates receipt by the recipient's facsimile machine. A
change of address to which notices are to be sent may be given in the manner for
providing notice.
8. Should any provision of this letter agreement be determined to
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this letter agreement, any such unenforceability or prohibition in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9. You may not assign your rights and obligations under this
letter agreement. The Company's rights and obligations under this letter
agreement are not assignable except as incident to a change of control
transaction. In the event of any such assignment by the Company, all rights and
obligations of the Company under this letter agreement shall inure to the
benefit of the assignee or the successor to the Company.
10. This letter agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
its conflict of laws principles. This letter agreement sets forth our entire
agreement and understanding concerning the subject matter hereof, and supersedes
all prior agreements (including, without limitation, the Employment Agreement,
dated August 15, 1983, as amended, between you and the Company), arrangements
and understandings between us with respect to such matters.
7
<PAGE>
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT WITH M. LERNER]
To indicate that the foregoing meets with your approval and
accurately reflects our mutual understanding with respect to the matters set
forth herein, please sign and return the enclosed duplicate copy of this letter
agreement.
Very truly yours,
AMERICAN LIST CORPORATION
By: /s/ Martin Lerner
------------------------
Name: Martin Lerner
Title: President and Chief
Executive Officer
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
-----------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
Agreed to and accepted as of March 18, 1997 by:
/s/ Martin Lerner
- -----------------
MARTIN LERNER
8
C:\DATA\WP\74807\0003\209\LTR3207K.080
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Martin Lerner
-----------------------
MARTIN LERNER
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman & Chief
Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207P.540
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ J. Morton Davis
-----------------------
J. MORTON DAVIS
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207P.560
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Kenton Wood
-----------------------
KENTON WOOD
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman & Chief
Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207P.570
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Philip Lubitz
-----------------------
PHILIP LUBITZ
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
----------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207P.580
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Ben Ermini
-----------------------
BEN ERMINI
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman & Chief
Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207R.010
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Donald Damore
-----------------------
DONALD DAMORE
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207R.080
<PAGE>
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
Gentlemen:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among American List Corporation, a Delaware corporation
(the "Company"), Snyder Communications, Inc., a Delaware corporation ("Parent"),
and Snyder Z Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
1
<PAGE>
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to Schulte, Roth & Zabel LLP,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March 18, 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
2
<PAGE>
Without the consent of J. Morton Davis, Parent shall not
register any shares of its common stock currently held or beneficially owned by
Mort Zuckerman, Fred Drasner, Dan Snyder or Michelle Snyder in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
/s/ Charles Caccia
-----------------------
CHARLES CACCIA
Acknowledged and agreed to:
SNYDER COMMUNICATIONS, INC.
By: /s/ Michele D. Snyder
---------------------
Name: Michele D. Snyder
Title: Vice Chairman &
Chief Operating Officer
3
C:\DATA\WP\74807\0003\1819\LTR3207R.090
March 18, 1997
Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
15th Floor
Bethesda, MD 20817
J. Morton Davis
Gentlemen:
Reference is made to the provisions of the Registration Rights
Agreement, dated September 4, 1996, by and among Snyder Communications, Inc., a
Delaware corporation (the "Company"), Daniel M. Snyder, Michele D. Snyder, U.S.
News College Marketing L.P., a Delaware limited partnership, and each of the
1995 Investors (as defined therein) (the "Registration Rights Agreement") and to
the Agreement and Plan of Merger, dated as of March 18, 1997, by and among
American List Corporation, a Delaware corporation, the Company and Snyder Z
Acquisition, Inc., a Delaware corporation (the "Merger Agreement").
The undersigned each agrees, severally and not jointly, that
notwithstanding the provisions of the Registration Rights Agreement, the
undersigned shall not, without the consent of J. Morton Davis, prior to the
publication of at least 30 days of financial results of the Company and its
consolidated subsidiaries for the period following the Merger (as defined in the
Merger Agreement) either (i) request or require the Company to register any
shares of its common stock currently held or beneficially owned by the
undersigned in connection with any registered secondary offering or (ii) sell
any such shares of the Company's common stock pursuant to Rule 144 under the
Securities Act of 1933, as amended. The restrictions in this Agreement shall
terminate on the earlier of (A) the date of the termination of the Merger
Agreement for any reason or (B) August 15, 1997 unless the Merger shall have
been consummated as of such date, provided that the restriction on sales
pursuant to Rule 144 shall terminate in any event on August 15, 1997.
1
<PAGE>
This letter agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
Very truly yours,
/s/ Daniel M. Snyder
---------------------------
DANIEL M. SNYDER
/s/ Michele D. Snyder
---------------------------
MICHELE D. SNYDER
U.S. NEWS COLLEGE MARKETING L.P.
By: /s/ Fred Drasner
-----------------------
Fred Drasner
/s/ Fred Drasner
---------------------------
FRED DRASNER
2
C:\DATA\WP\74807\0003\1819\LTR3207K.370
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of March 21,
1997, by and among SNYDER COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and the Shareholders listed on the signature page hereof
(collectively, the "Shareholders").
RECITALS
WHEREAS, pursuant to an offer made by the Company on March , 1997 to the
Shareholders, amongst others, to acquire (the "Acquisition") the entire issued
ordinary share capital of Brann Holdings Limited ("Brann"), the Shareholders
received shares of the Company's common stock, $.001 par value (the "Common
Stock") in exchange for all the outstanding shares of capital stock of Brann;
WHEREAS, the Shareholders have been granted certain registration rights with
respect to the shares of Common Stock received in connection with the
Acquisition; and
WHEREAS, the Company and the Shareholders desire to set forth the rights and
obligations of the parties with respect to such registration rights.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Closing" means the closing of the Acquisition.
