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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ADVANCE ROSS CORPORATION
---------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value Per Share
---------------------------------------------
(Title of Class of Securities)
00750D103
---------------------------------------------
(CUSIP Number)
Herbert S. Wander, Esq., 525 West Monroe Street, Suite 1600, Chicago, Illinois
60661-3693 (312) 902-5267
---------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
October 17, 1995
---------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [x]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 2 of 15 Pages
------------------- ----- -------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Harve A. Ferrill
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 542,600 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
542,600 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 575,728 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.3% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 15
<PAGE> 3
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 3 of 15 Pages
-------------------- ----- -------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Duane R. Kullberg
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,000 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 1,113,328 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.07% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
3 of 15
<PAGE> 4
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 4 of 15 Pages
-------------------- ----- -------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Thomas J. Peterson
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH -0- (See Item 5.)
10 SHARED DISPOSITIVE POWER
12,000 (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 1,106,328 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
Excludes 4,000 shares owned by spouse.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.17% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
4 of 15
<PAGE> 5
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 5 of 15 Pages
-------------------- ----- --------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Herbert S. Wander
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 20,000 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
20,000 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 1,098,328 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.28% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
5 of 15
<PAGE> 6
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 6 of 15 Pages
-------------------- ----- --------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paul G. Yovovich
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 406,400 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
406,400 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 711,928 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
6 of 15
<PAGE> 7
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 7 of 15 Pages
-------------------- ----- --------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Roger E. Anderson
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 123,128 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
123,128 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 995,200 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
7 of 15
<PAGE> 8
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 8 of 15 Pages
-------------------- ----- -------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Harold E. Guenther
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 6,000 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,000 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 1,112,328 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.08% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
8 of 15
<PAGE> 9
SCHEDULE 13D
<TABLE>
<S><C>
CUSIP No. 00750D103 Page 9 of 15 Pages
-------------------- ----- -------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Randy M. Joseph
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF.00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
Not Applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
-0- (See Item 5.)
8 SHARED VOTING POWER
1,118,328 (See Item 5.)
NUMBER OF SHARES
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 3,200 (See Item 5.)
10 SHARED DISPOSITIVE POWER
-0- (See Item 5.)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,200 (See Item 5.)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [x]
Excludes an aggregate of 1,115,128 shares owned by other signatories to a certain
Stockholders Agreement, dated October 17, 1995, as described more fully in Items 2, 4 and 6.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.05% (See Item 5.)
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
9 of 15
<PAGE> 10
ITEM 1. SECURITY AND ISSUER
The Title of the Class of equity securities to which this Statement
relates is the Common Stock, $.01 par value ("Common Stock") of Advance Ross
Corporation, a Delaware corporation ("Advance Ross"). The principal executive
office of Advance Ross is located at 233 South Wacker Drive, Suite 9700,
Chicago, Illinois 60606-6502.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed by Harve A. Ferrill, Duane R. Kullberg, Thomas
J. Peterson, Herbert S. Wander, Paul G. Yovovich, Roger E. Anderson, Harold E.
Guenther and Randy M. Joseph (collectively, the "Reporting Persons") in
connection with that certain Stockholders Agreement ("Stockholders Agreement"),
dated as of October 17, 1995, among the Reporting Persons and CUC International
Inc., a Delaware corporation ("CUC") whereby the Reporting Persons have agreed,
among other things, to vote their shares of Advance Ross Common Stock at a
Special Meeting of Advance Ross in favor of the proposal to adopt an Agreement
and Plan of Merger, dated October 17, 1995 (the "Merger Agreement"), among
Advance Ross, CUC, and Retreat Acquisition Corporation, a Delaware corporation
and a wholly owned subsidiary of CUC ("Merger Sub"), pursuant to which, among
other things, Merger Sub will be merged with and into Advance Ross (the
"Merger") and Advance Ross, as the surviving corporation in the Merger, will
become a wholly owned subsidiary of CUC, and holders of the Advance Ross Common
Stock immediately prior to the effective time of the Merger will, by virtue of
the Merger, become holders of the common stock, $.01 par value, of CUC ("CUC
Common Stock"), in accordance with the share exchange ratio (i.e., 5/6 of one
share of CUC Common Stock for each outstanding whole share of Advance Ross
Common Stock) and other terms and conditions specified in the Merger Agreement.
In connection with the Merger, each Reporting Person has signed an affiliate
letter ("Affiliate Letter"), dated as of October 17, 1995, whereby each
Reporting Person has agreed to certain restrictions regarding the
transferability of CUC common shares ("CUC Shares") received by the Reporting
Persons pursuant to the Merger, and each Reporting Person has agreed not to, in
any way, reduce such Reporting Person's risk with respect to any CUC Shares
received in the Merger until after a certain time, as provided in the Affiliate
Letter. This summary is qualified in its entirety by reference to the full
text of the Merger Agreement, Stockholders Agreement and Form of
Affiliate Letter, attached as Exhibit A, Exhibit B and Exhibit C, respectively,
hereto.
Harve A. Ferrill is the Chairman and Chief Executive Officer, Paul G.
Yovovich is the President and Chief Operating Officer, and Randy M. Joseph is
the Vice President, Chief Financial Officer and Treasurer of Advance Ross
Corporation. Advance Ross' principal executive office is located at 233 South
Wacker Drive, Suite 9700, Chicago, Illinois 60606-6502. Advance Ross' primary
business is the operation of a value-added tax ("VAT") refund system serving
travelers shopping in Europe.
Duane R. Kullberg serves as a director of Advance Ross. Mr. Kullberg is
retired and currently resides at 179 East Lake Shore Drive, Apartment 1001,
Chicago, Illinois 60611.
Thomas J. Peterson serves as a director of Advance Ross. Mr. Peterson is
retired and currently resides at 1644 North Russell Road, Bloomington, Indiana
47470.
Herbert S. Wander is a partner in the law firm of Katten Muchin & Zavis,
located at 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693.
Katten Muchin & Zavis offers a variety of legal services.
Roger E. Anderson is a partner of Hamilton Capital Partners, an
investment banking firm located at 50 Main Street, White Plains, New York
10606.
Harold E. Guenther is Senior Vice President of Kemper Financial Services,
Inc., located at 120 South LaSalle Street, Chicago, Illinois 60603. Kemper
Financial Services provides a variety of financial services.
None of the Recording Persons have, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor have any of them been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction which resulted in or
subjected any of them to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or a finding of any violation with respect to such laws.
Each Reporting Person is a United States Citizen.
10 10 of 15
<PAGE> 11
Each of the Reporting Person disclaims beneficial ownership of the
Advance Ross Common Stock held by the other Reporting Persons and disclaims
being a member of a "group" with such persons within the meaning of Section
13(d)(5) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
All funds used by Reporting Persons to purchase shares of the Common
Stock were obtained from such Reporting Persons' personal funds and, in the
case of options to purchase Common Stock which any Reporting Person holds, it
is expected that the funds to exercise such options will be from personal
funds.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons each acquired their respective shares of Common
Stock for the purpose of investment.
Pursuant to the Stockholders Agreement, the Reporting Persons have
agreed, among other things, to vote their shares of Advance Ross Common Stock
at a Special Meeting of Advance Ross in favor of the proposal to adopt the
Merger Agreement pursuant to which, among other things, Merger Sub will be
merged with and into Advance Ross and Advance Ross, as the surviving
corporation in the Merger, will become a wholly owned subsidiary of CUC, and
holders of the Advance Ross Common Stock immediately prior to the effective
time of the Merger will, by virtue of the Merger, become holders of CUC Common
Stock, in accordance with the share exchange ratio (i.e., 5/6 of one share of
CUC Common Stock for each outstanding whole share of Advance Ross Common Stock)
and other terms and conditions specified in the Merger Agreement. The
foregoing summary is qualified in its entirety by reference to the full text of
the Merger Agreement and Stockholders Agreement attached as Exhibit A and
Exhibit B, respectively, hereto.
If the Merger Agreement is approved and the Merger is consummated,
Advance Ross will become a wholly owned subsidiary of CUC and Advance Ross'
Board of Directors, which currently consists of Mr. Ferrill, Mr. Kullberg, Mr.
Peterson, Mr. Wander, Mr. Yovovich, Mr. Anderson and Mr. Guenther, will be
replaced by a Board of Directors selected by CUC.
Except as set forth above, as of the date of this Schedule, none of the
Reporting Persons has any plans or proposals which relate to or would result in
any of the actions set forth in parts (a) through (j) of Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(b) Harve A. Ferrill beneficially owns 142,600 shares of Common
Stock and has vested options to acquire 400,000 shares of Common Stock, which
collectively represent 7.3% of the Advance Ross Common Stock (calculated
pursuant to Rule 13d-3(d)(1) of the Exchange Act of 1934). Mr. Ferrill has the
sole power to vote and dispose of the shares he owns directly. Pursuant to the
Stockholders Agreement, Mr. Ferrill will vote his Common Stock shares in favor
of the Merger.
Duane R. Kullberg beneficially owns 5,000 shares of Common Stock which
represent .07% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Kullberg has the sole power to vote and
dispose of the shares he owns directly. Pursuant to the Stockholders
Agreement, Mr. Kullberg will vote his Common Stock shares in favor of the
Merger.
Thomas J. Peterson beneficially owns 12,000 shares of Common Stock which
represent .17% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Peterson shares the power to vote and
dispose of the shares he owns directly with his wife, Carol Peterson. Mrs.
Peterson is retired and resides at 1644 North Russell Road, Bloomington,
Indiana 47407. Pursuant to the Stockholders Agreement, Mr. Peterson will vote
his Common Stock shares in favor of the Merger.
Herbert S. Wander beneficially owns 20,000 shares of Common Stock which
represent .28% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Wander has the sole power to vote and
dispose of the shares he owns directly. Pursuant to the Stockholders
Agreement, Mr. Wander will vote his Common Stock shares in favor of the Merger.
11 11 of 15
<PAGE> 12
Paul G. Yovovich beneficially owns 6,400 shares of Common Stock and has
vested options to acquire 400,000 shares of Common Stock, which collectively
represent 5.4% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Yovovich has the sole power to vote and
dispose of shares he owns directly. Pursuant to the Stockholders Agreement,
Mr. Yovovich will vote his Common Stock shares in favor of the Merger.
Roger E. Anderson beneficially owns 9,432 shares of Common Stock and
has vested options to acquire 113,696 shares of Common Stock, which
collectively represent 1.7% of the Advance Ross Common Stock (calculated
pursuant to Rule 13d-3(d)(1) of the Exchange Act). Mr. Anderson has the sole
power to vote and dispose of the shares he owns directly. Pursuant to the
Stockholders Agreement, Mr. Anderson will vote his Common Stock shares in favor
of the Merger.
Harold E. Guenther beneficially owns 6,000 shares of Common Stock which
represent .08% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Guenther has the sole power to vote and
dispose of the shares he owns directly. Pursuant to the Stockholders
Agreement, Mr. Guenther will vote his Common Stock shares in favor of the
Merger.
Randy M. Joseph beneficially owns 1,200 shares of Common Stock and has
vested options to acquire 2,000 shares of Common Stock, which collectively
represent .05% of the Advance Ross Common Stock (calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act). Mr. Joseph has the sole power to vote and
dispose of the shares he owns directly. Pursuant to the Stockholders
Agreement, Mr. Joseph will vote his Common Stock shares in favor of the Merger.
(c) No transactions in shares of the Common Stock were effected during
the past 60 days by any of the Reporting Persons.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Concurrently with the execution and delivery of the Merger Agreement, CUC
entered into the Stockholders Agreement and Affiliate Letter with the Reporting
Persons (who constitute all directors and executive officers of Advance Ross
who are holders of Advance Ross Common Stock).
Voting. Pursuant to the Stockholders Agreement, each Reporting Person
has agreed that until the earlier to occur of the Effective Time (as defined in
the Merger Agreement) and the termination of the Merger Agreement in accordance
with its terms, at any meeting of the holders of Advance Ross Common Stock,
however called, or in connection with any written consent of the Advance Ross'
stockholders, such Reporting Person will vote (or cause to be voted) the shares
of Advance Ross Common Stock held of record or beneficially owned by such
stockholder: (i) in favor of approval of the Merger Agreement and any actions
required in furtherance thereof; (ii) against any action or agreement that
would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of Advance Ross under the Merger
Agreement (after giving effect to any materiality or similar qualifications
contained therein); and (iii) except as otherwise agreed to in writing in
advance by CUC, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving Advance Ross, (B) a sale, lease or transfer of a material
amount of assets of Advance Ross, or a reorganization, recapitalization,
dissolution or liquidation of Advance Ross, and (C)(1) any change in a majority
of the persons who constitute the Board of Directors of Advance Ross, (2) any
change in the present capitalization of Advance Ross or any amendment of
Advance Ross' Restated Certificate of Incorporation or By-laws, (3) any other
material change in Advance Ross' corporate structure or business, or (4) any
other action which in the case of each of the matters referred to in clauses
C(1), (2) or (3) above, is intended to, or reasonably could be expected to,
impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by the Merger Agreement and the
Stockholders Agreement.
Each of the Reporting Persons further has agreed not to enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent with or violative of the provisions and agreements described
above.
12 12 of 15
<PAGE> 13
Representations, Warranties, Covenants and Other Agreements. Pursuant
to the Stockholder's Agreement the Reporting Persons have made certain
customary representations, warranties and covenants, including with respect to
(i) their ownership of the shares of Advance Ross Common Stock, (ii) their
capacity and authority to enter into and perform their obligations under the
Stockholders Agreement, (iii) noncontravention, (iv) the receipt of requisite
governmental consents and approvals, (v) the absence of liens and encumbrances
on and in respect of their shares of Advance Ross Common Stock, (vi)
restrictions on the transfer of their shares of Advance Ross Common Stock,
(vii) the solicitation of Competing Transactions (as defined in the Merger
Agreement) and (viii) finders fees.
Termination. Other than as provided in the Stockholders Agreement,
the Stockholders Agreement will terminate by its terms on the earlier to occur
of the termination of the Merger Agreement or the Effective Time.
Affiliate Letter. Each Reporting Person has signed an Affiliate
Letter, dated as of October 17, 1995, whereby they have agreed not to (i)
transfer, sell or otherwise dispose of any of the CUC Shares except pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or as permitted by, and in accordance with,
Rule 145 or another applicable exemption under the Securities Act; and (ii)
transfer, sell or otherwise dispose of any Advance Ross common shares or
preferred shares prior to the Effective Time, or sell or otherwise reduce such
Reporting Person's risk (within the meaning of the Securities and Exchange
Commission's Financial Reporting Release No. 1., "Codification of Financial
Reporting Policies," Section 201.01 [41 F.R. 21030](April 15, 1982) with
respect to any CUC Shares until after such time as consolidated financial
statements which reflect at least 30 days of post-merger combined operations of
CUC and Advance Ross have been published by CUC, except as permitted by Staff
Accounting Bulletin No. 76 issued by the Securities and Exchange Commission.
The foregoing summary is qualified in its entirety by reference to the
full text of the Merger Agreement and Stockholders Agreement attached as
Exhibit A and Exhibit B, respectively, hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A: Agreement and Plan of Merger dated as of October 17, 1995, by
and among CUC International Inc., Retreat Acquisition
Corporation, and Advance Ross Corporation, with attached
Exhibits A, B, and C to the Agreement and Plan of Merger
Exhibit B: Stockholders Agreement, dated as of October 17, 1995, by
and among CUC International, Inc. and Harve A. Ferrill,
Duane R. Kullberg, Thomas J. Peterson, Herbert S. Wander,
Paul G. Yovovich, Roger E. Anderson, Harold E. Guenther and
Randy M. Joseph
Exhibit C: Form of Affiliate Letter, dated as of October 17, 1995, by
and between CUC International, Inc. and Harve A. Ferrill,
Duane R. Kullberg, Thomas J. Peterson, Herbert S. Wander,
Paul G. Yovovich, Roger E. Anderson, Harold E. Guenther and
Randy M. Joseph
13 13 of 15
<PAGE> 14
SIGNATURES
After reasonable inquiry and to the best of their knowledge and belief,
each of the undersigned certify that the information set forth in this
statement is true, complete and correct.
