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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
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M/A/R/C INC.
(Name of Subject Company)
ARMSTRONG ACQUISITION CORP.
and
OMNICOM GROUP INC.
(Bidders)
Common Stock, Par Value $1.00 Per Share
(Title of Class of Securities)
552914103
(CUSIP Number of Class of Securities)
Barry J. Wagner, Esq.
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
(212) 415-3600
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
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Copy to:
Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
(212) 326-3939
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Calculation of Filing Fee
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Transaction Valuation* Amount of Filing Fee**
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$124,998,500 $25,000
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* Estimated for purposes of calculating the filing fee only. Such amount was
derived by multiplying $20.00, the amount offered for each common share,
par value $1.00 per share (the "Shares"), of M/A/R/C Inc. by the sum of
(i) 5,240,185, representing all of the Shares that were issued and
outstanding as of September 30, 1999, (ii) 853,240, representing all of
the Shares reserved for issuance upon the exercise of all outstanding
options to purchase Shares, and (iii) 156,500, representing all of the
Shares reserved for issuance upon the exercise of outstanding warrants.
** 1/50th of 1% of the value of the transaction.
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
Page 1 of 5 Pages
(Exhibit Index is located on Page 5)
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<PAGE>
This Tender Offer Statement on Schedule 14D-1 is filed by Omnicom Group
Inc. ("Parent") and Armstrong Acquisition Corp., a wholly owned subsidiary of
Parent ("Purchaser"), relating to the offer by Purchaser to purchase all
outstanding common shares (the "Shares") of M/A/R/C Inc. (the "Company") at a
purchase price of $20.00 per Share, net to the seller in cash, without interest,
on the terms and subject to the conditions set forth in the Offer To Purchase,
dated October 4, 1999 (the "Offer To Purchase"), and in the related Letter of
Transmittal and any amendments or supplements thereto, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively (which collectively
constitute the "Offer").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
Item 1. Security and Subject Company
(a) The name of the subject company is M/A/R/C Inc. The address of its
principal executive offices is 7850 North Belt Line Road, P.O. Box 650083
Irving, Texas 75063. The telephone number of the Company at such location is
(972) 506-3400.
(b) The information set forth on the cover page and under "Introduction"
in the Offer To Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer To Purchase is incorporated herein by
reference.
Item 2. Identity and Background
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth on the cover page, under "Introduction," in Section 9
("Certain Information Concerning Purchaser and Parent") and in Schedule I of the
Offer To Purchase is incorporated herein by reference.
(e)-(f) None of Purchaser, Parent or, to the knowledge of Purchaser and
Parent, any of the persons listed in Schedule I of the Offer To Purchase has
during the last five years been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company
(a)-(b) The information set forth under "Introduction" and in Section 8
("Certain Information Concerning the Company"), Section 9 ("Certain Information
Concerning Purchaser and Parent"), Section 11 ("Background of the Offer") and
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company; the
Merger Agreement; the Tender, Voting and Option Agreement; Other Matters") of
the Offer To Purchase is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration
(a)-(b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer To Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder
(a)-(e) The information set forth under "Introduction" and in Section 12
("Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; the Tender, Voting and Option Agreement; Other Matters") and in
Section 13 ("Dividends and Distributions") of the Offer To Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in Section 7 ("Effect of the Offer on
the Market for Shares, Stock Exchange Listing and Exchange Act Registration and
Qualification of Shares as Margin Securities") of the Offer To Purchase is
incorporated herein by reference.
Page 2 of 5 Pages
<PAGE>
Item 6. Interest in Securities of the Subject Company
(a)-(b) The information set forth under "Introduction" and in Section 9
("Certain Information Concerning Purchaser and Parent") of the Offer To Purchase
is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to
the Subject Company's Securities
The information set forth under "Introduction" and in Section 9 ("Certain
Information Concerning Purchaser and Parent") and Section 12 ("Purpose of the
Offer and the Merger; Plans for the Company; the Merger Agreement; the Tender,
Voting and Option Agreement; Other Matters") of the Offer To Purchase is
incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated
The information set forth under "Introduction" and in Section 16 ("Fees
and Expenses") of the Offer To Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders
The information set forth in Section 9 ("Certain Information Concerning
Purchaser and Parent") of the Offer To Purchase is incorporated herein by
reference.
Item 10. Additional Information
(a) The information set forth under "Introduction" and in Section 9
("Certain Information Concerning Purchaser and Parent") and Section 12 ("Purpose
of the Offer and the Merger; Plans for the Company; the Merger Agreement; the
Tender, Voting and Option Agreement; Other Matters") of the Offer To Purchase is
incorporated herein by reference.
(b)-(c) The information set forth under "Introduction" and in Section 14
("Certain Conditions of the Offer") and Section 15 ("Certain Legal Matters and
Regulatory Approvals") of the Offer To Purchase is incorporated herein by
reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for Shares, Stock Exchange Listing and Exchange Act Registration and
Qualification of Shares as Margin Securities") of the Offer To Purchase is
incorporated herein by reference.
(e) To the knowledge of Parent and Purchaser, no legal proceedings
relating to the Offer and the Merger required to be disclosed in Item 10(e) of
Schedule 14D-1 are pending or have been instituted.
(f) The information set forth in the Offer To Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits
(a)(1) Offer To Purchase, dated October 4, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Form of Letter to Participants in the Dividend Reinvestment Plan of
M/A/R/C Inc.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(8) Text of Joint Press Release of Omnicom Group Inc. and M/A/R/C Inc.,
dated October 1, 1999
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated September 30, 1999, among M/A/R/C
Inc., Omnicom Group Inc. and Armstrong Acquisition Corp.
(c)(2) Tender, Voting and Option Agreement, dated September 30, 1999, among
Omnicom Group Inc., Armstrong Acquisition Corp., M/A/R/C Inc., certain
Shareholders of M/A/R/C Inc. and certain of such Shareholders' spouses
(c)(3) Confidentiality Agreement, dated December 17, 1998, between Omnicom
Group Inc. and M/A/R/C Inc.
(d) Not applicable
(e) Not applicable
(f) Not applicable
Page 3 of 5 Pages
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: October 1, 1999 ARMSTRONG ACQUISITION CORP.
By: /s/ Barry J. Wagner
--------------------------------------
Name: Barry J. Wagner
Title: Secretary
OMNICOM GROUP INC.
By: /s/ Barry J. Wagner
--------------------------------------
Name: Barry J. Wagner
Title: General Counsel and Secretary
Page 4 of 5 Pages
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
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(a)(1) Offer To Purchase, dated October 4, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Form of Letter to Participants in the Dividend Reinvestment Plan of
M/A/R/C Inc.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(8) Text of Joint Press Release of Omnicom Group Inc. and M/A/R/C Inc.,
dated October 1, 1999
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated September 30, 1999, among M/A/R/C
Inc., Omnicom Group Inc. and Armstrong Acquisition Corp.
(c)(2) Tender, Voting and Option Agreement, dated September 30, 1999, among
Omnicom Group Inc., Armstrong Acquisition Corp., M/A/R/C Inc., certain
Shareholders of M/A/R/C Inc. and certain of such Shareholders' spouses
(c)(3) Confidentiality Agreement, dated December 17, 1998, between Omnicom
Group Inc. and M/A/R/C Inc.
(d) Not applicable
(e) Not applicable
(f) Not applicable
Page 5 of 5 Pages
Exhibit (a)(1)
Offer To Purchase for Cash
All Outstanding Common Shares
of
M/A/R/C Inc.
at
$20.00 Net Per Share
by
Armstrong Acquisition Corp.,
a wholly owned subsidiary of
Omnicom Group Inc.
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
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The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined herein) that
number of common shares (the "Shares") of M/A/R/C Inc. (the "Company") that
(together with any Shares to be acquired by Omnicom Group Inc. ("Parent")
pursuant to the Tender, Voting and Option Agreement (as defined herein) and any
Shares then owned by Parent or any of its subsidiaries) constitutes at least
two-thirds of the Shares outstanding on a fully diluted basis on the date of
purchase. The Offer is also subject to certain other conditions contained in
this Offer To Purchase. See the Introduction and Sections 1, 14 and 15 of this
Offer To Purchase.
The Company, Parent and Armstrong Acquisition Corp. have entered into a
definitive agreement providing for the acquisition of the Company by Parent
pursuant to the Offer and a follow-up Merger. The Board of Directors of the
Company has determined that the Offer and the Merger are fair to and in the best
interests of the Shareholders, has approved the Offer and the Merger and
recommends that Shareholders accept the Offer and tender their Shares pursuant
to the Offer.