"Common Stock" shall have the meaning set forth in Paragraph one of the
Recitals.
"Company" shall mean Snyder Communications, Inc., a Delaware
corporation.
"Demand Registration Request" shall have the meaning set forth in
Section 3.1 hereof.
"Demand Registration Rights" shall mean the rights of the Holders to
have a Registration Statement filed by the Company with respect to the
Registrable Securities held by the Holders in accordance with the
provisions of Section 3 hereof.
<PAGE>
"Demanding Holders" shall have the meaning set forth in Section 3.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holders" shall mean the Shareholders or any Permitted Transferee of a
Shareholder, and, with respect to a Permitted Transferee, only if such
Shareholder has granted rights under this Agreement to such Permitted
Transferee; and "Holder" shall mean any one of them.
"Registrable Securities" means the aggregate number of shares of Common
Stock issued by the Company to the Shareholders in connection with the
Acquisition and shall include all shares of Common Stock received by
the Holders pursuant to a stock split, stock dividend or other
recapitalization of the Company or pursuant to any merger,
consolidation or reorganization involving the Company. For the purposes
of this Agreement, such shares of Common Stock shall cease to be
Registrable Securities on the Rule 144 Eligibility Date or, if earlier,
on such date on which (a) a Registration Statement covering such shares
has been declared effective and such shares have been disposed of
pursuant to such effective Registration Statement, (b) such shares are
sold pursuant to Rule 144A of the Securities Act or (c) all of the
Registrable Securities are eligible for sale (other than pursuant to
Rule 904 of the Securities Act), in the opinion of counsel to the
Company, in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act, so that all transfer
restrictions with respect to such shares and all restrictive legends
with respect to the certificates evidencing such shares are or may be
removed upon the consummation of such sale.
"Registration Period" shall mean the period commencing on the date of
publication of financial results of the Company for the first full
calendar month following the Closing provided that the Holders have
complied with all of their undertakings in the last sentence of Section
2 (the "Pooling Date"), and ending at the earlier of (i) such time as
no Holder owns any Registrable Securities or (ii) the Rule 144
Eligibility Date.
"Registration Statement" means any registration statement filed by the
Company under the Securities Act that covers any of the Registrable
Securities, including the Prospectus, any amendments and supplements to
such registration statement, including post-effective amendments, and
all exhibits thereto and all material incorporated by reference in such
registration statement.
"Rule 144 Eligibility Date" means the date on which all shares of
Common Stock issued by the Company to the Shareholders in the
Acquisition and the other shares of Common Stock defined as Registrable
Securities herein may first be sold under Rule 144 of the Securities
Act by the holders thereof within three months of such date within the
volume limitations of Rule 144(e), assuming for this purpose that the
average weekly trading volume in the four full weeks prior to such date
will be the average weekly trading volume during the following
three-month period; and provided further, however, that for
2
<PAGE>
purposes of Rule 144(d), the holding period applicable to the shares of
Common Stock issued by the Company to the Shareholders in the
Acquisition shall be computed without regard to any transfers of such
shares by any Shareholder to a Permitted Transferee.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Holder Information" shall mean information furnished in
writing by or on behalf of a Selling Holder for use in the Registration
Statement or Prospectus.
"Selling Holders" when used with respect to a Registration Statement,
shall mean those Holders whose Registrable Securities are included in a
Registration Statement pursuant to an exercise by such Holders of their
Demand Registration Rights.
"Shareholders" shall those persons listed in the Schedule I hereto.
"Underwriter(s)" shall mean any one or more investment banking or
brokerage firms to or through whom the Holders or the Company, as the
case may be, may offer and sell Registrable Securities pursuant to a
transaction requiring the filing of a Registration Statement under the
Securities Act, including one or more of such firms who shall manage
such public offering through such Underwriters and that are referred to
herein as "Managing Underwriter(s)."
2. PERMITTED TRANSFEREES
Any Shareholder may transfer any of the Registrable Securities held by
such Shareholder, (i) to the spouse, siblings or issue or spouses of
siblings or issue of such Shareholder; (ii) to a trust or custodial
account for the sole benefit of such Shareholder or the spouse,
siblings or issue of such Shareholder, (iii) to a partnership, limited
liability company or other entity, the majority and controlling equity
owners of which are a shareholder or the spouse, siblings or issue or
spouses of siblings or issue of such Shareholder or any trust referred
to in clause (ii) above; (iv) to the personal representative of a
Shareholder upon the death of such Shareholder for the purposes of
administration of such Shareholder's estate or upon the incompetency of
such Shareholder for the purposes of the protection and management of
such Shareholder's assets, but such personal representative may not
transfer such Registrable Securities other than as permitted under this
Agreement; (v) to a charitable foundation (subject to receipt by the
Shareholder of written approval from the Company, such approval not to
be unreasonably withheld), (vi) to the Company or (vii) to the extent
effected pursuant to an effective registration statement under the
Securities Act or in a transaction exempt from the registration
requirements of the Securities Act with respect to which the Company
has received an opinion of counsel reasonably acceptable to it (a
"Permitted Transferee"). No
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stockholder shall transfer, sell or otherwise dispose of or reduce its
risk (within the meaning of the SEC's Financial Reporting Release No.