Each of the undersigned hereby constitutes and appoints Harve A. Ferrill,
Paul G. Yovovich, Herbert S. Wander and Saul E. Rudo, and each of them, with
full power to act without the others, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to sign on his behalf,
individually and in each capacity stated below, all amendments to this Schedule
13D and to file the same, with all exhibits thereto and any other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as each might or could do in person, hereby ratifying
and confirming each act that said attorneys-in-fact and agents may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Schedule 13D has been signed below by the following persons in the capacities
and on the date indicated:
Dated: October 17, 1995
/s/ Harve A. Ferrill
-------------------------------------------
Harve A. Ferrill
/s/ Paul G. Yovovich
-------------------------------------------
Paul G. Yovovich
/s/ Duane R. Kullberg
-------------------------------------------
Duane R. Kullberg
/s/ Thomas J. Peterson
-------------------------------------------
Thomas J. Peterson
/s/ Herbert S. Wander
-------------------------------------------
Herbert S. Wander
14 14 of 15
<PAGE> 15
SIGNATURES (CONTINUED)
/s/ Roger E. Anderson
-------------------------------------------
Roger E. Anderson
/s/ Harold E. Guenther
-------------------------------------------
Harold E. Guenther
/s/ Randy M. Joseph
-------------------------------------------
Randy M. Joseph
15 15 of 15
<PAGE> 16
EXHIBIT A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
CUC INTERNATIONAL INC.,
RETREAT ACQUISITION CORPORATION
AND
ADVANCE ROSS CORPORATION
Dated October 17, 1995
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I The Merger; Effective Time; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Certificate of Incorporation and By-Laws of the Surviving Corporation . . . . . . . . . . . . . . . 2
2.1. Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. The By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV Merger Consideration; Conversion or Cancellation of Shares in the Merger . . . . . . . . . . . . . 3
4.1. Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger . . . . . . 3
4.2. Payment for Shares in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4. Transfer of Shares after the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Approvals; Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(g) SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(i) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) S-4 Registration Statement and Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . 12
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(m) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(n) Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(o) Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(p) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(q) Unlawful Payments and Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(r) Commission Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
i
<PAGE> 18
<TABLE>
<CAPTION>
Page
<S> <C> <C>
(s) Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(t) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(u) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Representations and Warranties of Parent and Merger Sub . . . . . . . . . . . . . . . . 18
(a) Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . 18
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Authorization for Parent Common Shares . . . . . . . . . . . . . . . . . . . . . 19
(d) Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . 19
(e) Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . 20
(f) Ownership of Merger Sub; No Prior Activities; Assets of Merger Sub . . . . . . . 21
(g) SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . 22
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) S-4 Registration Statement and Proxy Statement/Prospectus . . . . . . . . . . . 22
(k) Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(l) Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(m) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(n) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI Additional Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3. Meeting of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4. Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.5. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.8. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . 28
6.9. Affiliates of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.11. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13. Filings; Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.14. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.15. Pooling Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.16. Blue Sky Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17. NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.18. Pooling Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.19. Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.20. Tax-Free Reorganization Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.21. Combined Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.22. Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
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<S> <C> <C>
ARTICLE VII Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1. Conditions to the Obligations of Parent and Merger Sub . . . . . . . . . . . . . . . . . . 32
(a) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Company Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) S-4 Registration Statement; "Blue Sky" Permits . . . . . . . . . . . . . . . . . . . 32
(e) Listing of Parent Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(f) Governmental Filings and Consents; HSR Act . . . . . . . . . . . . . . . . . . . . . 32
(g) Pooling Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(h) Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(i) Delivery of Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(j) Termination of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(k) Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2. Conditions to the Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Company Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) S-4 Registration Statement; "Blue Sky" Permits . . . . . . . . . . . . . . . . . . . 34
(e) Listing of Parent Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(f) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(g) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.1. Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2. Termination by either Parent or the Company . . . . . . . . . . . . . . . . . . . . . . . . 35
8.3. Termination by Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.4. Termination by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.5. Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX Miscellaneous and General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 37
9.3. Modification or Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4. Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.8. Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.9. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.10. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.11. Obligation of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.12. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
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<S> <C> <C>
9.14. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.15. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.16. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
EXHIBITS
Stockholders Agreement Exhibit A
Form of Stockholder Certificate Exhibit B
Form of Company, Parent and Merger Sub Certificate Exhibit C
</TABLE>
iv
<PAGE> 21
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated October 17,
1995, among CUC International Inc., a Delaware corporation ("Parent"), Retreat
Acquisition Corporation, a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Merger Sub"), and Advance Ross Corporation, a Delaware
corporation (the "Company").
R E C I T A L S
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
each have determined that it is in the best interests of their respective
stockholders for Merger Sub to merge with and into the Company upon the terms
and subject to the conditions of this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger (as defined in Section 11) shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, concurrently with the execution hereof, certain holders
(each, a "Stockholder" and, collectively, the "Stockholders") of Shares (as
defined in Section 4.1(b)) are entering into the Stockholders Agreement, a copy
of which is attached as Exhibit A hereto (the "Stockholders Agreement");
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling-of-interests;
WHEREAS, the Company has delivered to Parent a letter identifying all
persons (each, a "Company Affiliate") who are, at the date hereof, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act of 1933, as
amended (the "Securities Act"), and each Company Affiliate has delivered to
Parent a letter (each, an "Affiliate Letter") relating to (i) the transfer,
prior to the Effective Time (as defined in Section 1.2), of the Shares
beneficially owned by such Company Affiliate on the date hereof, (ii) the
transfer of the Parent Common Shares (as defined in Section 4.1(a)) to be
received by such Company Affiliate in the Merger and (iii) the obligations of
each such Company Affiliate to deliver to Katten Muchin & Zavis, counsel to the
Company, a certificate substantially in the form attached hereto as Exhibit B;
and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, Merger Sub and
the Company hereby agree as follows:
<PAGE> 22
ARTICLE I
The Merger; Effective Time; Closing
1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), at the Effective Time the Company and
Merger Sub shall consummate a merger (the "Merger") in which (a) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger and shall continue to be governed by the
laws of the State of Delaware and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The corporation surviving the Merger
is sometimes hereinafter referred to as the "Surviving Corporation." The name
of the Surviving Corporation shall be "Advance Ross Corporation." At the
election of Parent, any direct wholly-owned subsidiary of Parent may be
substituted for Merger Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing.
1.2. Effective Time. Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company shall cause the Merger to be
consummated by filing an appropriate Certificate of Merger or other appropriate
documents (the "Certificate of Merger") with the Secretary of State of the
State of Delaware in such form as required by, and executed in accordance with,
the relevant provisions of the DGCL, as soon as practicable on or after the
Closing Date (as defined in Section 1.3). The Merger shall become effective
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").
1.3. Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Article VIII, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., New York City time, on the second business day after
satisfaction of the conditions set forth in Article VII (or as soon as
practicable thereafter following satisfaction or waiver of the conditions set
forth in Article VII) (the "Closing Date"), at the offices of Weil, Gotshal &
Manges, 767 Fifth Avenue, New York, New York 10153, unless another date, time
or place is agreed to in writing by the parties hereto.
1.4. Effects of the Merger. At the Effective Time, the effects
of the merger shall be as provided in the Certificate of Merger and the
applicable provisions of the DGCL.
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company immediately prior to the Effective
Time shall become the Certificate of incorporation of the Surviving
Corporation.
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2.2. The By-Laws. At the Effective Time, the by-laws of the
Company immediately prior to the Effective Time shall become the by-laws of the
Surviving Corporation.
ARTICLE III
Directors and Officers
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub at the Effective
Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
By-Laws.
3.2. Officers. The officers of the Company at the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
Merger Consideration;
Conversion or Cancellation
of Shares in the Merger
4.1. Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger. The manner of converting or canceling
shares of the Company and Merger Sub in the Merger shall be as follows:
(a) At the Effective Time, each share of common stock,
$.01 par value per share, of the Company (the "Common Shares") issued
and outstanding immediately prior to the Effective Time (other than
Common Shares owned by Parent, Merger Sub or any direct or indirect
wholly-owned subsidiary of Parent (collectively, "Parent Companies")
or any of the Company's direct or indirect wholly-owned subsidiaries)
shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into five-sixths (5/6) (the "Exchange
Ratio") of one share of common stock, par value $0.01 per share, of
Parent ("Parent Common Shares"); provided, however , that (x) if the
Average Stock Price (as defined below) is greater than $38.00, the
Exchange Ratio shall be reduced so as to equal the product of (i)
five-sixths (5/6) and (ii) a fraction, the numerator of which shall be
$38.00 and the denominator of which shall be the Average Stock Price
and (y) if the Average Stock Price is less than $30.00, the Exchange
Ratio shall be increased so as to equal the product of (i) five-sixths
(5/6) and (ii) a fraction, the numerator of which shall be $30.00 and
the denominator of which shall be the Average Stock Price. The term
"Average Stock Price" means a fraction, the numerator of which is the
sum of the Weighted Amount (as defined below) for each trading day
during the
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period of ten consecutive trading days commencing eleven trading days
prior to the date of the Stockholder Meeting (as defined in Section
6.3) and ending on the second trading day prior to the date of the
Stockholder Meeting, and the denominator of which is the total
reported volume in trading in Parent Common Shares on the New York
Stock Exchange ("NYSE") during such ten-day period. For purposes
hereof, with respect to any trading day, the "Weighted Amount" shall
be equal to the product of (A) the per share closing price on the NYSE
of Parent Common Shares on such day and (B) the total reported volume
of trading in Parent Common Shares on the NYSE for such day, in each
case as reported in the New York Stock Exchange Composite
Transactions.
(b) At the Effective Time, each share of 5% cumulative
preferred stock, $25.00 par value per share, of the Company (the
"Preferred Shares" and, together with the Common Shares, the "Shares")
issued and outstanding immediately prior to the Effective Time (other
than Preferred Shares owned by any of the Parent Companies or any of
the Company's direct or indirect wholly-owned subsidiaries) shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into a number of Parent Common Shares equal to
the quotient obtained by dividing (x) the sum of $27.50 plus all
dividends accumulated, accrued and unpaid on such Preferred Shares to
the Effective Time (excluding any such dividends that, as of the
Effective Time, have been declared with a record date prior to the
Effective Time but a payment date after the Effective Time) by (y) the
Average Stock Price. Notwithstanding the prior sentence or any other
provision of this Agreement, if, in the reasonable determination of
the Company, the amount of cash to be received by the holders of
Preferred Shares would exceed 20% of the total consideration to be
received by such holders at the Effective Time, then the Company shall
redeem the Preferred Shares prior to the Effective Time in accordance
with Article Fourth of the Restated Certificate of Incorporation of
the Company.
(c) All Shares to be converted into Parent Common
Shares pursuant to this Section 4.1 shall, by virtue of the Merger and
without any action on the part of the holders thereof, cease to be
outstanding, be cancelled and retired and cease to exist, and each
holder of a certificate representing any such Shares shall thereafter
cease to have any rights with respect to such Shares, except the right
to receive for each of the Shares, upon the surrender of such
certificate in accordance with Section 4.2, the number of Parent
Common Shares specified above (the "Share Consideration") and cash in
lieu of fractional Parent Common Shares as contemplated by Section
4.3.
(d) At the Effective Time, each share of common stock
of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action
on the part of Merger Sub or the holder thereof, be converted into the
same number of shares of common stock of the Surviving Corporation.
(e) At the Effective Time, each outstanding option to
purchase Common Shares (each, an "Option") issued pursuant to the
Advance Ross Corporation Stock Option Plan, effective October 26, 1992
(the "1992 Plan"), the 1993 Advance Ross Corporation Stock Option
Plan, effective June 15, 1993 (the "1993 Plan"), and each of the Stock
Option Agreements set forth in Section 5.1(b) of the Company
Disclosure
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<PAGE> 25
Schedule (collectively, the "Option Plans") and the Warrant
Certificate to purchase 480,000 Common Shares (after giving effect to
all amendments and stock splits) issued to Allen & Company
Incorporated, dated as of February 19, 1992 and amended pursuant to
the Amendment to Warrant Certificate dated as of December 1, 1992 and
the addendum, dated the date hereof, between the Company and Allen &
Company Incorporated (the "Warrant") shall be assumed by Parent and
shall be deemed to constitute an option or warrant, as the case may
be, to acquire, on the terms and conditions as were applicable under
such Option or Warrant, the same number of Parent Common Shares as the
holder of such Option or Warrant would have been entitled to receive
pursuant to the Merger had such holder exercised such Option or
Warrant in full immediately prior to the Effective Time (not taking
into account whether such option or warrant was in fact exercisable at
such time), at a price per share equal to (x) the aggregate exercise
price for the Common Shares subject to such Option or Warrant divided
by (y) the number of full Parent Common Shares deemed purchasable
pursuant to such Option or Warrant; provided, however , that the
number of Parent Common Shares that may be purchased upon exercise of
such Option or Warrant shall not include any fractional share and,
upon exercise of the Option or Warrant, a cash payment shall be made
for any fractional share based upon the closing price of a Parent
Common Share on the trading day immediately preceding the date of
exercise. As soon as practicable after the Effective Time, Parent
shall deliver to each holder of an option an appropriate notice
setting forth such holder's right to acquire Parent Common Shares and
the Option agreements of such holder shall be deemed to be
appropriately amended so that such Options shall represent rights to
acquire Parent Common Shares on substantially the same terms and
conditions as contained in the outstanding Options (subject to any
adjustments required by the preceding sentence); provided, however,
that notwithstanding anything to the contrary contained herein, Parent
shall not be obligated (x) to grant any incentive stock options
(within the meaning of Section 422 of the Code) or (y) to grant
options on terms more favorable than options to be assumed pursuant to
this Section 4.1(e).
(f) Parent shall use its best efforts to cause there
to be effective as of a date as soon as practicable after the
Effective Time a registration statement on Form S-8 (or any successor
form) or another appropriate form, with respect to the Parent Common
Shares subject to such Options and shall use its best efforts to
maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such
Options remain outstanding.
4.2. Payment for Shares in the Merger. The manner of making
payment for Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available
to The Bank of Boston (the "Exchange Agent"), or such other exchange
agent selected by Parent and reasonably acceptable to the Company for
the benefit of the holders of Shares, a sufficient number of
certificates representing Parent Common Shares required to effect the
delivery of the aggregate Share Consideration required to be issued
pursuant to Section 4.1 (the certificates representing Parent Common
Shares comprising such aggregate Share Consideration being hereinafter
referred to as the "Stock Merger
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<PAGE> 26
Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Parent Common Shares contemplated to be
issued pursuant to Section 4.1 and effect the sales provided for in
Section 4.3 out of the Stock Merger Exchange Fund. The Stock Merger
Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record (other than holders of
certificates for Shares referred to in Section 4.1(c)) of a
certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates") (i) a form of
letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent)
and (ii) instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender of Certificates for
cancellation to the Exchange Agent, together with such letter of
transmittal duly executed and any other required documents, the holder
of such Certificates shall be entitled to receive for each of the
Shares represented by such Certificates the Share Consideration and
the Certificates so surrendered shall forthwith be cancelled. Until so
surrendered, such Certificates shall represent solely the right to
receive the Share Consideration and any cash in lieu of fractional
Parent Common Shares as contemplated by Section 4.3 with respect to
each of the Shares represented thereby. No dividends or other
distributions that are declared after the Effective Time on Parent
Common Shares and payable to the holders of record thereof after the
Effective Time will be paid to persons entitled by reason of the
Merger to receive Parent Common Shares until such persons surrender
their Certificates. Upon such surrender, there shall be paid to the
person in whose name the Parent Common Shares are issued any dividends
or other distributions having a record date after the Effective Time
and payable with respect to such Parent Common Shares between the
Effective Time and the time of such surrender. After such surrender
there shall be paid to the person in whose name the Parent Common
Shares are issued any dividends or other distributions on such Parent
Common Shares which shall have a record date after the Effective Time
and prior to such surrender and a payment date after such surrender
and such payment shall be made on such payment date. In no event
shall the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or
other distributions. If any certificate representing Parent Common
Shares is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance
of certificates for such Parent Common Shares in a name other than
that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a
holder of Shares for any Parent Common Shares or dividends thereon,
or, in accordance with Section 4.3, cash in lieu of fractional Parent
Common Shares, delivered to a public official pursuant to applicable
escheat law. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the Parent Common
Shares held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid
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<PAGE> 27
or distributed with respect to such Parent Common Shares for the
account of the persons entitled thereto.
(c) Any portion of the Stock Merger Exchange Fund and
the Fractional Securities Fund (as defined in Section 4.3) which
remains unclaimed by the former stockholders of the Company for two
years after the Effective Time shall be delivered to Parent, upon
demand of Parent, and any former stockholders of the Company shall
thereafter look only to Parent for payment of their claim for the
Share Consideration for the Shares or for any cash in lieu of
fractional shares of Parent Common Shares.
4.3. Fractional Shares. No fractional Parent Common Shares
shall be issued in the Merger. Each holder of Shares shall be entitled to
receive in lieu of any fractional Parent Common Shares to which such holder
otherwise would have been entitled pursuant to Section 4.2 (after taking into
account all Shares then held of record by such holder) a cash payment in an
amount equal to the product of (i) the fractional interest of a Parent Common
Share to which such holder otherwise would have been entitled and (ii) the
closing price of a Parent Common Share on the NYSE on the trading day
immediately prior to the Effective Time (the cash comprising such aggregate
payments in lieu of fractional Parent Common Shares being hereinafter referred
to as the "Fractional Securities Fund"). Merger Sub shall make available to
the Exchange Agent cash in an amount sufficient to make the payments in lieu of
fractional shares as aforesaid.
4.4. Transfer of Shares after the Effective Time. No transfers
of Shares shall be made on the stock transfer books of the Company after the
close of business on the day prior to the date of the Effective Time.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Merger Sub that (except to
the extent set forth on the Disclosure Schedule previously delivered by the
Company to Parent (the "Company Disclosure Schedule"):
(a) Corporate Organization and Qualification. Each of
the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified and in good standing as
a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted, by it require such
qualification, except where failure to so qualify or be in good
standing would not have a Material Adverse Effect (as defined in
Section 9.10). Each of the Company and its subsidiaries has all
requisite power and authority (corporate or otherwise) to own its
properties and to carry on its business as it is now being conducted.
All of the subsidiaries of the Company, together with an
organizational chart, are set forth in Section 5.1(a) of the Company
Disclosure
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<PAGE> 28
Schedule. The Company has heretofore made available to Parent
complete and correct copies of its Certificate of Incorporation and
By- Laws.
(b) Capitalization. The authorized capital stock of
the Company consists of (i) 12,000,000 Common Shares of which, as of
October 10, 1995, 7,568,508 Shares were issued and outstanding and
493,138 Shares were held in treasury, (ii) 1,000,000 shares of
preferred stock, $1 par value per share, none of which are shares
issued or outstanding and (iii) 200,000 Preferred Shares, of which, as
of October 10, 1995, 20,247 Preferred Shares were issued and
outstanding and 3,324 Preferred Shares were held in treasury. All of
the outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
The Company has no outstanding stock appreciation rights. Except as
set forth in Section 5.1(b) of the Company Disclosure Schedule, no
Shares are owned by any subsidiary of the Company. Except as set
forth in Section 5.1(b) of the Company Disclosure Schedule, all
outstanding shares of capital stock or other equity interests of the
subsidiaries of the Company are owned by the Company or a direct or
indirect wholly-owned subsidiary of the Company, free and clear of all
liens, charges, encumbrances, claims and options of any nature.