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Any Shareholder desiring to tender all or a portion of its Shares should
(1) complete and sign the Letter(s) of Transmittal (or a manually signed
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, (2) mail or deliver the Letter(s) of Transmittal and any other
required documents to the Depositary, and (3) either deliver the certificates
representing those Shares ("Certificates") to the Depositary along with the
Letter(s) of Transmittal or tender those Shares pursuant to the procedures for
book-entry transfer set forth in Section 3 hereof. A Shareholder whose Shares
are held in "street name" or otherwise through a broker, bank or other nominee
must contact the broker, bank or other nominee who holds the Shares for the
Shareholder if the Shareholder desires to tender such Shares.
Any Shareholder who desires to tender Shares and whose Certificate(s) are
not immediately available or who cannot comply with the procedures for
book-entry transfer on a timely basis must tender those Shares by following the
procedures for guaranteed delivery set forth in Section 3 hereof.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer To Purchase. Requests for additional copies of this Offer To Purchase, the
Letter of Transmittal and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks or trust companies.
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October 4, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
Introduction ............................................................. 1
Section
1. Terms of the Offer ................................................ 2
2. Acceptance for Payment and Payment for Shares ..................... 4
3. Procedure for Tendering Shares .................................... 5
4. Withdrawal Rights ................................................. 7
5. Certain Federal Income Tax Consequences of the Offer
and the Merger ................................................. 8
6. Price Range of the Shares; Dividends on the Shares ................ 9
7. Effect of the Offer on the Market for Shares, Stock Exchange
Listing and Exchange Act Registration and Qualification of
Shares as Margin Securities. ...................................... 9
8. Certain Information Concerning the Company ........................ 11
9. Certain Information Concerning Purchaser and Parent ............... 13
10. Source and Amount of Funds ........................................ 13
11. Background of the Offer ........................................... 14
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; the Tender, Voting and Option Agreement;
Other Matters ..................................................... 14
13. Dividends and Distributions ....................................... 28
14. Certain Conditions of the Offer ................................... 29
15. Certain Legal Matters and Regulatory Approvals .................... 30
16. Fees and Expenses ................................................. 32
17. Miscellaneous ..................................................... 32
Schedule I -- Directors and Executive Officers of Purchaser and Parent ... I-1
<PAGE>
To the Holders of Common Shares of
M/A/R/C Inc.:
INTRODUCTION
Armstrong Acquisition Corp. ("Purchaser"), a newly formed wholly owned
subsidiary of Omnicom Group Inc. ("Parent"), hereby offers to purchase all
outstanding common shares (the "Shares") of M/A/R/C Inc. (the "Company") at a
purchase price of $20.00 per Share, net to the seller in cash, without interest
(the "Per Share Amount"), on the terms and subject to the conditions set forth
in this Offer To Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer").Tendering Shareholders who have Shares registered in
their own name and who tender directly to the Depositary (as defined below) will
not be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. Shareholders who hold their Shares in "street
name" or otherwise through a broker, bank or other nominee should consult with
such institution as to whether there are any fees applicable to a tender of
Shares. Purchaser will pay all charges and expenses of Harris Trust Company of
New York, as the depositary (the "Depositary"), and D. F. King & Co., Inc., as
the information agent (the "Information Agent"), in connection with the Offer.
See Section 16.
The Company, Parent and Purchaser have entered into an Agreement and Plan
of Merger dated as of September 30, 1999 (the "Merger Agreement"), providing for
the acquisition of the Company by Parent pursuant to the Offer and the Merger
(as defined below). The Board of Directors of the Company (the "Company Board")
has determined that the Offer and the Merger are fair to and in the best
interests of the Shareholders, has approved the Offer and the Merger and
recommends that Shareholders accept the Offer and tender their Shares pursuant
to the Offer.
ING Barings LLC, the Company's financial advisor ("ING Barings"), has
delivered to the Company Board such firm's opinion, dated September 30, 1999
(the "ING Barings' Opinion"), to the effect that, as of such date and based on
and subject to certain matters stated in such opinion, the $20.00 per Share cash
consideration to be received in the Offer and the Merger by Shareholders (other
than Parent and its affiliates) is fair, from a financial point of view, to such
Shareholders. A copy of the ING Barings' Opinion is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") in
connection with the Offer, a copy of which is being furnished to Shareholders
concurrently with this Offer To Purchase. Shareholders are urged to read the ING
Barings' Opinion in its entirety for a description of the assumptions made,
matters considered and limitations of the review undertaken by INGBarings.
In connection with the execution of the Merger Agreement, the Company,
certain Shareholders of the Company, the spouses of certain of such
Shareholders, Purchaser and Parent have entered into a Tender, Voting and Option
Agreement, dated as of September 30, 1999 (the "Tender, Voting and Option
Agreement"), pursuant to which the Shareholders party thereto have agreed, among
other things, to tender in the Offer the Shares beneficially owned by them and
vote their Shares in favor of the Merger and against proposals adverse to or
conflicting with the transactions contemplated by the Merger Agreement and have
granted an irrevocable proxy to that effect. The Shareholders party thereto have
also granted to Parent an option to purchase the Shares beneficially owned by
them at the Per Share Amount under certain cirumstances. The option is
exercisable if, among other things, (1) the Offer is consummated (under certain
circumstances), (2) the Merger Agreement becomes terminable under certain
circumstances, or (3) another person or group (a) discloses a tender or exchange
offer, (b) announces an intent to acquire the Company or acquires 10% or more of
the Company's capital stock, or (c) as of September 15, 1999, owned 10% or more
of the Company's capital stock and acquires or proposes to acquire an additional
5% or more of the Company's capital stock. The Shareholders party to the Tender,
Voting and Option Agreement include executive officers and certain directors of
the Company who beneficially own 22.5% of the outstanding Shares and 21.9% of
the Shares calculated on a fully diluted basis (assuming exercise of Options and
Warrants to purchase 95,000 Shares and 99,000 Shares, respectively, held by
these Shareholders). See Section 12.
1
<PAGE>
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) that number of Shares that (together with any Shares to be acquired by Parent
pursuant to the Tender, Voting and Option Agreement and any Shares then owned by
Parent or any of its subsidiaries) constitutes at least two-thirds of the Shares
outstanding on a fully diluted basis on the date of purchase (the "Minimum
Condition"). For purposes of the Minimum Condition, the phrase "on a fully
diluted basis" has the following meaning as of any date: the number of Shares
outstanding, together with the number of Shares the Company is then required to
issue pursuant to obligations outstanding at that date under employee stock
options, warrants, benefit plans or other rights to purchase or acquire Shares,
assuming the absence of any vesting requirements or conditions. The Offer is
also subject to certain other conditions contained in this Offer To Purchase.
See Sections 1, 14 and 15.
The Merger Agreement provides, among other things, for the commencement of
the Offer by Purchaser and further provides that after the purchase of Shares
pursuant to the Offer, subject to the satisfaction or waiver of certain
conditions, Purchaser will be merged into the Company (the "Merger"), as a
result of which the Company will become a wholly owned subsidiary of Parent (the
"Surviving Corporation"). In the Merger, each Share (excluding Shares owned by
Shareholders who have properly exercised their dissenters' rights under the
Texas Business Corporation Act ("Texas Law") and Shares owned by Parent and its
subsidiaries) issued and outstanding immediately prior to the effective time of
the Merger (the "Effective Time") will be converted at the Effective Time into
the right to receive the Per Share Amount (or any greater amount paid for Shares
pursuant to the Offer), in cash payable to the holder thereof, without interest,
prorated for fractional Shares and less any required withholding taxes and, in
certain circumstances, stock transfer taxes (the "Merger Consideration").
The Company has informed Purchaser that, as of September 29, 1999, there
were 5,240,185 Shares issued and outstanding, 853,240 Shares reserved for
issuance upon the exercise of outstanding Options (as defined herein) granted
under the Company's Option Plans (as defined herein) and 156,500 Shares reserved
for issuance upon the exercise of outstanding Warrants.
The completion of the Merger is subject to the satisfaction or waiver of a
number of conditions, including, if required, the approval of the Merger
Agreement by the requisite vote or consent of the Shareholders. The Company's
By-Laws and Texas Law require the affirmative vote of holders of at least
two-thirds of the outstanding Shares to approve the Merger. As a result, if the
Minimum Condition and the other conditions to the Offer are satisfied and the
Offer is consummated, the Purchaser will own a sufficient number of Shares to
ensure that the Merger Agreement will be approved. Under Texas Law, if after
consummation of the Offer, Purchaser owns at least 90% of the Shares then
outstanding, the Purchaser will be able to cause the Merger to occur without a
vote of Shareholders. If, however, after consummation of the Offer, the
Purchaser owns less than 90% of the then-outstanding Shares, a vote of the
Shareholders will be required under Texas Law to approve the Merger Agreement,
and a significantly longer period of time may be required to effect the Merger.
See Section 12. As of the date of this Offer To Purchase, neither Parent nor
Purchaser beneficially owns any Shares.
No dissenters' rights are available in connection with the Offer.
Shareholders may exercise dissenters' rights, however, in connection with the
Merger regardless of whether the Merger is consummated with or without a vote of
the Shareholders.