1, "Codification of Financial Reporting Policies", Section 2.1.01 [47
F.R 21028] (May 17, 1982)) with respect to any shares of Common Stock
until after such time as consolidated financial statements which
reflect at least 30 days of post-merger combined operations of the
Company and Brann Holdings Limited have been published by the Company,
except as permitted by Staff Accounting Bulletin 76. The Company agrees
to publish such results no later than 30 days following the completion
of the first full calendar month after closing.
The Holders acknowledge that (i) the shares of Common Stock issued in
connection with the execution of this agreement will be legended to
reflect the fact that such shares have not been registered under the
Securities Act (ii) such shares may not be sold in the absence of such
registration or the availability of an exemption from registration and
(iii) a stop transfer order will be issued to the transfer agent for
the Common Stock restricting the transfer of any such unregistered
shares in the absence of a legal opinion to the effect that the
transfer is in compliance with the Securities Act.
The Company will not, prior to the earlier of 3 business days after the
first anniversary of the commencement of the Registration Period and
the termination of the Registration Period, issue any Preferred Stock
without the consent of a majority of the holders of Registrable
Securities.
3. REGISTRATION RIGHTS.
3.1 Subject to the provisions of this Section 3, at any time (i) during
that portion of the Registration Period occurring between the Pooling
Date and the first anniversary date thereof, any Holder or Holders may
deliver to the Company a written request (a "Demand Registration
Request") that the Company register up to 50% of the Registrable
Securities owned by such Demanding Holders (as hereinafter defined)
(provided that such Demand Registration Request represents, in the
aggregate, at least 20% of the Registrable Securities held by all
Holders) and any other Holders that may elect to be included pursuant
to Section 3.2 hereof and (ii) during that portion of the Registration
Period occurring after the first anniversary of the Pooling Date, any
Holder or Holders may deliver to the Company a Demand Registration
Request that the Company register any or all of the Registrable
Securities owned by such Demanding Holders (provided that such Demand
Registration Request represents at least 20% of the Registrable
Securities held by all Holders) and any other Holders that may elect to
be included pursuant to Section 3.2 hereof; in each case under the
Securities Act and the state securities or blue sky laws of any
jurisdiction designated by such Selling Holders (subject to Section 8).
The requisite Holders making such demand are sometimes referred to
herein as the "Demanding Holders". The Company shall, as soon as
practicable following the Demand Registration Request, prepare and file
a Registration Statement (on the then appropriate form or, if more than
one form is available, on the appropriate form selected by the Company)
with the SEC under the Securities
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Act, covering such number of the Registrable Securities as the Selling
Holders request to be included in such Registration Statement and to
take all necessary steps to have such Registrable Securities qualified
for sale under state securities or blue sky laws; provided, however, in
the event that a Demand Registration Request is received by the Company
during that portion of the Registration Period between the Pooling Date
and the first anniversary date thereof, the Company shall not be
obligated to file a Registration Statement with respect to greater than
50% of the Registrable Securities held by all Holders. The Company
shall use its best efforts to file such Registration Statement no later
than 30 days following the Demand Registration Request and to have such
Registration Statement declared effective by the SEC (within the
meaning of the Securities Act) as soon as practicable thereafter and
shall take all necessary action (including, if required, the filing of
any supplements or posteffective amendments to such Registration
Statement) to keep such Registration Statement effective to permit the
lawful sale of such Registrable Securities included thereunder for the
period set forth in Section 5 hereof, subject, however, to the further
terms and conditions set forth in Sections 3.3, 3.4, 3.5, 3.6 and 3.7
hereof.
3.2 (a) No later than 10 days after the receipt of the Demand
Registration Request, the Company shall notify all Holders who
have not joined in such request of the proposed filing, and such
Holders may, if they desire to sell any Registrable Securities
owned by them, by notice in writing to the Company given within
15 days after receipt of such notice from the Company, elect to
have all or any portion of their Registrable Securities included
in the Registration Statement up to the maximum number of shares
that the Holders could require to be registered pursuant to a
Demand Registration Request pursuant to Section 3.1 at such
time. In addition, the Company shall notify the Holders no later
than 30 days prior to the effectiveness of any other
registration statement under the Securities Act with respect to
any proposed public offering by the Company or by any other
holders of Common Stock (other than a registration on Form S-8,
Form S-4 or any subsequent similar Form). In the event that
within the 15 days following such notice, written requests to
include Registratable Securities in such registration statement
are given to the Company by Holders with respect to a number of
Registrable Securities in the Registration Statement that would
be sufficient to initiate a Demand Registration Request pursuant
to section 3.1 ("the Minimum Number") the inclusion of at least
such number of the Holder's Registrable Securities in the
Registration Statement shall constitute an exercise of Demand
Registration Rights for purposes of Section 3.1 so long as all
shares that are the subject of the foregoing notices from
Holders are included in such Registration Statement (up to the
maximum number of shares that the Holders could require to be
registered pursuant to a Demand Registration Request pursuant to
Section 3.1 at such time). In the event the Managing Underwriter
determined that the Minimum Number of such Holders' Registrable
Securities cannot be included in such registration statement the
Company may exclude all such Holders' Registrable Securities
from such Registration Statement.
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Except for a registration on Form S-8 and one registration on Form S-4,
the Company covenants that until three business days following the
commencement of the Registration Period, it shall not register shares
of Common Stock in any primary offering and shall use best efforts not
to register any shares of Common Stock in any secondary offering by one
or more stockholders.
3.3 The Holders, in the aggregate, may only exercise the Demand
Registration Rights granted pursuant to this Section 3 one time prior
to the first anniversary of the commencement of the Registration Period
and one time thereafter. The Company shall only be required to file two
Registration Statements (as distinguished from supplements or
pre-effective or post-effective amendments thereto) in response to the
exercise by the Demanding Holders of their Demand Registration Right
pursuant to the provisions of this Section 3.