Except for (i) options outstanding on the date hereof to purchase
1,923,096 Common Shares under the Option Plans and 10,000 Common
Shares under the Advance Ross Corporation 1995 Directors Deferred
Plan, (ii) the Warrant, a true, complete and correct copy of which the
Company has delivered to Parent prior to the date hereof, and (iii) as
set forth in Section 5.1(b) of the Company Disclosure Schedule there
are not as of the date hereof and there will not be at the Effective
Time any outstanding or authorized options, warrants, calls, rights
(including preemptive rights), commitments or any other agreements of
any character which the Company or any of its subsidiaries is a party
to, or may be bound by, requiring it to issue, transfer, sell,
purchase, redeem or acquire any shares of capital stock or any
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of the Company
or any of its subsidiaries. There are not as of the date hereof and
there will not be at the Effective Time any stockholder agreements
(other than the Stockholders Agreement), voting trusts or other
agreements or understandings to which the Company is a party or to
which it is bound relating to the voting of any shares of the capital
stock of the Company. Except as otherwise agreed to by Parent, there
will not be at the Effective Time any outstanding options under the
Advance Ross Corporation 1995 Directors Deferral Plan.
(c) Approvals; Fairness Opinion.
(i) The approval of the holders of Common Shares
required by the DGCL, no other approval of the
stockholders of the Company is required in order to
consummate the transactions contemplated by this
Agreement.
(ii) The Board of Directors of the Company has received
an opinion from Allen & Company Incorporated to the effect
that the consideration to be received by the holders of
Common Shares in the Merger is fair to such holders from a
financial point of view. As of the date hereof, such
opinion has not been withdrawn, revoked or modified.
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<PAGE> 29
(d) Authority Relative to this Agreement. The Board
of Directors of the Company has declared the Merger advisable and the
Company has the requisite corporate power and authority to approve,
authorize, execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject to the approval of the
Merger by the stockholders of the Company in accordance with the
DGCL). This Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other
than the approval of the Merger by the holders of the Common Shares in
accordance with the DGCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding agreement of Parent and Merger Sub,
constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject,
as to enforceability, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors, rights and to general principles of equity.
(e) Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective Certificate
of Incorporation (or other similar documents) or By-Laws (or other
similar documents) of the Company or any of its subsidiaries; (ii)
require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority,
except (A) in connection with the applicable requirements, if any, of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (B) pursuant to the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder,
and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder, (C) the
filing of the Certificate of Merger pursuant to the DGCL and
appropriate documents with the relevant authorities of other states in
which the Company is authorized to do business, (D) as may be required
by any applicable state securities or takeover laws, (E) such filings
and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Merger or the transactions
contemplated b), this Agreement, (F) the consents, approvals, orders,
authorizations, registrations, declarations and filings required under
the laws of foreign countries, as set forth in Section 5.1(e) of the
Company Disclosure Schedule or (G) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse
Effect or adversely affect the ability of the Company to consummate
the transactions contemplated hereby; (iii) except as set forth in
Section 5.1(e) of the Company Disclosure Schedule, result in a
violation or breach of, or constitute (with or without notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or lien or other charge or encumbrance)
under any of the terms, conditions or provisions of any note, license,
agreement or other instrument or obligation to which the Company or
any of its subsidiaries or any of their assets may be bound, except
for such violations, breaches had defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance)
as to
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<PAGE> 30
which requisite waivers or consents have been obtained or which, in
the aggregate, would not have a Material Adverse Effect or adversely
affect the ability of the Company to consummate the transactions
contemplated hereby; or (iv) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
this Section 5.1(e) are duly and timely obtained or made and the
approval of the Merger and the approval of this Agreement by the
Company's stockholders has been obtained, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or to any of their respective
assets, except for violations which would not in the aggregate have a
Material Adverse Effect or adversely affect the ability of the Company
to consummate the transactions contemplated hereby. Except as set
forth in Section 5.1(e) of the Company Disclosure Schedule, the
Company does not know of any pending or proposed legislation,
regulation or order (other than those affecting businesses generally)
applicable to the Company or any of its subsidiaries or to the conduct
of the business or operations of the Company or any of its
subsidiaries which, if enacted or adopted, could have a material
adverse effect on the Company or any of its subsidiaries. As of the
date hereof, none of the Company or any of its subsidiaries are
subject to any laws governing lending or factoring businesses. Except
as set forth in Section 5.1(e) of the Company Disclosure Schedule, (x)
neither the Company nor any of its subsidiaries has ceased doing
business in any country which has a value-added or similar tax and
where the Company or any such subsidiary previously conducted business
and (y) the Company and its subsidiaries are not prohibited from
conducting business, as presently conducted, in any place in the world
which has a value-added or similar tax where the Company and its
subsidiaries conduct business or are (as described in Section 5.1(e)
of the Company Disclosure Schedule) considering conducting business.
Section 5.1(e) of the Company Disclosure Schedule also contains true,
correct and complete copies of studies prepared for the Company by
Price Waterhouse and Ernst & Young. To the actual knowledge of the
Company (without independent verification), the information contained
in such studies with respect to those countries in which the Company
and its subsidiaries presently conduct business is accurate in all
material respects as of the date hereof (it being acknowledged and
agreed that neither of such studies has been updated, nor has the
Company consulted with either of such firms or any third party in
making the representation set forth in this sentence).
(f) Litigation. Except as disclosed in the Company
SEC Reports (as defined in Section 5.1(g)) or as disclosed in writing
by the Company to Parent prior to the date hereof, there are no
actions, suits, investigations or proceedings pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries that (i) if adversely determined, would be reasonably
likely to result in any claims against or obligations or liabilities
of the Company or any of its subsidiaries that, alone or in the
aggregate, would have a Material Adverse Effect or (ii) question the
validity of this Agreement or any action to be taken by the Company in
connection with the consummation of the transactions contemplated
hereby.
(g) SEC Reports; Financial Statements.
(i) Since January 1, 1992, the Company has filed all
forms, reports and documents with the Securities and
Exchange Commission (the "SEC")
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<PAGE> 31
required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations
thereunder, all of which complied in all material respects
with all applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated
thereunder (collectively, the "Company SEC Reports").
None of the Company SEC Reports, including, without
limitation, any financial statements or schedules included
therein, at the time filed contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading.
(ii) The consolidated balance sheets and the related
consolidated statements of income, stockholders, equity
(deficit) and cash flows (including the related notes
thereto) of the Company included in the Company SEC
Reports complied as to form in all material respects with
applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior
periods (except as otherwise noted therein), and present
fairly the consolidated financial position of the Company
and its consolidated subsidiaries as of their respective
dates, and the consolidated results of their operations
and their cash flows for the periods presented therein
(subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Except as
set forth in Section 5.1(g) of the Company Disclosure
Schedule, since November 2, 1992, there has not been any
material change, or any application or request for any
material change, by the Company or any of its subsidiaries
in accounting principles, methods or policies for
financial accounting purposes that have affected or will
affect the Company's consolidated financial statements
included in the Company SEC Reports or for tax purposes.
(h) Absence of Certain Changes or Events. Neither the
Company nor any of its subsidiaries has any material indebtedness,
obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted
or unasserted), and, to the best knowledge of the Company, there is no
basis for the assertion of any claim or liability of any nature
against the Company or any of its subsidiaries, which is not fully
reflected in, reserved against or otherwise described in the financial
statements included in the Company SEC Reports. Except as disclosed
in the Company SEC Reports or as disclosed in writing by the Company
to Parent prior to the date hereof or in Section 5.1(h) of the Company
Disclosure Schedule, since January 1, 1995, the business of the
Company and its subsidiaries has been carried on only in the ordinary
and usual course and there has not been any material adverse change in
its business, properties, operations or financial condition and no
event has occurred and no fact or set of circumstances has arisen
which has resulted in or could reasonably be expected to result in a
Material Adverse Effect with respect to the Company and its
subsidiaries.
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<PAGE> 32
(i) Employment Agreements. Except as set forth in
Section 5.1(i) of the Company Disclosure Schedule, the Company is not
a party to any employment, consulting, noncompetition, severance,
golden parachute, indemnification agreement or any other agreement
providing for payments or benefits or the acceleration of payments or
benefits upon the change of control of the Company (including, without
limitation, any contract to which the Company is a party involving
employees of the Company).
(j) Brokers and Finders. Except for the fees and
expenses payable to Allen & Company Incorporated, which fees and
expenses are reflected in its agreement with the Company, a true and
complete copy of which (including all amendments) has been furnished
to Parent, the Company has not employed any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission
in connection with this Agreement or the transactions contemplated
hereby.
(k) S-4 Registration Statement and Proxy
Statement/Prospectus. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
the S-4 Registration Statement or the Proxy Statement (as such terms
are defined in Section 6.4) will (i) in the case of the S-4
Registration Statement, at the time it becomes effective or at the
Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or
(ii) in the case of the Proxy Statement, at the time of the mailing of
the Proxy Statement and at the time of the Stockholder Meeting (as
such term is defined in Section 6.3), contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with
respect to the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the S-4
Registration Statement, such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The
Proxy Statement will (only with respect to the Company) comply as to
form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder.
(l) Taxes. The Company and each subsidiary of the
Company has (x) filed all returns, declarations, reports, information
returns and statements of whatsoever kind ("Tax Returns") in respect
of all federal and all material state, county, local, foreign and
other Taxes (as defined below), that it is required to file through
the date hereof, and (y) paid or provided for the payment of all Taxes
shown due on such Tax Returns and all Taxes, if any, required to be
paid for which no return is required. True and complete copies of all
federal, state, local and foreign Tax Returns relating to the last
three taxable years of the Company and its subsidiaries have been
delivered or made available to Parent. True and complete copies of
the foreign income tax returns for the last taxable year of the
Company's subsidiaries for Germany, Italy, Sweden and the United
Kingdom have been delivered to Parent. Except as otherwise set forth
in Section 5.1(1) of the
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Company Disclosure Schedule, the Company and its subsidiaries have not
been audited, or received written notice (and are not otherwise aware)
of a pending or proposed audit, by the Internal Revenue Service or any
state, local or foreign taxing jurisdiction since the year ended
December 31, 1990 and no agreements or consents extending the period
during which any Taxes may be assessed or collected are now in force.
No material adjustments have been proposed by, or discussed with, the
Internal Revenue Service or by, or with, any other taxing authority
with respect to any open tax years or tax returns. Neither the
Company nor any of its subsidiaries nor any predecessor of the
foregoing has, during the past 5 years or, to the best knowledge of
the Company and its subsidiaries, at any time prior thereto, filed a
consent under section 341(f)(1) of the Code, or agreed under section
341(f)(3) of the Code to have the provisions of section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by the Company or such
subsidiary. Set forth in Section 5.1(1) of the Company Disclosure
Schedule is a complete list of all material differences for the
Company and any subsidiary between their financial statements and
income tax returns which have the effect of deferring the realization
of an item of income to a period after the period for which such item
of income was reported on the Company's financial statements or
accelerating an item of deduction to a period prior to the period for
which the corresponding item of loss or expense was reported on the
Company's financial statements. Except as set forth in Section 5.1(1)
of the Company Disclosure Schedule,.neither the Company nor any of its
subsidiaries has entered into within the last five (5) years, or
otherwise is a party to or bound by, any agreement providing for the
allocation or sharing of Taxes with any entity which is not, either
directly or indirectly, a subsidiary of the Company. The Company is
not a "United States real property holding corporation" as defined in
Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(i)(A)(ii) of the Code. Except as set forth in
Section 5.1(1) of the Company Disclosure Schedule, no closing
agreement pursuant to Section 7121 of the Code or compromise pursuant
to Section 7122 of the Code or any similar provision of state, local
or foreign law has been entered into by, or with respect to, the
Company or any of its subsidiaries or any assets thereof that would be
binding on, or affect the computation or reporting of any Tax
liability of, the Company or any subsidiary thereof for (i) any of the
last three taxable years of the Company or any subsidiary thereof
ending on or prior to the Closing Date or (ii) any taxable year of the
Company or any subsidiary thereof ending after the Closing Date. For
the purpose of this Agreement, the term "Tax" (and, with correlative
meaning, the terms "Taxes" and "Taxable") shall include all federal,
state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, value added, property, withholding,
excise and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts.
(m) Employee Benefits. Section 5.1(m) of the Company
Disclosure Schedule contains an accurate and complete list of all
Company Benefit Plans (as defined below). None of the Company Benefit
Plans is a "multiemployer plan" as defined in Section 3(37) of ERISA
or a multiple employer plan covered by Sections 4063 or 4064 of ERISA.
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<PAGE> 34
(i) Except as disclosed in Section 5.1(m) of the
Company Disclosure Schedule, each Company Benefit Plan
intended to qualify under Section 401 of the Code does so
qualify and the trust maintained pursuant thereto is
exempt from federal income taxation under Section 501 of
the Code. To the best knowledge of the Company, nothing
has occurred with respect to the operation of such plans
which could cause the loss of such qualification or
exemption or the imposition of any liability, penalty, or
tax under ERISA or the Code.
(ii) True and correct copies of the following documents
with respect to each Company Benefit Plans have been made
available or delivered to Parent by the Company: (1) any
plans, and amendments thereto, (2) the most recent forms
5500 and any financial statements attached thereto, (3)
the last Internal Revenue Service determination letter (if
any), (4) summary plan descriptions, (5) the two most
recent actuarial reports, including any such reports for
purposes of FASB 87, 106 and 112, and (6) written
descriptions of all material, non-written agreements
relating to the Company Benefit Plans.
(iii) The Company Benefit Plans have been maintained, in
all material respects, in accordance with their terms and
with all provisions of ERISA and other applicable law.
Neither the Company nor any of its subsidiaries has any
liability with respect to a non-exempt prohibited
transaction within the meaning of Section 4975 of the Code
or Section 406 of ERISA.
(iv) There has been no transaction involving an ERISA
Affiliate while any Company Benefit Plan subject to Title
IV of ERISA has unfunded benefit liabilities, as defined
in Section 4001(a)(18) of ERISA.
(v) Except as disclosed in Section 5.1(m) of the
Company Disclosure Schedule, neither the Company nor any
of its subsidiaries maintains retiree life insurance or
retiree health plans which are "welfare benefit plans"
within the meaning of Section 3(i) of ERISA and which
provide for continuing benefits or coverage for any
participant or any beneficiary of a participant after such
participant's termination of employment where such
participant was an employee of the Company or any
subsidiary of the Company, other than as required by Part
6 of Title I of ERISA and at the sole expense of the
participant or beneficiary.
(vi) Except as disclosed in Section 5.1(m) of the
Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (1) result in any
payment (including, without limitation, bonus or other
compensation severance, unemployment compensation, golden
parachute or otherwise) becoming due to any employee of
the Company under any Company Benefit Plan or otherwise,
(2) increase any benefits otherwise payable under any
Company Benefit Plan, or (3) result in the acceleration of
the time of payment or vesting of any such benefits.
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<PAGE> 35
(vii) (A) None of the employees of the Company or any of
its subsidiaries is represented in his or her capacity as
an employee of such company by any labor organization; (B)
neither the Company nor any of its subsidiaries has
recognized any labor organization nor has any labor
organization been elected as the collective bargaining
agent of any of their employees, nor has the Company or
any of its subsidiaries signed any collective bargaining
agreement or union contract recognizing any labor
organization as the bargaining agent of any of their
employees; and (C) to the best knowledge of the Company,
there is no active or current union organization activity
involving the employees of the Company or any subsidiary
of the Company, nor has there ever been union
representation involving employees of the Company and/or
its subsidiaries.
(viii) For the purposes of this Agreement: (A) the term
"Company Benefit Plan" shall include all employee benefit
plans (as defined in Section 3(3) of ERISA) and all other
employee benefit arrangements or payroll practices,
including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability,
scholarship programs, stock option or restricted stock
plans maintained by the Company or any ERISA Affiliate of
the Company (whether formal or informal, whether for the
benefit of a single individual or for more than one
individual and whether for the benefit of current or
former employees or their beneficiaries) on behalf of the
Company or any of the employees of the Company or any of
its subsidiaries or to which or under which or pursuant to
which the Company or any ERISA Affiliate of the Company
has contributed or is obligated to make contributions on
behalf of the Company or any employees of the Company or
any of its subsidiaries; (B) the term "ERISA" shall refer
to the Employee Retirement Income Security Act of 1974, as
amended; (C) the term "ERISA Affiliate" shall refer to any
trade or business (whether or not incorporated) under
common control or treated as a single employer with the
Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code.
(n) Intangible Property.
(i) Section 5.1(n) of the Company Disclosure Statement
sets forth a list of each patent, trademark, trade name,
service mark, brand mark, brand name, industrial design
and copyright owned or used in business by the Company and
its subsidiaries, as well as all registrations thereof and
pending applications therefor, and each license or other
contract relating thereto (collectively with any other
intellectual property owned or used in the business by the
Company and its subsidiaries, and all of the goodwill
associated therewith, the "Intangible Property") and
indicates, with respect to each item of Intangible
Property listed thereon, the owner thereof and, if
applicable, the name of the licensor and licensee thereof
and the terms of such license or other contract relating
thereto. Except as set forth in Section 5.1(n) of the
Company Disclosure Schedule, each of the foregoing is
owned free and clear of any and all liens, mortgages,
pledges, security interests, levies, charges,
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<PAGE> 36
options or any other encumbrances, restrictions or
limitations of any kind whatsoever and none of the Company
or any of its subsidiaries has received any notice to the
effect that any other entity has any claim of ownership
with respect thereto. To the best knowledge of the
Company, the use of the foregoing by the Company and its
subsidiaries does not conflict with, infringe upon,
violate or interfere with or constitute an appropriation
of any right, title, interest or goodwill, including,
without limitation, any intellectual property right,
patent, trademark, trade name, service mark, brand mark,
brand name, computer program" industrial design, copyright
or any pending application therefor of any other entity.