The Merger Agreement is more fully described in Section 12. Certain
federal income tax consequences of the sale of Shares pursuant to the Offer and
the conversion of Shares into the Merger Consideration pursuant to the Merger
are described in Section 5.
This Offer To Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
1. Terms of the Offer
On the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment (and thereby purchase) all Shares
that are validly tendered and not withdrawn in accordance with Section 4 prior
to the
2
<PAGE>
Expiration Date. As used in the Offer, the term "Expiration Date" means 12:00
midnight, New York City time, on Monday, November 1, 1999, unless and until
Purchaser, in accordance with the terms of the Offer and the Merger Agreement,
extends the period of time during which the Offer is open, in which event the
term "Expiration Date" means the latest time and date on which the Offer, as so
extended, expires.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition. The Offer is also subject to certain other conditions set
forth in Section 14, including the expiration or termination of all waiting
periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder (the "HSR Act"). Subject to the terms of
the Merger Agreement, without the prior written consent of the Company,
Purchaser will not (1) decrease or change the form of the Per Share Amount, (2)
decrease the number of Shares sought in the Offer, (3) amend or waive
satisfaction of the Minimum Condition, or (4) impose conditions other than the
Offer conditions set forth in Section 14 hereof (the "Offer Conditions") or
amend any other term of the Offer in any manner adverse to the Shareholders,
except that (x) if, on the initial Expiration Date, which will initially be 20
business days following commencement of the Offer, all conditions to the Offer
shall not have been satisfied or waived, Purchaser may, in its sole discretion,
extend the Expiration Date for such additional period as it may determine to be
appropriate to permit such conditions to be satisfied and (y) without the
consent of the Company, if there have been validly tendered and not withdrawn on
or before the Expiration Date that number of Shares that, together with any
Shares then owned by Parent or any of its Subsidiaries or to be acquired by
Parent pursuant to the Tender, Voting and Option Agreement, constitutes more
than 80% but less than 90% of the outstanding Shares, calculated on a fully
diluted basis, Purchaser may extend the Expiration Date for up to ten additional
business days. Except for the foregoing, Purchaser may not, without the prior
written consent of the Company, which consent the Company may not unreasonably
withhold, extend the Expiration Date. Notwithstanding the foregoing, subject to
applicable legal requirements, Parent may cause Purchaser to waive any Offer
Condition, other than the Minimum Condition, in Parent's sole discretion and the
Offer may be extended in connection with an increase in the consideration to be
paid pursuant to the Offer so as to comply with applicable rules and regulations
of the Commission. Assuming the prior satisfaction or waiver of the Offer
Conditions, Parent will cause Purchaser to accept for payment, and pay for, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as permitted under the Offer.
Subject to the terms of the Merger Agreement and the rights of tendering
Shareholders to withdraw their Shares, Purchaser will retain all tendered Shares
until the Expiration Date.
Subject to the applicable regulations of the Commission and the terms of
the Merger Agreement as described in the next preceding paragraph, Purchaser
also expressly reserves the right, in its sole discretion, at any time or from
time to time, to (1) delay acceptance for payment of, or regardless of whether
such Shares were theretofore accepted for payment, payment for, such Shares
pending receipt of any regulatory or governmental approvals specified in Section
15, (2) terminate the Offer (whether or not any Shares have theretofore been
accepted for payment) if any condition referred to in Section 14 has not been
satisfied prior to the Expiration Date or upon the occurrence of any event
specified in Section 14, (3) waive any condition (except the Minimum Condition),
and (4) except as set forth in the Merger Agreement, otherwise amend the Offer
in any respect, in any such case, by giving oral or written notice of such
termination, waiver or amendment to the Depositary.
The rights reserved by Purchaser in the immediately preceding paragraph
are in addition to Purchaser's rights described in Section 14. Any extension,
termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition to the Offer, Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by
3
<PAGE>
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. The staff of the Commission has stated that an offer
should remain open for a minimum of five business days from the date the
material change is first published, sent or given to shareholders and, if
material changes are made with respect to information that approaches the
significance of price and the percentage of securities sought, a period of up to
ten business days may be required to allow for adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the number of business days remaining between the occurrence of the
change and the then-scheduled Expiration Date equals or exceeds the minimum
extension period that would be required because of such amendment. For purposes
of the Offer, a "business day" means any day other than a Saturday, Sunday or a
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
The Company has provided Purchaser with mailing labels containing the
names and addresses of all record holders of the Shares and security position
listings for the purpose of disseminating the Offer to the Shareholders. This
Offer To Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's shareholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) and pay
for Shares that are validly tendered and not properly withdrawn prior to the
Expiration Date, as soon as practicable after the Expiration Date. Subject to
the applicable rules of the Commission and the terms of the Merger Agreement,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares in order to comply, in whole or in part, with any other
applicable law, government regulation or condition contained therein. See
Sections 1, 14 and 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (1) certificates for the
Shares (or a timely Book-Entry Confirmation (as defined in Section 3) with
respect to the Shares), (2) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees (or, in the case of a book-entry transfer of Shares, an
Agent's Message), and (3) all other documents required by the Letter of
Transmittal. See Section 3.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility (as defined in Section 3) to and received by the Depositary
and forming part of a Book-Entry Confirmation, which states that (1) the
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares that are
the subject of such Book-Entry Confirmation, (2) such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and (3)
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) tendered Shares if, as and when Purchaser gives
oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for the tendering Shareholders for the purpose of receiving
payment from Purchaser and transmitting payment to the tendering Shareholders
whose Shares have been accepted for payment. If, for any reason, acceptance for
payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser is
unable to accept for payment Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights described in Section 14, the Depositary
may, nevertheless, on behalf of Purchaser, retain the tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
Shareholders are entitled to withdrawal rights as described in Section 4 and as
otherwise required by Rule 14e-1(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
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Under no circumstances will interest accrue on the consideration to be
paid for the Shares by Purchaser, regardless of any delay in making such
payment.
If any tendered Shares are not purchased for any reason or if Certificates
are submitted for more Shares than are tendered, Certificates for the Shares not
purchased or tendered will be returned pursuant to the instructions of the
tendering Shareholder without expense to the tendering Shareholder (or, in the
case of Shares delivered by book-entry transfer into the Depositary's account at
a Book-Entry Transfer Facility pursuant to the procedures set forth in Section
3, the Shares will be credited to an account maintained at the appropriate
Book-Entry Transfer Facility) as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
Purchaser reserves the right, subject to the provisions of the Merger
Agreement, to assign, in whole or from time to time in part, to one or more of
Parent's subsidiaries or affiliates the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but no such assignment will relieve
Parent or Purchaser of its obligations under the Offer or prejudice the rights
of tendering Shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all Shares purchased pursuant to the Offer, whether or not the
Shares were tendered prior to the increase in consideration.
3. Procedure for Tendering Shares
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (1) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer of Shares, an Agent's Message), and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
To Purchase prior to the Expiration Date and either (x) Certificates
representing tendered Shares must be received by the Depositary at any one of
those addresses prior to the Expiration Date or (y) the Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below and a
Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (2) the tendering Shareholder must comply with the guaranteed
delivery procedures set forth below. If Certificates for Shares are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) must accompany each such delivery. No
alternative, conditional or contingent tenders will be accepted.
The method of delivery of Certificates for Shares, the Letter of
Transmittal and any other required documents is at the option and sole risk of
the tendering Shareholder and delivery will be deemed made only when actually
received by the Depositary. If delivery is made by mail, registered mail with
return receipt requested, properly insured, is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer To Purchase. Any financial institution that is a participant in the
Book-Entry Transfer Facility system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer the Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. Although delivery
of the Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
any required signature guarantees, or an Agent's Message, and any other required
documents must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer To Purchase
prior to the Expiration Date, or the tendering Shareholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to as a "Book-Entry Confirmation."
Delivery of the Letter of Transmittal or other documents to a Book-Entry
Transfer Facility does not constitute delivery of the Letter of Transmittal or
such other documents to the Depositary.
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Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares tendered therewith (which term, for purposes of this Section, includes
any participant in the Book-Entry Transfer Facility system whose name appears on
a security position listing as the owner of the Shares) and such registered
holder has not completed either the box entitled "Special Delivery Instructions"
or the box entitled "Special Payment Instructions" on the Letter of Transmittal
or (2) such Shares are tendered for the account of a financial institution
(including most commercial banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal.