3.4 In the event that preparation of a Registration Statement is commenced
by the Company in response to the exercise by the Demanding Holders of
the Demand Registration Right, but such Registration Statement is not
filed with the SEC, either at the request of the Company in accordance
with Section 6 or at the written request or with the written consent of
the Demanding Holders, for any reason, the Demanding Holders shall not
be deemed to have exercised the Demand Registration Right pursuant to
this Section 3, except that, if such Registration Statement is not
filed after the commencement of preparation thereof at the written
request of the Demanding Holders, then such Demanding Holders shall be
required to bear the fees, expenses and costs incurred in connection
with the preparation thereof.
3.5 In the event that any Registration Statement filed by the Company with
the SEC pursuant to the provisions of this Section 3 is withdrawn prior
to the completion of the sale or other disposition of the Registrable
Securities included thereunder, then the following provisions,
whichever applicable, shall govern:
(i) If such withdrawal is effected at the request of the Company
with the written consent of the Demanding Holders or otherwise
in accordance with Section 6 for any reason other than the
failure of all the Selling Holders to comply with their
obligations hereunder with respect to such registration, then
the filing thereof by the Company shall be excluded in
determining whether the Holders have exercised their Demand
Registration Rights hereunder with respect to the filing of such
Registration Statement
(ii) If such withdrawal is effected at the written request of the
Selling Holders, then the filing thereof by the Company shall be
deemed an exercise of their Demand Registration Rights with
respect to the filing of such Registration Statement.
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3.6 The Company shall bear and pay all fees, costs and expenses incident to
such Registration Statement and incident to keeping it effective and in
compliance with all federal and state securities laws, rules, and
regulations for the period set forth in Section 5 hereof (including,
without limitation, registration fees, blue sky qualification fees,
exchange listing fees and expenses, legal fees of Company counsel
(including blue sky counsel), printing costs, costs of any special
audits and accounting fees). Each Selling Holder shall pay fees or
disbursements of counsel, accountants or other advisors for the Selling
Holder and any underwriting discounts and commissions with respect to
its Registrable Securities and any internal, overhead and other
expenses of the Selling Holders.
3.7 Whenever a decision or election is required to be made hereunder by the
Demanding Holders or the Selling Holders, such decision or election
shall be made by a vote of holders of a majority of the Registrable
Securities owned by such Demanding Holders or Selling Holders, as the
case may be; provided, however, any decision to withdraw a Demand
Notice shall be made unanimously by the Demanding Holders.
3.8 In the event that there is a limitation on the number of securities
which may be covered by Registration Statement, the Selling Holders
shall have the right with respect to any such Registration Statement
filed as a result of their Demand Registration Request to include their
Registrable Securities prior to the inclusion of any other
securityholder exercising piggyback registration rights.
3.9 The Selling Holders shall have the right, with respect to any
Registration Statement to be filed as a result of a Demand Registration
Request, to determine whether such registration shall be underwritten
or not; provided, however, that the Company shall select the investment
banking firm or firms to manage the offering, provided such
underwriters are reasonably satisfactory to Holders holding at least
50% of the Registrable Securities to be included in the offering.
4. INFORMATION TO BE FURNISHED
In the event any of the Registrable Securities are to be included in a
Registration Statement under Section 3, the Selling Holders and the
Company shall furnish the following information and documents:
4.1 The Selling Holders will furnish to the Company all information
required by the Securities Act to be furnished by sellers of securities
for inclusion in the Registration Statement, together with all such
other information which the Selling Holders have or can reasonably
obtain and which may reasonably be required by the Company in order to
have such Registration Statement become effective and such Registrable
Securities qualified for sale under applicable state securities laws.
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4.2 The Company, before filing a Registration Statement, amendment or
supplement thereto, will furnish copies of such documents to legal
counsel selected by the Selling Holders. In addition, the Company will
make available for inspection by any Selling Holder or by any
Underwriter, attorney or other agent of any Selling Holder or
Underwriter all information reasonably requested by such persons. All
nonpublicly available information provided to any Selling Holder,
Underwriter or any attorney or agent of any Selling Holder or
Underwriter shall be kept strictly confidential by such Selling Holder,
Underwriter or attorney or agent of such Selling Holder or Underwriter
so long as such information remains nonpublic.
4.3 If requested by the underwriter with respect to any Registration
Statement the Company shall use its best efforts to cause its
independent accountants to provide such underwriter with a "comfort
letter ".
4.4 From the filing of any Registration Statement until the termination of
the effectiveness thereof the Company shall provide to the Selling
Holder without charge a reasonable number of copies of the prospectus
(including any preliminary prospectus prepared for circulation to
prospective purchasers of Registrable Securities) included in the
Registration Statement and any amendment or supplement thereto and the
Company consents to the use of any such prospectus or amendment or
supplement thereto in connection with the offering and sale of the
Registrable Securities covered thereby. In addition during such period,
the Company shall provide the Selling Holders, without charge, with (1)
one copy of the Registration Statement and any post-effective amendment
thereto (including financial statements and schedules and, to the
extent requested by the Selling Holders in writing, the exhibits
thereto) and (2) to the extent requested by the Selling Holders, all
reports and filing made by the Company pursuant to the Securities and
Exchange Act of 1934, as amended.