Except as set forth in Section 5.1(n) of the Company
Disclosure Schedule, no claims have been made, and none of
the Company or any of its subsidiaries has received any
notice, that any of the foregoing is invalid, conflicts
with the asserted rights of other entities, or has not
been used or enforced (or has failed to be used or
enforced) in a manner that would result in the
abandonment, cancellation or unenforceability of any item
of the Intangible Property.
(ii) The Company and each of its subsidiaries possesses
all Intangible Property, including, without limitation,
all know-how, formulae and other proprietary and trade
rights necessary for the conduct of their businesses as
now conducted. None of the Company or any of its
subsidiary has taken or failed to take any action that
would result in the forfeiture or relinquishment of any
such Intangible Property used in the conduct of their
respective businesses as now conducted.
(o) Certain Contracts. Section 5.1(o) of the Company
Disclosure Schedule lists all of the following contracts to which the
Company or a subsidiary is a party or by which any one of them or any
of their properties or assets may be bound ("Listed Agreements"): (i)
all employment or other contracts with any employee, consultant,
officer or director of the Company or any subsidiary of the Company
(or any company which is controlled by any such individual) whose
total rate.of annual remuneration is estimated to exceed $100,000 in
1995; (ii) union, guild or collective bargaining contracts relating to
employees of the Company or any subsidiary; (iii) instruments for
money borrowed (including, without limitation, any indentures,
guarantees, loan agreements, sale and leaseback agreements, or
purchase money obligations incurred in connection with the acquisition
of property other than in the ordinary course of business) in excess
of $500,000; (iv) underwriting, purchase or similar agreements entered
into in connection with the Company's or any of its subsidiaries,
currently existing indebtedness; (v) agreements for acquisitions or
dispositions (by merger, purchase or sale of assets or stock or
otherwise) of material assets entered into within the last two years,
as to which the transactions contemplated have been consummated or are
currently pending; (vi) joint venture or partnership agreements
entered into; (vii) material licensing, merchandising and distribution
contracts; (viii) contracts granting any person or other entity
registration rights; (ix) guarantees, suretyships, indemnification and
contribution agreements, in excess of $500,000; (x) contracts between
the Company and its subsidiaries and their ten largest retailers, as
measured as a percent of Company sales to the customers of such
retailers; (xi) contracts with respect to duty-free arrangements
including any lease or
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<PAGE> 37
revenue-sharing or profit-sharing arrangements; (xii) contracts with
any governmental or quasi-governmental entity concerning refunds or
advances; and (xiii) other contracts which materially affect the
business, properties or assets of the Company and its subsidiaries
taken as a whole, and are not otherwise disclosed in this Agreement or
were entered into other than in the ordinary course of business. A
true and complete copy (including all amendments) of each Listed
Agreement and each contract with a retailer listed on Exhibit D to
Section 5.1(o) of the Company Disclosure Schedule, has been made
available to Parent. Neither the Company nor any subsidiary (i) to
the knowledge of the Company is in breach or default in any material
respect under any of the Listed Agreements or (ii) has any knowledge
of any other material breach or default under any Listed Agreement by
any other party thereto or by any other person or entity bound
thereby, except in the case of (i) or (ii) breaches or defaults which
would not, individually or in the aggregate, have a Material Adverse
Effect with respect to the Company. At the Effective Time, no person
will have the right, by contract or otherwise, to become, nor does any
entity have the right to designate or cause the Company to appoint a
person as, a director of the Company.
(p) Accounting Matters. Neither the Company nor, to
the best of its knowledge, any of its affiliates, has taken or agreed
to take any action that would prevent the Parent from accounting for
the business combination to be effected by the Merger as a
"pooling-of-interests.11 The Company has not failed to bring to the
attention of Parent any actions, or agreements or understandings,
whether written or oral, to act that would be reasonably likely to
prevent Parent from accounting for the Merger as a pooling-of-
interests.
(q) Unlawful Payments and Contributions. To the best
knowledge of the Company, neither the Company, any subsidiary of the
Company nor any of their respective directors, officers or, any of
their respective employees or agents has, with respect to the
businesses of the Company and its subsidiaries, (i) used any funds for
any unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any person or entity.
(r) Commission Rates. Set forth in Section 5.1(r) of
the Company Disclosure Statement is a list of the commissions earned
by the Company and its subsidiaries in percentages of invoiced VAT and
the Swedish Krona amount of invoiced VAT processed by the Company and
its subsidiaries from January 1, 1993 to July 31, 1995.
(s) Listings. The Company's securities are not
listed, or quoted, for trading on any U.S. domestic or foreign
securities exchange, except as set forth in Section 5.1(s) of the
Company Disclosure Schedule.
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<PAGE> 38
(t) Environmental Matters. Except as disclosed in the
Company's SEC Reports or as disclosed in writing by the Company to
Parent prior to the date hereof, (i) the Company and its subsidiaries
and the operations thereof are in material compliance with all
Environmental Laws (as defined below); (ii) there are no judicial or
administrative actions, suits, proceedings or investigations pending
or, to the knowledge of the Company, threatened against the Company or
any subsidiary of the Company alleging the violation of any
Environmental Law and neither the Company nor any subsidiary of the
Company has received notice from any governmental body or person
alleging any violation of or liability under any Environmental Laws,
in either case which could reasonably be expected to result in
material Environmental Costs and Liabilities; and (iii) to the
knowledge of the Company, there are no facts, circumstances or
conditions relating to, arising from associated with or attributable
to the Company or its subsidiaries or any real property currently or
previously owned, operated or leased by the Company or its
subsidiaries that could reasonably be expected to result in material
Environmental Costs and Liabilities. For the purpose of this Section
5.1(t), the following terms have the following definitions: (X)
"Environmental Costs and Liabilities" means any losses, liabilities,
obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including, without limitation, fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and
the costs of investigation and feasibility studies, remedial or
removal actions and cleanup activities) arising from or under any
Environmental Law; (Y) "Environmental Laws" means any applicable
federal, state, local, or foreign law (including common law), statute,
code, ordinance, rule, regulation or other requirement relating to the
environment, natural resources, or public or employee health and
safety; (Z) "Hazardous Material" means any substance, material or
waste regulated by federal, state or local government, including,
without limitation, any substance, material or waste which is defined
as a "hazardous waste," "hazardous material," "hazardous substance,"
"toxic waste" or "toxic substance" under any provision of
Environmental Law and including but not limited to petroleum and
petroleum products.
(u) Disclosure. No representation or warranty by the
Company in this Agreement and no statement contained in the Schedules
to this Agreement or any certificate delivered by the Company to
Merger Sub or Parent pursuant to this Agreement, contains any untrue
statement of a material fact or omits any material fact necessary to
make the statements herein or therein not misleading when taken
together in light of the circumstances in which they were made, it
being understood that as used in this Section 5.1(u) "material" means
material to the Company and its subsidiaries taken as a whole.
5.2. Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub each represents and warrants to the Company that (except
to the extent set forth on the Disclosure Schedule previously delivered by
Parent to the Company (the "Parent Disclosure Schedule")):
(a) Corporate Organization and Qualification. Each of
Parent and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is qualified and
18
<PAGE> 39
in good standing as a foreign corporation in each jurisdiction where
the properties owned, leased or operated, or the business conducted,
by it require such qualification, except where the failure to so
qualify or be in such good standing would not have a Material Adverse
Effect. Each of Parent and its Significant Subsidiaries has all
requisite power and authority (corporate or otherwise) to own its
properties and to carry on its business as it is now being conducted.
Parent and Merger Sub have heretofore made available to the Company
complete and correct copies of their Certificate of Incorporation, as
the case may be, and their respective By-Laws.
(b) Capitalization. The authorized capital stock of
Parent consists of (i) 400,000,000 Parent Common Shares of which, as
of September 30, 1995, approximately 181,000,000 Parent Common Shares
were issued and outstanding and 3,000,000 Parent Common Shares were
held in treasury and (ii) 1,000,000 shares of preferred stock, $.01
par value per share (the "Parent Preferred Shares"), none of which is
issued or outstanding. All of the outstanding shares of capital stock
of Parent have been duly authorized and validly issued and are fully
paid and nonassessable. All outstanding shares of capital stock or
other equity interests of the subsidiaries of Parent are owned by
Parent or a direct or indirect wholly-owned subsidiary of Parent, free
and clear of all liens, charges, encumbrances, claims and options of
any nature. Except as set forth in Parent SEC Reports (as defined in
Section 5.2(g)) or as contemplated by this Agreement, there are not,
as of the date hereof, any outstanding or authorized options,
warrants, calls, rights (including preemptive rights) commitments or
any other agreements of any character which Parent or any of its
subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, sell, purchase, redeem or acquire any Parent Common Shares
or any shares of capital stock or any of its securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of capital stock of Parent or any of its
subsidiaries. There are not as of the date hereof and there will not
be at the Effective Time any stockholder agreements, voting trusts or
other agreements or understandings to which Parent is a party or to
which it is bound relating to the voting of any shares of the capital
stock of Parent. Parent has reserved for issuance under a stock
option plan or plans of Parent a sufficient number of Parent Common
Shares to cover the exercise of the Options and Warrant assumed by
Parent in accordance with Section 4.1(d).
(c) Authorization for Parent Common Shares. Parent
has taken all necessary action to permit it to issue the number of
Parent Common Shares required to be issued pursuant to Article IV.
Parent Common Shares issued pursuant to Article IV will, when issued,
be validly issued, fully paid and nonassessable and no person will
have any preemptive right of subscription or purchase in respect
thereof. Parent Common Shares will, when issued, be registered under
the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws and will, when
issued, be listed on the NYSE, subject to official notice of issuance.
(d) Authority Relative to this Agreement. The Board
of Directors of Parent and Merger Sub have each declared the Merger
advisable and each of Parent and Merger Sub has the requisite
corporate power and authority to approve, authorize, execute and
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<PAGE> 40
deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by Parent and Merger Sub
of the transactions contemplated hereby have been duly and validly
authorized by the respective Boards of Directors of Parent and Merger
Sub and by Parent as sole stockholder of Merger Sub, and no other
corporate proceedings on the part of Parent and Merger Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each of Parent and Merger Sub and,
assuming this Agreement constitutes the valid and binding agreement of
the Company, constitutes valid and binding agreements of Parent and
Merger Sub, enforceable against them in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors, rights and to general principles of equity.
(e) Consents and Approvals; No Violation. Except as
set forth in Section 5.2(e) of the Parent Disclosure Schedule, neither
the execution and delivery of this Agreement by Parent or Merger Sub
nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby will (i) conflict with or result in any breach of
any provision of the respective Certificate of Incorporation and the
respective By-Laws of Parent and Merger Sub; (ii) require any consent,
approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (A) in connection
with the applicable requirements, if any, of the HSR Act, (B) pursuant
to the applicable requirements of the Securities Act and the Exchange
Act, (C) the filing of the Certificate of Merger pursuant to the DGCL
and appropriate documents with the relevant authorities of other
states in which Parent is authorized to do business, (D) as may be
required by any applicable state securities or takeover laws, (E) such
filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, (F) such filings,
consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any
foreign country, (G) filings with, and approval of, the NYSE or, (H)
where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the
aggregate have a Material Adverse Effect or adversely affect the
ability of Parent or Merger Sub to consummate the transactions
contemplated hereby; (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration or lien or other charge or encumbrance) under any of the
terms, conditions or provisions of any note, license, agreement or
other instrument or obligation to which Parent or any of its
subsidiaries or any of their assets may be bound, except for such
violations, breaches and defaults (or rights of termination,
cancellation, or acceleration or lien or other charge or encumbrance)
as to which requisite waivers or consents have been obtained or which,
in the aggregate, would not have a Material Adverse Effect or
adversely affect the ability of Parent and Merger Sub to consummate
the transactions contemplated hereby; or (iv) assuming the consents,
approvals, authorizations or permits and filings or notifications
referred to in this Section 5.2(e) are duly and timely obtained or
made, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of its subsidiaries or to any
of their respective assets, except for violations which would not in
the aggregate have a Material
20
<PAGE> 41
Adverse Effect or adversely affect the ability of Parent and Merger
Sub to consummate the transactions contemplated hereby.
(f) Ownership of Merger Sub; No Prior Activities;
Assets of Merger Sub.
(i) Merger Sub was formed solely for the purpose
of the Merger and engaging in the transactions
contemplated hereby.
(ii) As of the date hereof and the
Effective Time, the capital stock of Merger Sub is and
will be directly owned 100% by Parent. Further, there are
not as of the date hereof and there will not be at the
Effective Time any outstanding or authorized options,
warrants, calls, rights, commitments or any other
agreements of any character which Merger Sub is a party
to, or may be bound by, requiring it to issue, transfer,
sell, purchase, redeem or acquire any shares of capital
stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for
or acquire, any shares of capital stock of Merger Sub.
(iii) As of the date hereof and the
Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or
organization and the transactions contemplated hereby,
Merger Sub has not and will not have incurred, directly or
indirectly through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into
any agreements or arrangements with any person or entity.
(g) SEC Reports; Financial Statements.
(i) Since January 1, 1992, Parent has filed all
forms, reports and documents with the SEC required to be
filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder, all of which
complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act
(the "Parent SEC Reports"). None of Parent SEC Reports,
including, without limitation, any financial statements or
schedules included therein, at the time filed contained
any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(ii) The consolidated balance sheets and
the related statements of income, stockholders' equity and
cash flow (including the related notes thereto) of Parent
included in Parent SEC Reports 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
basis consistent with prior periods (except as otherwise
noted therein), and present fairly the consolidated
financial position of Parent and its consolidated
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subsidiaries as of their respective dates, and the results
of its operations and its cash flow for the periods
presented therein (subject, in the case of the unaudited
interim financial statements, to normal year-end
adjustments).
(h) Absence of Certain Changes or Events. Except as
disclosed in Parent SEC Reports filed by Parent and as set forth in
Section 5.2(h) of the Parent Disclosure Schedule, since January 1,
1995, the business of Parent has been carried on only in the ordinary
and usual course and there has not been any adverse change in its
business, properties, operations or financial condition and no event
has occurred and no fact or set of circumstances has arisen which has
resulted in or could reasonably be expected to result in a Material
Adverse Effect.
(i) Litigation. Except as disclosed in the Parent SEC
Reports, there are no actions, suits, investigations or proceedings
pending or, to the best knowledge of Parent threatened against Parent
or any of its subsidiaries t at Parent or any of its subsidiaries
that, alone or in the aggregate, would have a Material Adverse Effect
or (ii) question the validity of the Agreement or any action to be
taken by Parent in connection with the consummation of the
transactions contemplated hereby.
(j) S-4 Registration Statement and Proxy
Statement/Prospectus. None of the information to be supplied by
Parent or Merger Sub for inclusion or incorporation by reference in
the S-4 Registration Statement will, at the time it becomes effective
and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
If at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its subsidiaries shall
occur which is required to be described in the S-4 Registration
Statement, such event shall be so described, and an amendment or
supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the stockholders of the Parent. The S-4
Registration Statement will comply (only with respect to Parent and
Merger Sub) as to form in all material respects with the provisions of
the Securities Act and the rules and regulations promulgated
thereunder.
(k) Brokers and Finders. Parent has not employed any
investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
(l) Ownership of Shares. As of the date hereof, none
of the Parent Companies owns any Shares.
(m) Accounting Matters. Neither Parent nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to
take any action that would prevent Parent from accounting for the
business combination to be effected by the Merger as a "pooling-
of-interests." Parent has not failed to bring to the attention of the
Company any actions,
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or agreements or understandings, whether written or oral, to act that
would be reasonably likely to prevent Parent from accounting for the
Merger as a pooling-of-interests, any by
(n) Disclosure. No representation or was Parent or
Merger Sub in this Agreement and no statement contained in the
Schedules to this Agreement or any certificate delivered by Parent or
Merger Sub to the Company pursuant to this Agreement, contains any
untrue statement of a material fact or omits any material fact
necessary to make the statements herein or therein not misleading when
taken together in light of the circumstances in which they were made,
it being understood that as used in this Section 5.2(m) "material"
means material to Parent or Merger Sub and their subsidiaries taken as
a whole.