If the Certificates representing Shares are registered in the name of a
person other than the signer of the Letter of Transmittal or if payment is to be
made or if Certificates for Shares not tendered or not accepted for payment are
to be returned to a person other than the registered holder of the Certificates
surrendered, then the Certificates representing the tendered Shares must be
endorsed or accompanied by appropriate stock powers, in each case signed exactly
as the name or names of the registered holder or owners appears on the
Certificates, with the signatures on the Certificates or stock powers guaranteed
by an Eligible Institution as described above and as provided in the Letter of
Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a Shareholder wishes to tender Shares pursuant to
the Offer and the Shareholder's Certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to be received by the Depositary
prior to the Expiration Date, the Shares may nevertheless be tendered if all the
following guaranteed delivery procedures are complied with:
(1) the tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser with this Offer
To Purchase, is received by the Depositary as provided below prior to the
Expiration Date; and
(3) the Certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any required signature
guarantees (or, in the case of a book-entry transfer of Shares, an Agent's
Message) in connection with a book-entry transfer of Shares, and any other
documents required by the Letter of Transmittal, are received by the
Depositary within three Nasdaq trading days after the date of execution of
the Notice of Guaranteed Delivery. A "Nasdaq trading day" is any day on
which The Nasdaq Stock Market, Inc.'s ("Nasdaq") Nasdaq National Market is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mailed to the Depositary and must include
an endorsement by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery and a representation that the Shareholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision of this Offer To Purchase, payment for
Shares accepted for payment pursuant to the Offer in all cases will be made only
after timely receipt by the Depositary of Certificates for (or Book-Entry
Confirmation with respect to) the Shares, the Letters of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed with
all required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and all other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering Shareholders at the same
time, and will depend upon when Share certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding of 31% of the payments made to Shareholders with respect to the
purchase price of Shares purchased pursuant to the Offer or the conversion of
Shares in the Merger, a Shareholder must provide the Depositary with
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its correct taxpayer identification number and certify that it is not subject to
backup federal income tax withholding by completing the substitute Form W-9
included in the Letter of Transmittal. See Section 5 below and Instruction 10 of
the Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination will be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of Shares. Subject to the terms of the Merger Agreement, Purchaser also
reserves the absolute right to waive or amend any or all of the Offer
Conditions, other than the Minimum Condition, which cannot be waived without the
prior written consent of the Company.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter(s) of Transmittal and the instructions thereto) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, Parent, Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
Shareholder irrevocably appoints designees of Purchaser as his attorneys-in-fact
and proxies, with full power of substitution and resubstitution, in the manner
set forth in the Letter of Transmittal, to the full extent of the Shareholder's
rights with respect to the Shares tendered by the Shareholder and purchased by
Purchaser and with respect to any and all other Shares or other securities
issued or issuable in respect of those Shares, on or after the date of the
Offer. All such powers of attorney and proxies will be considered coupled with
an interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts the Shares for payment. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
Shareholder with respect to the Shares (and any other Shares or other securities
so issued in respect of such purchased Shares) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective) by the Shareholder. The designees of
Purchaser will be empowered to exercise all voting and other rights of the
Shareholder with respect to such Shares (and any other Shares or securities so
issued in respect of such purchased Shares) as they in their sole discretion may
deem proper, including without limitation in respect of any annual or special
meeting of the Shareholders, or any adjournment or postponement of any such
meeting.
Purchaser reserves the absolute right to require that, in order for Shares
to be validly tendered, immediately upon Purchaser's acceptance for payment of
the Shares, Purchaser must be able to exercise full voting and other rights with
respect to the Shares, including voting at any meeting of Shareholders then
scheduled.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering Shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. Withdrawal Rights
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided in this Offer To Purchase, may
also be withdrawn at any time after December 2, 1999.
If Purchaser extends the Offer, is delayed in its purchase of or payment
for Shares, or is unable to purchase or pay for Shares for any reason then,
without prejudice to the rights of Purchaser, tendered Shares may be retained by
the Depositary on behalf of Purchaser and may not be withdrawn, except to the
extent that tendering Shareholders are entitled to withdrawal rights as set
forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the terms of the Merger
Agreement and provisions of Rule 14e-1(c) under the Exchange Act, which
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requires Purchaser to pay the consideration offered or to return Shares
deposited by or on behalf of Shareholders promptly after the termination or
withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer To Purchase. Any
such notice of withdrawal must specify the name of the persons who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered the Shares.
If Certificates representing Shares have been delivered or otherwise identified
to the Depositary then, prior to the release of the Certificates, the tendering
Shareholder must also submit the serial numbers shown on the particular
Certificates representing the Shares to be withdrawn, and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered for the account of an Eligible Institution). If
Shares have been tendered pursuant to the procedure for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been made properly until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. Certain Federal Income Tax Consequences of the Offer and the Merger
Introduction. The following is a summary of the material federal income
tax consequences of the Offer and the Merger to holders whose Shares are
purchased pursuant to the Offer or whose Shares are converted into the right to
receive the Merger Consideration in the Merger (including any cash amounts
received by dissenting Shareholders pursuant to the exercise of dissenters'
rights). It is assumed for purposes of this discussion that the Shares are held
as "capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). This discussion does not address all
aspects of federal income taxation that may be relevant to a particular
Shareholder in light of such Shareholder's personal investment circumstances, or
those Shareholders subject to special treatment under the federal income tax
laws (for example, life insurance companies, tax-exempt organizations, foreign
corporations and nonresident alien individuals) or to Shareholders who acquired
their Shares through the exercise of employee stock options or other
compensation arrangements. In addition, the discussion does not address any
aspect of foreign, state or local income taxation or any other form of taxation
that may be applicable to a Shareholder.
The federal income tax discussion set forth below is included for general
information purposes only. Shareholders should consult their own tax advisors to
determine the federal, state, local and foreign tax consequences of the Offer
and the Merger to them in view of their own particular circumstances.
Consequences of the Offer and the Merger to Shareholders. The receipt of
the Per Share Amount and the Merger Consideration (and any cash amounts received
by dissenting Shareholders pursuant to the exercise of dissenters' rights) will
be a taxable transaction for federal income tax purposes (and also may be a
taxable transaction under applicable state, local and other income tax laws). In
general, for federal income tax purposes, a Shareholder will recognize gain or
loss equal to the difference between its adjusted tax basis in the Shares sold
pursuant to the Offer or converted to cash in the Merger or pursuant to the
exercise of dissenters' rights and the amount of cash received therefor. Such
gain or loss will be capital gain or loss and will be long-term gain or loss if,
on the date of sale (or, if applicable, the date of the Merger), the Shares were
held for more than one year. Limitations on the deductibility of capital losses
may apply, depending on a Shareholder's particular circumstances.
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Backup Tax Withholding. A Shareholder may be subject, under certain
circumstances, to "backup withholding" for federal income tax purposes at a 31%
rate with respect to payments made in connection with the Offer or the Merger.
Backup withholding generally applies if the Shareholder (1) fails to furnish his
social security number or other taxpayer identification number ("TIN"), (2)
furnishes an incorrect TIN, (3) fails properly to report interest or dividends,
or (4) under certain circumstances, fails to provide a certified statement,
signed under penalties of perjury, that the TIN provided is his correct number
and that he or she is not subject to backup withholding. Backup withholding is
not an additional tax but merely an advance payment, which may be refunded to
the extent it results in an overpayment of tax. Certain persons generally are
exempt from backup withholding, including corporations and financial
institutions. Certain penalties apply for failure to furnish correct information
and for failure to include the reportable payments in income. Each Shareholder
should consult with its own tax advisor as to its qualifications for exemption
from withholding and the procedure for obtaining such exemption.
6. Price Range of the Shares; Dividends on the Shares
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, (the "Company Form 10-K"), the Shares are traded on the
Nasdaq National Market under the symbol "MARC." The following table sets forth,
for the periods indicated, the reported high and low closing sale prices for the
Shares on the Nasdaq National Market as reported in the Company Form 10-K with
respect to calendar years 1997 and 1998, and as reported thereafter by published
financial sources with respect to calendar year 1999.
High Low
----- -----
1997
First Quarter .............................. $12.67 $12.00
Second Quarter ............................. 17.88 15.84
Third Quarter .............................. 22.67 20.67
Fourth Quarter ............................. 20.21 18.17
1998
First Quarter .............................. $16.56 $14.58
Second Quarter ............................. 17.71 14.96
Third Quarter .............................. 15.46 14.33
Fourth Quarter ............................. 13.50 12.32
1999
First Quarter .............................. $13.75 $10.00
Second Quarter ............................. 15.94 10.50
Third Quarter .............................. 14.63 12.50
On September 30, 1999, the last full trading day before the public
announcement of the Merger Agreement, the last reported sale price on the Nasdaq
National Market was $14.13 per Share. On October 1, 1999, the last full trading
day before the commencement of the Offer, the last reported sale price on the
Nasdaq National Market was $19.69 per share.
Since the second quarter of 1995, the Company has paid quarterly
dividends. The Company began paying quarterly dividends at an annual rate of
$.27 per share and, as of the date of the Company Form 10-K, was paying
quarterly dividends at an annual rate of $.30 per share. The Company has agreed
in the Merger Agreement that, so long as the Merger Agreement is in effect, it
will not declare or pay any dividend or other distribution payable in cash,
stock or property with respect to the Shares prior to the Effective Time of the
Merger.