4.5 The Company will promptly notify each Selling Holder of the occurrence
of any event which renders any Prospectus then being circulated among
prospective purchasers misleading because such Prospectus contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements made, in light of the circumstances in
which they were made, not misleading, and the Company will, as promptly
as possible, amend the Prospectus so that it does not contain any
material misstatements or omissions and deliver the number of copies of
such amendments to each Selling Holder as each Selling Holder may
require.
5. REGISTRATION TO BE KEPT EFFECTIVE
In connection with any registration of Registrable Securities pursuant
to this Agreement, the Company shall, at its expense, keep effective
and maintain such registration and any related qualification of
Registrable Securities under state securities laws for such period not
exceeding 120 days as may be necessary for the Selling Holder,
Underwriters and selling agents to dispose of such Registrable
Securities, from time to time to amend or supplement the
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Prospectus used in connection therewith to the extent necessary to
comply with applicable laws, and to furnish to such Selling Holders
such number of copies of the Registration Statement, the Prospectus
constituting part thereof, and any amendment or supplement thereto as
such Selling Holders may reasonably request in order to facilitate the
disposition of the registered Registrable Securities.
6. CONDITIONS TO COMPANY'S OBLIGATIONS
The obligations of the Company to cause the Registrable Securities
owned by the Holders to be registered under the Act are subject to each
of the following limitations, conditions and qualifications:
(a) The Company shall be entitled to postpone for a reasonable
period of time up to three (3) months the filing of any
Registration Statement otherwise required to be prepared and
filed by it pursuant to Section 3 hereof, if the Company
determines, in its reasonable judgment, that such registration
and offering would materially interfere with any financing,
acquisition, corporate reorganization or other material
transaction involving the Company, and the Company promptly
gives the Holders written notice including an explanation of
such determination. The Company shall not exercise its rights to
defer the filing of any specific Registration Statement pursuant
to the terms of this paragraph more than once or in any event if
the result thereof is to permit a registration of shares of
Common Stock (other than a registration on Form S-8, Form S-4 or
any subsequent similar form) to the exclusion of the Holders. If
the Company shall so postpone the filing of a Registration
Statement, the Selling Holders shall have the right to withdraw
the Demand Registration Request by giving written notice to the
Company within 30 days after receipt of the notice of
postponement (and, in the event of such withdrawal, such Demand
Registration Request shall not be counted for purposes of the
Demand Registration Request to which the Holders are entitled
pursuant to Section 3 hereof). The exercise by the Company of
its rights under this paragraph shall not affect the timeliness
of a Demand Registration Request made prior to such exercise
that is not so withdrawn.
(b) The Company shall not be required to file any Registration
Statement pursuant to this Agreement in connection with a Demand
Registration Request made less than 90 days after the effective
date of any registration statement filed by the Company (other
than registrations statements filed on Form S-4, Form S-8, or
any successor forms thereto), if the Managing Underwriter(s)
associated with such prior registration statement reasonably
objects to such Demand Registration Request or has otherwise
precluded the Company from filing a registration statement
within such 90 day period.
(c) The Company may require, as a condition to fulfilling its
obligations to register the Registrable Securities under
Sections 3 hereof, that the Selling Holders execute reasonable
and customary indemnification agreements for the benefit of the
Underwriters of the registration; provided, however, a Selling
Holder shall not be required to indemnify the Underwriters
except with respect to Selling Holder Information and that the
maximum liability
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of any Selling Holder under any such indemnification agreement
shall not exceed the net proceeds received by such Selling
Holder from the sale of such Registrable Securities.
(d) The Company shall not be required to fulfill any registration
obligations under this Agreement, if the Company provides the
Holders with an opinion of counsel reasonably acceptable to such
Holders stating that the Holders are free to sell in the manner
proposed by them the Registrable Securities that they desired to
register without registering such Registrable Securities or such
Registrable Securities can be sold under Rule 144 of the
Securities Act, or otherwise without registration in the open
market in compliance with the Securities Act, without regard to
volume restrictions.
(e) The Company shall not be obligated to file any Registration
Statement pursuant to this Agreement in connection with a Demand
Registration Request at any time if the Company would be
required to include financial statements audited as of any date
other than the end of its fiscal year, unless the Selling
Holder(s) agree to pay the cost of any such additional audit.
7. EXCHANGE LISTING
In the event any Registrable Securities are included in a Registration
Statement under Section 3 hereof, the Company will exercise reasonable
efforts to cause all such Registrable Securities to be listed on the
New York Stock Exchange or any other exchange(s) on which the Common
Stock is then listed.
8. REGISTRATION UNDER STATE SECURITIES LAWS
The Company shall use its best efforts to register or qualify any
Registrable Securities included in a Registration Statement pursuant to
Section 3 hereof under state "blue sky" or similar securities laws in
such jurisdictions as the Selling Holders reasonably request and to
take such other action as may be reasonably necessary to enable the
Selling Holders to sell their shares of Registrable Securities in the
jurisdictions where such registration or qualification was made,
provided that the Company will not be required to qualify to do
business in any jurisdiction in which it would not otherwise be
required to be so qualified or to execute a general consent to service
of process in any jurisdiction in which it would not otherwise be
required to execute such a consent.