ARTICLE VI
Additional Covenants and Agreements
6.1. Conduct of Business.
(a) The Company covenants and agrees that, during the
period from the date of this Agreement to the Effective Time (unless
Parent shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), the Company will, and will cause each
of its subsidiaries to, conduct its operations according to its
ordinary and usual course of business consistent with past practice
and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organizations, keep available the
service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall
be ' unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise permitted in this
Agreement, prior to the Effective Time, neither the Company nor any of
its subsidiaries will, without the prior written consent of Parent (i)
except (x) as otherwise provided in this Agreement or as set forth in
Section 6.1(a) of the Company Disclosure Schedule and (y) for shares
to be issued upon exercise of the outstanding Options and the Warrant,
as the case may be, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance of (A) any additional
shares of capital stock of any class, or any securities or rights
convertible into, exchangeable for, or evidencing the right to
subscribe for any shares of capital stock, or any rights, warrants,
options, calls, commitments or any other agreements of any character
to purchase or acquire any shares of capital stock or any securities
or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any shares of capital stock, or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof, (ii) except as provided in Section
4.1(b), redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities
(including the Shares), (iii) split, combine, subdivide or reclassify
any shares of its capital stock or declare, set aside for payment or
pay any dividend, or make any other actual, constructive or deemed
distribution in respect of any
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shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such, except for regular quarterly
dividends on the Preferred Shares not in excess of $.3125 per share in
accordance with customary record and payment dates, (iv) adopt a plan
of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries not constituting an inactive
subsidiary (other than the Merger), (v) adopt any amendments to its
Certificate of Incorporation or By-Laws or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any subsidiary not constituting an
inactive subsidiary of the Company, (vi) make any acquisition, by
means of merger, consolidation or otherwise, or disposition, of assets
or securities, except for joint venture agreements under negotiation
in the countries set forth in Section 6.1(a) of the Company Disclosure
Schedule, (vii) other than in the ordinary course of business
consistent with past practice and except to the extent required under
any joint venture agreement listed in Section 5.1(b) of the Company
Disclosure Schedule or as set forth in Section 6.1(a) of the Company
Disclosure Schedule, incur any indebtedness for borrowed money or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other person, other than to
the Company or any wholly owned subsidiary of the Company, (viii) take
any action with respect to the Warrant other than as contemplated by
the Warrant Amendment, dated the date hereof, between the Company and
Allen & Company Incorporated, (ix) except as set forth in Section
6.1(a) of the Company Disclosure Schedule, make or revoke any material
Tax election, settle or compromise any material federal, state, local
or foreign Tax liability or change (or make a request to any taxing
authority to change) any material aspect of its method of accounting
for Tax purposes (except that the Company and its subsidiaries may
make Tax elections that are consistent with prior such elections (in
past years) so long as the Company provides Parent with reasonable
prior notice, to the extent possible, of its .intention to do so (it
being understood that the giving of such notice shall not be deemed a
request for, or give Parent a right of, approval of such election)),
(x) incur any liability for Taxes other than in the ordinary course of
business, or (xi) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
(b) The Company and its subsidiaries shall not
(without the prior written consent of Parent) grant any material
increases in the compensation of any of its directors, officers or key
employees, except in the ordinary course of business and in accordance
with its customary past practices; (A) pay or agree to pay any
pension, retirement allowance or other employee benefit not required
or contemplated by any of the existing benefit, severance, pension or
employment plans, agreements or arrangements as in effect on the date
hereof to any such director, officer or key employee, whether past or
present; (B) enter into any new or materially amend any existing
employment or severance agreement with any such director, officer or
key employee; or (C) except as may be required to comply with
applicable law, become obligated under any new pension plan, welfare
plan, multi-employer plan, employee benefit plan, severance plan,
benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, or amend any such plan or arrangement in
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<PAGE> 45
existence on the date hereof if such amendment would have the effect of
enhancing any benefits thereunder.
6.2. No Solicitation.
(a) The Company, its subsidiaries and their respective
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries)
(collectively, the "Company's Representatives") shall immediately
cease any discussions or negotiations with any party that may be
ongoing with respect to a Competing Transaction (as defined below).
From and after the date hereof-until the termination of this
Agreement, neither the Company nor any of its subsidiaries will, nor
will the Company authorize or permit any of its subsidiaries or any of
the Company Representatives to, directly or indirectly, initiate,
solicit or knowingly encourage (including by way of furnishing
non-public information), or take any other action to facilitate
knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries
or to obtain a Competing Transaction or agree to or endorse any
Competing Transaction, and the Company shall notify Parent orally
(within one business day) and in writing (as promptly as practicable)
of all of the relevant details relating to all inquiries and proposals
which it or any of its subsidiaries or any such Company Representative
may receive relating to any of such matters and, if such inquiry or
proposal is in writing, the Company shall deliver to Parent a copy of
such inquiry or proposal promptly provided, however, that the Company
shall not be obligated to deliver to Parent a copy of such written
inquiry or proposal if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal
counsel), determines in good faith that delivery to Parent of such
written inquiry or proposal would cause the Board of Directors of the
Company to breach its fiduciary duties to stockholders under
applicable law; provided, further, that nothing contained in this
Section 6.2 shall prohibit the Company or its Board of Directors from
(i) taking and disclosing to its stockholders a position contemplated
by Exchange Act Rule 14e-2 or (ii) making any disclosure to its
stockholders that, in the good faith judgment of its Board of
Directors, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), is required under applicable law;
provided, further, however, that nothing contained in this Section 6.2
shall prohibit the Company from (A) furnishing information to, or
entering into discussions or negotiations with, any person or entity
that after the date hereof states in an unsolicited writing that it
has a bona fide serious interest to make a Superior Proposal (as
defined below) if (1) (x) the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent legal
counsel), determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary
duties to stockholders under applicable law and (y) after consultation
with and based upon the advice of an independent financial advisor
(who may be the Company's regularly engaged independent financial
advisor) determines in good faith that such person or entity is
capable of
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<PAGE> 46
making, financing and consummating a Superior Proposal and (2) prior
to taking such action, the Company (x) provides reasonable notice to
Parent to the effect that it is taking such action and (y) receives
from such person or entity an executed confidentiality agreement in
reasonably customary form or (B) failing to make or withdrawing or
modifying its recommendation referred to in Section 6.2(b) if there
exists a Competing Transaction and the Board of Directors of the
Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law. For purposes
of this Agreement, "Competing Transaction" shall mean any of the
following (other than the transactions between the Company, Parent and
Merger Sub contemplated hereunder) involving the Company: (i) any
merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or a
substantial portion of the assets of the Company and its subsidiaries,
taken as a whole, or of more than 25% of the equity securities of the
Company or any of its subsidiaries, in any case in a single
transaction or series of transactions; (iii) any tender offer or
exchange offer for 25% or more of the outstanding shares of capital
stock of the Company or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) Except as set forth in this Section 6.2, the Board
of Directors of the Company shall not approve or recommend, or cause
the Company to enter into any agreement with respect to, any Competing
Transaction. Notwithstanding the foregoing, if the Board of Directors
of the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that it is
necessary to do so in order to comply with its fiduciary duties to
stockholders under applicable law, the Board of Directors of the
Company may approve or recommend a Superior Proposal (as defined
below) or cause the Company to enter into an agreement with respect to
a Superior Proposal, but in each case only after providing reasonable
written notice to Parent (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior
Proposal. In addition, if the Company proposes to enter into an
agreement with respect to any Competing Transaction, it shall
concurrently with entering into such an agreement pay, or cause to be
paid, to Parent the fee required by Section 8.5(a) hereof. For
purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all or substantially all the
Shares then outstanding or all or substantially all the assets of the
Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of
a financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Merger.
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6.3. Meeting of Stockholders. The Company will take all action
necessary in accordance with applicable law and its Certificate of
Incorporation and By-Laws to convene a meeting of its stockholders (the
"Stockholder Meeting") as promptly as practicable to consider and vote upon the
approval of the Merger. Subject to the fiduciary duties of the Company's Board
of Directors under applicable law after consultation with and based upon the
advice of independent legal counsel the Board of Directors of the Company shall
recommend and declare advisable such approval and the Company shall take all
lawful action to solicit, and use its best efforts to obtain, such approval.
6.4. Registration Statement. Parent will, as promptly as
practicable, prepare and file with the SEC a registration statement on Form S-4
(the "S-4 Registration Statement"), containing a proxy statement/prospectus and
a form of proxy, in connection with the registration under the Securities Act
of Parent Common Shares issuable upon conversion of the Shares and the other
transactions contemplated hereby. The Company will, as promptly as
practicable, prepare and file with the SEC a proxy statement that will be the
same proxy statement/prospectus contained in the S-4 Registration Statement and
a form of proxy, in connection with the vote of the Company's stockholders with
respect to the Merger (such proxy statement/prospectus, together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's stockholders, is herein called the "Proxy Statement").
Parent and the Company will, and will cause their accountants and lawyers to,
use their best efforts to have or cause the S-4 Registration Statement declared
effective as promptly as practicable, including, without limitation, causing
their accountants to deliver necessary or required instruments such as opinions
and certificates, and will take any other action required or necessary to be
taken under federal or state securities laws or otherwise in connection with
the registration process, it being understood and agreed that Katten Muchin &
Zavis, counsel to the Company, will render the tax opinion referred to in
Section 7.2(g) on (i) the date the preliminary Proxy Statement is filed with
the SEC and (ii) the date the S-4 Registration Statement is filed with the SEC.
The Company will use its best efforts to cause the Proxy Statement to be mailed
to stockholders of the Company at the earliest practicable date and will
coordinate and cooperate with Parent with respect to the timing of the
Stockholder Meeting and shall use its best efforts to hold such Stockholder
meeting as soon as practicable after the date hereof.
6.5. Best Efforts. The Company and Parent shall: (i) promptly
make their respective filings and thereafter make any other required
submissions under all applicable laws with respect to the Merger and the other
transactions contemplated hereby; and (ii) use their best efforts to promptly
take, or cause to be taken, all other actions and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement as soon as practicable.
6.6. Access to Information. Upon reasonable notice, the
Company shall (and shall cause each of its subsidiaries to) afford to officers,
employees, counsel, accountants and other authorized representatives of Parent
("Parent's Representatives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books and
records and, during such period, shall (and shall cause each of its
subsidiaries to) furnish promptly to Parent's Representatives all information
concerning its business, properties and personnel as may reasonably be
requested, provided that no investigation pursuant to this Section
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6.6 shall affect or be deemed to modify any of the representations or
warranties made by the Company. Parent agrees that it will not, and will cause
Parent's Representatives not to, use any information obtained pursuant to this
Section 6.6 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. In connection with the foregoing, the Company
agrees to use its best efforts to cause the Company's independent accountants
to provide their workpapers to Parent, subject to the confidentiality
provisions of this Section 6.6. Subject to the requirements of law, Parent will
keep confidential, and will cause Parent's Representatives to keep
confidential, all information and documents obtained pursuant to this Section
6.6 except as otherwise consented to by the Company; provided, however, that
Parent shall not be precluded from making any disclosure which it deems
required by law in connection with the Merger. In the event Parent is required
to disclose any information or documents pursuant to the immediately preceding
sentence, Parent shall give prompt prior notice of such disclosure to the
Company. Upon any termination of this Agreement, Parent will collect and
deliver to the Company all documents obtained pursuant to this Section 6.6 by
it or any of Parent's Representatives then in their possession and any copies
thereof. Notwithstanding anything to the contrary contained herein, in the
event this Agreement is terminated and the Merger abandoned pursuant to Article
VIII, the terms of the Confidentiality Agreement, dated August 23, 1995 (the
"Confidentiality Agreement"), between Parent and the Company shall survive such
termination subject to the conditions and limitations set forth in such
Confidentiality Agreement.
6.7. Publicity. The parties hereto agree that they will
consult with each other concerning any proposed press release or public
announcement pertaining to the Merger in order to seek to agree upon the text
of any such press release or the making of such public announcement.
6.8. Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall,
and shall cause the Surviving Corporation to, indemnify, defend and
hold harmless the present and former officers, directors and employees
of the Company and any of its subsidiaries against all losses,
expenses, claims, damages or liabilities arising out of actions or
omissions occurring on or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement)
to the full extent (not otherwise covered by insurance) permitted or
required under applicable law (and shall also advance expenses as
incurred to the fullest extent permitted under applicable law,
provided that the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that
such person is not entitled to indemnification); provided, however,
the indemnification provided hereunder by Parent shall not be greater
than (x) the indemnification permissible pursuant to the Company's
Certificate of Incorporation and By- Laws, as in effect as of the date
hereof or (y) the indemnification actually provided by the Company as
of the date hereof. Parent and Merger Sub agree that all rights to
indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the
present or former directors, officers, employees, fiduciaries and
agents of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") as provided in the Company's Certificate of
Incorporation or By-Laws or pursuant to other agreements, or
certificates
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of incorporation or by-laws or similar documents of any of the
Company's subsidiaries, as in effect as of the date hereof, with
respect to matters occurring through the Effective Time, shall survive
the Merger and shall continue in full force and effect for a period of
five (5) years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim (a "Claim") asserted
or made within such period shall continue until the disposition of
such Claim.
(b) Parent shall cause to be maintained in effect for
not less than three (3) years the current policies of directors, and
officers, liability insurance and fiduciary liability insurance
maintained by the Company and the Company's subsidiaries with respect
to matters occurring prior to the Effective Time to the extent
required to cover the types of actions and omissions currently covered
by such policies; provided, however, that (i) Parent may substitute
therefor policies of substantially the same coverage containing terms
and conditions which are not less advantageous, in any material
respect, to the Indemnified Parties and (ii) Parent shall not be
required to pay an annual premium for such insurance in excess of
$150,000 but in such case shall purchase as much coverage as possible
for such amount.
(c) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by
this Agreement is commenced, whether before or after the Closing, the
parties hereto agree to cooperate and use their respective best
efforts to vigorously defend against and respond thereto.
(d) This Section 6.8 is intended to benefit the
Indemnified Parties and shall be binding on all successors and assigns
of Parent, Merger Sub, the Company and the Surviving Corporation.
6.9. Affiliates of the Company. The Company has identified to
Parent each Company Affiliate and each Company Affiliate has delivered to
Parent on or prior to the date hereof, a written agreement (i) that such
Company Affiliate will not sell, pledge, transfer or otherwise dispose of any
Parent Common Shares issued to such Company Affiliate pursuant to the Merger,
except in compliance with Rule 145 promulgated under the Securities Act or an
exemption from the registration requirements of the Securities Act and (ii)
that on or prior to the earlier of (x) the mailing of the Proxy
Statement/Prospectus or (y) the thirtieth day prior to the Effective Time such
Company Affiliate will not thereafter sell or in any other way reduce such
Company Affiliate's risk relative to any Parent Common Shares received in the
Merger (within the meaning of the SEC's Financial Reporting Release No. 1,
"Codification of Financing Reporting Policies," Section 201.01 47 F.R. 21028
(April 15, 1982)), until such time as financial results (including combined
sales and net income) covering at least 30 days of post- merger operations have
been published, except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC.
6.10. Taxes. In respect of Tax Returns of the Company or any
subsidiary not required to be filed prior to the date hereof, the Company
shall, to the extent permitted by law without any penalty, delay (or cause such
subsidiary to delay) the filing of any such Tax Returns until after the
Effective Time; provided, however, that the Company shall notify Parent of its
intention to delay (or cause such subsidiary to delay) any such filing and
shall not so delay the
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filing of a Tax Return if Parent and the Company agree that so delaying the
filing of such Tax Return is not in the best interests of either the Company or
Parent. If any such Tax Return is required to be filed on or prior to the
Effective Time, the Company or its subsidiaries, as the case may be, shall
prepare and timely file such Tax Return in,a manner consistent with prior years
and all applicable laws and regulations; provided, however, that Parent shall
be notified and given an opportunity to review and to comment, prior to the
filing thereof, on any such Tax Return (a) which relates to a Tax which is
based upon or measured by income, (b) which is not regularly filed by the
Company or a subsidiary thereof in connection with the conduct of its business
in the ordinary course, or (c) for which Parent requests such opportunity,
although neither Parent's approval nor consent shall be required prior to the
filing of any such Tax Return.
6.11. Maintenance of Insurance. Between the date hereof and
through the Effective Time the Company will use its best efforts to maintain in
full force and effect all of its presently existing policies of insurance or
insurance comparable to the coverage afforded by such policies.
6.12. Representations and Warranties. Neither the Company on
the one hand, nor Parent or Merger Sub on the other, will take any action that
would cause any of the representations and warranties set forth in Section 5.1
or 5.2, as the case may be, not to be true and correct in all material respects
at and as of the Effective Time.
6.13. Filings; Other Action. Subject to the terms and
conditions herein provided, the Company, Parent and Merger Sub shall: (a)
promptly make their respective filings and thereafter make any other required
submissions under the HSR Act, the Securities Act and the Exchange Act with
respect to the Merger; and (b) use best efforts promptly to take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
as soon as practicable.
6.14. Notification of Certain Matters. Each of the Company and
Parent shall give prompt notice to the other of (a) any notice of, or other
communication relating to,a default or event which, with notice or lapse of
time or both,would become a default, received by it or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the financial condition, properties, businesses or
results of operations of it and its subsidiaries taken as a whole to which it
or any of its subsidiaries is a party or is subject, (b) any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement, or (c) any material adverse change in their respective
financial condition, properties, businesses or results of operations, taken as
a whole, other than changes resulting from general economic conditions.
6.15. Pooling Accounting. None of the Company, any of its
subsidiaries, Parent nor Merger Sub will take any action that could prevent the
Merger from being accounted for as a pooling-of-interests and the Company will
bring to the attention of Parent, and Parent will bring to the attention of the
Company, any actions, or agreements or understandings, whether written or oral,
to act that could be reasonably likely to prevent Parent from accounting for
the Merger as a pooling-of-interests.
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6.16. Blue Sky Permits. Parent shall use its best efforts to
obtain, prior to the effective date of the S-4 Registration Statement, all
necessary state securities laws or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Merger, and
will pay all expenses incident thereto.
6.17. NYSE Listing. Parent shall use its best efforts to cause
the Parent Common Shares constituting the Share Consideration to be listed on
the NYSE, subject to notice of official issuance thereof.
6.18. Pooling Letter. Parent shall use commercially reasonable
efforts to cause Ernst & Young LLP ("E&Y") to deliver to Parent a letter to the
effect that pooling-of-interests accounting is appropriate for the Merger if it
is closed and consummated in accordance with the terms of this Agreement, and
the Company shall use commercially reasonable efforts to cause Deloitte &
Touche LLP ("Deloitte") to cooperate fully with E&Y (including, without
limitation, sharing information, analysis and work product, engaging in active
discussions and delivering to the Company a letter substantially similar to
E&Y's letter to Parent) in connection with E&Y's delivery of such letter.
6.19. Comfort Letter. The Company shall use its best efforts to
cause to be delivered to Parent a letter of Deloitte, independent public
accountants to the Company, dated a date within two business days before the
date on which the S-4 Registration Statement shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
S-4 Registration Statement.
