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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) July 3, 1997
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WYLE ELECTRONICS
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(Exact name of registrant as specified in charter)
California 1-5374 95-1779998
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(State or other (Commission (IRS employer
jurisdiction of file number) identification
incorporation) number)
15370 Barranca Parkway, Irvine California 92713
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(Address of principal executive offices)
Registrant's telephone number, including area code:
(714) 753-9953
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
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(b). Information Required by Item 403(c) of Regulation S-K.
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On July 3, 1997, Wyle Electronics, a California corporation
(the "Company"), Raab Karcher AG, a corporation organized under the laws of the
Federal Republic of Germany ("Parent"), and EBV Electronics Inc., a Delaware
corporation and indirect wholly owned subsidiary of Parent ("Purchaser"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), a copy of
which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The following summary of the Merger Agreement is qualified in its entirety by
reference to the Merger Agreement. The Merger Agreement provides, subject to
certain conditions as described therein, for the commencement of a cash tender
offer (the "Offer") to purchase all of the issued and outstanding shares of the
Company's common stock, without par value, including the associated preferred
stock purchase rights (the "Shares"), at a price of $50.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related Letter of Transmittal filed by Parent and
Purchaser with the Securities and Exchange Commission on July 9, 1997
(collectively, the "Offer Documents") and, together with the Company's
recommendation of the tender offer, mailed to the Company's shareholders on the
same date. The obligation of Purchaser to accept for payment and pay for the
Shares tendered pursuant to the Offer is subject to at least 90% of the
outstanding Shares (on a fully diluted basis) being validly tendered and to
certain other conditions that are described in the Merger Agreement and the
Offer Documents.
The Merger Agreement provides that, following the purchase of
Shares by Purchaser in the Offer, upon the terms and subject to the conditions
thereof, and in accordance with the Delaware General Corporation Law and the
California Corporations Code (the "CCC"), Purchaser shall be merged with and
into the Company (the "Merger"). As a result of the Merger, the separate
corporate existence of Purchaser shall cease and the Company shall continue as
the surviving corporation of the Merger and shall become an indirect wholly
owned subsidiary of Parent. Upon consummation of the Merger, each issued and
then outstanding Share (other than (i) any Shares owned by the Company or any
subsidiary of the Company, or owned by Parent, Purchaser or any other subsidiary
of Parent, and (ii) any Shares held by the Company's shareholders who have
demanded and perfected a right to an appraisal of their Shares, who have not
withdrawn or otherwise lost such right to appraisal and who shall have complied
with all of the relevant provisions of Section 1300 et. seq. of the CCC) shall
be converted automatically into the right to receive the amount paid per Share
in the Offer, in cash, without interest upon surrender of the certificate
representing the Share.
On July 3, 1997, Parent and the Company issued a joint press
release announcing the execution of the Merger Agreement. A copy of the press
release is filed herewith as Exhibit 99.1 and is incorporated herein by
reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
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AND EXHIBITS
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2.1 Agreement and Plan of Merger, dated as of July 3, 1997, among Wyle
Electronics, a California corporation, Raab Karcher AG, a corporation
organized under the laws of the Federal Republic of Germany, and EBV
Electronics Inc., a Delaware corporation and an indirect wholly owned
subsidiary of Raab Karcher AG.
99.1 Joint Press Release by Wyle Electronics and Raab Karcher AG, dated July
3, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WYLE ELECTRONICS
Date: July 18, 1997 By: /s/ R. Van Ness Holland, Jr.
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Name: R. Van Ness Holland, Jr.
Title: Executive Vice President-
Finance and Treasurer,
Chief Financial Officer
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit Page
No. Description of Exhibit Number
--- ---------------------- ------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of July 3, 1997, among Wyle
Electronics, a California corporation, Raab Karcher AG, a corporation
organized under the laws of the Federal Republic of Germany, and EBV
Electronics Inc., a Delaware corporation and an indirect wholly owned
subsidiary of Parent.
99.1 Joint Press Release by Wyle Electronics and Raab Karcher AG, dated July
3, 1997.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
RAAB KARCHER AG,
EBV ELECTRONICS INC.
and
WYLE ELECTRONICS
Dated as of July 3, 1997
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TABLE OF CONTENTS
Section Page
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ARTICLE I
THE OFFER
1.01. The Offer ........................................................ 2
1.02. Company Actions .................................................. 4
ARTICLE II
THE MERGER
2.01. The Merger ....................................................... 5
2.02. Effective Time; Closing........................................... 5
2.03. Effects of the Merger............................................. 6
2.04. Articles of Incorporation and By-Laws............................. 6
2.05. Directors......................................................... 6
2.06. Officers ......................................................... 6
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.01. Effect on Capital Stock........................................... 7
3.02. Exchange of Certificates.......................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.01. Organization...................................................... 10
4.02. Subsidiaries...................................................... 10
4.03. Capitalization.................................................... 10
4.04. Authority......................................................... 11
4.05. Noncontravention; Filings and Consents............................ 12
4.06. SEC Documents; Financial Statements............................... 13
4.07. Absence of Certain Changes or Events.............................. 14
4.08. No Undisclosed Liabilities........................................ 14
4.09. Information Supplied.............................................. 15
4.10. Litigation........................................................ 15
4.11. Labor Matters..................................................... 16
4.12. Employee Benefits; ERISA.......................................... 16
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ii
Section Page
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4.13. Taxes.......................................................... 19
4.14. Compliance with Applicable Laws................................ 19
4.15. Environmental Matters.......................................... 20
4.16. Real Property.................................................. 20
4.17. Intellectual Property.......................................... 21
4.18. Insurance...................................................... 21
4.19. Amendment of Rights Agreement.................................. 22
4.20. State Takeover Statutes........................................ 22
4.21. Opinion of Financial Advisor................................... 22
4.22. Brokers........................................................ 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
5.01. Organization................................................... 22
5.02. Authority ..................................................... 23
5.03. Noncontravention; Filings and Consents......................... 23
5.04. Information Supplied........................................... 24
5.05. Financing...................................................... 24
5.06. Interim Operations of Purchaser................................ 24
5.07. Litigation..................................................... 24
5.08. Brokers ....................................................... 25
ARTICLE VI
COVENANTS OF THE COMPANY
6.01. Conduct of Business ........................................... 25
6.02. Other Actions ................................................. 28
6.03. No Solicitation ............................................... 28
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01. Shareholders Meeting; Preparation of the Proxy Statement....... 30
7.02. Access to Information; Confidentiality......................... 31
7.03. Reasonable Efforts ............................................ 32
7.04. Stock Options.................................................. 32
7.05. Benefit Plans.................................................. 33
7.06. Indemnification and Insurance.................................. 34
7.07. Directors of the Company....................................... 35
7.08. Fees and Expenses ............................................. 36
7.09. Public Announcements........................................... 37
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iii
Section Page
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7.10. Notification..................................................... 37
7.11. Certain Litigation ............................................. 37
7.12. Other Actions ................................................... 38
ARTICLE VIII
CONDITIONS PRECEDENT
8.01. Conditions to Each Party's Obligation to Effect the Merger....... 38
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01. Termination ..................................................... 39
9.02. Effect of Termination............................................ 40
9.03. Amendment ....................................................... 40
9.04. Extension; Waiver................................................ 40
9.05. Procedure for Termination, Amendment, Extension or Waiver........ 40
ARTICLE X
GENERAL PROVISIONS
10.01. Nonsurvival of Representations.................................. 41
10.02. Notices ........................................................ 41
10.03. Definitions .................................................... 42
10.04. Interpretation ................................................. 43
10.05. Counterparts ................................................... 43
10.06. Entire Agreement; Third Party Beneficiaries..................... 43
10.07. Assignment...................................................... 43
10.08. Governing Law .................................................. 44
10.09. Enforcement .................................................... 44
10.10. Severability ................................................... 44
Exhibit A Conditions of the Offer
Exhibit B Form of Agreement of Merger
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INDEX OF DEFINED TERMS
Defined Term Section
AARC Section 4.05(b)
acquisition proposal Section 6.03(a)
affiliate Section 10.03(a)
Agreement Preamble
Benefit Plans Section 4.12(a)
Certificates Section 3.02(b)
CCC Recitals
Code Section 4.12(a)
Commonly Controlled Entity Section 4.12(a)
Company Preamble
Company Common Stock Recitals
Company Filed SEC Documents Section 4.07
Company Permits Section 4.14
Company Preferred Stock Section 4.03
Company Representatives Section 6.03(a)
Company SEC Documents Section 4.06
Company Shareholder Vote Section 4.04
Company Shareholders Meeting Section 7.01(a)
Confidentiality Agreement Section 7.02
control Section 10.03(b)
controlled by Section 10.03(b)
DGCL Recitals
Disclosure Schedule Article IV
Dissenting Shares Section 3.01(d)
Effective Time Section 2.02
Environmental Laws Section 4.15
ERISA Section 4.12(a)
Exchange Act Section 1.01(d)
Expenses Section 7.08(b)
FCO Section 4.05(b)
Governmental Entity Section 4.05(b)
Hazardous Substance Section 4.15
HSR Act Section 4.05(b)
Indemnified Parties Section 7.06(a)
Independent Counsel Section 1.02(a)
Independent Directors Section 7.07(a)
Information Statement Section 4.09
Intellectual Property Rights Section 4.17
IRS Section 4.12(a)
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Defined Term Section
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Law Section 4.05(a)
Leased Real Property Section 4.16(b)
Lien Section 10.03(c)
Material Adverse Change Section 10.03(d)
Material Adverse Effect Section 10.03(d)
Merger Recitals
Merger Consideration Section 3.01(c)
Merger Documents Section 2.02
Minimum Condition Exhibit A
Notice of Superior Proposal Section 6.03(b)
Offer Recitals
Offer Documents Section 1.01(d)
Owned Real Property Section 4.16(a)
Parent Preamble
Paying Agent Section 3.02(a)
PBGC Section 4.12(d)
Pension Plans Section 4.12(a)
Per Share Amount Recitals
person Section 10.03(e)
Preferred Stock Section 4.03
Proxy Statement Section 4.05(b)
Purchaser Preamble
Real Property Section 4.16(b)
Revised Minimum Number Section 1.01(b)
Rights Agreement Section 4.03
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Securities Act Section 4.06
Significant Subsidiary Section 4.01
Specified Court Section 10.09
Stock Incentive Plans Section 7.04(a)
Stock Option Section 7.04(a)
Stock Option Agreement Recitals
subsidiary Section 10.03(f)
Superior Proposal Section 6.03(b)
Surviving Corporation Section 2.01
taxes Section 4.13
Termination Fee Section 7.08(b)
under common control with Section 10.03(b)
WARN Section 4.12(g)
Welfare Plans Section 4.12(a)
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AGREEMENT AND PLAN OF MERGER, dated as of July 3, 1997 (this
"Agreement"), among RAAB KARCHER AG, a corporation organized under the laws of
Germany ("Parent"), EBV ELECTRONICS INC., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Purchaser"), and WYLE ELECTRONICS, a
California corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent,
Purchaser and the Company have each determined that it is in the best interests
of their respective shareholders for Parent to acquire the Company upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Purchaser to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of common stock, no par value, of the Company (the "Company
Common Stock"), at a purchase price of US$50.00 per share (such amount, or any
greater amount to be paid per share of Company Common Stock in the Offer, being
referred to as the "Per Share Amount"), net to the seller in cash, upon the
terms and subject to the conditions set forth in this Agreement and in the
Offer; and the Board of Directors of the Company has unanimously approved the
Offer and is recommending that the Company's shareholders accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the
respective Boards of Directors of Parent, Purchaser and the Company have
approved the merger of Purchaser with and into the Company (the "Merger") upon
the terms and subject to the conditions set forth in this Agreement and in
accordance with the provisions of the Delaware General Corporation Law (the
"DGCL") and the California Corporations Code (the "CCC"), whereby each share of
Company Common Stock, other than shares owned directly or indirectly by Parent
or by the Company and other than Dissenting Shares (as defined in Section
3.01(d)), will be converted into the right to receive the Per Share Amount;
WHEREAS, as an inducement to Parent to enter into this
Agreement, Parent, Purchaser and the Company have entered into a Stock Option
Agreement (the "Stock Option Agreement") pursuant to which the Company has
granted to Parent an option to purchase newly issued shares of Company Common
Stock under certain circumstances;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of the public announcement of this Agreement, Purchaser
shall, and Parent shall cause Purchaser to, commence the Offer. The obligation
of Purchaser to, and of Parent to cause Purchaser to, commence the Offer and
accept for payment, and pay for, any shares of Company Common Stock tendered
pursuant to the Offer shall be subject to the conditions set forth in Exhibit A
(any of which may be waived in whole or in part by Purchaser in its sole
discretion), and to the terms and conditions of this Agreement. Purchaser
expressly reserves the right to modify the terms and conditions of the Offer,
except that, without the prior written consent of the Company or as expressly
permitted by this Agreement, Purchaser shall not (i) reduce the number of shares
of Company Common Stock subject to the Offer, (ii) reduce the Per Share Amount,
(iii) modify or add to the conditions set forth in Exhibit A, (iv) except as
provided in the following sentence or in Section 1.01(b), extend the term of the
Offer, (v) change the form of consideration payable in the Offer or (vi) make
any other modifications that are otherwise materially adverse to holders of
Company Common Stock. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (A) extend the term of the Offer beyond any scheduled
expiration date of the Offer if, at any such scheduled expiration date, any of
the conditions to Purchaser's obligation to accept for payment, and pay for,
shares of Company Common Stock tendered pursuant to the Offer shall not have
been satisfied or waived (provided, however, that Purchaser may extend the Offer
under this clause (A) on not more than one occasion and for not more than ten
business days on such occasion) and (B) extend the Offer for any period required
by any rule, regulation, interpretation or position of the Securities and
Exchange Commission (the "SEC") or the staff thereof applicable to the Offer or
any other applicable Law.