9. INDEMNIFICATION.
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9.1 The Company will indemnify and hold each Selling Holder, its partners,
officers, directors and agents (including sales agents and
Underwriters) and each person, if any, who controls (within the meaning
of the Securities Act or the Exchange Act) the Selling Holder or any of
the foregoing, harmless to the maximum extent permitted by law, from
and against any loss, claim, liability, damage or expense (including
attorney's fees) resulting from any Registration Statement, Prospectus
or amendment thereof of supplement thereto, which includes Registrable
Securities to be sold by such Selling Holder, or any information
reincorporated by reference therein, containing an untrue statement of
material fact or omitting to state a material fact necessary in order
to make the statements made therein in light of the circumstances under
which they were made, not misleading unless such misstatement or
omission is with respect to Selling Holder Information or results from
the Selling Holder's failure to deliver a current Prospectus as
required under the Securities Act and provided to such Selling Holder
by the Company; and each such Selling Holder will (severally and not
jointly) indemnify and hold harmless the Company, its directors,
officers and agents and each person, if any, who controls (within the
meaning of the Securities Act or the Exchange Act) the Company against
any loss, claim, liability, damage or expense (including attorney's
fees) resulting from any such claim relating to Selling Holder
Information provided by such Selling Holder.
9.2 Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party
in writing of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 9 or otherwise to
the extent such omission did not materially prejudice the indemnifying
party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there exists a
conflict of interest between the indemnifying party and any indemnified
party or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to, and
inconsistent or in conflict with, those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party from
separate fees and disbursements of counsel unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the preceding sentence, (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action, or(iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at
the expense of the
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indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). No settlement of an action
against any party under this Section 9 shall bind the other party
unless such other party agrees in writing to the terms of such
settlement (which agreement will not be unreasonably withheld).
9.3 The obligation of the indemnifying party to indemnify the indemnified
party under this Section 9 shall, in each case, be in addition to any
liability which the indemnifying party may otherwise have hereunder or
otherwise at law or in equity.
9.4 If the indemnification provided for in this Section 9 from the
indemnifying party is applicable in accordance with its terms but for
any reason is held to be unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as
appropriate to reflect the relative faults of the indemnifying party
and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative faults of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such misstatement
or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 9.1 and 9.2 hereof, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.4 were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person.
9.5 In no event shall the liability with respect to any Registration
Statement of any Selling Holder under this Section 9, whether by way of
indemnification or contribution, exceed the net proceeds to such
Selling Holder from the sale of Registrable Securities pursuant to such
Registration Statement.
10. RULE 144
The Company covenants that it shall file any reports required to be
filed by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and that it shall take such further
action as any Holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to
sell the Registrable Securities without registration under
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the Securities act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such rule may be amended from
time to time, or (b) any similar rule or regulation adopted by the SEC.
The Company shall, upon the request of any Holder of Registrable
Securities, deliver to such Holder a written statement as to whether it
has complied with such requirements.
11. MISCELLANEOUS
11.1 Amendments and Waivers. Subject to Section 11.2, this Agreement may be
modified or amended only by a writing signed by the Company and each of
the Holders.
11.2 Third Party Beneficiaries. Any Permitted Transferee shall be a third
party beneficiary or intended beneficiary to the agreement made
hereunder by a Holder so long as such Holder has granted rights under
this Agreement to such Permitted Transferee, and any such third party
beneficiary shall have the right to enforce such Agreement directly to
the extent it deems such enforcement necessary or advisable.
11.3 No Waiver. No failure to exercise and no delay in exercising on the
Company's or the Holders' part, of any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other
right power or privilege. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
11.4 Survival of Agreements. All agreements, representations and warranties
contained herein or made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby shall survive the
execution and delivery of this Agreement.
11.5 Limitation of Registration Rights. Nothing contained in this Agreement
shall create any obligation on behalf of the Company to register under
the Securities Act any securities which are not Registrable Securities.
11.6 Binding Effect and Benefits. This Agreement shall be binding upon and
shall insure to the benefit of the Company and the Holders and their
respective successors and assigns. Without limiting the generality of
the foregoing, each Holder's registration rights granted hereunder
shall be transferable to and exercised by any Permitted Transferee of
Registrable Securities. In the event the Company merges into or
consolidates with another entity or transfers substantially all of its
assets to another entity, the Company shall cause the surviving entity
or transferee to assume the Company's obligations hereunder.
11.7 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the
subjects hereof.
11.8 Separability of Provisions. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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11.9 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be by telecopy, facsimile
transmission (confirmed by U.S. mail), telegraph, hand delivery or
mailed by certified or registered mail postage prepaid, returned
receipt requested, to the addresses set forth below or to such other
address as any party may advise the other party in a written notice
given in accordance with this Section.
If to the Company: Snyder Communications, Inc.
Two Democracy Center
6903 Rockledge Drive
Fifteenth Floor
Bethesda, Maryland 20817
If to the Holders: To the respective addresses set
forth in the records of the Company
Any notice or other communication so addressed and so mailed shall be
deemed to have been given when duly delivered or sent.
11.10 Construction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving
effect to the conflict of laws provisions thereof. The descriptive
headings of the several sections and subsections hereof are for
convenience only and shall not control or affect the meaning of
construction of any of the provisions hereof.
11.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute a single original instrument.