6.20. Tax-Free Reorganization Treatment. The Company, Parent
and Merger Sub shall execute and deliver to Katten Muchin & Zavis, counsel to
the Company, a certificate substantially in the form attached hereto as Exhibit
C at such time or times as reasonably requested by such law firm in connection
with its delivery of an opinion with respect to the transactions contemplated
hereby, and shall provide a copy thereof to Parent and the Company. Prior to
the Effective Time, none of the Company, Parent or Merger Sub shall take or
cause to be taken any action which would cause to be untrue (or fail to take or
cause not to be taken any action which would cause to be true) any of the
representations in Exhibit C.
6.21. Combined Operations. Parent agrees to make publicly
available financial statements reflecting at least 30 days of combined
operations of Parent and the Company on or prior to March 5, 1996.
6.22. Employment Agreements. At the Closing, Parent shall offer
or cause the Surviving Corporation to offer to enter into employment agreements
with each of the individuals listed in Section 6.22 of the Company Disclosure
Schedule (the "Employment Agreements"), each such agreement to be substantially
in the form previously agreed to among Parent, the Company and each such
individual on or prior to the date hereof.
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ARTICLE VII
Conditions
7.1. Conditions to the Obligations of Parent and Merger Sub.
The respective obligations of Parent and Merger Sub to consummate the Merger
are subject to the fulfillment at or prior to the Effective Time of the
following conditions, any or all of which may be waived in whole or in part by
Parent or Merger Sub, as the case may bell to the extent permitted by
applicable law.
(a) Certificate. The representations and warranties
of the Company set forth in this Agreement shall be true and correct
in all material respects on and as of the Effective Time with the same
force and effect as though the same had been made on and as of the
Effective Time (except to the extent they relate to a particular
date), the Company shall have performed in all material respects all
of its material obligations under this Agreement theretofore to be
performed, and Parent shall have received at the Effective Time a
certificate to that effect dated the Effective Time and executed by
the President of the Company.
(b) Company Stockholder Approval. This Agreement shall
have been duly approved by the holders of a majority of the
outstanding Common Shares, in accordance with applicable law and the
Certificate of Incorporation and By-Laws of the Company.
(c) Injunction. There shall be in effect no preliminary
or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the
transactions contemplated herein not be consummated; provided,
however, that prior to invoking this condition Parent shall use its
best efforts to have such injunction or order vacated.
(d) S-4 Registration Statement; "Blue Sky" Permits. The
S-4 Registration Statement shall have become effective and no stop
order suspending the effectiveness of the S-4 Registration Statement
shall have been issued and no proceedings for such purpose shall have
been initiated and be continuing or threatened by the SEC. Parent
shall have received all state securities laws or "blue sky" permits
and other authorizations necessary to issue Parent Common Shares in
exchange for the Shares in the Merger.
(e) Listing of Parent Common Shares. The Parent Common
Shares constituting the aggregate Share Consideration and the other
such shares required to be reserved for issuance in connection with
the Merger shall have been authorized for listing on the NYSE, subject
to notice of official issuance.
(f) Governmental Filings and Consents; HSR Act. (i) All
governmental filings required to be made prior to the Effective Time
by the Company with, and all governmental consents required to be
obtained prior to the Effective Time from, governmental and regulatory
authorities in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
shall have been made or obtained, except where the failure to make
such filing or obtain such
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consent would not reasonably be expected to have a Material Adverse
Effect on Parent (assuming the Merger had taken place) and (ii) the
waiting periods under the HSR Act shall have expired or been
terminated.
(g) Pooling Letter. Parent shall have received from E&Y
a letter to the effect that pooling-of-interests accounting is
appropriate for the Merger pursuant to 6.18 of this Agreement.
(h) Third Party Consents. All required authorizations,
consents and approvals of any third party (other than a governmental
authority), the failure to obtain which would have a Material Adverse
Effect on Parent (assuming the Merger had taken place), shall have
been obtained.
(i) Delivery of Comfort Letter. Deloitte shall have
delivered to the Company, for delivery by it to Parent, one or more
letters with respect to the financial information contained in the
Proxy Statement as contemplated by Section 6.19.
(j) Termination of Actions. The Option Plans shall have
been terminated or substituted in a manner satisfactory to Parent.
The Advance Ross Corporation 1995 Directors Deferral Plan shall have
been duly and validly terminated by action of the Company's Board of
Directors and all outstanding options thereunder shall have been
terminated without further liability on the part of the Company or
Parent to the holders thereof.
(k) Affiliate Letters. Each Company Affiliate shall have
performed all of their respective obligations under their respective
Affiliate Letters, Allen & Company Incorporated shall have performed
all of its obligations under the letter, dated the date hereof, from
such firm to the Company and Parent, and Parent shall have received
certificates signed by each of them to such effect.
(l) Termination of Advisory Agreement. The agreement
between the Company and Allen & Company Incorporated referred to in
Section 5.1(i) of the Company Disclosure Schedule shall have been
terminated without further liability thereunder for advisory fees for
future periods on the part of the Company, and Parent shall have
received satisfactory evidence thereof except that the indemnification
provisions of such agreement shall survive the Merger.
7.2. Conditions to the Obligations of the Company. The obligation
of the Company to consummate the Merger is subject to the fulfillment at or
prior to the Effective Time of the following conditions, any or all of which
may be waived in whole or in part by the Company to the extent permitted by
applicable law.
(a) Certificate. The representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and
correct in all material respects on and as of the Effective Time with
the same force and effect as though the same had been made on and as
of the Effective Time (except to the extent they relate to a
particular date), Parent and Merger Sub shall have performed all
material respects all of their respective
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<PAGE> 54
obligations under this Agreement theretofore to be performed, and the
Company shall have received at the Effective Time a certificate to
that effect dated the Effective Time and executed by the President of
Parent.
(b) Company Stockholder Approval. This Agreement shall
have been duly approved by the holders of a majority of the
outstanding Common Shares, in accordance with applicable law and the
Certificate of Incorporation and By-Laws of the Company.
(c) Injunction. There shall be in effect no preliminary
or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the
transactions contemplated herein not be consummated; provided,
however, that prior to invoking this condition the Company shall use
its best efforts to have such injunction or order vacated.
(d) S-4 Registration Statement; "Blue Sky" Permits. The
S-4 Registration Statement shall have become effective and no stop
order suspending the effectiveness of the S-4 Registration Statement
shall have been issued and no proceedings for such purpose shall have
been initiated and be continuing or threatened by the SEC. Parent
shall have received all state securities laws or "blue sky" permits
and other authorizations necessary to issue Parent Common Shares in
exchange for the Shares in the Merger.
(e) Listing of Parent Common Shares. The Parent Common
Shares constituting the aggregate Share Consideration and such other
shares required to be reserved for issuance in connection with the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(f) HSR Act. The waiting periods under the HSR Act shall
have expired or been terminated.
(g) Tax Opinion. The Company shall have received an
opinion of Katten Muchin & Zavis, dated the Closing Date, to the
effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code; (ii) each of the Parent, Merger Sub and the Company will be
a party to the reorganization within the meaning of Section 368(b) of
the Code; and (iii) no gain or loss will be recognized by a
shareholder of the Company as a result of the Merger with respect to
Shares converted solely into shares of Parent Common Stock. In
rendering such opinion, Katten Muchin & Zavis may receive and rely
upon representations contained in certificates of Parent, Merger Sub
and the Company, and certain shareholders of the Company as requested
by Katten Muchin & Zavis.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval
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by holders of Common Shares, either by the mutual written consent of Parent and
the Company, or by mutual action of their respective Boards of Directors.
8.2. Termination by either Parent or the Company. This Agreement
may be terminated and the Merger may be abandoned by action of the Board of
Directors of either Parent or the Company if (i) the Merger shall not have been
consummated by January 31, 1996 (provided that the right to terminate this
Agreement under this Section 8.2(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); (ii)
any court of competent jurisdiction in the United States or some other
governmental body or regulatory authority shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or (iii) the Merger shall have been
voted on by stockholders of the Company at a meeting duly convened therefor and
the vote shall not have been sufficient to satisfy the conditions set forth in
Sections 7.1(b) and 7.2(b).
8.3. Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by action of the Board of Directors of
Parent, if (i) the Company shall have failed to comply in any material respect
with any of the covenants, conditions or agreements contained in this Agreement
to be complied with or performed by the Company at or prior to such date of
termination, which failure to comply has not been cured within five business
days following receipt by the Company of notice of such failure to comply, (ii)
any representation or warranty of the Company contained in the Agreement shall
not be true in all material respects when made (provided such breach has not
been cured within five business days following receipt by the Company of notice
of the breach) or (except to the extent they relate to a particular date) on
and as of the Effective Time as if made on and as of the Effective Time, or
(iii) (A) the Board of Directors of the Company shall withdraw, modify or
change its recommendation of this Agreement or the Merger in a manner adverse
to Parent or Merger Sub, or shall have approved or recommended to the
stockholders of the Company any Competing Transaction or (B) the Company shall
have entered into any agreement with respect to any Competing Transaction or
(C) the Board of Directors of the Company shall resolve to do any of the
foregoing.
8.4. Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by action of the Board of Directors
of the Company, if (i) Parent or Merger Sub shall have failed to comply in any
material respect with any of the covenants, conditions or agreements contained
in this Agreement to be complied with or performed by Parent or Merger Sub at
or prior to such date of termination, which failure to comply has not been
cured within five business days following receipt by the breaching party of
notice of such failure to comply, (ii) any representation or warranty of Parent
or Merger Sub contained in this Agreement shall not be true in all material
respects when made (provided such breach has not been cured within five
business days following receipt by the breaching party of notice of the breach)
or on and as of the Effective Time as if made on and as of the Effective Time
(except to the extent they relate to a particular date) or (iii) the Company
enters into a definitive agreement relating to a Superior Proposal in
accordance with Section 6.2(b), provided it has complied with all of the
provisions thereof and has made payment of the fees required by Section 8.5
hereof.
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8.5. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement by
either the Company or Parent as provided in this Article VIII, this
Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Parent, Merger Sub or the Company or
their respective affiliates, officers, directors or stockholders
except (x) with respect to this Section 8.5 and Section 9.1 and (y) to
the extent that such termination results from the breach of a party
hereto or any of its representations or warranties, or any of its
covenants or agreements, in each case, as set forth in this Agreement;
Provided, that, the Company agrees that if this Agreement shall be
terminated pursuant to (i) Section 8.2(iii), if at or prior to the
time of the Stockholder Meeting (x) a Competing Transaction shall have
been commenced, publicly proposed or publicly disclosed and (y) the
Company has not rejected such Competing Transaction, (ii) Section
8.3(iii), or (iii) Section 8.4(iii), then the Company shall pay to
Parent an amount equal to $2,500,000; provided, however, that no such
fee shall be payable upon a termination by Parent pursuant to Section
8.3(iii)(A) or Section 8.3(iii)(C) (to the extent subparagraph (C)
relates to subparagraph (A)) if (x) the Company gave to Parent prior
to Parent's termination of this Agreement pursuant to Section
8.3(iii)(A) or Section 8.3(iii)(C) (to the extent subparagraph (C)
relates to subparagraph (A)) a termination notice pursuant to Section
8.4(i) or Section 8.4(ii) (the company Termination Notice") setting
forth in reasonable detail the reason therefor and (y) at the time
Parent terminates this Agreement pursuant to Section 8.3(iii)(A) or
8.3(iii)(C) (to the extent subparagraph (C) relates to subparagraph
(A)) the Company is entitled to terminate this Agreement pursuant to
the reasons set forth in the Company Termination Notice; provided,
further, that the Company shall pay to Parent an additional
$2,500,000 if the Company consummates any Competing Transaction
within one year after (A) in the case of clause (i) of this
Section 8.5(a), the earlier of the Stockholder Meeting or payment of
the first $2,500,000, (B) in the case of clause (ii) of this
Section 8.5(a), the termination of this Agreement by Parent and (C)
in the case of clause (iii) of this Section 8.5(a), the termination
of this Agreement by the Company.
(b) Any payment required to be made pursuant to Section
8.5(a) shall be made as promptly as practicable but not later than
five business days after the occurrence of the event giving rise to
such payment and shall be made by wire transfer of immediately
available funds to an account designated by Parent except that any
payment to be made pursuant to Section 8.5(a)(i) shall be made not
later than the termination of this Agreement by the Company pursuant
to Section 8.4(iii).
(c) Each of the parties hereto agrees that the payment in
full of immediately available funds by the Company to Parent shall be
Parent's exclusive remedy for an action taken by the Company which (x)
is permitted under this Agreement and (y) results in the payment to
Parent of the fee set forth in Section 8.5(a). Except as set forth in
the immediately preceding sentence and subject to Section 9.12, all
rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any such right, power or
remedy by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
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ARTICLE IX
Miscellaneous and General
9.1. Payment of Expenses. Whether or not the Merger shall be
consummated, each party hereto and the stockholders of the Company shall pay
their own expenses incident to preparing for, entering into and carrying out
this Agreement and the consummation of the transactions contemplated hereby,
provided that the Surviving Corporation shall pay, with funds of the Company
and not with funds provided by any of Parent Companies, any and all property or
transfer taxes imposed on the Surviving Corporation. The cost of printing the
S-4 Registration Statement and the Proxy Statement shall be borne equally by
the Company and the Parent.
9.2. Survival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 9.2 shall not
limit any covenant or agreement of the parties hereto which by its terms
contemplates performance after the Effective Time.
9.3. Modification or Amendment. Subject to the applicable
provisions of the DGCL, at any time prior to the Effective Time, the parties
hereto may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties; provided,
however, that after approval of the Merger by the stockholders of the Company,
no amendment shall be made which changes the consideration payable in the
Merger or adversely affects the rights of the Company's stockholders hereunder
without the approval of such stockholders.
9.4. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.5. Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
9.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
9.7. Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile transmission (with a confirming copy sent by overnight
courier), as follows:
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(a) if to the Company, to
Advance Ross Corporation
233 South Wacker Drive
Suite 9700
Chicago, Illinois 60606-6502
Attention: Paul G. Yovovich
Facsimile: (312) 382-1109
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Herbert S. Wander, Esq.
Facsimile: (312) 902-1061
(b) if to Parent or Merger Sub, to
UC International Inc.
707 Summer Street
Stamford, Connecticut 06901
Attention: Amy N. Lipton, Esq.
Facsimile: (203) 348-1982
with a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Howard Chatzinoff, Esq.
Facsimile: (212) 310-8007
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
9.8. Entire Agreement; Assignment. This Agreement, including the
Disclosure Schedules, (i) constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (ii) shall not be
assigned by operation of law or otherwise, provided that Parent may assign its
rights and obligations or those of Merger Sub to any direct wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
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<PAGE> 59
9.9. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied, other
than the right to receive the consideration payable in the Merger pursuant to
Article IV hereof, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement; provided, however, that the provisions of Section 6.8 shall
inure to the benefit of and be enforceable by the Indemnified Parties.
9.10. Certain Definitions. As used herein:
(a) "Significant Subsidiary" shall have the meaning
ascribed to it under Rule 12b-1 of the Exchange Act.
(b) "Subsidiary" shall mean, when used with reference to
any entity, any entity fifty percent (50%) or more of the outstanding
voting securities or interests of which are owned directly or
indirectly by such former entity.
(c) "Material Adverse Effect" shall mean any adverse
change in the properties, financial condition, business or results of
operations of the Company or any of its subsidiaries or Parent or any
of its subsidiaries, as the case may be, which is material to the
Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as the case may be.
(d) "Knowledge" with respect to the Company shall mean
the knowledge of any of the executive officers or directors of the
Company, any of the managing or deputy managing directors of Europe
Tax-Free Shopping ETS AB, and the managing directors of the
subsidiaries listed in Section 9.10.(d) of the Company Disclosure
Schedule, after due inquiry.
9.11. Obligation of Parent. Whenever this Agreement requires Merger
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Merger Sub to take such action.
9.12. Arbitration. Any controversy, dispute or claim arising out of
or relating to this Agreement or the breach hereof which cannot be settled by
mutual agreement (except for actions by Parent or the Company seeking
equitable, injunctive or other relief under Section 9.14) shall be finally
settled by arbitration as follows: Any party who is aggrieved shall deliver a
notice to other party setting forth the specific points in dispute. Any points
remaining in dispute twenty (20) days after the giving of such notice shall be
submitted to arbitration in New York, New York, to Endispute, before a single
arbitrator appointed in accordance with Endispute's Arbitration Rules, modified
only as herein expressly provided. The arbitrator may enter a default decision
against any party who fails to participate in the arbitration proceedings. The
decision of the arbitrator on the points in dispute will be final, unappealable
and binding and judgment on the award may be entered in any court having
jurisdiction thereof. The arbitrator will be authorized to apportion its fees
and expenses and the reasonable attorney's fees and expenses of Parent and the
Company as the arbitrator deems appropriate. In the absence of any such
apportionment, the fees and expense of the arbitrator will be borne equally by
each party,
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<PAGE> 60
and each party will bear the fees and expenses of its own attorney. The
parties agree that this clause has been included to rapidly and inexpensively
resolve any disputes between them with respect to this Agreement, and that this
clause shall be grounds for dismissal of any court action commenced by either
party with respect to this Agreement, other than post-arbitration actions
seeking to enforce an arbitration award. The parties shall keep confidential,
and shall not disclose to any person, except as may be required by law, the
existence of any controversy-hereunder, the referral of any such controversy to
arbitration or the status or resolution thereof.
9.13. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.
9.14. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific
performance issued by a court of competent jurisdiction. Such remedy shall,
however, not be exclusive and, subject to Section 9.12, shall be in addition to
any other remedies, including-arbitration, which any party may have under this
Agreement or otherwise.