7. Effect of the Offer on the Market for Shares, Stock Exchange Listing and
Exchange Act Registration and Qualification of Shares as Margin Securities.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market
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value of the remaining Shares held by Shareholders other than Purchaser.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Per Share Amount.
Nasdaq Quotation. Depending upon the number of Shares purchased pursuant
to the Offer, the Shares may no longer meet the standards for continued
inclusion in Nasdaq. According to Nasdaq's published guidelines, the Shares
would not be eligible to be included for quotation if, among other things, the
number of publicly held Shares falls below 500,000, the number of holders of
Shares falls below 400 or the aggregate market value of such publicly held
Shares falls below $3,000,000. If these standards are not met, the Shares might
continue to be quoted on The Nasdaq SmallCap Market, Inc., but if the number of
holders of the Shares falls below 300, or if the number of publicly held Shares
falls below 100,000, or if the aggregate market value of such publicly held
Shares falls below $200,000 or there are not at least two registered and active
market makers (one of which may be a market maker entering a stability bid),
Nasdaq rules provide that the securities would no longer qualify for inclusion
in Nasdaq and Nasdaq would cease to provide any quotations. Shares held directly
or indirectly by an officer or director of the Company or by a beneficial owner
of more than 10% of the Shares will ordinarily not be considered as being
publicly held for purposes of these standards. In the event the Shares are no
longer eligible for Nasdaq quotation, quotations might still be available from
other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of such Shares remaining at such time, the interest in maintaining a
market in such Shares on the part of securities firms, the possible termination
of registration of such Shares under the Exchange Act as described below and
other factors.
Purchaser has been advised by the Company that, as of September 29, 1999,
there were 424 holders of record of the Shares. The Company has advised
Purchaser that it believes that the number of beneficial owners of the Shares as
of September 29, 1999, is in excess of 350.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. The
termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), and the requirement of furnishing a proxy statement in connection with
Shareholders' meetings pursuant to Section 14(a), no longer applicable to the
Shares. Furthermore, if the Shares are no longer registered under the Exchange
Act, the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions would no longer be applicable to the Company. In
addition, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended. Purchaser believes that the purchase of the Shares pursuant to the
Offer may result in the Shares becoming eligible for termination of registration
under the Exchange Act, and it is the intention of Purchaser to cause the
Company to make an application for termination of registration of the Shares as
soon as possible after successful completion of the Offer if the Shares are then
eligible for such termination.
If registration of the Shares is not terminated prior to the Merger, then
following the consummation of the Merger, the Shares will no longer be eligible
for Nasdaq quotation and the registration of the Shares under the Exchange Act
will be terminated.
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute"margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities" or be eligible for reporting by
Nasdaq. Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after consummation of
the Offer as the requirements for termination of the registration of the Shares
are met.
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8. Certain Information Concerning the Company
General Information. The Company is a Texas corporation with its principal
executive offices located at 7850 North Belt Line Road, P.O. Box 650083, Irving,
Texas 75063. The Company was formed in 1981. The Company became a publicly
traded company as a result of the spin-off of shares to shareholders of
Tracy-Locke Company (the "Company's Prior Parent") effected in connection with
the acquisition by a predecessor of Parent of the Company's Prior Parent in the
mid-1980's (the "Prior Parent Acquisition"). The following description of the
Company's business has been derived in part from the Company Form 10-K and is
qualified in its entirety by reference to the Company Form 10-K.
Through its two operating units, M/A/R/C Research and Targetbase
Marketing, the Company provides marketing information services to large consumer
and business product and service companies. The Company has designed and
developed proprietary, computer-based systems for providing an integrated
offering of marketing intelligence services. The marketing research services
include forecasting the business impact of marketing strategies through market
segmentation, market testing, market forecasting and market tracking. The
Company also provides a full complement of database marketing services that
include market consulting, database construction and management, creative design
and production and strategic analysis.
Historical Financial Information. Certain selected consolidated financial
information for the Company excerpted from the Company 10-K and the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999, (the
"Company Form 10-Q") is set forth below. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operations) and other documents
filed by the Company with the Commission, and the following summary is qualified
in its entirety by reference to such reports and other documents and all of the
financial information (including any related notes) contained therein. Such
reports and other documents should be available for inspection and copies should
be obtainable in the manner set forth below under "Available Information."
Selected Consolidated Financial Information
(Dollars in thousands, except per Share amounts)
<TABLE>
<CAPTION>
Six months ended
June 30, Year ended December 31,
------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Operating revenues ........... $46,335 $44,473 $88,911 $96,709 $85,459 $74,387 $68,462
Net income ................... 4,341(3) (229) 104 6,075(1) 4,690 3,275 2,677
Diluted earnings per
common and common
equivalent share(2) .......... .86(3) (.05) .02 1.21(1) 1.00 .74 .61
Shares of common
stock used for per
share computations(2) ........ 5,069,228 4,923,606 5,145,594 5,034,307 4,696,017 4,432,406 4,579,052
Dividends per Share(2) ....... $.15 $.15 $.30 $.30 $.27 $.20 --
</TABLE>
- ----------
(1) Includes a nonrecurring benefit of $391 or $.08 per Share.
(2) Restated to reflect three-for-two stock split paid on February 28, 1997 to
holders of record on February 7, 1997.
(3) Includes nonrecurring benefit of $3,097 or $.61 per share.
<TABLE>
<CAPTION>
December 31,
June 30, -------------------------------------
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance Sheet Data
Total current assets .......................... $32,248 $27,145 $30,234 $28,585
Total assets .................................. 84,128 78,892 74,974 7,333
Long-term debt (excluding current portion
and deferred compensation and other
liabilities) ................................. 17,294 19,879 17,453 17,961
Total current liabilities ..................... 10,651 7,272 6,496 9,905
Total shareholders equity ..................... 49,984 46,390 47,561 39,562
</TABLE>
11
<PAGE>
Certain Forward-Looking Information. During the course of discussions
among Parent, Purchaser and the Company that led to the execution of the Merger
Agreement, the Company provided Parent with certain business and financial
information that was not publicly available, including the Company's internal
business plan for 1999, 2000 and 2001. Set forth below is a summary of the
financial forecasts included in such information. These forecasts should be read
together with the financial statements of the Company referred to herein.
The Company forecasts were not prepared with a view to public disclosure
or compliance with published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
financial forecasts, and are included in this Offer To Purchase only because
they were provided to Parent. None of Parent, Purchaser nor any of their
representatives assumes any responsibility for the accuracy of these forecasts.
While presented with numerical specificity, these forecasts are based upon a
variety of assumptions (not all of which were stated therein and not all of
which were provided to Parent or Purchaser) relating to the businesses of the
Company, which may not be realized and are subject to significant financial,
market, economic and competitive uncertainties and contingencies which are
difficult or impossible to predict accurately, many of which are beyond the
control of the Company and Parent. There can be no assurance that these
forecasts will be realized, and actual results may vary materially from those
shown. The inclusion of the forecasts set forth below should not be regarded as
a representation by Parent, Purchaser or any of their respective affiliates or
representatives or by the Company or any of its affiliates or representatives
that the forecasted results will be achieved.
The Company's business plan provided to Parent and Purchaser forecasted
revenue and net income of $99.2 million and $6.4 million (including $3.0 million
from a nonrecurring divestiture of a minority interest in another company),
respectively, for 1999, $121.0 million and $7.0 million, respectively, for 2000
and $140.5 million and $9.9 million, respectively, for 2001. The business plan
was prepared early in 1999 and management of the Company has informed Parent and
Purchaser that the Company's 1999 year-to-date results are slightly behind the
results projected for 1999 as set forth above.
The foregoing business plan and forecasts were prepared by the Company's
management in the ordinary course of the Company's annual budgeting process and
make certain assumptions regarding the Company's revenues, variable and fixed
costs, expenses, including interest expense, growth rates and certain other
future conditions affecting the Company's results of operations, including that
there would be no loss of material clients and that the Company would experience
an accelerating growth rate during the applicable period. The Company has not
updated, and under the Merger Agreement is under no obligation to update, the
business plan since its preparation early in 1999.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters. The
Company is required to disclose in such proxy statements certain information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of Shares and
any material interest of those persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the
Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and also
should be available for inspection and copying at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies may be obtained upon payment of the Commission's prescribed
fees by writing to its principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549, or through the Commission's website (http://www.sec.gov).
Although neither Parent nor Purchaser believes as of the date of the Offer
To Purchase that statements contained herein based upon such documents are
untrue in any material respect, none of Parent, Purchaser or the Information
Agent assumes any responsibility for the accuracy or completeness of the
information concerning the Company, furnished by the Company or contained in the
documents and records referred to herein or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Parent and Purchaser.