(b) Notwithstanding any other provision contained herein,
including, without limitation, Section 1.01(a), in the event the Minimum
Condition (as defined in Exhibit A) is not satisfied on any scheduled expiration
date of the Offer, the Purchaser may either (x) extend the Offer pursuant to
clause (A) of the last sentence of Section 1.01(a) or (y) amend the Offer to
provide that, in the event (i) the Minimum Condition is not satisfied at the
next scheduled expiration date of the Offer (after giving effect to the issuance
of any shares of Company Common Stock theretofore issued under the Stock Option
Agreement) and (ii) the number of shares of Company Common Stock tendered
pursuant to the Offer and not withdrawn as of such next scheduled expiration
date is more than 50% of the then outstanding shares of Company Common Stock,
Purchaser must waive the Minimum Condition and amend the Offer to reduce the
number of shares of Company Common Stock subject to the Offer to 49.9% of the
shares of Company Common Stock then outstanding (the "Revised Minimum Number")
and, if a greater number of shares is tendered into the Offer and not withdrawn,
purchase, on a pro rata basis, the Revised Minimum Number of shares (it being
understood that Purchaser shall not in any event be required to accept for
payment,
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3
or pay for, any shares of Company Common Stock if less than the Revised Minimum
Number of shares are tendered pursuant to the Offer and not withdrawn at the
expiration date).
(c) The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Subject to the terms and conditions of the Offer
and this Agreement, Purchaser shall, and Parent shall cause Purchaser to, pay
for all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer promptly after the expiration of the Offer. Parent shall
provide or cause to be provided to Purchaser on a timely basis the funds
necessary to pay for any shares of Company Common Stock that Purchaser becomes
obligated to accept for payment, and pay for, pursuant to the Offer.
(d) On the date of commencement of the Offer, Parent and
Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
Parent and Purchaser agree that the Offer Documents shall comply as to form in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and when first published, sent or
given to the Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or Purchaser with respect to information
supplied by the Company for inclusion in the Offer Documents or incorporated
therein by reference to any statement, report or other document filed by or on
behalf of the Company with the SEC. Each of Parent, Purchaser and the Company
agrees to correct promptly any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Purchaser further
agrees to take all steps necessary to amend or supplement the Offer Documents
and to cause the Offer Documents as so amended or supplemented to be filed with
the SEC and to be disseminated to the Company's shareholders, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given reasonable opportunity to review and comment upon
the Offer Documents and all amendments and supplements thereto prior to their
filing with the SEC or dissemination to shareholders of the Company. Parent and
Purchaser agree to provide the Company and its counsel any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments and shall
provide the Company and its counsel an opportunity to participate in the
response of Parent and/or Purchaser to such comments.
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SECTION 1.02. Company Actions. (a) The Company hereby approves
of and consents to the Offer and represents that the Board of Directors of the
Company, at a meeting duly called and held, has unanimously adopted resolutions
(i) approving this Agreement, the Offer, the Merger and the Stock Option
Agreement, (ii) determining that the terms of the Offer and the Merger are fair
to, and in the best interests of, the Company's shareholders, and (iii)
recommending that the Company's shareholders accept the Offer, tender their
shares pursuant to the Offer and approve this Agreement. Subject to the
fiduciary duties of the Board under applicable law as advised by independent
counsel (which may be the Company's regularly engaged outside counsel)
("Independent Counsel"), the Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Board described in the immediately
preceding sentence. The Company has been advised by each of its directors and
executive officers that they intend to tender all shares of Company Common Stock
beneficially owned by them to Purchaser pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, or
as soon thereafter as is practicable, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
containing, subject to the fiduciary duties of the Board under applicable law as
advised by Independent Counsel, the recommendation described in Section 1.02(a)
and shall mail the Schedule 14D-9 to the shareholders of the Company. The
Company agrees that the Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and when first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Purchaser for inclusion in the Schedule 14D-9. Each of the
Company, Parent and Purchaser agrees to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's shareholders, in each
case as and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given reasonable opportunity to review and comment upon
the Schedule 14D-9 and all amendments and supplements thereto prior to their
filing with the SEC or dissemination to shareholders of the Company. The Company
agrees to provide Parent and its counsel with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and shall provide Parent and its
counsel an opportunity to participate in the response of the Company to such
comments.
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(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Purchaser promptly with mailing labels containing the
names and addresses of the record holders of Company Common Stock as of the most
recent practicable date and of those persons becoming record holders subsequent
to such date, together with copies of all lists of shareholders, security
position listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Purchaser such information and assistance (including
updated lists of shareholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
shareholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent and Purchaser shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will, upon request, deliver to the
Company all copies of such information then in their possession or control.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL and the
CCC, Purchaser shall be merged with and into the Company at the Effective Time
(as defined in Section 2.03). Following the Effective Time, the separate
corporate existence of Purchaser shall cease and the Company shall continue its
corporate existence under the laws of the State of California as the surviving
corporation (the "Surviving Corporation").
SECTION 2.02. Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VIII, the parties will cause the Merger to be consummated
by delivering to the Secretary of State of the State of Delaware a certificate
of merger or a certificate of ownership and merger and by filing with the
Secretary of State of the State of California a duly executed agreement of
merger, in substantially the form attached hereto as Exhibit B and, if
applicable, a certificate of satisfaction by the California Franchise Tax Board
with respect to the Company, together with the requisite officer's certificates
or a certificate of ownership, each in such form or forms as may be required by,
and executed and acknowledged in accordance with, the relevant provisions of the
DGCL and the CCC (such documents being referred to collectively as the "Merger
Documents"), and shall make all other filings and recordings required by the
DGCL and the CCC in connection with the Merger. The Merger shall become
effective at the time of filing of the appropriate Merger Documents with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California, or at such later time,
<PAGE> 12
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which shall be as soon as reasonably practicable, specified as the effective
time in the Merger Documents (the "Effective Time"). Prior to such filing, a
closing shall be held at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York 10022, unless another date, time or place is agreed
to in writing by the parties hereto, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VIII.
SECTION 2.03. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL and Section 1107 of the CCC.
SECTION 2.04. Articles of Incorporation and By-Laws. (a) The
Restated Articles of Incorporation of the Company as in effect immediately prior
to the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided therein and as permitted by law
and this Agreement.
(b) The Bylaws of the Company as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation upon
completion of the Merger and remain the Bylaws of the Surviving Corporation
until thereafter amended as provided therein and as permitted by law and this
Agreement.
SECTION 2.05. Directors. At the Effective Time, the directors
of the Company immediately prior to the Effective Time shall be deemed to have
resigned. At the Effective Time, the directors of Purchaser immediately prior to
the Effective Time shall become the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.06. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be, or as
otherwise provided in the Bylaws of the Company.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of
Purchaser:
(a) Capital Stock of Purchaser. Each issued and outstanding
share of capital stock of Purchaser shall be converted into and become
one fully paid and nonassessable share of Common Stock, no par value,
of the Surviving Corporation.
(b) Cancellation of Parent Owned Stock. Each share of Company
Common Stock that is owned by the Company or by any subsidiary of the
Company and each share of Company Common Stock that is owned by Parent,
Purchaser or any other subsidiary of Parent shall automatically be
cancelled and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
3.01(d), each share of Company Common Stock issued and outstanding
(other than shares to be cancelled in accordance with Section 3.01(b))
shall be converted into the right to receive the Per Share Amount in
cash, without interest (the "Merger Consideration"). As of the
Effective Time, all such shares of Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and shall cease to
exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without
interest.
(d) If, pursuant to the CCC, an affirmative vote of the
Company's shareholders is required to approve the Merger, then
notwithstanding Section 3.01(c), shares of Company Common Stock held by
a holder who, subject to and in accordance with Section 1300 et seq. of
the CCC, has demanded and perfected such holder's right to an appraisal
of such holder's shares of Company Common Stock and has not effectively
withdrawn or lost the right to such appraisal ("Dissenting Shares"),
shall not be converted into a right to receive the Merger
Consideration, unless such holder withdraws or otherwise loses the
right to appraisal for such holder's shares of Company Common Stock. If
after the Effective Time of the Merger such holder withdraws or loses
the right to appraisal for such holder's shares of Company Common
Stock, such shares of Company Common Stock shall be treated as if they
had been converted as of the Effective Time into the right to receive
the Merger
<PAGE> 14
8
Consideration payable in respect of such shares of Company Common Stock
pursuant to Section 3.01(c).
(e) If Parent is not required under the CCC to obtain the
approval of the other shareholders of the Company in order to effect
the Merger and effects the Merger without holding a meeting of the
shareholders, then, prior to consummating the Merger, Parent will
provide notice, as required by the CCC, that the Merger will become
effective on or after a specified date and that shareholders are
entitled to exercise their dissenters' rights.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time, prior to or after the Effective Time,
Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent cash in amounts and at the times necessary for
the payment of the Merger Consideration upon surrender of certificates
representing Company Common Stock as part of the Merger pursuant to Section
3.01. The Paying Agent shall invest portions of the Merger Consideration as
Parent directs (it being understood that any and all interest earned on funds
made available to the Paying Agent pursuant to this Agreement shall be the
property of, and shall be turned over to, Parent), provided that such
investments shall be in obligations of or guaranteed by the United States of
America or of any agency thereof and backed by the full faith and credit of the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investors Services, Inc. or Standard & Poor's Corporation,
respectively, or in deposit accounts, certificates of deposit or banker's
acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar
time deposits purchased from, commercial banks with capital, surplus and
undivided profits aggregating in excess of US$100 million (based on the most
recent financial statements of such bank which are then publicly available at
the SEC or otherwise). The Merger Consideration shall not be used for any other
purpose, except as provided in this Agreement.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Paying Agent
to mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 3.01, (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 Paying Agent and shall be in such form and have such other
provisions as Parent may specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
<PAGE> 15
9
transmittal, duly executed, and such other documents as may reasonably be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
shares of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 3.01, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All
cash paid upon the surrender of Certificates in accordance with the terms of
this Article III shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, and, from and after the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they shall be cancelled and exchanged as provided in this Article
III.
(d) No Liability. At any time following the twelfth month
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of shares of Company Common Stock
(including, without limitation, all interest and other income received by the
Paying Agent in respect of all funds made available to it), and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) only as general creditors
thereof with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a share of Company Common Stock for any Merger Consideration properly
delivered in respect of such Share to a public official as required pursuant to
any abandoned property, escheat or other similar law.
<PAGE> 16
10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser as follows (with such exceptions thereto as are set forth in the
disclosure schedule delivered by the Company to Parent on the date hereof (the
"Disclosure Schedule") with reference to particular Sections of this Agreement):
SECTION 4.01. Organization. The Company and each of its
Significant Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority and governmental
approvals to own, lease or operate its properties and to carry on its business
as now being conducted, except when the failure to be so organized, existing or
in good standing, or to have such power, authority and governmental approvals
would not, individually or in the aggregate, have a Material Adverse Effect (as
defined in Section 10.03). The Company and each of its Significant Subsidiaries
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the properties 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 qualified,
licensed and in good standing would not have a Material Adverse Effect. For
purposes of this Agreement, a "Significant Subsidiary" means any subsidiary of
the Company that constitutes a significant subsidiary within the meaning of Rule
1-02 of Regulation S-X of the SEC. The Company has delivered to Parent complete
and correct copies of its Articles of Incorporation and By-Laws and the articles
of incorporation and by-laws (or other comparable organizational documents) of
its Significant Subsidiaries, in each case as amended to the date of this
Agreement.
SECTION 4.02. Subsidiaries. Section 4.02 of the Disclosure
Schedule lists each subsidiary of the Company. All the outstanding shares of
capital stock or other ownership interest of each such subsidiary are owned by
the Company (or by another wholly owned subsidiary of the Company) free and
clear of all Liens (as defined in Section 10.03), and are duly authorized,
validly issued, fully paid and nonassessable. Except for the capital stock of
its subsidiaries or as set forth in Section 4.02 of the Disclosure Schedule, the
Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, limited liability company,
joint venture or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company consists of 25,000,000 shares of Company Common Stock and 500,000
shares of Preference Stock, no par value, of the Company ("Company Preferred
Stock"). As of June 30, 1997, 12,229,100 shares of Company Common Stock and no
shares of Company Preferred Stock were issued and outstanding. Pursuant to a
Rights Agreement, dated as of February 23,
<PAGE> 17
11
1995, as amended, between the Company and ChaseMellon Shareholder Service LLC
(as successor to Chemical Bank) as Rights Agent (the "Rights Agreement") the
Company has issued to the shareholders certain rights to purchase shares of
Junior Participating Cumulative Preferred Stock of the Company (the "Preferred
Stock") which Preferred Stock is, under certain circumstances, convertible into
Company Common Stock. As of June 30, 1997, 902,985 shares of Company Common
Stock were reserved for issuance upon exercise of outstanding Stock Options (as
defined in Section 7.04). Except as set forth in Section 4.03 of the Disclosure
Schedule and as set forth above, as of the date of this Agreement, no shares of
capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued will, when issued, be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which shareholders
of the Company may vote. Except as set forth in Section 4.03 of the Disclosure
Schedule and as set forth above, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Except as set forth above and as set forth in Section 4.03 of the Disclosure
Schedule, there are not as of the date hereof and there will not be at the
Effective Time any shareholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound relating
to the voting, registration or disposition of any shares of the capital stock of
the Company (including any such agreements or understandings that may limit in
any way the solicitation of proxies by or on behalf of the Company from, or the
casting of votes by, the shareholders of the Company with respect to the Merger)
or granting to any person or group of persons the right to elect, or to
designate or nominate for election, a director to the Board of Directors of the
Company. Except as set forth above and as set forth in Section 4.03 of the
Disclosure Schedule, there are not any outstanding contractual obligations of
the Company or any of its subsidiaries (i) to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its subsidiaries or
(ii) to vote or to dispose of any shares of the capital stock of any of the
Company's subsidiaries.
SECTION 4.04. Authority. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby, subject to, in
the case of the Merger, the approval of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of
<PAGE> 18
12
Company Common Stock (the "Company Shareholder Vote") to the extent required by
the CCC. The execution and delivery of this Agreement and the Stock Option
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, subject to, with respect
to the Merger, the Company Shareholder Vote (to the extent required by the CCC).