9.15. Recapitalization. Whenever (a) the number of outstanding
Parent Common Shares is changed by reason of a subdivision or combination of
shares, whether effected by a reclassification of shares or otherwise or (b)
Parent pays a cash or stock dividend or makes a similar distribution, each
specified number of shares referred to in this Agreement and each specified per
share amount (other than par values) shall be adjusted accordingly.
9.16. Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. of the parties hereto and shall be effective as of the date first
hereinabove written.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto and shall be
effective as of the date first hereinabove written:
CUC INTERNATIONAL INC.
By:______________________________
Name:_________________________
Title:________________________
RETREAT ACQUISITION CORPORATION
By:______________________________
Name:_________________________
Title:________________________
ADVANCE ROSS CORPORATION
By:______________________________
Name:_________________________
Title:________________________
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<PAGE> 62
Exhibit A to the
Merger Agreement
EXHIBIT A
FORM OF STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT
AGREEMENT, dated October 17, 1995 (this "Agreement"), by and among CUC
International Inc., a Delaware corporation ("Parent"), and each of the other
parties signatory hereto (each, a "Stockholder", and collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Retreat Acquisition
Corporation, a Delaware corporation and a direct wholly-owned subsidiary of
Parent ("Merger Sub"), and Advance Ross Corporation, a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement";
capitalized terms used and not defined herein have the respective meanings
ascribed to them in the Merger Agreement) pursuant to which Merger Sub will be
merged with and into the Company (the "Merger");
WHEREAS, each of the Stockholders owns the number of shares, par value
$.01 per share, of common stock of the Company (the "Shares" or "Company Common
Stock") of the Company set forth opposite such Stockholder's name on Schedule I
hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of the Effective Time and termination
of the Merger Agreement in accordance with its terms, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, such Stockholder shall
vote (or cause to be voted) the Shares held of record or Beneficially Owned (as
defined below) by such Stockholder, whether heretofore owned or hereafter
acquired, (i) in favor of approval of the Merger Agreement and any actions
required in furtherance thereof and hereof; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement (after giving effect to any materiality
<PAGE> 63
or similar qualifications contained therein); and (iii) except as otherwise
agreed to in writing in advance by Parent, against the following actions (other
than the Merger and the transactions contemplated by the Merger Agreement): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company; (B) a sale, lease or transfer
of a material amount of assets of the Company, or a reorganization,
recapitalization, dissolution or liquidation of the Company; (C) (1) any change
in a majority of the persons who constitute the board of directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-Laws; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action which, in the case of each of the matters referred to in
clauses C (1), (2), (3) or (4), is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement. Such Stockholder shall not enter into any agreement or
understanding with any Person (as defined below) the effect of which would be
inconsistent or violative of the provisions and agreements contained in Section
1 or 2 hereof. For purposes of this Agreement, "Beneficially Own" or
"Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meanings of Section 13(d)(3) of the Exchange Act. For
purposes of this Agreement, "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Other Covenants, Representations and Warranties.
Each Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record
and Beneficial Owner of the number of Shares set forth opposite such
Stockholder's name on Schedule I hereto. On the date hereof, the Shares set
forth opposite such Stockholder's name on Schedule I hereto constitute all of
the Shares owned of record or Beneficially Owned by such Stockholder. Such
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Section 1 hereof, sole power of
disposition, sole power of conversion, sole power to demand appraisal rights
and sole power to agree to all of the matters set forth in this Agreement, in
each case with respect to all of the Shares set forth opposite such
Stockholder's name on Schedule I hereto, with no limitations, qualifications or
restrictions on such rights.
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<PAGE> 64
(b) Power; Binding Agreement. Such Stockholder has the
legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting Agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is Trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such stockholder of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.
(c) No Conflicts. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated
hereby and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (1) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to
any third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound, or (2) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) No Finder's Fees. Other than existing financial
advisory and investment banking arrangements and agreements between the Company
and Allen & Company Incorporated, no broker, investment banker, financial
adviser or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the
transactions contemplated by the Merger Agreement based upon arrangements made
by or on behalf of such Stockholder.
(e) No Solicitation. From and after the date hereof
until termination of the Merger Agreement, such Stockholder shall not, in his,
her or its capacity as such, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of
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<PAGE> 65
furnishing non-public information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries or to obtain a
Competing Transaction or agree to or endorse any Competing Transaction, or
authorize or permit any of such Stockholder's agents, and such Stockholder
shall promptly notify Parent orally (in all events within two business days)
and in writing (as promptly thereafter as practicable) of the material terms
and status of all inquiries and proposals which he, she or it, or any such
agent, may receive after the date hereof relating to any of such matters and,
if such inquiry or proposal is in writing, such Stockholder shall deliver to
Parent a copy of such inquiry or proposal promptly. Such Stockholder will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations, with any parties conducted heretofore with respect
to any of the foregoing.
(f) Restriction on Transfer, Proxies and Non-Interference.
Such Stockholder shall not, directly or indirectly: (i) except as contemplated
by the Merger Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sell, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Stockholder's Shares or any interest
therein; (ii) except as contemplated by this Agreement, grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that
would make any representation or warranty of such Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under this
Agreement.
(g) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter
into, the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement.
3. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
4. Stop Transfer. Each Stockholder agrees with, and
covenants to, Parent that such Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement. In the event of a
stock dividend or distribution, or any change in the Company Common Stock by
reason
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<PAGE> 66
of any stock dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed or exchanged.
5. Termination. Except as otherwise provided herein,
the covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) termination of the Merger Agreement in
accordance with its terms and (b) the Effective Time.
6. Stockholder Capacity. No person executing this
Agreement who is or becomes during the term hereof a director of the Company
makes any agreement or understanding herein in his or her capacity as such
director. Each Stockholder signs solely in his or her capacity as the record
and beneficial owner of such Stockholder's Shares.
7. Confidentiality. The Stockholders recognize that
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, each
Stockholder hereby agrees not to disclose or discuss such matters with anyone
not a party to this Agreement (other than such Stockholder's counsel and
advisors, if any) without the prior written consent of Parent, except for
disclosures such Stockholder's counsel advises are necessary in order to
fulfill such Stockholder's obligations imposed by law, in which event such
Stockholder shall give notice of such disclosure to Parent as promptly as
practicable so as to enable Parent to seek a protective order from a court of
competent jurisdiction with respect thereto.
8. Release. Each of the Stockholders, solely in such
person's capacity as a stockholder of the Company, hereby releases and
discharges the Company and its officers, directors, stockholders, employee,
agents, attorneys, representatives, successors and assigns (and the respective
heirs, executors, administrators, representatives, successors and assigns of
such officers, directors, stockholders, employees, agents, attorneys and
representatives) from any and all claims, actions, causes of action, suits,
debts, sums of money, controversies, agreements, promises, damages, judgments,
claims and demands whatsoever, at law or in equity, which any of the
Stockholders, as a result of such person's status as a stockholder of the
Company, had, now have or hereafter can, shall or may have for, upon, or by
reason of any matter, cause or thing whatsoever relating, directly or
indirectly, to the Company or the Surviving Corporation, as the case may be.
9. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior
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<PAGE> 67
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
with respect to any one or more Stockholders, except upon the execution and
delivery of a written agreement executed by the relevant parties hereto;
provided that Schedule I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any Stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to any Stockholder: At the addresses set forth
on Schedule I hereto
with a copy to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Herbert S. Wander, Esq.
Telephone: (312) 902-5200
Facsimile: (312) 902-1061
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<PAGE> 68
If to Parent CUC International Inc.
or Merger Sub: 707 Summer Street
Stamford, Connecticut 06901
Telephone: (203) 324-9261
Facsimile: (203) 977-8501
Attention: Amy N. Lipton, Esq.
with a copy to: Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Howard Chatzinoff, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by
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<PAGE> 69
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR
PROCEEDING.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
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<PAGE> 70
IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
CUC INTERNATIONAL INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Harve A. Ferrill
By:
--------------------------------
Duane R. Kullberg
By:
--------------------------------
Thomas J. Peterson
By:
--------------------------------
Herbert S. Wander
By:
--------------------------------
Paul G. Yovovich
By:
--------------------------------
Roger E. Anderson
By:
--------------------------------
Harold E. Guenther
By:
--------------------------------
Randy M. Joseph
-9-
<PAGE> 71
AGREED TO AND ACKNOWLEDGED
(with respect to Section 2):
ADVANCE ROSS CORPORATION
By:__________________________
Name:
Title:
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<PAGE> 72
Schedule I to
Stockholders Agreement
Name and Address Number of Shares Owned
- ---------------- ----------------------
I-1
<PAGE> 73
Exhibit B to the
Merger Agreement
EXHIBIT B
FORM OF STOCKHOLDER CERTIFICATE
[THIS STOCKHOLDER CERTIFICATE MUST BE COMPLETED BY
ADVANCE ROSS CORPORATION STOCKHOLDERS WHICH OWN 5 PERCENT OR MORE OF THE
ADVANCE ROSS CORPORATION STOCK.]
[DATE]
Katten Muchin & Zavis
525 W. Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: Saul E. Rudo, Esq.
RE: OWNERSHIP IN ADVANCE ROSS CORPORATION
Ladies and Gentlemen:
In connection with the proposed merger (the "Merger") of Retreat
Acquisition Corporation (the "Merger Sub"), a Delaware corporation and
wholly-owned subsidiary of CUC International Inc. ("Parent"), with and into
Advance Ross Corporation (the "Company"), a Delaware corporation, pursuant to
the terms of the Agreement and Plan of Merger, dated as of October 17, 1995
(the "Agreement") by and among Parent, Merger Sub and the Company,
______________ ("Shareholder") recognizes that you will rely on this letter in
rendering your opinion pursuant to Section 7.2(g) of the Agreement. The
undersigned, a duly authorized officer of Shareholder and acting as such,
hereby certifies that to the best knowledge of the management of Shareholder,
after consulting with legal counsel regarding the meaning of the following
representations, Shareholder has no plan or intention to sell, exchange,
transfer by gift or otherwise dispose of ("Transfer") any of the shares of
common stock of Parent to be received by it as a result of the Merger. In
addition, Shareholder has no plan or intention to Transfer any of its Company
stock prior to the effective time of the Merger.
This letter is being furnished to you solely for your benefit and for
your use in rendering your opinion and is not to be used, circulated, quoted or
otherwise referred to for any other purpose without the express written consent
of Shareholder.
Very truly yours,
[STOCKHOLDER]
By: ____________________________
Print Name:_____________________
Title:__________________________
<PAGE> 74
Exhibit C to the
Merger Agreement
EXHIBIT C
REPRESENTATION LETTER FROM CUC INTERNATIONAL INC. AND
RETREAT ACQUISITION CORPORATION
Katten Muchin & Zavis
525 W. Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: Saul E. Rudo, Esq.
RE: AGREEMENT AND PLAN OF MERGER
Ladies and Gentlemen:
In connection with the proposed merger (the "Merger") of Retreat
Acquisition Corporation ("Merger Sub"), a Delaware corporation and wholly owned
subsidiary of CUC International Inc. ("Parent"), a Delaware corporation, with
and into Advance Ross Corporation (the "Company"), a Delaware corporation,
pursuant to the terms of the Agreement and Plan of Merger, dated October 17,
1995 (the "Agreement"), by and among Parent, Merger Sub and the Company, and
the Articles of Merger and Plan of Merger, to be executed (together with the
Agreement, the "Merger Agreements"), each as described in the Registration
Statement on Form S-4 to be filed by Parent with the Securities and Exchange
Commission (the "Registration Statement"), you are rendering an opinion
pursuant to Section 7.2(g) of the Agreement. Capitalized terms used but not
defined herein are defined in the Agreement.
In connection with such opinion, and recognizing that you will rely on
this letter in rendering said opinion, the undersigned, a duly authorized
officer of Parent and acting as such, hereby certifies, to the best knowledge
of the management of Parent, after consulting with legal counsel regarding the
following representations, that the following are now true and are expected to
continue to be true as of the effective time of closing of the Merger and
thereafter where relevant:
1. The Merger will be consummated in compliance with the material
terms of the Merger Agreements and Parent has no plan or
intention to waive or modify further any such material
condition.
2. Pursuant to the Merger, shares of Company stock possessing at
least 80% of the total combined voting power of all classes of
stock of the Company entitled to vote and at least 80% of the
total number of shares of each other class of stock of the
Company will be exchanged solely for voting stock of Parent.
For purposes of this representation, shares of Company stock
exchanged for cash or other property originating with Parent
pursuant to the Merger will be treated as outstanding Company
stock on the date of the Merger.
<PAGE> 75
____________, 1995
Page 2
3. The ratio for the exchange of shares of stock of the Company
for common stock of Parent in the Merger was negotiated
through arm's length bargaining.
4. Following the Merger, the Company will hold at least ninety
percent (90%) of the fair market value of the net assets and
at least seventy percent (70%) of the fair market value of
the gross assets that the Company actually held at the
Effective Time. Following the Merger, the Company will hold
at least ninety percent (90%) of the fair market value of
Merger Sub's net assets and at least seventy percent (70%) of
the fair market value of Merger Sub's gross assets held
immediately prior to the Merger. For this purpose, amounts
paid by Merger Sub to dissenters, amounts paid by Merger Sub
to shareholders who receive cash or other property, and
amounts used by Merger Sub to pay reorganization expenses, are
considered as assets held by Merger Sub immediately prior to
the Merger.
5. Prior to the Merger, Parent will own all of the outstanding
Merger Sub stock, and thus, will be in control of Merger Sub.
Merger Sub is a newly-formed corporation that was created for
the sole purpose of facilitating Parent's acquisition of the
Company. It has not conducted and is not conducting any
business activities, and thus, there are no liabilities of
Merger Sub to be assumed by the Company.
6. Parent has no plan or intention to cause the Company after the
Merger to issue additional shares of the stock of the Company
(or rights to acquire Company stock).
7. Parent has no plan or intention to reacquire any of its stock
issued in the Merger.
8. Parent has no plan or intention after the Merger to liquidate
the Company; to merge the Company into another corporation; to
cause the Company to make any extraordinary distribution in
respect of Parent's stock in the Company; to sell or otherwise
dispose of the stock of the Company (excluding transfers of
stock to a corporation directly controlled by Parent); or to
cause the Company to sell or otherwise dispose of any of its
assets, except for dispositions made in the ordinary course of
business or transfers of assets to corporations directly
controlled by the Company.
9. After the Merger, Parent will cause the Company to continue
its historic business or use a significant portion of the
historic business assets of the Company in a business.
10. Parent and Merger Sub will pay their respective expenses
incurred in connection with the Merger. Neither Parent nor
Merger Sub will pay any of the expenses of the shareholders of
the Company incurred in connection with the Merger.
<PAGE> 76
____________, 1995
Page 3
11. There is no indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued,
acquired or will be settled at a discount. Further, Merger
Sub will have no liabilities assumed by the Company and will
not transfer to the Company any assets subject to liabilities.
12. Neither Parent nor any subsidiary of Parent owns, or has owned
during the past five years, directly or indirectly, any shares
of the Company stock, or the right to acquire or vote any such
stock.
13. No stock of Merger Sub will be issued in the Merger.
14. The payment of cash in lieu of fractional shares of stock of
Parent was not separately bargained for consideration and is
being made solely for the purpose of saving Parent the expense
and inconvenience of issuing fractional shares; the total cash
consideration that will be paid in the Merger to the Company
shareholders instead of issuing fractional shares of Parent
stock is not expected to exceed one percent of the total
consideration that will be issued in the transaction to the
Company shareholders in exchange for their shares of Company
stock.
15. None of the payments to be received by any shareholder of the
Company from Parent or Merger Sub which are designated as
compensation are actually separate consideration for, or
allocable to, any of their shares of the Company stock and the
compensation to be paid to any shareholder of the Company will
be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length
for similar services.
16. At the time of the Merger, the Company will not have
outstanding any warrants, options, convertible securities, or
any other type of right pursuant to which any person could
acquire stock in the Company that, if exercised or converted,
would affect Parent's acquisition or retention of "control" of
the Company.
17. Neither Parent nor Merger Sub is an "investment company" as
defined in Section 368(a)(2)(F) of the Internal Revenue Code
of 1986, as amended (the "Code").
18. Parent will report the Merger as a tax-free reorganization
pursuant to and consistent with Section 368(a)(2)(E) of the
Code.
<PAGE> 77
____________, 1995
Page 4
This letter is being furnished to you solely for your benefit and for
use in rendering your opinion and is not to be used, circulated, quoted or
otherwise referred to for any other purpose (other than inclusion in your
opinion) without the express written consent of Parent.
Very truly yours,
CUC INTERNATIONAL INC.
By: ____________________________
Print Name:_____________________
Title:__________________________
RETREAT ACQUISITION CORPORATION
By: ____________________________
Print Name:_____________________
Title:__________________________
<PAGE> 78
EXHIBIT C (CONTINUED)
REPRESENTATION LETTER FROM ADVANCE ROSS CORPORATION
Katten Muchin & Zavis
525 W. Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attention: Saul E. Rudo, Esq.
RE: AGREEMENT AND PLAN OF MERGER
Ladies and Gentlemen:
In connection with the proposed merger (the "Merger") of Retreat
Acquisition Corporation ("Merger Sub"), a Delaware corporation and wholly owned
subsidiary of CUC International, Inc. ("Parent"), a Delaware corporation, with
and into Advance Ross Corporation (the "Company"), a Delaware corporation,
pursuant to the terms of the Agreement and Plan of Merger, dated October 17,
1995 (the "Agreement"), by and among Parent, Merger Sub and the Company, and
the Articles of Merger and Plan of Merger, to be executed (together with the
Agreement, the "Merger Agreements"), each as described in the Registration
Statement on Form S-4 to be filed by Parent with the Securities and Exchange
Commission (the "Registration Statement"), you are each rendering an opinion
pursuant to Section 7.2(g) of the Agreement. Capitalized terms used but not
defined herein are defined in the Agreement.