12
<PAGE>
9. Certain Information Concerning Purchaser and Parent
Purchaser, a Texas corporation, was organized to acquire all of the Shares
pursuant to the Offer and the Merger and has not conducted any unrelated
activities since its organization. All of the outstanding capital stock of
Purchaser is owned directly by Parent. The principal executive offices of
Purchaser are located at 437 Madison Avenue, New York, New York 10022.
Parent is a New York corporation, with its principal executive offices
located at 437 Madison Avenue, New York, New York 10022. Parent, through its
wholly and partially owned companies, provides corporate communications services
to clients worldwide on a global, pan-regional, national and local basis. The
communications services offered by Parent include advertising in various media
such as television, radio, newspaper, magazines, outdoor and the Internet, as
well as public relations, specialty advertising, direct response and promotional
marketing, strategic media planning and buying and Internet and digital media
development.
Parent's consolidated revenues and net income were $2.4 billion and $172.7
million, respectively, for the six months ended June 30, 1999 and its aggregate
market capitalization (number of fully diluted shares times market price plus
long-term debt) at that date was $15.9 billion. The name, business address,
citizenship, present principal occupation and employment history for the past
five years of each of the executive officers and directors of Parent and
Purchaser are set forth on Schedule I.
Parent's common stock is traded on the New York Stock Exchange. Parent is
subject to the informational filing requirements of the Exchange Act. For
additional information relating to Parent, please review Parent's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 (the "Parent 10-K") and
Parent's Quarterly Report on Form 10-Q for the fiscal quarters ended March 31,
1999 and June 30, 1999 (the "Parent 10-Qs"). The Parent 10-K and the Parent
10-Qs as well as all reports and other documents filed with the Commission by
Parent since the date of the Parent 10-K are incorporated herein by reference.
Such reports and other documents should be available for inspection and copies
should be obtainable from the offices of the Commission in the same manner as
set forth under the caption "Available Information" in Section 8 above.
Except as set forth elsewhere in this Offer To Purchase or Schedule I
hereto, (1) neither Parent nor Purchaser nor, to the knowledge of Parent or
Purchaser, any of the persons listed in Schedule I hereto or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed, beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company, has effected any transaction in the Shares or
any other equity securities of the Company during the past 60 days, or has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company (including any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations), (2) there have been no transactions which
would require reporting under the rules and regulations of the Commission
between Parent or Purchaser or any of their respective subsidiaries or, to the
knowledge of Parent or Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or any of its executive officers,
directors or affiliates, on the other hand, and (3) there have been no contacts,
negotiations or transactions between Parent or Purchaser or any of their
respective subsidiaries or, to the knowledge of Parent or Purchaser, any of the
persons listed in Schedule I hereto, on the one hand, and the Company or its
subsidiaries or affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
10. Source and Amount of Funds
Based on information furnished to Parent and Purchaser, the total number
of Shares outstanding (calculated on a fully diluted basis) as of September 29,
1999, was 6.25 million. Based thereon, the total amount payable in respect of
the Shares pursuant to the Offer and the Merger and to pay Purchaser's and
Parent's related fees and expenses is $127.0 million, before the expected
payment or refinancing of certain indebtedness of the Company. The funds
required to purchase Shares tendered pursuant to the Offer will be provided to
Purchaser in the form of capital contributions or advances made by Parent.
Parent has cash on hand and other capital resources sufficient for these
purposes.
13
<PAGE>
11. Background of the Offer
From time to time following the Prior Parent Acquisition, representatives
of Parent and the Company conducted discussions in the ordinary course of
business and in respect of possible transactions.
In late 1998, representatives of the management of one of Parent's
operating subsidiaries contacted senior management of the Company to determine
whether the Company would be interested in pursuing discussions regarding the
possible acquisition of the Company by Parent. Subsequent discussions were
conducted among representatives of the Company, including representatives of ING
Barings, on an intermittent basis during the first several months of 1999. In
early May 1999, representatives of Parent informed representatives of the
Company that Parent would be interested in pursuing the possible acquisition of
the Company at an indicated acquisition price of $18.50 per Share, payable in
cash. Representatives of the Company informed representatives of Parent that the
Company was not interested in pursuing discussions of a possible transaction at
the indicated price level. In early June 1999, Parent indicated that it would be
willing to discuss a transaction at a price of $20.00 per share, payable in
cash.
Discussions of a possible transaction among representatives of Parent and
the Company continued on an intermittent basis over the following three-month
period. In early September 1999, representatives of Parent reiterated to
representatives of the Company that Parent would be willing to pursue the
possible acquisition of the Company at $20.00 per Share, payable in cash.
Representatives of Parent informed representatives of the Company that Parent's
proposal was subject to Parent's due diligence examination of the Company and
the negotiation of transactional documentation that provided Parent with a high
level of assurance that the transaction would be completed.
Thereafter, representatives of the Company informed representatives of
Parent that the Company would be interested in pursuing discussions of a
possible transaction on that basis. During the following approximately two-week
period, representatives of the parties negotiated the final terms of the
transaction and the related transactional documentation on a substantially
continuous basis and Parent conducted a due diligence examination of the
Company. In addition, at the request of Parent, the parties discussed the terms
of employment arrangements with the Company's senior executives, in each case,
to be effective for a three-year period following the Merger. The terms of these
agreements are described in Item 3(b) of the Company's Schedule 14D-9 being
furnished to Shareholders simultaneously with this Offer To Purchase.
On October 1, 1999, Parent and the Company publicly announced that they
had entered into the Merger Agreement. The Offer was formally commenced on the
date of this Offer To Purchase.
For additional information regarding the background of the Offer and the
Merger, see "Item 4. The Solicitation or Recommendation--Background of the
Offer" in the Company's Schedule 14D-9 being furnished to Shareholders
contemporaneously with this Offer To Purchase.
12. Purpose of the Offer and the Merger; Plans for the Company; the Merger
Agreement; the Tender, Voting and Option Agreement; Other Matters
Purpose of the Offer and the Merger. The purpose of the Offer and the
Merger is to enable Purchaser to acquire the Company. The Offer is intended to
increase the likelihood that the Merger will be completed promptly.
The Company represented to Parent and Purchaser in the Merger Agreement
that (1) the Company Board, at a meeting duly called and held on September 30,
1999, (x) adopted the Merger Agreement and the transactions contemplated
thereby, including the Tender, the Voting and Option Agreement, the Offer and
the Merger (such adoption being sufficient to render Article 13 of Texas Law
inapplicable to the Merger Agreement and the transactions contemplated thereby,
including the Tender, the Voting and Option Agreement, the Offer and the
Merger), (y) recommended that the Shareholders accept the Offer, tender their
Shares pursuant to the Offer and approve the Merger Agreement and the
transactions contemplated thereby, including the Merger, and (z) determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interests of Shareholders and
(2) ING Barings, the Company's financial advisor, rendered to the Company Board
its opinion as investment bankers that the consideration to be received by the
holders of Shares (other than Parent and its affiliates) pursuant to the Offer
and the Merger is fair to such holders from a financial point of view.
14
<PAGE>
Plans for the Company. Following consummation of the Merger, Parent
presently intends to operate the Company as a subsidiary under the name "M/A/R/C
Inc." However, Parent will conduct a further review of the Company and its
subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
After such review, Parent will determine what actions or changes, if any, would
be desirable in light of the circumstances which then exist, and reserves the
right to effect such actions or changes. Parent's decisions could be affected by
information hereafter obtained, changes in general economic or market conditions
or in the business of the Company or its subsidiaries, actions by the Company or
its subsidiaries and other factors.
Except as otherwise described in this Offer To Purchase, and for possible
transactions between the Company and other subsidiaries of Parent in connection
with the integration of business conducted by the Company with the other
businesses of Parent and its subsidiaries, Purchaser, Parent and the directors
and executive officers of Purchaser and Parent listed on Schedule I have no
current plans or proposals that would result in (1) an extraordinary corporate
transaction, such as a merger, reorganization, liquidation or sale or transfer
of a material amount of assets involving the Company or any of its subsidiaries,
(2) a sale or transfer of a material amount of the assets of the Company or any
of its subsidiaries, (3) any change in the present Company Board or management
of the Company, (4) any material change in the present capitalization or
dividend policy of the Company, (5) any material change in the Company's
corporate structure or business, (6) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an interdealer quotation system of a registered
national securities association, or (7) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act.
The Merger Agreement
The summary of the material terms of the Merger Agreement that follows is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which has been filed with the Commission as an exhibit to
the Schedule 14D-1 and is incorporated herein by reference. The Merger Agreement
should be read in its entirety for a more complete description of the matters
summarized below. The Merger Agreement may be examined, and copies obtained from
the offices of the Commission in the same manner as set forth in Section 8
above. Defined terms used below and not defined herein have the respective
meanings assigned to those terms in the Merger Agreement.