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery thereof by Parent and Purchaser,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
SECTION 4.05. Noncontravention; Filings and Consents. (a)
Except as set forth in Section 4.05 of the Disclosure Schedule, the execution
and delivery of this Agreement and the Stock Option Agreement by the Company do
not, and the performance by the Company of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not, (i)
conflict with or violate the Articles of Incorporation or By-laws or equivalent
organizational documents of the Company or any of its Significant Subsidiaries,
(ii) assuming that all consents, approvals, orders and authorizations described
in Section 4.05(b) have been obtained and all registrations, declarations,
filings and notifications described in Section 4.05(b) have been made, conflict
with or violate any United States federal, state or local or any foreign
statute, law, rule, regulation, ordinance, code, order, or any other requirement
or rule of law (a "Law"), applicable to the Company or any subsidiary or by
which any property or asset of the Company or any subsidiary is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any property or asset of the Company
or any subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, breaches, defaults, rights or Liens that individually or in the
aggregate would not (x) have a Material Adverse Effect or (y) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Stock Option Agreement or the performance by the Company of any
of its material obligations hereunder or thereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any United States
federal, state or local or any foreign government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by the Company or any
of its subsidiaries in connection with the execution and delivery of this
Agreement or the Stock Option Agreement by the Company, the performance by the
Company of its obligations hereunder and thereunder or the consummation by the
Company of the transactions contemplated hereby and thereby, except for (i) the
filing of a
<PAGE> 19
13
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or termination of the waiting period thereunder, (ii)
the filing with the SEC of (x) the Schedule 14D-9 and any Information Statement,
(y) a proxy statement relating to any required approval by the Company's
shareholders of this Agreement (as amended or supplemented from time to time,
the "Proxy Statement") and (z) such reports under Section 13(a) of the Exchange
Act as may be required in connection with this Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby, (iii)
shareholder approval of the Merger, if required by the CCC, and the filing of
the applicable Merger Documents with the Secretary of State of the State of
Delaware and the Secretary of State of the State of California, and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) as may be required by any applicable state
securities or "blue sky" laws, (v) the filing of reports with the U.S.
Department of Commerce regarding foreign direct investment in the United States,
(vi) notification under the German Law Against Restraints of Competition (the
"AARC") and the approval of the German Federal Cartel Office (the "FCO")
thereunder and any filings or notifications under other similar laws throughout
the world and (vii) such other consents, approvals, orders, authorizations,
registrations, declarations, filings and notices, the failure of which to be
obtained or made would not, individually or in the aggregate, (x) have a
Material Adverse Effect or (y) prevent or materially delay the consummation of
the transactions contemplated by this Agreement or the Stock Option Agreement or
the performance by the Company of any of its material obligations hereunder or
thereunder.
SECTION 4.06. SEC Documents; Financial Statements. The Company
and each of its subsidiaries has filed with the SEC, and has heretofore made
available to Parent true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed by it since December 31,
1993 under the Exchange Act or the Securities Act of 1933, as amended (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein, are
referred to as the "Company SEC Documents"). Each of the Company SEC Documents,
at the time it was filed, (i) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act, as
the case may be, and the applicable rules and regulations of the SEC thereunder.
Except to the extent that information contained in any Company SEC Document has
been revised or superseded by a subsequently filed Company Filed SEC Document
(as defined in Section 4.07) (a copy of which has been made available to Parent
prior to the date hereof), none of the Company SEC Documents contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company
<PAGE> 20
14
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal, recurring audit adjustments)
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except for
the transactions contemplated by this Agreement and except as disclosed in
Section 4.07 of the Disclosure Schedule or in the Company SEC Documents filed
and publicly available prior to the date of this Agreement (the "Company Filed
SEC Documents"), since December 31, 1996, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course in a manner
consistent with past practice, and there has not been (i) any Material Adverse
Change, (ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Company's capital stock or any redemption,
purchase or other acquisition of any of its capital stock, other than regular
quarterly dividends on Company Common Stock not in excess of US$0.08 per share,
(iii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock, (iv)
(x) any granting by the Company or any of its subsidiaries to any director,
officer, employee or consultant of the Company or any of its subsidiaries of any
increase in compensation or benefits, except in the ordinary course of business
consistent with past practice, (y) any granting by the Company or any of its
subsidiaries to any such director, officer, employee or consultant of any
increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired, or (z) except employment
agreements in the ordinary course of business consistent with past practice with
employees other than any executive officer of the Company, any entry by the
Company or any of its subsidiaries into any employment, consulting, severance,
termination or indemnification agreement with any such employee or executive
officer, (v) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a Material Adverse
Effect, (vi) any change in accounting methods, principles or practices by the
Company or (vii) any entry by the Company or any of its subsidiaries into any
commitment or transaction material to the Company and its subsidiaries taken as
a whole.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
extent set forth in Section 4.08 of the Disclosure Schedule or in the Company's
Annual Report to Shareholders for the fiscal year ended December 31, 1996
(including the financial statements included therein), as of December 31, 1996,
neither the Company nor any of its subsidiaries
<PAGE> 21
15
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted accounting
principles to be reflected on a consolidated balance sheet of the Company and
its subsidiaries (including the notes thereto). Since December 31, 1996, except
as and to the extent set forth in Section 4.08 of the Disclosure Schedule or in
the Company Filed SEC Documents, neither the Company nor any of its subsidiaries
has incurred any liabilities of any nature, whether or not accrued, contingent
or otherwise, other than liabilities incurred in the ordinary course of business
which would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect.
SECTION 4.09. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion in (i) the Offer
Documents, (ii) the information to be filed by the Company pursuant to Rule
14f-1 promulgated under the Exchange Act and Section 7.07 hereof (the
"Information Statement") or (iii) the Proxy Statement, will, in the case of the
Offer Documents and the Information Statement, at the respective times the Offer
Documents and the Information Statement are filed with the SEC or first
published, sent or given to the Company's shareholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's shareholders or at the time of the Company Shareholders Meeting (as
defined in Section 7.01), 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. The Information Statement and the Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made therein based on information supplied by Parent or Purchaser for inclusion
therein. The information set forth in Section 4.09 of the Disclosure Schedule is
true and correct in all material respects.
SECTION 4.10. Litigation. Except as disclosed in the Company
Filed SEC Documents or as set forth in Section 4.10 of the Disclosure Schedule,
there is no suit, claim, action, proceeding or investigation (whether judicial,
administrative, regulatory, arbitral or otherwise) pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries that
could reasonably be expected to (x) have a Material Adverse Effect or (y)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement or the Stock Option Agreement or the performance by the Company
of any of its material obligations hereunder or thereunder. Except as disclosed
in the Company Filed SEC Documents, as of the date of this Agreement, neither
the Company nor any of its subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree that could reasonably be expected to (x) have
a Material Adverse Effect or (y) prevent or materially delay the consummation of
the transactions contemplated by this Agreement or the Stock Option Agreement or
the performance by the Company of any of its material obligations hereunder or
thereunder.
<PAGE> 22
16
SECTION 4.11. Labor Matters. Except as set forth in Section
4.11 of the Disclosure Schedule, (i) there are no material controversies pending
or, to the knowledge of the Company, threatened between the Company or any
subsidiary and any of their respective employees, (ii) neither the Company nor
any subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any subsidiary,
nor, to the knowledge of the Company, are there any activities or proceedings of
any labor union to organize any such employees, (iii) there are no unfair labor
practice complaints pending against the Company or any subsidiary before the
National Labor Relations Board or any current union representation questions
involving employees of the Company or any subsidiary and (iv) there is no
strike, slowdown, work stoppage or lockout, or, to the knowledge of the Company,
any threat thereof, by or with respect to any employees of the Company or any
subsidiary. The Company and each subsidiary is in material compliance with all
applicable Laws relating to the employment of labor, including, without
limitation, those relating to wages, hours, collective bargaining and the
payment and withholding of taxes and other sums as required by appropriate
Governmental Entities and has withheld and paid to the appropriate Governmental
Entities all amounts required to be withheld from employees of the Company and
its subsidiaries and is not liable for any arrears of wages, taxes, penalties or
other sums for failure to comply with any of the foregoing, except where such
failure would not have a Material Adverse Effect.
SECTION 4.12. Employee Benefits; ERISA. (a) Section 4.12(a) of
the Disclosure Schedule contains a list of all "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
(sometimes referred to herein as "Welfare Plans"), and each other material plan,
material arrangement or material policy (written or oral) providing for bonuses,
pensions, profit sharing, stock options, stock purchases, compensation, deferred
compensation, incentive compensation, severance, disability, retiree medical or
life insurance, supplemental retirement, death benefits, hospitalization,
medical or dental benefits, fringe benefits or other employee benefits, in each
case maintained, or contributed to, by the Company or any of its subsidiaries or
any other person or entity that, together with the Company is treated as a
single employer (each, together with the Company, a "Commonly Controlled
Entity") under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code"), for the benefit of any current or former
employees, officers, consultants, agents or directors of the Company or any of
its subsidiaries (all of the foregoing being herein called "Benefit Plans"). The
Company has delivered to Parent true and complete copies of (i) each Benefit
Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof),
(ii) the most recent annual report on Form 5500 (and related schedules and
financial statements or opinions required in connection therewith) filed with
the Internal Revenue Service (the "IRS") with respect to each Benefit Plan (if
any such report was required), (iii) the most recent actuarial report and
financial statement with respect to each Benefit Plan, as applicable, (iv) the
most recent summary plan
<PAGE> 23
17
description (or similar document) for each Benefit Plan for which a summary plan
description is required or was otherwise provided to plan participants or
beneficiaries, (v) the most recent IRS determination letter, if any, for each
Benefit Plan and (vi) each trust agreement and group annuity contract relating
to any Benefit Plan.
(b) All Pension Plans and related trusts that are intended to
be tax-qualified plans have been the subject of determination letters from the
IRS to the effect that such Pension Plans and related trusts are qualified and
exempt from federal income taxes under Sections 401(a) and 501(a), respectively,
of the Code, and no such determination letter has been revoked nor, to the
knowledge of the Company, has revocation been threatened; no event has occurred
and no circumstances exist that would adversely affect or would reasonably be
likely to adversely affect the tax qualification of such Pension Plan nor has
any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would adversely
affect or would reasonably be likely to adversely affect its qualification or
materially increase its costs or require security under Section 302 of ERISA.
(c) Each Benefit Plan has been administered in all material
respects in accordance with its terms. The Benefit Plans are, and have been
operated, in compliance in all material respects with the applicable provisions
of ERISA, the Code and all other applicable Laws. All material contributions or
payments required to be made to or in respect of the Benefit Plans has been
timely made or provided for. No Benefit Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or Section 412
of the Code), whether or not waived. All contributions, premiums or payments
required to be made with respect to any Benefit Plan are fully deductible for
income tax purposes and no such deduction previously claimed has been challenged
by any Governmental Entity; provided, however, that no benefits under any
nonqualified pension or deferred compensation plan are deductible until actually
paid. There are no investigations by any Governmental Entity, termination
proceedings or other claims (except claims for benefits payable in the normal
operation of the Benefit Plans), suits or proceedings against or involving any
Benefit Plan or asserting any rights to or claims for benefits under any Benefit
Plan that could give rise to any material liability, and there are not any facts
or circumstances that would reasonably be expected to give rise to any material
liability in the event of any such investigation, claim, suit or proceeding.
(d) No Commonly Controlled Entity is required to contribute to
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or has
withdrawn or expects to withdraw from any such multiemployer plan where such
withdrawal has resulted or would result in any material "withdrawal liability"
(within the meaning of Section 4201 of ERISA) that has not been fully paid. None
of the Company, any of its subsidiaries, any officer of the Company or any of
its subsidiaries or any of the Benefit Plans which are subject to ERISA,
including the Pension Plans, any trusts created thereunder or any trustee or
<PAGE> 24
18
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its subsidiaries to any
material tax or penalty on prohibited transactions imposed by such Section 4975
of ERISA or to any material liability under Section 502(i) or (l) of ERISA.
Neither any of such Benefit Plans nor any of such trusts has been terminated,
nor has there been, nor is there expected to be, any "reportable event" (as that
term is defined in Section 4043 of ERISA) as to which notice would be required
with the Pension Benefit Guaranty Corporation (the "PBGC") with respect thereto,
during the last five years, except that the Company's acquisition of Sylvan
Ginsbury was reported to the PBGC under Section 4043(c)(10) of ERISA.
(e) Neither the Company nor any subsidiary has or reasonably
expects to incur liability under Title IV of ERISA (other than for the payment
of premiums, none of which are overdue). Each Benefit Plan subject to Title IV
of ERISA is fully funded in accordance with the actuarial assumptions used by
the PBGC to determine the level of funding required in the event of the
termination of such plan. No Commonly Controlled Entity has completely or
partially terminated a plan subject to Title IV of ERISA within the last five
years. None of the assets of the Company or any subsidiary is the subject of any
lien arising under Section 302 of ERISA or Section 412(n) of the Code; neither
the Company nor any subsidiary has been required to post any security under
Section 307 of ERISA or Section 401(a)(29) of the Code; and no fact or event
exists which could give rise to any such lien or requirement to post any such
security.
(f) Except as set forth in Section 4.12(f) of the Disclosure
Schedule, no employee of the Company or any of its subsidiaries will be entitled
to any additional benefits or any acceleration of the time of payment or vesting
of any benefits under any Benefit Plan as a result of the transactions
contemplated by this Agreement.
(g) The Company and its subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker Adjustment
Retraining Notification Act and the rules and regulations promulgated thereunder
("WARN") and do not reasonably expect to incur any such liability as a result of
actions taken or not taken prior to the Effective Time. The Company will advise
Parent and Purchaser in writing of any material terminations, layoffs and
reductions in hours from the date hereof through the Effective Time and will
provide Parent and Purchaser with any related information that they may
reasonably request.
(h) Except as disclosed in Section 4.12(h) of the Disclosure
Schedule, since December 31, 1996 there has not been any adoption or amendment
in any material respect by the Company or any of its subsidiaries of any Benefit
Plan.
<PAGE> 25
19
(i) Except as disclosed in Section 4.12(i) of the Disclosure
Schedule, there exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between the Company
or any of its subsidiaries and any current or former employee, officer, director
or consultant of the Company or any of its subsidiaries, and there is no oral or
written understanding or arrangement to enter into any such agreement with any
such individual.
(j) The Commonly Controlled Entities have complied in all
material respects with the requirements of Part 6 of Subtitle B of Title I of
ERISA and of Code Section 4980B.
SECTION 4.13. Taxes. The Company and each of its subsidiaries
has filed all federal, state, local and foreign tax returns and reports required
to be filed by it. All such returns and reports are complete and correct in all
material respects. The Company and each of its subsidiaries has paid (or the
Company has paid on its subsidiaries' behalf) all taxes required to be paid by
it, and the most recent financial statements contained in the Company Filed SEC
Documents reflect reserves sufficient to cover all taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through the
date of such financial statements except where such failure to pay or to reflect
such reserves would not have a Material Adverse Effect. No material deficiencies
for any taxes have been proposed, asserted or assessed against the Company or
any of its subsidiaries, and no requests for waivers of the time to assess any
such taxes are pending. The federal income tax returns of the Company and each
of its subsidiaries consolidated in such returns have been examined by and
settled with the IRS for all years through January 31, 1992. As used in this
Agreement, "taxes" shall include all federal, state, local and foreign income,
property, sales, excise and other taxes, tariffs or governmental charges of any
nature whatsoever.