11.12 Third Party Demand Rights. The Company represents that as of the date
hereo there are no effective demand registration rights in relation to
the
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Common Stock of the Company other than those contained herein and those
contained in the Registration Rights Agreement dated as of 6 January
1997 among the Company, Andrew Arkin Theodore Klein and Barbara
Saltzman and the Registration Rights Agreement dated as of September 4,
1996 among the Company, Daniel M Snyder, Michelle D Snyder, U.S. News
College Marketing, L P and the 1995 Investors referred to therein.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE SHAREHOLDERS:
/s/ Christopher John Gater
------------------------------------
Name: Christopher John Gater
/s/ Alan Taylor Bigg
------------------------------------
Name: Alan Taylor Bigg
/s/ CJ Gater
------------------------------------
Name: John Madoc Hansel
Signed by his attorney Mr CJ Gater
/s/ CJ Gater
-----------------------------------
Name: Paul Jonathan Ayle Kitcatt
Signed by his attorney Mr CJ Gater
/s/ Brenda Joyce Hawkins
------------------------------------
Name: Brenda Joyce Hawkins
/s/ Paul Anthony Burton Jenkins
------------------------------------
Name: Paul Anthony Burton Jenkins
/s/ CJ Gater
------------------------------------
Name: Mrs D Gater
Signed by her attorney Mr CJ Gater
/s/ Michael J Parker
------------------------------------
Name: Michael J Parker
/s/ MJ Parker
------------------------------------
Name: Mrs BR Parker
Signed by her attorney Mr MJ Parker
/s/ CJ Gater
-----------------------------------
Name: Mrs CP Hansel
Signed by her attorney Mr CJ Gater
16
<PAGE>
/s/ CJ Gater
-----------------------------------
Name: Mrs CM Kitcatt
Signed by her attorney Mr CJ Gater
/s/ CJ Gater
-----------------------------------
Name: Royston Gary Godwell Boss
Signed by his attorney Mr CJ Gater
/s/ Andrew McInally
-----------------------------------
Name: Andrew McInally
/s/ N Van Der Bergh/GP Courtenay-Evans
--------------------------------------
Name: N Van Der Bergh and GP
Courtenay-Evans as Trustees of the
ATB 1995 Settlement
/s/ AT Bigg
-----------------------------------
Name: Mrs CB Taylor Bigg
Signed by her attorney Mr AT Bigg
/s/ Rosemary M Lyon
-----------------------------------
Name: Rosemary M Lyon
/s/ BJ Hawkins
-----------------------------------
Name: John Gordon Wynn
Signed by his attorney Mr BJ Hawkins
/s/ Simon Beswick /CJ Gater
-----------------------------------
Name: Sandra Brown and D Gater as
Trustees of the C Gater settlement
Signed by Simon Beswick as
attorney for Sandra Brown
Signed on behalf of
D Gater by her attorney Mr CJ
Gater
/s/ DI Williams
-----------------------------------
3i Group plc
/s/ A Clayton Perfall
-----------------------------------
NatWest Ventures Investment Limited
By its attorney Clayton Perfall, a duly
authorized agent of Snyder
Communications Inc.
17
<PAGE>
THE COMPANY:
SNYDER COMMUNICATIONS, INC.
By: /s/ A Clayton Perfall
----------------------------
Name: A Clayton Perfall
Title: Chief Financial Officer
18
FOR IMMEDIATE RELEASE
Contact:
Snyder Communications, Inc. American List Corp. Dewe Rogerson Inc.
Clay Perfall Martin Lerner Jeffrey Luth
Chief Financial Officer President Media: Kathryn Corbett
(301) 571-6270 (516) 248-6100 (212) 688-6840
SNYDER COMMUNICATIONS TO ACQUIRE AMERICAN LIST CORP.
EXPANDS SNYDER'S DATABASE REACH TO 30 MILLION STUDENTS
(BETHESDA, MD, March 19, 1997) - Snyder Communications, Inc. (NYSE: SNC) and
American List Corp. (AMEX: AMZ) today announced the signing of a definitive
agreement for Snyder to acquire American List. Under the terms of the agreement,
Snyder will issue one share of common stock in exchange for each of the
approximately 4.5 million American List shares outstanding if the average
trading price of Snyder stock prior to closing of the transaction is at least
$32, with the exchange ratio increasing if the trading price is less than $32.
The transaction, which is valued at approximately $125 million, will be
accounted for as a pooling of interests.
Snyder also announced today the acquisition of Brann Holdings Limited, a leading
UK direct marketing company. Brann provides a full range of database and
customer care & retention services to many of the largest corporations operating
in the UK.
The acquisitions of American List and Brann will be accretive from the outset.
Snyder currently expects the acquisitions to be accretive by approximately 20%
($0.08 per share) and 25% ($0.14 per share) on a fully diluted basis, over
existing consensus analyst estimates for 1997 and 1998, respectively.
The acquisition is subject to the approval of American List shareholders, and to
the satisfaction of other customary conditions. The companies anticipate closing
the transaction in the second quarter of 1997.
Commenting on the proposed acquisition, Daniel M. Snyder, Chairman and Chief
Executive Officer of Snyder Communications, said, "American List represents a
truly premier targeted marketing resource, providing clients with the ability to
reach over 30 million students and young adults. The addition of American List
to the Snyder family of companies significantly enhances our ability to provide
clients with integrated
<PAGE>
Snyder Communications, Inc. Page2
solutions to their targeted marketing needs. American List's proprietary
database of over 30 million students and young adults, combined with our
existing proprietary database of over 19 million households and small
businesses, perfectly complements our ability to provide database marketing and
teleservice solutions."
Martin Lerner, President of American List, said, "We are extremely excited about
the opportunity to merge with Snyder Communications, a leading company in the
field of outsourced targeted marketing. Snyder's approach to providing
integrated marketing solutions offers the ideal platform for expanding the scope
and size of our business, and will provide substantial benefits to our existing
customers and employees. We look forward to capitalizing on the opportunity that
joining forces with Snyder creates."