The Offer. The Merger Agreement contemplates the commencement of the Offer
and prescribes conditions to consummation of the Offer. The Merger Agreement
provides that, without the prior written consent of the Company, Purchaser may
not (1) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (2) decrease the number of Shares sought to be purchased
in the Offer, (3) amend or waive satisfaction of the Minimum Condition, or (4)
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares, except that (x) if on the
initial Expiration Date, which will initially be November 1, 1999, all
conditions to the Offer have not been satisfied or waived, Purchaser may, in its
sole discretion, extend the Expiration Date for such additional period as it may
determine to be appropriate to permit such condition to be satisfied, and (y) if
there have been validly tendered and not withdrawn on or before the Expiration
Date, that number of Shares that, together with any Shares then owned by Parent
or any of its Subsidiaries or to be acquired by Parent pursuant to the Tender,
Voting and Option Agreement, constitute more than 80% but less than 90% of the
outstanding Shares, calculated on a fully diluted basis, Purchaser may extend
the Expiration Date for up to ten additional business days. Except for the
foregoing, Purchaser will not, without the prior written consent of the Company,
which consent will not be unreasonably withheld, extend the Expiration Date.
Purchaser shall, on the terms and subject to the prior satisfaction or waiver of
the conditions of the Offer, accept for payment and purchase, as soon as
permitted under the terms of the Offer, all Shares validly tendered and not
withdrawn prior to the expiration of the Offer.
Company Board Representation. The Merger Agreement provides that promptly
upon the payment by Purchaser for Shares pursuant to the Offer, and from time to
time thereafter as Shares are acquired by Purchaser, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company Board as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act,
15
<PAGE>
representation on the Company Board equal to at least the number of directors
which equals the product of the total number of directors on the Company Board
(giving effect to the directors appointed or elected pursuant to such provision
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Parent or any affiliate of parent (including for purposes of such provision such
Shares as are accepted for payment pursuant to the Offer, but excluding Shares
held by the Company) bears to the number of Shares outstanding. At such times,
if requested by Parent, the Company will also cause each committee of the
Company Board to include persons designated by Parent constituting the same
percentage of each such committee as Parent's designees are of the Company
Board. The Merger Agreement also provides that the Company shall, upon request
by Parent, promptly increase the size of the Company Board or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent designees to be elected to the Company Board and shall cause
Parent's designees to be so elected. However, in the event that Parent's
designees are appointed or elected to the Company Board, until the Effective
Time, the Company Board is required to have at least two directors who are
directors on the date of the Merger Agreement and who are neither officers of
the Company nor designees, stockholders, affiliates or associates (within the
meaning of the federal securities laws) of Parent (one or more of such
directors, the "Independent Directors"), except that, if no Independent
Directors remain, the other directors are to designate two persons to fill the
vacancies neither of whom shall be either an officer of the Company or a
designee, stockholder, affiliate or associate of Parent, and such persons shall
be deemed to be Independent Directors for purposes of the Merger Agreement.
The Merger. The Merger Agreement provides that, at the Effective Time,
subject to and upon the terms and conditions of the Merger Agreement and Texas
Law, Purchaser will be merged into the Company. Subject to applicable law, the
directors of the Purchaser immediately before the Effective Time will be the
initial directors of the Surviving Corporation and the officers of the Company
immediately before the Effective Time will be the initial officers of the
Surviving Corporation, in each case until their successors are elected or
appointed and qualified.
The Merger Agreement provides that if Parent, Purchaser or any other
subsidiary of Parent acquires at least 90% of the outstanding Shares pursuant to
the Offer or otherwise, the parties to the Merger Agreement will, at the request
of Parent or Purchaser, take all necessary and appropriate action to cause the
Merger to become effective in accordance with Article 5.16 of Texas Law without
a meeting of Shareholders as soon as practicable after the acceptance for
payment and purchase of the Shares by the Purchaser pursuant to the Offer. The
Company has agreed in the Merger Agreement that, if required by applicable law
in order to consummate the Merger because Parent, Purchaser and any other
Subsidiaries do not acquire at least 90% of the outstanding Shares, following
the purchase of and payment for Shares by the Purchaser pursuant to the Offer,
the Company shall (1) promptly take all action necessary in accordance with
Texas Law and its Articles of Incorporation and By-Laws to convene a special
meeting of Shareholders, (2) use its best efforts to solicit from the
Shareholders proxies in favor of the approval of the Merger Agreement, and (3)
take all other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote or consent of Shareholders required by Texas Law to
effect the Merger. Parent has agreed in the Merger Agreement that it will vote,
or cause to be voted, all Shares directly or indirectly beneficially owned by it
in favor of the Merger.
Conversion of Outstanding Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the Purchaser, the Company or any
holder of Shares, each Share issued and outstanding immediately before the
Effective Time (other than Shares held by Parent, any wholly owned subsidiary of
Parent or in the treasury of the Company, which will be canceled and
extinguished at the Effective Time and as to which no payment or other
consideration will be made, and Dissenting Shares) will be canceled and
extinguished and be converted into the right to receive the Merger Consideration
in cash, payable to the holder thereof, without interest, upon surrender of the
Certificate formerly representing such Share. At the Effective Time, each common
share of Purchaser will be converted into common shares of the Surviving
Corporation. As a result, the Company will become a wholly owned subsidiary of
Parent.
Treatment of Options and Warrants. The Merger Agreement provides that the
Company will take all actions necessary to provide that, upon consummation of
the Merger, (1) subject to clause (2), each then outstanding option to purchase
Shares (the "Options") granted under any of the Company's stock option plans
(the "Option Plans") and each then outstanding warrant to purchase Shares (the
"Warrants"), whether or not
16
<PAGE>
then exercisable or vested, will either (a) be acquired by the Company for
cancellation in consideration of payment to the holders of such Options and
Warrants of an amount in respect thereof equal to the product of (x) the excess,
if any, of the Per Share Amount over the per share exercise price thereof and
(y) the number of Shares subject thereto (such payment to be net of applicable
withholding taxes) or (b) be converted into an option or warrant, as applicable,
to purchase the number of shares of common stock of Parent equal to the number
of Shares subject to such Option or Warrant, as applicable, in each case on
terms which, giving effect to the Offer and the Merger, preserve the existing
terms of such Options and Warrants, and (2) each then outstanding Option that
has been designated by the Company as an "Incentive Stock Option" (an "ISO")
will be converted into an option in accordance with clause (b) above. In
accordance with the terms of the Merger Agreement, any Options (other than ISOs)
and Warrants not exercised or exchanged prior to the Effective Time will be
converted by reason of the Merger into the right to receive, upon payment of the
exercise price thereunder, an amount in cash, without interest, equal to the Per
Share Amount times the number of Shares subject thereto. The adjustments, if
any, provided in this paragraph with respect to Options will be effected in a
manner consistent with Section 424(a) of the Code.
Representations and Warranties of the Company. Pursuant to the Merger
Agreement, the Company has made representations and warranties with respect to,
among other things, (1) the organization, corporate powers and qualifications of
the Company and each of its Subsidiaries, (2) the capitalization of the Company,
(3) the corporate power and authority to enter into the Merger Agreement and,
subject to obtaining any necessary Shareholder approval of the Merger, to carry
out its obligations thereunder, (4) due authorization, execution and delivery of
the Merger Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby, subject to the approval of the Merger by the
Shareholders in accordance with Texas Law, (5) the absence of any conflicts
between the Merger Agreement and the transactions contemplated thereby with any
law, regulation, court order, judgment, decree, permit or license, agreements,
contracts or other instruments and obligations, (6) the absence of required
waivers, consents or approvals, (7) the accuracy of the documents filed with the
Commission, (8) the Company's financial statements and its financial condition,
(9) the compliance of the Company and its Subsidiaries with all laws, including
those relating to the protection of the environment, (10) required permits,
licenses, variances, exemptions, orders, regulations and approvals of
governmental authorities for the conduct of business by the Company and its
subsidiaries, (11) the ING Barings' Opinion, (12) the absence of certain
litigation, (13) the accuracy and completeness of the information supplied by
the Company in connection with the Offer or any other document to be filed with
the Commission or any other governmental entity in connection with the
transactions contemplated by the Merger Agreement, (14) action taken by the
Company Board to render Article 13 of Texas Law inapplicable to the Offer, the
Merger, the Merger Agreement and any of the transactions contemplated thereby
and the Tender, Voting and Option Agreement and (15) employee benefit plans,
(16) patents, trademarks and other intellectual property, (17) certain tax
returns required to be filed and certain taxes required to be paid by the
Company and its subsidiaries, (18) the absence of certain events since December
31, 1998, including that there has not been any change in or effect on the
business of the Company that is or can be reasonably expected to be materially
adverse to the business, assets, properties (including intangible properties),
condition (financial or otherwise), results of operations, prospects,
liabilities or regulatory status of the Company and subsidiaries taken as a
whole (a "Company Material Adverse Effect"), (19) the vote required by the
Shareholders to approve the Merger, (20) transactions with affiliates, (21)
certain contractual obligations, (22) the absence of brokerage or finders fees
or commissions payable in connection with the Merger Agreement and the
transactions contemplated thereby (other than with respect to fees payable to
ING Barings), (23) client relations, and (24) the accuracy of the information
contained in the Merger Agreement and each certificate or other instrument
furnished by the Company to Parent or Purchaser.