SECTION 4.14. Compliance with Applicable Laws. 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 where the failure to hold
such permits, licenses, variances, exemptions, orders and approvals would not
have a Material Adverse Effect. The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits.
Except as disclosed in the Company Filed SEC Documents, to the knowledge of the
Company, the businesses of the Company and its subsidiaries are not being
conducted in violation of any Law. Except as set forth in the Company Filed SEC
Documents, as of the date of this Agreement, no investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or, to the knowledge of the Company, threatened, other than, in each
case, those the outcome of which would not be reasonably expected to (x) have a
Material Adverse Effect or (y) prevent or materially delay the consummation of
the transactions contemplated by this Agreement or the Stock Option
<PAGE> 26
20
Agreement or the performance by the Company of any of its material obligations
hereunder or thereunder.
SECTION 4.15. Environmental Matters. Except as set forth in
Section 4.15 of the Disclosure Schedule, neither the Company nor any of its
subsidiaries has (i) placed, held, located, released, transported or disposed of
any Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any of its subsidiaries' properties or any other properties, other
than in a manner that could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, (ii)
any knowledge or reason to know of the presence of any Hazardous Substances on,
under or at any of the Company's or any of its subsidiaries' properties or any
other property but arising from the Company's or any of its subsidiaries'
current or former properties or operations, other than in a manner that could
not reasonably be expected to result in a Material Adverse Effect, or (iii)
received any written notice (A) of any violation of or liability under any Law
relating to any matter of pollution, protection of the environment or natural
resources, environmental regulation or control or regarding Hazardous Substances
(collectively, "Environmental Laws") on, under or emanating from any of the
Company's or any of its subsidiaries' current or former properties or operations
or any other properties, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the response
to or remediation of Hazardous Substances at or arising from any of the
Company's or any of its subsidiaries' current or former properties or operations
or any other properties, (D) alleging noncompliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental Law
in any manner reasonably likely to require material expenditures or to result in
material liability or (E) demanding payment for response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of its
subsidiaries' current or former properties or operations, as to clauses (A)
through (E) of this Section 4.15(iii), other than for matters that could not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Agreement, the term "Hazardous Substance" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined or regulated as a pollutant or contaminant under any
Environmental Law.
SECTION 4.16. Real Property. (a) Section 4.16(a) of the
Disclosure Schedule sets forth a true and complete list of all the real property
owned by the Company and its subsidiaries (the "Owned Real Property").
(b) Section 4.16(b) of the Disclosure Schedule sets forth a
true and complete list of the real property leased by the Company and the
Subsidiaries (the "Leased Real Property" and, together with the Owned Real
Property, the "Real Property").
<PAGE> 27
21
(c) The Company and its subsidiaries have sufficient title to
all their properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as individually or in the aggregate would not have a Material Adverse
Effect.
(d) Each parcel of Real Property (i) is owned or leased free
and clear of all Liens, other than Liens and other imperfections of title which
would not, individually or in the aggregate, have a Material Adverse Effect and
(ii) is neither subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Company,
has any such condemnation, expropriation or taking been proposed.
(e) All leases of real property leased for the use or benefit
of the Company or any subsidiary to which the Company or any subsidiary is a
party requiring rental payments in excess of US$400,000 during the period of the
lease, and all amendments and modifications thereto, are in full force and
effect and have not been modified or amended, and there exists no default under
any such lease by the Company or any subsidiary, nor any event which with notice
or lapse of time or both would constitute a default thereunder by the Company or
any subsidiary, except as, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 4.17. Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise have the legal right to
use, all patents, patent rights, trademarks, trade names, service marks,
copyrights, know-how and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights") that are
material to the conduct of the business of the Company and its subsidiaries.
Section 4.17 of the Disclosure Schedule sets forth a description of all
Intellectual Property Rights that are material to the conduct of the business of
the Company and its subsidiaries taken as a whole. No claims that would have a
Material Adverse Effect are pending or, to the knowledge of the Company,
threatened that the Company or any of its subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right, and the Company is not aware of any basis for any
such claims. To the knowledge of the Company, no person is infringing the rights
of the Company or any of its subsidiaries with respect to any material
Intellectual Property Right, except where such infringement would not have a
Material Adverse Effect.
SECTION 4.18. Insurance. The Company and its subsidiaries have
obtained and maintained in full force and effect public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with the activities of the Company or its subsidiaries
or any properties owned, occupied or controlled by the Company
<PAGE> 28
22
or its subsidiaries and other insurance, in each case, with responsible and
reputable insurance companies or associations in such amounts, on such terms and
covering such risks as reasonably deemed necessary by the Company and its
subsidiaries.
SECTION 4.19. Amendment of Rights Agreement. The Rights
Agreement has been duly and validly amended to the extent necessary to permit
Parent and Purchaser to perform their obligations under this Agreement and
consummate the transactions contemplated hereby.
SECTION 4.20. State Takeover Statutes. Except for Section 1101
of the CCC, to the knowledge of the Company, no state takeover statute or
similar statute applies or purports to apply to the Offer, the Merger, this
Agreement or the Stock Option Agreement or any of the transactions contemplated
by this Agreement or the Stock Option Agreement.
SECTION 4.21. Opinion of Financial Advisor. The Company has
received an opinion from Credit Suisse First Boston Corporation, to the effect
that, as of the date of this Agreement, the consideration to be received in the
Offer and the Merger by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, and a true and correct signed copy
of such opinion has been, or promptly upon receipt thereof will be, delivered to
Parent.
SECTION 4.22. Brokers. No broker, investment banker, financial
advisor or other person, other than Credit Suisse First Boston Corporation, the
fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has provided
Parent a true and correct copy of the agreement between the Company and Credit
Suisse First Boston Corporation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent
and warrant to the Company as follows:
SECTION 5.01. Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation.
<PAGE> 29
23
SECTION 5.02. Authority. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery thereof by the Company, constitute the
legal, valid and binding obligations of Parent and Purchaser, enforceable
against each of Parent and Purchaser in accordance with their respective terms.
SECTION 5.03. Noncontravention; Filings and Consents. (a) The
execution and delivery of this Agreement and the Stock Option Agreement by
Parent and Purchaser do not, and the performance by Parent and Purchaser of
their respective obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, (i) conflict with or violate the
Certificate of Incorporation or by-laws or equivalent organizational documents
of Parent or Purchaser, (ii) assuming that all consents, approvals, orders and
authorizations described in Section 5.03(b) have been obtained and all
registrations, declarations, filings and notifications described in Section
5.03(b) have been made, conflict with or violate any Law applicable to Parent or
Purchaser or by which any property or asset of Parent or Purchaser is bound or
affected or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a Lien on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation, other than,
in the case of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights or Liens that would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the Stock
Option Agreement or the performance by Parent or Purchaser of any of their
respective material obligations hereunder or thereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by Parent or Purchaser in connection with the execution and delivery
of this Agreement or the Stock Option Agreement by Parent and Purchaser, the
performance by Parent and Purchaser of their respective obligations hereunder
and thereunder or the consummation by Parent or Purchaser of any of the
transactions contemplated hereby and thereby, except for (i) the filing of a
premerger notification and report form under the HSR Act, and the expiration or
termination of the waiting period thereunder, (ii) the filing with the SEC of
(x) the Offer
<PAGE> 30
24
Documents and (y) such reports under the Exchange Act as may be required in
connection with this Agreement or the Stock Option Agreement and the
transactions contemplated hereby and thereby, (iii) shareholder approval of the
Merger, if required by the CCC, and the filing of the applicable Merger
Documents with the Secretary of State of the State of Delaware and the Secretary
of State of the State of California, and the filing of appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iv) as may be required by any applicable state securities or
"blue sky" laws, (v) the filing of reports with the U.S. Department of Commerce
regarding foreign direct investment in the United States, (vi) notification
under the AARC and the approval of the FCO thereunder and any filings or
notifications under other similar laws throughout the world and (vii) such other
consents, approvals, orders, authorizations, registrations, declaration, filings
and notices the failure of which to be obtained or made would not prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the Stock Option Agreement or the performance by Parent or
Purchaser of any of their respective material obligations hereunder or
thereunder.
SECTION 5.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Purchaser for inclusion in (i) the
Schedule 14D-9, (ii) the Information Statement or (iii) the Proxy Statement
will, in the case of the Schedule 14D-9 and the Information Statement, at the
respective times the Schedule 14D-9 and the Information Statement are filed with
the SEC or first published, sent or given to the Company's shareholders, or, in
the case of the Proxy Statement, at the time the Proxy Statement is first mailed
to the Company's shareholders or at the time of the Company Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
SECTION 5.05. Financing. Parent and Purchaser have funds
available sufficient to consummate the Offer and the Merger on the terms
contemplated by this Agreement, and at the expiration of the Offer and the
Effective Time, Parent and Purchaser will have available all of the funds
necessary (i) for the acquisition of all shares of Company Common Stock pursuant
to the Offer and the Merger, as the case may be and (ii) to repay all the
outstanding debt that may become due and payable as a result of the Offer or the
Merger, as set forth in Section 5.05 of the Disclosure Schedule.
SECTION 5.06. Interim Operations of Purchaser. Purchaser was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby.
SECTION 5.07. Litigation. There is no suit, claim, action,
proceeding or investigation (whether judicial, administrative, regulatory,
arbitral or otherwise) pending or,
<PAGE> 31
25
to the knowledge of Parent, threatened against Parent or Purchaser that could
reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or the Stock Option Agreement or the
performance by Parent and Purchaser of their respective obligations hereunder
and thereunder. Neither Parent nor Purchaser is subject to any outstanding
judgment, order, writ, injunction or decree that could reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement or the Stock Option Agreement or the performance by Parent and
Purchaser of their respective obligations hereunder and thereunder.
SECTION 5.08. Brokers. No broker, investment banker, financial
advisor or other person, other than Goldman, Sachs & Co., the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Purchaser.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of Business. Until such time as Parent's
designees shall constitute a majority of the members of the Board of Directors
of the Company, the Company agrees (except as expressly contemplated or
permitted by this Agreement, the Stock Option Agreement or to the extent that
Parent shall otherwise consent in writing) as follows:
(a) Ordinary Course. The Company shall and shall cause its
subsidiaries to carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as
heretofore conducted and shall use all reasonable efforts to preserve
intact their present business organizations, keep available the
services of their present officers and employees and preserve their
relationships with customers, suppliers and others having business
dealings with the Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its subsidiaries to, (i) declare or pay any
dividends on or make other distributions in respect of any of its
capital stock, except for regular quarterly dividends on Company Common
Stock not in excess of US$0.08 per share or dividends by a direct or
indirect wholly owned subsidiary of the Company to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or
(iii) repurchase, redeem or otherwise acquire any
<PAGE> 32
26
shares of capital stock of the Company or its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its subsidiaries to, issue, deliver, sell, pledge or
encumber, or authorize or propose the issuance, delivery, sale, pledge
or encumbrance of, any shares of its capital stock of any class or any
securities convertible into, or any rights, warrants, calls,
subscriptions or options to acquire, any such shares or convertible
securities, or any other ownership interest other than: (i) the
issuance of shares of Company Common Stock upon the exercise of Stock
Options granted under the Stock Incentive Plans and outstanding on the
date of this Agreement and in accordance with the present terms of such
Stock Options and (ii) the issuance of Preferred Stock and Company
Common Stock upon conversion thereof, if any, pursuant to the Rights
Agreement.
(d) Governing Documents. The Company shall not, and shall not
permit any of its subsidiaries to, amend or propose to amend its
Articles of Incorporation or By-Laws (or comparable organizational
documents).
(e) No Acquisitions. The Company shall not, and shall not
permit any of its subsidiaries to, acquire or agree to acquire (i) by
merging or consolidating with, or by purchasing a substantial equity
interest in all or a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, limited
liability company, association or other business organization or
division thereof or (ii) any assets that are material, individually or
in the aggregate, to the Company and its subsidiaries taken as a whole,
except purchases of inventory and supplies in the ordinary course of
business consistent with past practice.
(f) No Dispositions. Other than sales of its products to
customers or other dispositions, in any case in the ordinary course of
business consistent with past practice, the Company shall not, and
shall not permit any of its subsidiaries to, sell, lease, license,
encumber or otherwise dispose of, or agree to sell, lease, license,
encumber or otherwise dispose of, any of its assets.
(g) Capital Expenditures. The Company shall not, nor shall the
Company permit any of its subsidiaries to, make or agree to make any
capital expenditures other than expenditures consistent with the
Company's current capital expenditure forecast of US$12,000,000 for
1997.
(h) Indebtedness. The Company shall not, and shall not permit
any of its subsidiaries to, incur any indebtedness for borrowed money
or guarantee any such
<PAGE> 33
27
indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of the Company or any of its
subsidiaries or guarantee any debt securities of others, except in the
ordinary course of business consistent with past practice.
(i) Tax Matters. The Company shall not make any tax election
that would have a material effect on the tax liability of the Company
or settle or compromise any income tax liability of the Company of any
of its subsidiaries that would materially affect the aggregate tax
liability of the Company or any of its subsidiaries. The Company shall,
before filing or causing to be filed any material tax return of the
Company or any of its subsidiaries, consult with Parent and its
advisors as to the positions and elections that may be taken or made
with respect to such return.
(j) Discharge of Liabilities. The Company shall not, and shall
not permit any of its subsidiaries to, pay, discharge, settle 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
or as otherwise set forth in the Disclosure Schedule, consistent with
past practice or in accordance with their terms, of liabilities
recognized or disclosed in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the
Company Filed SEC Documents or incurred since the date of such
financial statements in the ordinary course of business consistent with
past practice, or waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which
the Company or any of its subsidiaries is a party.
(k) Material Contracts. Except in the ordinary course of
business, the Company shall not, and shall not permit any of its
subsidiaries to, enter into, modify, amend or terminate any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license which
is material to the Company and its subsidiaries or waive, release or
assign any material rights or claims.