American List Corp., headquartered in Mineola, NY, develops, maintains and
markets one of the largest and most comprehensive databases of high school,
college, and preschool through junior high school students in the United States,
currently containing information on approximately 30 million individuals. The
Company rents database lists to direct marketers for use primarily in direct
mail and telemarketing programs. During the fiscal year ended February 28, 1995,
the Company rented its lists to approximately 3,200 customers, including
financial institutions, list brokers and advertising agencies, retailers and
educational institutions. For the fiscal year ended February 28, 1996, American
List reported revenues of $18.9 million and net earnings of $7.6 million.
In a separate release, American List Corp. has commented on its expected fourth
quarter results and on certain other matters.
Snyder Communications, Inc., based in Bethesda, MD, is a leading provider of
outsourced targeted marketing solutions for primarily Fortune 500 companies. The
Company designs and implements marketing programs utilizing a range of
complementary resources, including field sales, medical detailing, database
marketing, teleservices, WallBoardR information displays and product sampling.
# # #
C:\DATA\WP\74807\0003\1819\REL3217N.170
FOR IMMEDIATE RELEASE
Contact:
Snyder Communications, Inc. American List Corp. Dewe Rogerson Inc.
Clay Perfall Martin Lerner Jeffrey Luth
Chief Financial Officer President Media: Kathryn Corbett
(301) 571-6270 (516) 248-6100 (212) 688-6840
SNYDER COMMUNICATIONS AND AMERICAN LIST FURNISH
ADDITIONAL INFORMATION REGARDING MERGER AGREEMENT
(BETHESDA, MD, March 19, 1997) - Snyder Communications, Inc. (NYSE: SNC) and
American List Corp. (AMEX: AMZ) furnish the following additional information
with respect to the number of shares of common stock of Snyder to be issued for
each share of American List in connection with the previously announced merger.
In the event that the average trading price of Snyder common stock for the
twenty-day period ending on the third day prior to the closing (the "Average
Trading Price") equals or exceeds $32.00, one share of Snyder common stock will
be issued for each share of American List common stock. In the event that the
Average Trading Price equals or exceeds $28.00 but is less than $32.00, the
number of shares of Snyder common stock issuable for each share of American List
common stock will equal the quotient of $32.00 divided by the Average Trading
Price. In the event that the Average Trading Price equals or exceeds $26.00 but
is less than $28.00, 1.14 shares of Snyder common stock will be issuable for
each share of American List common stock. In the event that the Average Trading
Price is less than $26.00 and the merger agreement is not otherwise terminated
in accordance with its terms, the number of shares of Snyder common stock
issuable for each share of American List common stock will equal the quotient of
$29.71 divided by the Average Trading Price.
# # #
1
C:\DATA\WP\74807\0003\1819\REL3217N.180
FOR IMMEDIATE RELEASE
Contact:
Snyder Communications, Inc. Dewe Rogerson Inc.
Clay Perfall Jeffrey Luth
Chief Financial Officer Media: Kathryn Corbett
(301) 571-6270 (212) 688-6840
SNYDER TO ACQUIRE LEADING UK DIRECT MARKETING COMPANY
CREATES STRONG PLATFORM FOR SERVICING GLOBAL CLIENT BASE
(BETHESDA, MD, March 19, 1997) - Snyder Communications, Inc. (NYSE: SNC) today
announced a definitive agreement to acquire Brann Holdings Limited, a leading
direct marketing company in the UK. Under the terms of the agreement, Snyder
will issue approximately 2.7 million shares of common stock in exchange for all
the outstanding stock of Brann. The transaction is valued at approximately $77.5
million, and includes the assumption of approximately $5.0 million in debt, will
be accounted for as a pooling of interests.
Snyder also announced today the acquisition of American List Corp., a leading
database developer, with a proprietary database of over 30 million students and
young adults.
The acquisitions of Brann and American List will be accretive from the outset.
Snyder currently expects the acquisitions to be accretive by approximately 20%
($0.08 per share) and 25% ($0.14 per share) on a fully diluted basis, over
existing consensus analyst estimates for 1997 and 1998, respectively.
"This acquisition, which will be accretive from the outset, is an outstanding
opportunity for Snyder to enhance our ability to meet the explosive growth in
demand for outsourced marketing services on a more globalized basis," commented
Daniel M. Snyder, Chairman and Chief Executive Officer of Snyder Communications.
"Brann's world-class client base includes Microsoft, Intel, Barclays Bank and
many other leading consumer products companies. The addition of Brann into the
Snyder family of companies will greatly increase our ability to provide targeted
outsourced marketing to leading companies operating in the UK, and it
dramatically enhances our ability to expand our reach into the European Market."
<PAGE>
Snyder Communications, Inc. Page 2
Privately held Brann Holdings Limited, founded in 1967 and based in Cirencester,
U.K., is the leading direct marketing services company in the United Kingdom.
Brann provides a full range of database managed services; creative services; and
customer care & retention marketing primarily to large corporations. With a
fully integrated services offering and a staff of more than 700 professionals,
Brann is uniquely positioned to create, plan and implement complete direct
marketing and communications programs to help its clients develop and retain
loyal customers. For the year ended December 31, 1996, Brann had revenues of
approximately US$60 million.
Christopher Gater, Chief Executive Officer of Brann, said, "We are extremely
pleased to be joining forces with a market leader like Snyder. The combination
will leverage both companies' marketing strengths and should result in
significant operational synergies."
Snyder Communications, Inc., based in Bethesda, MD, is a leading provider of
outsourced targeted marketing solutions for primarily Fortune 500 companies. The
Company designs and implements marketing programs utilizing a range of
complementary resources, including field sales & marketing, medical detailing,
database marketing, teleservices, WallBoardR information displays and product
sampling.
# # #
C:\DATA\WP\74807\0003\1819\REL3217N.220