In connection with such opinion, and recognizing that you will rely on
this letter in rendering said opinion, the undersigned, a duly authorized
officer of the Company and acting as such, hereby certifies, that, to the best
knowledge of the management of the Company, after consulting with legal counsel
regarding the meaning of the following representations, the facts relating to
the Merger as described in the prospectus included as part of the Registration
Statement, including attachments thereto, to the extent those facts apply to
the Company, are true, correct and complete in all material respects and hereby
certifies, to the best knowledge of the management of the Company, that the
following are now true and are expected to continue to be true as of the
effective time of closing of the Merger and thereafter where relevant:
1. The Merger will be consummated in compliance with the material
terms of the Merger Agreements and the Company has no plan or
intention to waive or modify further any such material
condition.
2. Except with respect to payments of cash in lieu of fractional
shares of Parent voting capital stock, 100% of the Company
stock outstanding immediately prior to the Merger (which does
not include treasury shares) will be exchanged solely for
Parent voting capital stock. Thus, except as set forth in the
preceding sentence, the Company intends that no consideration
other than Parent voting
<PAGE> 79
________________, 1995
Page 2
capital stock be received (directly or indirectly, actually or
constructively) for Company stock. The total fair market
value of all consideration other than Parent voting capital
stock received by the Company shareholders in exchange for
their Company stock in the Merger (including, without
limitation, cash paid to Company shareholders in lieu of
fractional shares of Parent voting capital stock) will be less
than 10% of the aggregate fair market value of the Company
stock outstanding immediately prior to the Merger.
3. The ratio for the exchange of shares of stock of the Company
for common stock of Parent in the Merger was negotiated
through arm's length bargaining.
4. The management of the Company knows of no plan or intention by
the shareholders of the Company, in the aggregate, to sell,
exchange, transfer by gift or otherwise dispose of a number of
shares of the Company before the Merger or of a number of
shares of Parent stock received in the Merger that would, in
the aggregate, reduce the historic Company shareholders'
ownership of Parent stock to a number of shares having a
value, as of the date of the Merger, of less than 50 percent
of the value of all of the formerly outstanding stock of the
Company as of the same date.
5. Following the Merger, the Company will hold at least ninety
percent (90%) of the fair market value of its net assets and
at least seventy percent (70%) of the fair market value of its
gross assets and at least ninety percent (90%) of the fair
market value of Merger Sub's net assets and at least seventy
percent (70%) of the fair market value of Merger Sub's gross
assets held in connection with the Merger. For this purpose,
amounts paid by the Company or Merger Sub to shareholders who
receive cash or other property, amounts used by the Company or
Merger Sub to pay reorganization expenses and all redemptions
and distributions (except for regular, normal dividends) made
by the Company in connection with the Merger are considered as
assets held by the Company or Merger Sub, respectively,
immediately prior to the Merger. The Company has not redeemed
any of the Company stock, made any distribution with respect
to any of the Company stock, or disposed of any of its assets
(other than the disposition of assets in the ordinary course
of business and payments for expenses in connection with the
Merger) in anticipation of or as a part of a plan for the
Merger.
6. The Company has no plan or intention to issue additional
shares of the stock of the Company either before or after the
Merger, except for shares issued pursuant to exercises of
previously granted options under the Option Plans or
previously granted rights under the Warrant, which options or
rights were issued in the ordinary course of business and not
in anticipation of or as a part of a plan for the Merger.
<PAGE> 80
________________, 1995
Page 3
7. Management of the Company knows of no plan or intention after
the Merger to liquidate the Company; to merge the Company into
another corporation; to make any extraordinary distribution in
respect of stock in the Company; to sell or otherwise dispose
of the stock of the Company; or to cause the Company to sell
or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Sub, except for dispositions made
in the ordinary course of business or payments for expenses
incurred in connection with the Merger.
8. After the Merger, the Company will continue its historic
business and use a significant portion of the historic
business assets of the Company in a business.
9. The Company will pay its respective expenses incurred in
connection with the Merger. The Company will not pay any of
the expenses of the shareholders of the Company incurred in
connection with the Merger.
10. There is no indebtedness existing between Parent and the
Company or between Merger Sub and the Company that was issued,
acquired or will be settled at a discount.
11. The Company is not an "investment company" as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue
Code of 1986, as amended (the "Code").
12. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
13. On the date of the Merger, the fair market value of the assets
of the Company will exceed the sum of its liabilities
(including any liabilities to which its assets are subject).
14. The payment of cash in lieu of fractional shares of stock of
Parent was not separately bargained for consideration and is
being made solely for the purpose of saving Parent the expense
and inconvenience of issuing fractional shares; the total cash
consideration that will be paid in the Merger to the Company
shareholders instead of issuing fractional shares of Parent
stock will not exceed one percent of the total consideration
that will be issued in the transaction to the Company
shareholders in exchange for their shares of Company stock.
15. None of the payments from the Company, to be received by any
shareholder of the Company which are designated as
compensation are actually separate consideration for, or
allocable to, any of their shares of the Company stock, and
such compensation to be paid to any shareholder of the Company
will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's length for similar services.
<PAGE> 81
________________, 1995
Page 4
16. At the time of the Merger, the Company will not have
outstanding any warrants, options, convertible securities, or
any other type of right pursuant to which any person could
acquire stock in the Company that, if exercised or converted,
would affect Parent's acquisition or retention of "control" of
the Company as defined in Section 368(c) of the Code.
This letter is being furnished to you solely for your benefit and for
use in rendering your opinion and is not to be used, circulated, quoted or
otherwise referred to for any other purpose (other than inclusion in your
opinion) without the express written consent of the Company.
Very truly yours,
ADVANCE ROSS CORPORATION
By:
----------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
<PAGE> 82
EXHIBIT B
EXECUTION COPY
STOCKHOLDERS AGREEMENT
AGREEMENT, dated October 17, 1995 (this "Agreement"), by and among
CUC International Inc., a Delaware corporation ("Parent"), and each of the
other parties signatory hereto (each, a "Stockholder", and collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Retreat Acquisition
Corporation, a Delaware corporation and a direct wholly-owned subsidiary of
Parent ("Merger Sub"), and Advance Ross Corporation, a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement";
capitalized terms used and not defined herein have the respective meanings
ascribed to them in the Merger Agreement) pursuant to which Merger Sub will be
merged with and into the Company (the "Merger");
WHEREAS, each of the Stockholders owns the number of shares, par
value $.01 per share, of common stock of the Company (the "Shares" or "Company
Common Stock") of the Company set forth opposite such Stockholder's name on
Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each Stockholder
hereby agrees that during the period commencing on the date hereof and
continuing until the first to occur of the Effective Time and termination of
the Merger Agreement in accordance with its terms, at any meeting of the
holders of Company Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock, such Stockholder shall
vote (or cause to be voted) the Shares held of record or Beneficially Owned (as
defined below) by such Stockholder, whether heretofore owned or hereafter
acquired, (i) in favor of approval of the Merger Agreement and any actions
required in furtherance thereof and hereof; (ii) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement (after giving effect to any materiality or similar
qualifications contained therein); and (iii) except as otherwise agreed to in
writing in advance by Parent, against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company; (B) a sale, lease or transfer of a
material amount of assets of the Company, or a reorganization,
recapitalization, dissolution or liquidation of the Company; (C) (1) any change
in a majority of the persons who constitute the board of
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<PAGE> 83
directors of the Company; (2) any change in the present capitalization of the
Company or any amendment of the Company's Certificate of Incorporation or
By-Laws; (3) any other material change in the Company's corporate structure or
business; or (4) any other action which, in the case of each of the matters
referred to in clauses C (1), (2), (3) or (4), is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially
adversely affect the Merger and the transactions contemplated by this Agreement
and the Merger Agreement. Such Stockholder shall not enter into any agreement
or understanding with any Person (as defined below) the effect of which would
be inconsistent or violative of the provisions and agreements contained in
Section 1 or 2 hereof. For purposes of this Agreement, "Beneficially Own" or
"Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the
same holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meanings of Section 13(d)(3) of the Exchange Act. For
purposes of this Agreement, "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the number of Shares set forth opposite such Stockholder's
name on Schedule I hereto. On the date hereof, the Shares set forth opposite
such Stockholder's name on Schedule I hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder. Such Stockholder has sole
voting power and sole power to issue instructions with respect to the matters
set forth in Section 1 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Shares set forth opposite such Stockholder's name on Schedule I
hereto, with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly executed and delivered by such Stockholder and
constitutes a valid and binding agreement of such Stockholder, enforceable
against such Stockholder in accordance with its terms. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of which
such Stockholder is Trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such stockholder of the
transactions contemplated hereby. If such Stockholder is married and such
Stockholder's Shares constitute community property, this Agreement has been
duly authorized, executed and delivered by, and constitutes a valid and binding
agreement of, such Stockholder's spouse, enforceable against such person in
accordance with its terms.
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<PAGE> 84
(c) No Conflicts. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated
hereby and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the
provisions hereof shall (1) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to
any third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
such Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound, or (2) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets.
(d) No Finder's Fees. Other than existing financial advisory and
investment banking arrangements and agreements between the Company and Allen &
Company Incorporated, no broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated by
the Merger Agreement based upon arrangements made by or on behalf of such
Stockholder.
(e) No Solicitation. From and after the date hereof until
termination of the Merger Agreement, such Stockholder shall not, in his, her or
its capacity as such, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction, or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction or agree to or endorse any
Competing Transaction, or authorize or permit any of such Stockholder's agents,
and such Stockholder shall promptly notify Parent orally (in all events within
two business days) and in writing (as promptly thereafter as practicable) of
the material terms and status of all inquiries and proposals which he, she or
it, or any such agent, may receive after the date hereof relating to any of
such matters and, if such inquiry or proposal is in writing, such Stockholder
shall deliver to Parent a copy of such inquiry or proposal promptly. Such
Stockholder will immediately cease and cause to be terminated any existing
activities, discussions or negotiations, with any parties conducted heretofore
with respect to any of the foregoing.
(f) Restriction on Transfer, Proxies and NonInterference. Such
Stockholder shall not, directly or indirectly: (i) except as contemplated by
the Merger Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition
of, any or all of such Stockholder's Shares or any interest therein; (ii)
except as contemplated by this Agreement, grant any proxies or powers of
attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of such Stockholder contained herein untrue or
incorrect
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<PAGE> 85
or have the effect of preventing or disabling such Stockholder from performing
such Stockholder's obligations under this Agreement.
(g) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter
into, the Merger Agreement in reliance upon such Stockholder's execution and
delivery of this Agreement.
3. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
4. Stop Transfer. Each Stockholder agrees with, and covenants
to, Parent that such Stockholder shall not request that the Company register
the transfer (book-entry or otherwise) of any certificate or uncertificated
interest representing any of such Stockholder's Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
5. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earlier of (a) termination of the Merger Agreement in
accordance with its terms and (b) the Effective Time.
6. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director.
Each Stockholder signs solely in his or her capacity as the record and
beneficial owner of such Stockholder's Shares.
7. Confidentiality. The Stockholders recognize that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to herein.
In this connection, pending public disclosure thereof, each Stockholder hereby
agrees not to disclose or discuss such matters with anyone not a party to this
Agreement (other than such Stockholder's counsel and advisors, if any) without
the prior written consent of Parent, except for disclosures such Stockholder's
counsel advises are necessary in order to fulfill such Stockholder's
obligations imposed by law, in which event such Stockholder shall give notice
of such disclosure to Parent as promptly as practicable so as to enable Parent
to seek a protective order from a court of competent jurisdiction with respect
thereto.
8. Release. Each of the Stockholders, solely in such person's
capacity as a stockholder of the Company, hereby releases and discharges the
Company and its officers, directors, stockholders, employees, agents,
attorneys, representatives, successors and assigns (and the respective heirs,
executors, administrators, representatives, successors and assigns of
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<PAGE> 86
such officers, directors, stockholders, employees, agents, attorneys and
representatives) from any and all claims, actions, causes of action, suits,
debts, sums of money, controversies, agreements, promises, damages, judgments,
claims and demands whatsoever, at law or in equity, which any of the
Stockholders, as a result of such person's status as a stockholder of the
Company, had, now have or hereafter can, shall or may have for, upon, or by
reason of any matter, cause or thing whatsoever relating, directly or
indirectly, to the Company or the Surviving Corporation, as the case may be.
9. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof.
(b) Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of the other party,
provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any Stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to any Stockholder: At the addresses set forth
on Schedule I hereto
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<PAGE> 87
with a copy to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Herbert S. Wander, Esq.
Telephone: (312) 902-5200
Facsimile: (312) 902-1061
If to Parent
or Merger Sub: CUC International Inc.
707 Summer Street
Stamford, Connecticut 06901
Telephone: (203) 324-9261
Facsimile: (203) 977-8501
Attention: Amy N. Lipton, Esq.
with a copy to: Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Attention: Howard Chatzinoff, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes
and acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
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<PAGE> 88
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended
to be for the benefit of, and shall not be enforceable by, any person or entity
who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
(l) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR
PROCEEDING.
(m) Descriptive-Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
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<PAGE> 89
IN WITNESS WHEREOF, Parent and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
CUC INTERNATIONAL INC.
By: /s/ Cosmo Corigliano
--------------------------------
Name: Cosmo Corigliano
Title: Senior Vice President and
Chief Financial Officer
By: /s/ Harve A. Ferrill
--------------------------------
Harve A. Ferrill
By: /s/ Duane R. Kullberg
--------------------------------
Duane R. Kullberg
By: /s/ Thomas J. Peterson
--------------------------------
Thomas J. Peterson
By: /s/ Herbert S. Wander
--------------------------------
Herbert S. Wander
By: /s/ Paul G. Yovovich
--------------------------------
Paul G. Yovovich
By: /s/ Roger E. Anderson
--------------------------------
Roger E. Anderson
By: /s/ Harold E. Guenther
--------------------------------
Harold E. Guenther
By: /s/ Randy M. Joseph
--------------------------------
Randy M. Joseph
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<PAGE> 90
SCHEDULE I TO STOCKHOLDERS AGREEMENT
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES OWNED
- ---------------- ----------------------
<S> <C>
Roger E. Anderson 9,432
14 Oriole Avenue
Broxville, NY 10708
Harve A. Ferrill 142,600
1300 N. Lakeshore Drive, Apt. 26-B
Chicago, IL 60610
Harold E. Guenther 6,000
417 Dana Lane
Barrington, IL 60010
Randy M. Joseph 1,200(1)
130 Bentley Court
Deerfield, IL 60015
Duane R. Kullberg 5,000
179 East Lake Shore Drive, Apt. 1001
Chicago, IL 60611
Thomas J. Peterson 16,000(2)
1649 N. Russell Road
Bloomington, IN 47407
Paul G. Yovovich 6,400
1007 Forest
Wilmette, IL 60091
Herbert S. Wander 20,000
2023 Linden Avenue
Highland Park, IL 60035
</TABLE>
(1) Mr. Joseph's wife owns 200 shares for which he disclaims beneficial
ownership.
(2) Shares voting power on 12,000 shoes. Mr. Peterson's wife owns 4,000
shares for which he disclaims beneficial ownership.
<PAGE> 91
Exhibit C
FORM OF AFFILIATE LETTER
October 17, 1995
CUC International Inc.
707 Summer Street
Stamford, CT 06901
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated October 17, 1995 (together with any amendments thereto, the
"Merger Agreement"), among Advance Ross Corporation, a Delaware corporation
(the "Company"), CUC International Inc., a Delaware corporation ("Parent"), and
Retreat Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be
merged with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the Company,
as such term is defined for purposes of Rule 145 ("Rule 145") promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and that the
transferability of the shares of common stock, par value $.01 per share, of
Parent (the "Parent Shares") which I will receive upon the consummation of the
Merger in exchange for my shares of common stock or preferred stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company, is therefore restricted.
Nothing herein shall be construed as an admission that I am an affiliate.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of the
Parent Shares except (i) pursuant to an effective registration statement under
the Securities Act, or (ii) as permitted by, and in accordance with, Rule 145
or another applicable exemption under the Securities Act; and
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares prior to the Effective Time (as defined in the Merger Agreement)
or (ii) sell or otherwise reduce my risk (within the meaning of the Securities
and Exchange Commission's Financial Reporting Release No. 1., "Codification of
Financial Reporting Policies," Section 201.01 [41 F.R. 21030] (April 15, 1982)
with respect to any Parent Shares until after such time as consolidated
financial statements which reflect at least 30 days of post-merger combined
operations of parent and the Company have been published by Parent, except as
permitted by Staff Accounting Bulletin No. 76 issued by the Securities and
Exchange Commission.
<PAGE> 92
I hereby acknowledge that Parent is under no obligation to register
the sale, transfer, pledge or other disposition of the Parent Shares or to take
any other action necessary for the purpose of making an exemption from
registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agents with respect to the Parent Shares and that a restrictive legend
will be placed on certificates delivered to me evidencing the Parent Shares in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold or otherwise disposed of unless
registered under the Securities Act pursuant to a Registration
Statement in effect at the time or unless the proposed sale or
disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is
made to that certain letter agreement, dated October 17, 1995, between
the Holder and the Issuer, a copy of which is on file in the principal
office of the issuer which contains further restrictions on the
transferability of this certificate and the shares represented
hereby."
The term Parent Shares as used in this letter shall mean and include
not only the common stock of Parent as presently constituted, but also any
other stock which may be issued in exchange for, in lieu of, or in addition to,
all or any part of such Parent Shares.
I hereby acknowledge that the receipt of this letter by Parent is an
inducement and condition to Parent's obligation to consummate the Merger under
the Merger Agreement and that I understand the requirements of this letter and
the limitations imposed upon the transfer, sale or other disposition of the
Company Shares and the Parent Shares.
Very truly yours,
2