(l) Employee Benefits. The Company shall not, and shall not
permit any of its subsidiaries to, (i) grant any increase in the
compensation of any of its directors, officers or employees, except for
increases for officers other than executive officers and employees in
the ordinary course of business consistent with past practice, (ii) pay
or agree to pay any pension, retirement allowance or other employee
benefit not required or contemplated by any of the existing Benefit
Plans as in effect on the date hereof to any director, officer or
employee, (iii) enter into any new employment, severance or termination
agreement with any such director, officer or employee or (iv) except as
may be required to comply with applicable Law, become
<PAGE> 34
28
obligated under any Benefit Plan which was not in existence on the date
hereof or amend any such plan in existence on the date hereof.
(m) Accounting Matters. The Company shall not, and shall not
permit any of its subsidiaries to, take any action, other than
reasonable and usual actions in the ordinary course of business and
consistent with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to
the payment of accounts payable and collection of accounts receivable).
SECTION 6.02. Other Actions. (a) The Company shall not, and
shall not permit any of its subsidiaries to, take any action that would, or that
would reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect, (iii) except
as otherwise permitted by Section 6.03, any of the conditions to the Offer set
forth in Exhibit A, or any of the conditions to the Merger set forth in Article
VIII, not being satisfied or (iv) a Material Adverse Effect.
(b) The Company shall promptly advise Parent of any change or
event having, or which, insofar as can reasonably be foreseen, could have, a
Material Adverse Effect.
SECTION 6.03. No Solicitation. (a) The Company shall, and
shall cause its subsidiaries and their respective officers, directors,
employees, consultants, investment bankers, accountants, attorneys and other
advisors, representatives and agents ("Company Representatives") to immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to any "acquisition proposal" (as defined below in this Section
6.03(a)). The Company shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any Company Representative to, directly or
indirectly, (i) solicit or initiate, or knowingly encourage the submission of,
any acquisition proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to any proposal
that constitutes, or may reasonably be expected to lead to, an acquisition
proposal; provided, however, that if, prior to the acceptance for payment of
shares of Company Common Stock pursuant to the Offer, the Board of Directors
determines in good faith, based upon advice of Independent Counsel, that not to
do so would be inconsistent with its fiduciary duties to the Company's
shareholders under applicable Law, the Company may, in response to an
unsolicited acquisition proposal, and subject to compliance with Section
6.03(c), (x) furnish information with respect to the Company pursuant to a
customary confidentiality agreement and (y) participate in discussions or
negotiations regarding such acquisition proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any subsidiary of the Company or any Company
Representative, whether or not such person is
<PAGE> 35
29
purporting to act on behalf of the Company or any of its subsidiaries or
otherwise, shall be deemed to be a breach of this Section 6.03(a) by the
Company. For purposes of this Agreement, "acquisition proposal" means any
proposal or offer from any person relating to any direct or indirect acquisition
or purchase of all or a substantial part of the assets of the Company or any of
its subsidiaries or of over 15% of any class of equity securities of the Company
or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its subsidiaries, any
merger, consolidation, business combination, sale of all or substantially all
the assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Except as set forth in this Section 6.03, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by the Board of Directors or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose
to approve or recommend, any acquisition proposal or (iii) enter into any
agreement with respect to any acquisition proposal. Notwithstanding the
foregoing, in the event that, prior to the time of acceptance for payment of
shares of Company Common Stock pursuant to the Offer, the Board of Directors of
the Company determines in good faith, based upon advice of Independent Counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's shareholders under applicable Law, the Board of Directors of the
Company may (subject to this and the following sentences) (x) withdraw or modify
(or propose to withdraw or modify) its approval or recommendation of the Offer,
the Merger and this Agreement or (y) approve or recommend (or propose to approve
or recommend) a Superior Proposal (as defined below) or terminate (or propose to
terminate) this Agreement (and concurrently with or after such termination, if
it so chooses, cause the Company to enter into any agreement with respect to any
Superior Proposal), but in each of the cases set forth in this clause (y), only
at a time that is at least three business days after Parent's receipt of written
notice (a "Notice of Superior Proposal") advising Parent that the Board of
Directors of the Company has received a Superior Proposal. The Notice of
Superior Proposal shall specify the amount and type of consideration to be paid
and such other terms and conditions of the Superior Proposal as the Company
determines in good faith to be material and identifying the person making such
Superior Proposal. For purposes of this Agreement, a "Superior Proposal" means
any bona fide proposal made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on the advice of a financial advisor of nationally recognized reputation)
to be more favorable to the Company's shareholders than the Offer and the Merger
and for which financing, to the extent required, is then committed or which,
<PAGE> 36
30
in the good faith judgment of the Board of Directors of the Company (based on
the advice of a financial advisor of nationally recognized reputation), is
reasonably capable of being financed by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.03, the Company shall promptly advise
Parent orally and in writing of the Company's receipt of any bona fide
acquisition proposal and any request for information that may reasonably be
expected to lead to or is otherwise related to any such acquisition proposal and
the identity of the person making such request or acquisition proposal. The
Company will keep Parent informed on a reasonable basis of the status and
details (including amendments) of any such request or acquisition proposal,
unless the Board of Directors determines in good faith, based upon advice of
Independent Counsel, that to do so would be inconsistent with its fiduciary
duties to the Company's shareholders under applicable Law.
(d) Nothing contained in this Section 6.03 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act, issuing a communication
meeting the requirements of Rule 14d-9(e) promulgated under the Exchange Act or
from making any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company, based upon written advice of
Independent Counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable Law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.03(b), withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to the Offer,
this Agreement or the Merger or to approve or recommend, or propose to approve
or recommend, an acquisition proposal.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Shareholders Meeting; Preparation of the Proxy
Statement. (a) If approval of this Agreement by the shareholders of the Company
is required by applicable Law, the Company shall, at Parent's request, as soon
as practicable following the consummation of the Offer, duly call, give notice
of, convene and hold a meeting of its shareholders (the "Company Shareholders
Meeting") for the purpose of approving this Agreement. Subject to the provisions
of Section 6.03(b), the Company shall, through its Board of Directors, recommend
to its shareholders approval of this Agreement. Notwithstanding the foregoing,
if Purchaser or any other subsidiary of Parent shall own at least 90% of the
outstanding shares of Company Common Stock, and provided that the
<PAGE> 37
31
conditions set forth in Section 8.01 shall have been satisfied or waived, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after acceptance of shares of Company
Common Stock for payment pursuant to the Offer without the approval of the
shareholders of the Company in accordance with the CCC.
(b) If approval of this Agreement by the shareholders of the
Company is required by applicable Law, the Company shall, at Parent's request,
as soon as practicable prepare and file a preliminary Proxy Statement with the
SEC and the Company and Parent will cooperate in responding to any comments of
the SEC or its staff and the Company shall cause the Proxy Statement to be
mailed to the Company's shareholders as promptly as practicable after responding
to all such comments to the satisfaction of the staff. The Company shall notify
Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of the Company Representatives, on
the one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger. If at any time prior to the Company Shareholders
Meeting there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare (and if
relating to Parent, Parent will also promptly cooperate with the Company in
preparing) and mail to its shareholders such an amendment or supplement. The
Company will not file or mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c) If approval of this Agreement by the shareholders of the
Company is required by applicable Law, Parent shall cause all of the shares of
Company Common Stock then actually or beneficially owned by Parent, Purchaser or
any of their subsidiaries, or as to which Parent, Purchaser or any of their
subsidiaries has voting rights by proxy or otherwise, to be voted in favor of
the approval of this Agreement.
SECTION 7.02. Access to Information; Confidentiality. The
Company shall afford to Parent, and to Parent's officers, directors, employees,
consultants, investment bankers, accountants, counsel and other advisors,
representatives and agents, reasonable access during normal business hours
during the period prior to the Effective Time to all the properties, books,
contracts, commitments and records of the Company and its subsidiaries and,
during such period, the Company shall furnish promptly to Parent (a) a copy of
each report, schedule, registration statement and other document filed by it or
its subsidiaries during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its or its
subsidiaries' business, properties and personnel as Parent or any of its
officers, directors, employees, consultants, investment bankers, accountants,
counsel or other advisors, representatives or agents may reasonably request.
Except as otherwise agreed to by the Company, unless and until Parent or
Purchaser shall
<PAGE> 38
32
have purchased a majority of the outstanding shares of Company Common Stock, and
notwithstanding any termination of this Agreement, the terms of the
confidentiality agreement dated April 9, 1997 (the "Confidentiality Agreement")
between Parent and the Company shall apply to all information concerning the
Company made available to Parent or Purchaser under this Agreement. No
investigation pursuant to this Section 7.02 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto; provided, however, that Parent and Purchaser
shall promptly provide to the Company any information that Parent or Purchaser
obtains that conflicts with any representation or warranty of the Company under
this Agreement or the Stock Option Agreement.
SECTION 7.03. Reasonable Efforts. Except as otherwise
contemplated in this Agreement, each of the Company, Parent and Purchaser agree
to use all commercially reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the Offer and the Merger (which actions shall include
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and shall promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their subsidiaries in connection
with the Offer and the Merger. Except as otherwise contemplated in this
Agreement, each of the Company, Parent and Purchaser shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to take all reasonable
actions necessary to obtain (and shall cooperate with each other in obtaining)
any consent, approval, order or authorization of, or any exemption by or waiver
from, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, Purchaser, the Company or any of their respective
subsidiaries in connection with the Offer and the Merger or the taking of any
action contemplated thereby or by this Agreement or the Stock Option Agreement,
except that no party need waive any substantial rights or agree to any
substantial limitation on its operations or to dispose of any assets having more
than a de minimus value.
SECTION 7.04. Stock Options. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Stock Incentive Plans (as
defined below) shall adopt such resolutions or take such other actions as are
required to provide that each outstanding stock option to purchase shares of
Company Common Stock (a "Stock Option") heretofore granted under any stock
option or stock purchase plan, program or arrangement or other option agreement
or contingent stock grant plan of the Company or any of its subsidiaries
(collectively, the "Stock Incentive Plans") shall be accelerated so as to be
fully exercisable prior to the consummation of the Offer, and the Company shall
assure that any such Stock Options outstanding immediately prior to the
consummation of the Offer shall be surrendered immediately prior to the
consummation of the Offer in exchange for an amount in cash, payable at the time
of such cancellation, equal to the product of (x) the number of shares of
<PAGE> 39
33
Company Common Stock subject to such Stock Option immediately prior to the
consummation of the Offer and (y) the excess of the Per Share Amount over the
per share exercise price of such Stock Option. Any Stock Option not cancelled in
accordance with this paragraph (a) immediately prior to the consummation of the
Offer shall be cancelled at the Effective Time in exchange for an amount in
cash, payable at the Effective Time, equal to the amount which would have been
paid had such Stock Option been surrendered immediately prior to the
consummation of the Offer. A listing of all outstanding Stock Options as of June
30, 1997, showing the portions of such Stock Options that are exercisable as of
such date, the dates upon which such Stock Options expire and the exercise price
of such Stock Options, is set forth in Section 7.04 of the Disclosure Schedule.
(b) All Stock Incentive Plans shall terminate as of the
Effective Time and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be terminated as of the
Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of a Stock Option or any participant in
any Stock Incentive Plan shall have any right thereunder to acquire any capital
stock of the Company, Parent or the Surviving Corporation, except as provided in
Section 7.04(a).
SECTION 7.05. Benefit Plans. (a) For a period of at least
through December 31, 1998, Parent shall cause the Surviving Corporation to
continue to maintain the Company's existing compensation, severance, welfare and
pension benefit plans, programs and arrangements (other than any stock based
plans, programs and arrangements) for the benefit of current and former
employees of the Company and its subsidiaries (subject to such modification as
may be required by applicable law or to maintain the tax exempt status of any
such plan which is intended to be qualified under Section 401(a) of the Code);
provided, however, that (i) nothing herein shall prohibit Parent from replacing
any such existing plan, program or arrangement with a plan, program or
arrangement which provide such employees with benefits which are not less
favorable in the aggregate than the benefits that would have been provided under
such existing plan, program or arrangement to the extent such replacement is
permitted under the terms of the applicable plan, program or arrangement and
(ii) nothing herein shall obligate Parent to provide such employees with any
stock based compensation (including, without limitation, stock options or stock
appreciation rights) after the Effective Time.
(b) In light of Parent's desire that the Surviving Corporation
provide appropriate employee incentives in the future, Parent agrees to
institute during the one-year period following the Effective Time a new
performance-based incentive compensation plan for the benefit of employees of
the Surviving Corporation and its subsidiaries.
(c) All service credited to each employee by the Company
through the Effective Time shall be recognized by Parent for all purposes,
including for purposes of
<PAGE> 40
34
eligibility, vesting and benefit accruals under any employee benefit plan
provided by the Surviving Corporation or Parent for the benefit of the
employees; provided, however, that, to the extent necessary to avoid duplication
of benefits, amounts payable under employee benefit plans provided by the
Surviving Corporation or Parent may be reduced by amounts payable under similar
Company plans with respect to the same periods of service.
(d) Parent hereby agrees to cause the Surviving Corporation to
honor (without modification) and assume, and hereby guarantees the Surviving
Corporation's performance of, the employment agreements, executive termination
agreements and individual benefit arrangements listed in Section 4.12(h) of the
Disclosure Schedule, all as in effect on the date hereof or as amended after the
date hereof with Parent's consent pursuant to Section 6.01.
SECTION 7.06. Indemnification and Insurance. (a) Parent and
Purchaser agree that all rights to indemnification for acts or omissions
occurring prior to the Effective Time now existing in favor of the current or
former directors, officers, employees and agents (the "Indemnified Parties") of
the Company and its subsidiaries as provided in their respective articles of
incorporation or by-laws (or similar organizational documents) shall survive the
Merger and shall continue in full force and effect in accordance with their
terms for a period of not less than six years. From and after the Effective Time
and for a period of not less than six years thereafter, Parent shall, and shall
cause the Surviving Corporation to, indemnify and hold harmless any and all
Indemnified Parties to the full extent such persons may be indemnified by the
Company or such subsidiaries, as the case may be, pursuant to applicable law,
their respective certificates of incorporation or by-laws (or similar
organizational documents) or pursuant to indemnification agreements as in effect
on the date of this Agreement for acts or omissions occurring at or prior to the
Effective Time, and Parent shall, or shall cause the Surviving Corporation to,
advance litigation expenses incurred by such persons in connection with
defending any action arising out of such acts or omissions to the extent
provided by the respective terms and provisions of such certificates of
incorporation, by-laws, similar documents or indemnification agreements as in
effect on the date hereof.
(b) For not less than six years from the Effective Time,
Parent shall maintain in effect the Company's current directors' and officers'
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Parent); provided, however, that in no event
shall Parent be required to pay a premium in any one year in an amount in excess
of 175% of the annual premium paid by the Company (which annual premium the
Company represents and warrants to be approximately US$475,000); and provided
further that if the annual premiums of such insurance coverage exceed such
amount, Parent shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
<PAGE> 41
35
(c) This Section 7.06 shall survive the consummation of the
Merger, is intended to benefit the Company, Parent, the Surviving Corporation
and the Indemnified Parties, and shall be binding on all successors and assigns
of Parent and the Surviving Corporation.
SECTION 7.07. Directors of the Company. (a) Promptly following
the purchase of and payment for shares of Company Common Stock by Purchaser
pursuant to the Offer, Purchaser shall be entitled to designate such number of
directors, rounded down to the nearest whole number, on the Board of Directors
of the Company as will give Purchaser representation on the Board of Directors
equal to the product of the total number of directors on the Board (giving
effect to any increase in the number of directors pursuant to this Section
7.07(a)) and the percentage that the aggregate number of shares of Company
Common Stock beneficially owned by Purchaser bears to the total number of shares
of Company Common Stock then outstanding (on a fully diluted basis); provided,
however, that Purchaser shall be entitled to designate a number of directors
equal to or greater than 50% of the total number of directors only if Purchaser
purchases 90% or more of the outstanding shares of Company Common Stock pursuant
to the Offer. The Company and its Board of Directors shall, at such time, take
such action as may be necessary to cause Purchaser's designees to be so
appointed or elected to the Company's Board of Directors, with Purchaser's
designees being allocated as evenly as possible among the classes of directors.
Notwithstanding the foregoing, in the event that Purchaser's designees are to be
appointed or elected to the Board of Directors, until the Effective Time, such
Board of Directors shall have at least three directors who are directors on the
date of this Agreement and who are not officers of the Company (the "Independent
Directors"), provided that, in such event, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there shall be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of this Agreement. An
affirmative vote of a majority of the Independent Directors shall be obtained
prior to the Company entering into any material transaction with Parent,
Purchaser or any affiliate thereof.
(b) In the event the Company's obligation to appoint or elect
designees to the Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, Parent shall give the Company reasonable
notice of its intention to exercise its rights under Section 7.07(a) and, after
receipt of such notice, the Company shall promptly take such action as may be
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 7.07 and shall include in the Schedule 14D-9 or a
separate Rule 14f-1 Statement to shareholders such information with respect to
the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 to fulfill its obligations under this Section 7.07. Parent shall
provide to the Company and be solely responsible for all information relating to
Parent and Purchaser and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
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36
SECTION 7.08. Fees and Expenses. (a) Except as provided below
in this Section 7.08, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees or expenses, whether or not the Offer
or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in immediately
available funds to Parent, the sum of US$20,000,000 (the "Termination Fee")
under the circumstances and at the times set forth as follows:
(i) if Parent or Purchaser terminates this Agreement pursuant
to Section 9.01(e), the Company shall pay the Termination Fee upon
demand;
(ii) immediately prior to any termination of this Agreement
pursuant to Section 9.01(f), the Company shall pay the Termination Fee;
(iii) if, at the time of any termination of this Agreement
pursuant to Section 9.01(b) (as a result of less than 50% of the
outstanding shares of Company Common Stock being tendered), an
acquisition proposal shall have been made and shall be pending and the
Board of Directors of the Company shall not have withdrawn or modified
in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, and, within 12 months of such termination,
(x) the Company shall enter into an agreement providing for an
acquisition proposal or an acquisition proposal shall be consummated at
a price per share equal to or in excess of the Per Share Amount, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such agreement or the consummation of such
acquisition proposal or (y) the Company shall enter into an agreement
providing for an acquisition proposal or an acquisition proposal shall
be consummated at a price less than the Per Share Amount, the Company
shall pay the Expenses concurrently with the earlier of the entering
into of such agreement or the consummation of such acquisition
proposal; and
(iv) if, at the time of any termination of this Agreement
pursuant to Section 9.01(d) resulting from a wilful and material breach
of any covenant or agreement contained in this Agreement, an
acquisition proposal shall have been made and shall be pending and,
within 12 months of such termination, the Company shall enter into an
agreement providing for an acquisition proposal or an acquisition
proposal shall be consummated, the Company shall pay the Termination
Fee concurrently with the earlier of the entering into of such
agreement or the consummation of such acquisition proposal.
"Expenses" shall mean documented out-of-pocket fees and expenses incurred or
paid by or on behalf of Parent or Purchaser in connection with the Offer or the
Merger, the preparation
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37
and negotiation of this Agreement and the Stock Option Agreement and the
consummation of any of the transactions contemplated hereby or thereby,
including without limitation all fees and expenses of law firms, commercial
banks, investment banking firms, accountants, printing firms, information
agents, proxy solicitors, experts and consultants to Parent; provided, however,
that in no event shall such fees and expenses exceed US$5,000,000.
(c) In the event that the Company shall fail to pay the
Termination Fee or the Expenses when due, the amount of any such Termination Fee
or the Expenses shall be increased to include the costs and expenses actually
incurred or accrued by Parent (including, without limitation, fees and expenses
of counsel) in connection with the collection under and enforcement of this
Section 7.08, together with interest on such unpaid Termination Fee or the
Expenses, commencing on the date that such Termination Fee or the Expenses
became due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in The City of New York as such bank's base
rate plus 3.00%.
SECTION 7.09. Public Announcements. The initial press release
concerning the Merger shall be a joint press release and, thereafter, Parent and
the Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement without the prior written approval of the other, except to the extent
required by applicable Law or the requirements of the New York Stock Exchange,
in which case the issuing party shall use its reasonable efforts to consult with
the other party before issuing any such release or making any such public
statement.
SECTION 7.10. Notification. The Company shall give prompt
notice to Parent of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 7.11. Certain Litigation. The Company agrees that it
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any shareholder of the Company relating to
the Offer, the Merger, this Agreement or the Stock Option Agreement without the
prior written consent of Parent. In addition, subject to its rights under
Section 6.03, the Company shall not voluntarily cooperate with any third party
that may hereafter seek to restrain or prohibit or otherwise oppose the Offer or
the Merger and shall cooperate with Parent and Purchaser to resist any such
effort to restrain or prohibit or otherwise oppose the Offer or the Merger.
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SECTION 7.12. Other Actions. (a) Parent and Purchaser shall
not, and shall not permit any of its subsidiaries to, take any action that
would, or that would reasonably be expected to, result in (i) any of the
representations and warranties of Parent and Purchaser set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Offer set forth in
Exhibit A, or any of the conditions to the Merger set forth in Article VIII, not
being satisfied.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Company Shareholder Approval. If required by applicable
law, this Agreement shall have been approved by the Company Shareholder
Vote.
(b) No Injunctions or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any
Governmental Entity or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; provided, however,
that, in the case of a temporary restraining order, injunction or other
order, each of the parties shall have used all reasonable efforts to
prevent the entry of any such temporary restraining order, injunction
or other order and to appeal as promptly as possible any temporary
restraining order, injunction or other order that may be entered.
(c) Purchase of Shares. Purchaser shall have previously
accepted for payment and paid for shares of Company Common Stock
pursuant to the Offer.
(d) HSR Act. Any waiting period (and any extensions thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of this
Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if (i) as a result of the
failure of any of the conditions set forth in Exhibit A to this
Agreement the Offer shall have terminated or expired in accordance with
its terms without Purchaser having accepted for payment any shares of
Company Common Stock pursuant to the Offer or (ii) Purchaser shall not
have accepted for payment any shares of Company Common Stock pursuant
to the Offer within 90 days following the date of this Agreement;
provided, however, that the right to terminate this Agreement pursuant
to this Section 9.01(b) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results
in the failure, occurrence or existence of any such condition;
(c) by either Parent or the Company if any Governmental Entity
shall have enacted or issued any statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent
injunction or taken any other action permanently enjoining, restraining
or otherwise prohibiting the acceptance for payment of, or payment for,
shares of Company Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final
and nonappealable;
(d) by Parent or Purchaser prior to the purchase of shares of
Company Common Stock pursuant to the Offer in the event of a breach by
the Company of any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the
failure of a condition set forth in paragraph (e) or (f) of Exhibit A
and (B) cannot be or has not been cured within 10 days after the giving
of written notice to the Company;
(e) by Parent or Purchaser if either Parent or Purchaser is
entitled to terminate the Offer as a result of the occurrence of any
event set forth in paragraph (d) of Exhibit A to this Agreement;
(f) by the Company in connection with entering into a
definitive agreement in accordance with Section 6.03(b), provided it
has complied with all provisions
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thereof, including the notice provisions therein, and that it makes
immediately prior to such termination payment of the Termination Fee
pursuant to Section 7.08(b); or
(g) by the Company, if Purchaser or Parent shall have breached
in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which failure to perform is incapable of being cured or has not been
cured within 10 days after the giving of written notice to Parent or
Purchaser, as applicable.
SECTION 9.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Purchaser or the
Company, other than the provisions of Section 4.22 [Brokers], Section 5.08
[Brokers], the last sentence of Section 7.02 [Confidentiality], Section 7.08
[Fees], this Section 9.02 and Article X and except to the extent that such
termination results from the wilful and material breach by a party of any of its
covenants or agreements set forth in this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of this Agreement by
the shareholders of the Company; provided, however, that after any such
approval, there shall not be made any amendment that by law requires further
approval by such shareholders without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in any instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 9.05. Procedure for Termination, Amendment, Extension
or Waiver. In the event Purchaser's designees are appointed or elected to the
Board of Directors of the Company as provided in Section 7.07, the affirmative
vote of a majority of the Independent Directors shall be required by the Company
to (i) amend or terminate this Agreement, (ii) exercise or waive any of the
Company's rights or remedies under this Agreement or (iii) extend the time for
performance of Parent's and Purchaser's obligations under this Agreement.
<PAGE> 47
41
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Nonsurvival of Representations. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
shares of Company Common Stock by Purchaser pursuant to the Offer. This Section
10.01 shall not limit any covenant or agreement of the parties which by its
terms contemplates performance after the Effective Time.
SECTION 10.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by telecopy or by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser, to:
Raab Karcher AG
Rudolf-von-Bennigsen
Foerder-Platz 1
45131 Essen
Germany
Attn: Curt von Berghes
Telecopier: 011-49-201-459-1508
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attn: John J. Madden, Esq.
Telecopier: (212) 848-7179
<PAGE> 48
42
(b) if to the Company, to:
Wyle Electronics
15370 Barranca Pkwy
P.O. Box 19675
Irvine, California 92713-9675
Attn: General Counsel
Telecopier: (714) 753-9908
with a copy to:
O'Melveny & Myers
610 Newport Center Drive
Suite 1700
Newport Beach, California 92660
Attn: Gary J. Singer, Esq.
Telecopier: (714) 669-6994
SECTION 10.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person;
(b) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise;
(c) "Lien" means any encumbrance, hypothecation, lien,
mortgage, pledge, security interest or other encumbrance; provided,
however, that the term "lien" does not include (i) liens for water and
sewer charges and current taxes not yet due and payable or being
contested in good faith, (ii) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business or (iii) vendor
liens granted pursuant to the distributor agreements between the
Company and its vendors in existence on the date hereof and previously
made available to Parent;
(d) "Material Adverse Change" or "Material Adverse Effect"
means any change or effect (other than a change or effect that impacts
the Company's industry generally or is specifically identified in
Sections 4.07 and 4.08 of the Disclosure Schedules) that is or is
reasonably likely to be materially adverse to the business,
<PAGE> 49
43
operations, properties, condition (financial or otherwise), assets or
liabilities (including, without limitation, contingent liabilities) or
long-term prospects of the Company and its subsidiaries taken as a
whole; provided that a change or effect that impacts the prospects of
the Company's industry generally shall not be considered impacting the
long-term prospects of the Company;
(e) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(f) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests
of which) is owned directly or indirectly by such first person,
including, without limitation, Accord Contract Services LLC.
SECTION 10.04. Interpretation. When a reference is made in
this Agreement to a Section or Exhibit, such reference shall be to a Section of,
or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or"including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 10.05. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
SECTION 10.06. Entire Agreement; Third Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement (provided, however, that the
provisions of the Confidentiality Agreement shall remain valid and in effect to
the extent such provisions do not conflict with the provisions of this
Agreement) and, except for the provisions of Article III and Sections 7.04, 7.05
and 7.06 [Benefits; Indemnity], is not intended to confer upon any person other
than the parties any rights or remedies hereunder.
SECTION 10.07. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by
<PAGE> 50
44
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Purchaser of any of its obligations
under this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and assigns.
SECTION 10.08. Governing Law. Except to the extent the laws of
the State of California is mandatorily applicable hereto, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of New York, Delaware or California or in New
York, Delaware or California state court (a "Specified Court"), this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Specified Court in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a
Specified Court and (iv) agrees to waive any defense based upon venue or forum
non conveniens grounds.
SECTION 10.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
<PAGE> 51
45
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
RAAB KARCHER AG
By /s/ Gunther Beuth /s/ Curt Von Berghes
-----------------------------------------------
Name: Gunther Beuth Curt Von Berghes
Title: Member of the Board General Counsel
EBV ELECTRONICS INC.
By Michael Rohleder
------------------------
Name: Michael Rohleder
Title: President and CEO
WYLE ELECTRONICS
By Ralph L. Ozorkiewicz
--------------------------
Name: Ralph L. Ozorkiewicz
Title: President and Chief
Executive Officer
<PAGE> 52
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
shares of Company Common Stock after the termination or withdrawal of the
Offer), to pay for any shares of Company Common Stock tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer such number of shares of Company Common Stock
which would constitute not less than 90% (determined on a fully diluted basis)
of the outstanding shares of Company Common Stock (the "Minimum Condition"),
(ii) any waiting period under the HSR Act applicable to the purchase of shares
of Company Common Stock pursuant to the Offer shall have expired or been
terminated and (iii) the satisfaction of any applicable foreign competition and
antitrust statutes and regulations, including the approval of the FCO pursuant
to the AARC. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Purchaser shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and may terminate the Offer if, at any time on
or after the date of this Agreement and before the acceptance of such shares for
payment or the payment therefor, any of the following events shall occur (other
than as a result of any action or inaction of Parent or any of its subsidiaries
which constitutes a breach of this Agreement):
(a) there shall have been entered any order, preliminary or
permanent injunction, decree, judgment or ruling in any suit, action or
proceeding that (i) makes illegal or otherwise directly or indirectly
restrains or prohibits the acquisition by Parent or Purchaser of any
shares of Company Common Stock under the Offer or the making or
consummation of the Offer or the Merger, the performance by the Company
of any of its obligations under this Agreement or the consummation of
any purchase of Company Common Stock contemplated hereby, (ii)
prohibits or limits the ownership or operation by the Company, Parent
or any of their respective subsidiaries of a material portion of the
business or assets of the Company and its subsidiaries, taken as a
whole, or Parent and its subsidiaries, taken as a whole, or compels the
Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its subsidiaries, taken as
a whole, or Parent and its subsidiaries, taken as a whole, as a result
of the Offer or the Merger, (iii) imposes material limitations on the
ability of Parent or Purchaser to acquire or hold, or exercise full
rights of ownership of, any shares of Company Common Stock accepted for
payment pursuant to the Offer including, without limitation, the right
to vote such Company Common Stock on all matters properly presented to
the shareholders of the Company or (iv) prohibits Parent or any of its
subsidiaries from effectively
<PAGE> 53
2
controlling in any material respect the business or operations of the
Company and its subsidiaries, taken as a whole; or
(b) there shall be any Law enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger, or any
other action shall be taken by any Governmental Entity, other than the
application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that results, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
(c) there shall have occurred any Material Adverse Change; or
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer, the Merger or
this Agreement, or approved or recommended any other acquisition
proposal or (ii) the Company shall have entered into any agreement to
consummate any acquisition proposal; or
(e) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
not be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any respect that
is reasonably likely to have a Material Adverse Effect, in each case at
the date of this Agreement and at the scheduled expiration of the
Offer; or
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under this Agreement; or
(g) there shall have occurred and be continuing to exist for
at least three business days (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange
(excluding any coordinated trading halt triggered solely as a result of
a specified decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States or the Federal Republic of Germany, (iii)
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States or the Federal Republic of Germany which in any case is
reasonably expected to have a Material Adverse Effect or to materially
adversely affect Parent's or Purchaser's ability to complete the Offer
or the Merger or materially delay the consummation of the Offer, the
Merger or both or (iv) in case of
<PAGE> 54
3
any of the foregoing existing on the date of this Agreement, material
acceleration or worsening thereof; or
(h) this Agreement shall have been invalidated or terminated.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may, subject to the terms of this Agreement, be waived by
Purchaser and Parent in whole or in part at any time and from time to time in
their sole discretion. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. Terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement to which this
Exhibit A is a part.
<PAGE> 55
EXHIBIT B
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "AGREEMENT") is executed as of
_______________, 1997 by and between EBV ELECTRONICS INC. a Delaware corporation
(the "PURCHASER"), and WYLE ELECTRONICS, a California corporation (the
"COMPANY"), which corporations are hereinafter sometimes referred to jointly as
the "CONSTITUENT CORPORATIONS."
BACKGROUND
A. The Purchaser is a corporation duly organized and existing
under the laws of the State of Delaware. The Company is a corporation duly
organized and existing under the laws of the State of California.
B. The Purchaser has authorized capital stock consisting of
1.000 shares of common stock, $.01 par value, of which 100 shares are now
validly issued, are fully paid and nonassessable and are owned by EBV
ELECTRONICS HOLDINGS INC., a Delaware corporation ("HOLDING"). Holding is a
wholly owned subsidiary of RAAB KARCHER AG, a corporation organized under the
laws of Germany ("PARENT").
C. The Company has authorized capital stock consisting of
25,000,000 shares of common stock and 500,000 shares of preference stock, no par
value, of which 12,229,100 shares were validly issued, fully paid and
nonassessable.
D. The Purchaser and the Company desire to effect a merger
(the "MERGER") of the Purchaser with and into the Company in the manner herein
set forth, and the Board of Directors of the Constituent Corporations have duly
adopted resolutions approving this Agreement.
E. The Purchaser, the Company and Parent have entered into
that certain Agreement and Plan of Merger, dated as of July 3, 1997 (the "MERGER
AGREEMENT"), pursuant to which the parties agreed to the Merger of the Purchaser
with and into the Company and the conversion in the Merger of each issued and
outstanding share of common stock, without par value, of the Company (the
"COMPANY COMMON STOCK") into the right to receive $50.00 per share in cash (the
"PER SHARE AMOUNT") in cash, without interest. This Agreement is being filed
pursuant to Section 2.02 of the Merger Agreement and Section 1103 of the
California Corporations Code ("CCC").
In consideration of the foregoing premises, and the mutual
covenants and agreements herein contained, it is hereby agreed as follows:
1
<PAGE> 56
ARTICLE I
PARTIES TO THE MERGER
SECTION 1 THE PURCHASER. The name of the corporation proposing
to merge into the Company is EBV ELECTRONICS INC.
SECTION 2 THE SURVIVING CORPORATION. The name of the
corporation into which the Purchaser proposes to merge is WYLE ELECTRONICS and
WYLE ELECTRONICS will be the corporation surviving the Merger (the "SURVIVING
CORPORATION").
SECTION 3 PARENT. Cash will be issued in the Merger to the
holders of the Company Common Stock.
ARTICLE II
TERMS AND CONDITIONS OF THE MERGER
SECTION 1 GENERAL. Upon the date on which this Agreement is
filed with the Secretary of State of the State of California and the Certificate
of Ownership and Merger (or Certificate of Merger) is filed with the Secretary
of State of the State of Delaware, together with any required officers'
certificates (collectively, the "Merger Documents") of each Constituent
Corporation: (a) the Purchaser shall merge with and into the Company, which
shall survive the Merger and continue to be a California corporation; (b) the
shares of Company Common Stock outstanding at the Effective Time of the Merger
shall be converted into the right to receive the Per Share Amount; (c) the
separate existence of the Purchaser shall cease, as provided by the CCC; and (d)
the name of the Surviving Corporation shall remain WYLE ELECTRONICS.
SECTION 2 EFFECTIVE TIME. The "EFFECTIVE TIME" with respect to
the Merger contemplated by this Agreement shall be at the time of filing of the
appropriate Merger Documents with the Secretary of State of the State of
California.
SECTION 3 ADDITIONAL ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its rights, title or interest in, to or under any of the
rights, properties or assets of either Constituent Corporation or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized, so long as such action is consistent with this
Agreement, to execute and deliver, in the name and on behalf of each Constituent
Corporation, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each Constituent Corporation, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title
2
<PAGE> 57
and interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
ARTICLE III
CONVERSION OF CAPITAL STOCK
At the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any shares of the Purchaser's capital stock
or the holders of any shares of the Company Common Stock:
(a) Capital Stock of Purchaser. Each issued and outstanding
share of capital stock of Purchaser shall be converted into and become one fully
paid and nonassessable share of common stock, no par value, of the Surviving
Corporation.
(b) Cancellation of Company Common Stock Owned by Parent. Each
share of Company Common Stock that is owned by the Company or by any subsidiary
of the Company and each share of Company Common Stock that is owned by Parent,
Purchaser or any other subsidiary of Parent shall automatically be cancelled and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to paragraph
(d) of this Article III, each share of Company Common Stock issued and
outstanding (other than shares to be cancelled in accordance with paragraph (b)
of this Article III) shall be converted into the right to receive the Per Share
Amount in cash, without interest (the "MERGER CONSIDERATION"). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and
each holder of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
(d) Company Dissenting Shares. Notwithstanding paragraph (c)
of this Article III, shares of Company Common Stock held by a holder who,
subject to and in accordance with Section 1300 et seq. of the CCC, has demanded
and perfected such holder's right to an appraisal of such holder's shares of
Company Common Stock and has not effectively withdrawn or lost the right to such
appraisal ("DISSENTING SHARES"), shall not be converted into a right to receive
the Merger Consideration, unless such holder withdraws or otherwise loses the
right to appraisal for such holder's shares of Company Common Stock. If after
the Effective Time of the Merger such holder withdraws or loses the right to
appraisal for such holder's shares of Company Common Stock, such shares of
Company Common Stock shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration payable in
respect of such shares of Company Common Stock pursuant to paragraph (c) of this
Article III.
3
<PAGE> 58
ARTICLE IV
ARTICLES OF INCORPORATION AND BYLAWS;
DIRECTORS AND OFFICERS
Upon the Effective Time, the Restated Articles of
Incorporation and the Bylaws of the Company shall be the Articles of
Incorporation and the Bylaws of the Surviving Corporation until thereafter
amended as provided therein and as permitted by law and by the Merger Agreement.
At the Effective Time, the directors of the Company immediately prior to the
Effective Time shall be deemed to have resigned, and the directors of Purchaser
immediately prior to the Effective Time shall become the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their successors are duly elected and qualified, as the case may be. The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be, or as otherwise provided in the Bylaws of the Company.
ARTICLE V
CORPORATE APPROVALS
SECTION 1 CORPORATE APPROVALS. Pursuant to Section 1201 of the
CCC and Section 251 of the DGCL, this Agreement and related matters have been
approved in accordance with such provisions.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1 AMENDMENT. This Agreement may be amended by the
parties hereto any time before or after approval hereof by the shareholders of
the Surviving Corporation, if necessary, but, after such approval, no amendment
shall be made which by law requires the further approval of such shareholders
without obtaining such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 2 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 together shall constitute one agreement.
4
<PAGE> 59
IN WITNESS WHEREOF, this Agreement has been executed as of the
date first written above.
WYLE ELECTRONICS
a California corporation
By:________________________
Name:
Title:
By:________________________
Name:
Title:
EBV ELECTRONICS INC.
a Delaware corporation
By:________________________
Name:
Title:
By:________________________
Name:
Title:
5
<PAGE> 60
CERTIFICATE
________________ and _______________ certify that:
1. They are the _______________ and the __________________,
respectively, of WYLE ELECTRONICS, a corporation organized under the laws of the
State of California (the "CORPORATION").
2. The Corporation has authorized two classes of stock, designated
"Common Stock" and "Preference Stock."
3. The number of outstanding shares of Common Stock of the Corporation
entitled to vote on the Record Date, ______________, for the Special Meeting of
the Shareholders of the Corporation was _______________ shares. There are no
outstanding shares of Preferred Stock.
4. The principal terms of the agreement relating to the merger of EBV
ELECTRONICS INC., a Delaware corporation, with and into the Corporation (the
"MERGER") in the form attached were approved by the Corporation's Board of
Directors and by the vote of a number of shares of Common Stock which equaled or
exceeded the vote required.
5. The percentage vote required of the holders of Common Stock entitled
to vote in connection with the Merger is more than 50%.
_____________________________________
Name:
Title:
_____________________________________
Name:
Title:
6
<PAGE> 61
__________________ declares under penalty of perjury under the laws of
the State of California that he has read the foregoing certificate and knows the
contents thereof and that the same is true of his own knowledge.
____________, 1997
___________________________
Name:
___________________ declares under penalty of perjury under the laws of
the State of California that he has read the foregoing certificate and knows the
contents thereof and that the same is true of his own knowledge.
_____________, 1997
___________________________
Name:
<PAGE> 62
CERTIFICATE
_____________________ and ___________________ certify that:
1. They are the _______________ and the _________________,
respectively, of EBV ELECTRONICS, INC. a corporation organized under the laws of
the State of Delaware (the "CORPORATION").
2. The number of outstanding shares of common stock of the Corporation
is 1,000 shares.
3. The principal terms of the agreement relating to the merger of the
Corporation with and into WYLE ELECTRONICS, a California corporation, (the
"MERGER") in the form attached were approved by the Corporation's Board of
Directors and by the vote of a number of shares of each class which equaled or
exceeded the vote required.
___________________________
Name:
Title:
___________________________
Name:
Title:
<PAGE> 63
_____________________ declares under penalty of perjury under the laws
of the State of California that he has read the foregoing certificate and knows
the contents thereof and that the same is true of his own knowledge.
_____________, 1997
___________________________
Name:
___________________ declares under penalty of perjury under the laws of
the State of California that he has read the foregoing certificate and knows the
contents thereof and that the same is true of his own knowledge.
______________, 1997
___________________________
Name:
<PAGE> 64
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 3, 1997 (this
"Agreement"), among RAAB KARCHER AG, a company organized under the laws of
Germany ("Parent"), EBV ELECTRONICS INC., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Purchaser"), and WYLE ELECTRONICS, a
California corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Parent, Purchaser and the Company propose to enter
into, simultaneously herewith, an Agreement and Plan of Merger (the "Merger
Agreement"; capitalized terms used but not defined in this Agreement shall have
the meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for (i) the commencement by
Purchaser of a tender offer (the "Offer") to purchase all of the issued and
outstanding shares of the common stock, no par value, of the Company ("Common
Stock"), at a purchase price of $50.00 per share, net to the seller in cash, and
(ii) the subsequent merger of Purchaser with and into the Company (the
"Merger"), whereby each share of Common Stock, other than shares owned directly
or indirectly by Parent or by the Company and other than Dissenting Shares, will
be converted into the right to receive $50.00 (or such greater amount to be paid
per share in the Offer); and
WHEREAS, as a condition to the willingness of Parent and
Purchaser to enter into the Merger Agreement, Parent and Purchaser have required
that the Company agree, and in order to induce Parent and Purchaser to enter
into the Merger Agreement, the Company has agreed, to grant Purchaser an option
to purchase shares of Common Stock, upon the terms and subject to the conditions
of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.01. Grant of Top-Up Stock Option. The Company hereby
grants to Purchaser an irrevocable option (the "Top-Up Stock Option") to
purchase that number of shares of Common Stock (the "Top-Up Option Shares")
equal to the number of shares of Common Stock that, when added to the number of
shares of Common Stock owned by
<PAGE> 65
2
Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute 90% of the shares of Common Stock then outstanding on a fully
diluted basis (assuming the issuance of the Top-Up Option Shares), at a cash
purchase price per Top-Up Option Share equal to $50.00 (the "Purchase Price"),
subject to the terms and conditions set forth herein; provided, however, that
the Top-Up Stock Option shall not be exercisable if the number of shares of
Common Stock subject thereto exceeds the number of authorized shares of Common
Stock available for issuance.
SECTION 1.02. Exercise of Top-Up Stock Option. (a) Subject to
the conditions set forth in Section 1.05 and to any additional requirements of
Law, the Top-Up Stock Option may be exercised by Purchaser, in whole but not in
part, at any time or from time to time after the occurrence of a Top-Up Exercise
Event (as defined below) and prior to the Top-Up Termination Date (as defined
below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this
Agreement upon Purchaser's acceptance for payment pursuant to the Offer of
shares of Common Stock constituting more than 50% but less than 90% of the
shares of Common Stock then outstanding on a fully diluted basis.
(c) The "Top-Up Termination Date" shall occur for purposes of
this Agreement upon the first to occur of any of the following:
(i) the Effective Time;
(ii) the date which is 10 business days after the occurrence
of a Top-Up Exercise Event (unless prior thereto the Top-Up Stock
Option shall have been exercised); or
(iii) the termination of the Merger Agreement.
(d) In the event Purchaser wishes to exercise the Top-Up Stock
Option, Purchaser shall send a written notice (a "Top-Up Exercise Notice") to
the Company specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which Purchaser wishes to receive, a date
(subject to the earlier satisfaction or waiver of the conditions set forth in
Section 1.03) (the "Closing Date"), which shall be a business day which is not
later than 10 business days and not earlier than the fifth business day after
delivery of such notice, and place for the closing of such purchase (the
"Closing"). The Company shall, within two business days after receipt of a
Top-Up Exercise Notice, deliver written notice to Purchaser specifying the
number of Top-Up Option Shares and the aggregate Purchase Price therefor.
<PAGE> 66
3
SECTION 1.03. Conditions to Closing. The obligation of the
Company to deliver Top-Up Option Shares upon any exercise of the Top-Up Stock
Option is subject to the following conditions:
(a) Such delivery would not in any material respect violate,
or otherwise cause the material violation of, Section 312.03(c) of the
NYSE Listed Company Manual ("Section 312") or any material Law,
including, without limitation, the HSR Act, applicable thereto;
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting such exercise of the Top-Up
Stock Option or the delivery of the Top-Up Option Shares in respect of
such exercise; and
(c) The Company shall have available from its authorized
shares of Common Stock such number of shares as is sufficient to issue
the Top-Up Option Shares; provided, however, that the Company shall
have fully complied with its obligations under Section 3.01(b).
SECTION 1.04. Closing. (a) At the Closing, (i) the Company
shall deliver to Purchaser a certificate or certificates evidencing the
applicable number of Top-Up Option Shares (in the denominations specified
therein), and (ii) Purchaser shall purchase each Top-Up Option Share from the
Company at the Purchase Price. Payment by Purchaser of the Purchase Price for
the Top-Up Option Shares shall be made in cash.
(b) All cash payments made pursuant to this Agreement shall be
made by wire transfer of immediately available funds. Certificates evidencing
Top-Up Option Shares delivered hereunder may, at the Company's election, contain
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR AN EXEMPTION THEREFROM.
<PAGE> 67
4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser as follows:
SECTION 2.01. Organization; Authority Relative to this
Agreement. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Company has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the part
of the Company. This Agreement has been duly executed and delivered by the
Company.
SECTION 2.02. Authority to Issue Shares. The Company has taken
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the Top-Up Termination Date shall
have reserved, all the Top-Up Option Shares issuable pursuant to this Agreement,
and the Company shall take all necessary corporate action to authorize and
reserve and permit it to issue all additional shares of the Company Common Stock
or other securities which may be issued pursuant to Section 1.03, all of which,
upon their issuance and delivery in accordance with the terms of this Agreement,
shall be duly authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on Purchaser's voting
rights, charges, adverse rights and other encumbrances of any nature whatsoever
(other than this Agreement) and shall not be subject to any preemptive rights.
SECTION 2.03. No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 4.05 of the Disclosure Schedule, the execution
and delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any of its subsidiaries, (ii) assuming that all consents, approvals, orders and
authorizations described in Section 2.03(b) have been obtained and all
registrations, declarations, filings and notifications described in Section
2.03(b) have been made, conflict with or violate any Law applicable to the
Company or any subsidiary or by which any property or asset of the Company or
any subsidiary is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
<PAGE> 68
5
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any property or asset of the Company or any subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, breaches, defaults or other
occurrences that individually or in the aggregate would not prevent or
materially delay the consummation of the transactions contemplated hereby or the
performance by the Company of any of its obligations hereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement except for (i) the filing of a
pre-merger notification and report form by the Company under the HSR Act and the
expiration or termination of the waiting period thereunder and (ii) such other
consents, approvals, orders, authorizations, registrations, declarations,
filings and notices the failure of which to be obtained or made would not,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated hereby or the performance by the Company of any
of its obligations hereunder.
ARTICLE III
COVENANTS OF THE COMPANY
SECTION 3.01. Further Action. (a) The Company shall use its
best efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated hereunder,
including, without limitation, using all reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
(b) The Company shall not take any action in order to cause
intentionally the exercise of the Top-Up Stock Option to violate Section 312.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent
and warrant to the Company as follows:
<PAGE> 69
6
SECTION 4.01. Organization; Authority Relative to this
Agreement. Each of Parent and Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of Parent and Purchaser has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Purchaser and the consummation by
Parent and Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION 4.02. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance by Parent and Purchaser of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the Certificate of Incorporation or Bylaws or equivalent
organizational documents of Parent or Purchaser, (ii) assuming that all
consents, approvals, orders and authorizations described in Section 4.02(b) have
been obtained and all registrations, declarations, filings and notifications
described in Section 4.02(b) have been made, conflict with or violate any Law
applicable to Parent or Purchaser or by which any property or asset of Parent or
Purchaser is bound or affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, breaches, defaults or other occurrences that
individually or in the aggregate would not prevent or materially delay the
consummation of the transactions contemplated hereby or the performance by
Parent or Purchaser of any of their respective obligations hereunder.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required by Parent or Purchaser in connection with the execution and delivery
of this Agreement, the performance by Parent or Purchaser of any of its
obligations hereunder or the consummation by Parent or Purchaser of the
transactions contemplated hereby, except for (i) the filing of a pre-merger
notification and report form under the HSR Act and the expiration or termination
of the waiting period thereunder and (ii) such other consents, approvals,
orders, authorizations, registrations, declarations, filings and notices the
failure of which to be obtained or made would not, individually or in the
aggregate, prevent or materially delay the consummation of
<PAGE> 70
7
the transactions contemplated hereby or the performance by Parent or Purchaser
of any of their respective obligations hereunder.
ARTICLE V
COVENANTS OF PARENT AND PURCHASER
SECTION 5.01. Distribution. Purchaser shall acquire the Top-Up
Option Shares for investment purposes only and only for the purpose of effecting
a short-form merger with the Company and not with a view to any distribution
thereof in violation of the Securities Act, and shall not sell any Top-Up Option
Shares purchased pursuant to this Agreement except in compliance with the
Securities Act and applicable state securities and "blue sky" laws.
SECTION 5.02. Parent Guaranty. Parent hereby agrees to cause
Purchaser to perform all of Purchaser's obligations under this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENT
SECTION 6.01. Termination. This Agreement, other than the
rights and obligations of the Company and Purchaser under Sections 3.01, 5.01
and 5.02 and Article VII, shall terminate on the Top-Up Termination Date.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendment. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 7.02. Waiver. Any party hereto may (a) extend the time
for or waive compliance with the performance of any obligation or other act of
any other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
<PAGE> 71
8
SECTION 7.03. Fees and Expenses. Except as otherwise provided
herein or in Section 7.08 of the Merger Agreement, all Expenses incurred in
connection with this Agreement shall be paid by the party incurring such
Expenses.
SECTION 7.04. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 10.02 of the Merger Agreement.
SECTION 7.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner to the fullest extent permitted by applicable Law in order
that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
SECTION 7.06. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned, in whole or in part, by operation of law or otherwise, by any of
the parties hereto without the prior written consent of the other parties,
except that Purchaser may assign, in its discretion, any or all of its rights,
interests and obligations hereunder to Parent or any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Purchaser of
any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, express or implied, is intended to confer on any person other
than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 7.07. Governing Law. Except to the extent the law of
the State of California is mandatorily applicable hereto, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware.
SECTION 7.08. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
<PAGE> 72
9
court of the United States located in the State of New York, Delaware or
California or in New York, Delaware or California state court (a "Specified
Court"), this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Specified Court in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Specified Court and (iv) agrees to waive any defense based upon venue or forum
non conveniens grounds.
SECTION 7.09. Headings. The descriptive headings contained in
this Agreement are included for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 7.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
SECTION 7.11. Entire Agreement. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement.
<PAGE> 73
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the date first written above.
RAAB KARCHER AG
By /s/ Gunther Beuth /s/ Curt Von Berghes
-----------------------------------------------
Name: Gunther Beuth Curt Von Berghes
Title: Member of the Board General Counsel
EBV ELECTRONICS INC.
By Michael Rohleder
------------------------
Name: Michael Rohleder
Title: President and CEO
WYLE ELECTRONICS
By Ralph L. Ozorkiewicz
--------------------------
Name: Ralph L. Ozorkiewicz
Title: President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 99.1
-- JOINT PRESS RELEASE --
RAAB KARCHER TO ACQUIRE LEADING US ELECTRONICS DISTRIBUTOR WYLE
RAAB KARCHER TO COMMENCE TENDER OFFER AT $50 PER SHARE IN CASH
WYLE TO PARTNER WITH EBV EUROPE AS PART OF A GLOBAL STRATEGY;
WILL KEEP NAME, OPERATE AUTONOMOUSLY, NO LAYOFFS
ESSEN, GERMANY AND IRVINE, CALIFORNIA, JULY 3, 1997 -- Raab Karcher AG, a
wholly-owned subsidiary of VEBA AG, and Wyle Electronics (NYSE:WYL.N), one of
North America's leading electronics distributors, today jointly announced that
they have entered into a definitive agreement for Raab Karcher to acquire all of
the outstanding shares of Wyle for $50 per share in cash, for a transaction
valued at approximately $810 million, including Wyle's debt. The purchase price
represents a premium of approximately 40% over the average trading price for
Wyle shares over the last 90 days. Under the agreement, EBV Electronics Inc., a
wholly-owned subsidiary of Raab Karcher, will commence a tender offer for all
outstanding shares of common stock of Wyle on or prior to July 10, 1997. The
transaction has been unanimously approved by the Boards of Directors of both
companies and is not subject to financing. The combination of the two businesses
creates a leading global company in electronic component and computer system
distribution with combined sales of approximately $3.0 billion.
Raab Karcher is a market leading, European-based distribution and services
group, with worldwide activities. In 1996, Raab Karcher generated revenue of
$7.0 billion with a total of approximately 29,000 employees. In distribution of
electronic components and computer systems, Raab Karcher serves as the holding
company for its subsidiaries EBV, Memec, Insight and Raab Karcher Electronic
Systems, which in 1996 reported aggregate sales of $1.7 billion. Raab Karcher is
a wholly owned subsidiary of VEBA AG, the fourth largest company in Germany.
With 1996 consolidated sales of approximately $50 billion and a current market
capitalization of approximately $28 billion, the VEBA Group counts as one of the
largest industrial groups in Europe.
<PAGE> 2
Wyle is a leading US-based distributor of electronic components and
computer systems with 1996 sales of $1.2 billion and earnings before interest
and taxes of $74 million. Wyle, which has a total of approximately 1,700
employees, operates 35 sales locations throughout the US and serves customers in
7 European countries through wholly owned subsidiaries. Wyle ranks 6th among the
electronic component and computer system distributors on a world-wide basis and
holds a particularly strong position in the value-added service segment of the
electronics distribution field, including programming of ASIC components,
kitting and just-in-time delivery services.
With the acquisition of Wyle, Raab Karcher will significantly enhance its
global scale and presence. Mr. Georg Kulenkampff, CEO of Raab Karcher, said,
"This is the largest acquisition in the near-150 year history of Raab Karcher.
The transaction will clearly position the combined business as a strong global
player in the world-wide markets for distribution of electronic components and
computer systems and will provide an excellent platform for further growth. In
addition, the acquisition is another significant step in Raab Karcher's strategy
to internationalise and build global size operations in its core business."
Dr. Ferdinand Pohl, President of Raab Karcher's electronics operations
added, "Wyle is an excellent company, widely recognized as a leader in the
value-added segment of the electronics distribution industry. We see this
acquisition as a unique opportunity to capitalize on the complementary strengths
of our two organisations and we fully intend to build on Wyle's existing
strengths, maintaining the Wyle name, its headquarters and its excellent
workforce."
Mr. Ralph L. Ozorkiewicz, President and CEO of Wyle, stated, "This is an
outstanding opportunity to build a substantial multi-national alliance of a
number of important electronic component distribution companies and will create
a new force in the market, which we believe will offer substantial benefits to
customers as well as suppliers. Our Board of Directors unanimously concluded
that this transaction is in the best interest of our shareholders, who will
receive a significant all-cash premium for their shares. In addition, our
employees will all keep their jobs and have the potential for enhanced career
opportunities and suppliers and customers will benefit from our increased global
reach. There is no better partner for Wyle in our consolidating industry."
Raab Karcher's obligation to purchase shares in the tender offer will be
subject to at least 90% of the shares outstanding (on a fully diluted basis)
being tendered into the offer. In order to comply with California law regarding
mergers of companies, in the event that fewer than 90% of the outstanding shares
(on a fully diluted basis) are tendered into the offer, Raab Karcher will
<PAGE> 3
have the right to exercise an option granted by Wyle to acquire additional
shares of Wyle's common stock under certain circumstances to enable Raab Karcher
to acquire 90% of the outstanding shares (on a fully diluted basis). In the
event the option would not permit Raab Karcher to acquire sufficient shares, and
more than 50% of the outstanding shares but fewer than 90% of the outstanding
shares (on a fully diluted basis) are tendered into the offer, Raab Karcher will
reduce the number of shares subject to the offer to 49.9% of the shares
outstanding and subsequently pursue a merger with Wyle.
Raab Karcher's obligation to purchase shares in the offer will be further
subject to the satisfaction or waiver of certain customary conditions, including
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Contacts:
Mr. Van Holland
Chief Financial Officer
Wyle Electronics
Tel: +1-714-453 4310
Internet home page: http://www.wyle.com
Dr. Andreas Dahms
Director Public Relations
Raab Karcher
Tel: +49-201-459 1311
E-mail: [email protected]
Internet home page: http://www.raab-karcher.de
Mr. Paul Verbinnen
Mr. David Reno
Mr. Drew Brown
Sard Verbinnen & Co
Tel: +1-212-687 8080