Representations and Warranties of Parent and Purchaser. Pursuant to the
Merger Agreement, Parent and Purchaser have made representations and warranties
with respect to, among other things, (1) the organization, corporate powers and
qualifications of Parent and Purchaser, (2) the corporate power and authority to
execute and deliver the Merger Agreement and to consummate the transactions
contemplated thereby, (3) the absence of any conflicts between the Merger
Agreement and the transactions contemplated thereby with any laws, regulations,
agreements, contracts or other instruments and obligations, (4) obligations or
liabilities of Purchaser other than those incurred in connection with its
incorporation or organization or the consummation of the Merger Agreement or
transactions contemplated thereby, (5) the absence of brokerage or finders fees
or
17
<PAGE>
commissions payable in connection with the Merger Agreement and the transactions
contemplated thereby, and (6) the accuracy of documents filed with the
Commission.
Covenants. The Merger Agreement obligates the Company and its
Subsidiaries, from the date of the Merger Agreement until the Effective Time, to
conduct their operations only in the ordinary and usual course of business
consistent with past practice and obligates the Company and its Subsidiaries to
use their reasonable efforts to preserve intact their business organizations, to
keep available the services of their present officers, employees and consultants
and to preserve the present relationships of the Company with customers,
suppliers and other Persons with which the Company has significant business
relations. The Merger Agreement also contains specific covenants as to certain
impermissible activities of the Company prior to the Effective Time, which
provide that the Company will not (and, in certain cases, will not permit any of
its Subsidiaries to): (1) adopt any amendment to its Articles of Incorporation
or By-Laws, (2) (a) issue, sell, transfer, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or any of its Subsidiaries,
other than the issuance of Shares pursuant to securities, options, warrants,
calls, commitments or rights existing on the date of the Merger Agreement and
previously disclosed to Parent in writing (including as disclosed in reports to
the Commission), (b) incur any long-term indebtedness (whether evidenced by a
note or other instrument, pursuant to a financing lease, sale-leaseback
transaction, or otherwise) or incur short-term indebtedness other than under
lines of credit existing on the date of the Merger Agreement, (c) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock or
other securities; or (d) enter into, amend, terminate, renew or fail to use
reasonable efforts to renew in any material respect, any contract except in the
ordinary course of business consistent with past practice, (3) declare, set
aside or pay any dividend or other distribution (payable in cash, stock or
property) with respect to its capital stock, (4) except pursuant to employment
contracts in effect as of the date of the Merger Agreement (a) grant any
increase in the compensation payable or to become payable by the Company or any
of its Subsidiaries to any employee, except that, solely with respect to
non-officer employees, the Company may grant increases in base compensation in
the ordinary course of business consistent with past practice, (b) adopt, enter
into, amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement, or (c) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director, employee or consultant of
the Company or any of its Subsidiaries, (5) change the accounting principles
used by it unless required by GAAP (or, if applicable with respect to
subsidiaries, foreign generally accepted accounting principles), (6) acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business consistent
with past practice) for an amount in excess of $100,000 individually or in the
aggregate, (7) sell, lease, exchange, transfer or otherwise dispose of, or agree
to sell, lease, exchange, transfer or otherwise dispose of, any of its assets
except in the ordinary course of business consistent with past practice, (8)
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its subsidiaries is a party, (9)
mortgage, pledge, hypothecate, grant any security interest in, or otherwise
subject to any other lien on any of its properties or assets, (10) compromise,
settle, grant any waiver or release relating to or otherwise adjust any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any litigation, except for any such
compromise, settlement, waiver, release or adjustment in the ordinary course of
business consistent with past practice and involving a payment by the Company or
any of its Subsidiaries not in excess of $50,000 in the aggregate following
prior notice to and consultation with the Parent, and (11) enter into an
agreement, contract, commitment or arrangement to do any of the foregoing.
Access to Information. The Merger Agreement provides that, from the date
of the Merger Agreement until the Effective Time, the Company shall give Parent
and its representatives reasonable access, at all
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reasonable times, to its officers, employees, agents, properties, offices and
other facilities and to all books and records, and furnish Parent and Purchaser
will all financial, operating and other data and information as Parent or
Purchaser may reasonably request, subject to Parent's maintaining the
confidentiality of any non-public information disclosed to them.
Efforts. The parties have agreed to use their best efforts to take or
cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate the transactions contemplated by
the Merger Agreement and to use their best efforts to obtain all necessary
waivers, consents and approvals, and to effect all necessary filings under the
Exchange Act and the HSR Act. The parties also agreed to cooperate in responding
to inquiries from, and making presentations to, governmental authorities.
Public Announcements. The Merger Agreement provides that the Company and
Parent will consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer or the Merger
and shall not issue any press release or make any such public statement before
such consultation, except as may be required by law or applicable stock exchange
rules.
Employee Benefits. With respect to employee benefit matters, the Merger
Agreement provides that at the Effective Time, the Surviving Corporation will
continue as the plan sponsor of each Employee Plan. The Merger Agreement
provides that, for at least one year following the Effective Time, employees of
the Company and its Subsidiaries will receive employee benefits that, in the
aggregate, are substantially comparable to the employee benefits provided
immediately prior to the date of the Merger Agreement, except (1) for
termination of the Option Plans, or (2) as required by applicable law (including
as required to preserve any favorable tax treatment afforded such benefits as of
the Effective Time), (3) resulting from the substitution of benefits applicable
to employees of Diversified Agency Services, a division of Parent, or (4)
changes effective on or after September 30, 2000. Thereafter, such participants
will, in any event, be credited with their service with the Company in
determining their right to participate and vesting under any successor Employee
Plans.
Agreement to Defend and Indemnify. The Merger Agreement provides that the
Articles of Incorporation and By-Laws of the Surviving Corporation shall contain
indemnification provisions identical to those contained in the Company's
Articles of Incorporation and By-Laws and shall not be amended, repealed or
otherwise modified for a period of seven years after the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who as
of the date of the Merger Agreement were directors or officers of the Company or
otherwise entitled to indemnification under the Articles of Incorporation,
By-Laws or indemnification agreements (the "Indemnified Parties"). The Merger
Agreement further provides that the Company will, to the fullest extent
permitted under Texas Law and regardless of whether the Merger becomes
effective, indemnify, defend and hold harmless, and after the Effective Time,
Parent will cause the Surviving Corporation, to the fullest extent permitted
under Texas Law, to indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, including,
without limitation, liabilities arising out of the Merger Agreement and the
transactions contemplated thereby, to the extent that it was based on the fact
that such Indemnified Party is or was a director or officer of the Company and
arising out of actions or omissions or alleged actions or omissions occurring at
or prior to the Effective Time, and in the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (1) the Company or the Surviving Corporation, as applicable, shall pay
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly as statements therefor are received, and (2) the Company
and the Surviving Corporation will cooperate in the defense of any such matter,
except that (a) neither the Company nor the Surviving Corporation will be liable
for any settlement effected without its written consent (which consent will not
be unreasonably withheld) and (b) that neither the Company nor the Surviving
Corporation will be obliged to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single action except to the extent
that, in the opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such action.
The Merger Agreement provides further that, for seven years after the Effective
Time, the Surviving Corporation will be required to maintain or obtain officers'
and directors' liability insurance covering the Indemnified Parties who are
currently covered by the Company's officers and directors liability insurance
policy, on terms not less favorable than those in effect on the date of the
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Merger Agreement in terms of coverage and amounts, except that (y) the Surviving
Corporation will not be required to expend in any year an amount in excess of
150% of the annual aggregate premiums currently paid by the Company for such
insurance and (z) if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation will be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of its Board of Directors,
for a cost not exceeding such amount. Parent has agreed to cause the Surviving
Corporation to reimburse all expenses, including reasonable attorney's fees and
expenses, incurred by any Person to enforce the foregoing obligations of Parent
and the Surviving Corporation. Parent has agreed that these provisions will
survive consummation of the Merger and be binding on all successors and assigns.
Each of the Indemnified Parties are entitled to enforce this section of the
Merger Agreement whether or not they are a party to the Merger Agreement.
Notification of Certain Matters. Parent and the Company have agreed to
promptly notify each other of (1) the occurrence or non-occurrence of any event
whose occurrence or non-occurrence would be likely to cause either (a) any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect at any time from the date of the Merger
Agreement to the Effective Time or (b) any condition described in Section 14 to
be unsatisfied in any material respect at any time from the date of the Merger
Agreement to the date Purchaser purchases Shares pursuant to the Offer and (2)
any material failure of the Company, Purchaser or Parent, as the case may be, or
any officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement, provided, however, that the delivery of any notice will
not limit or otherwise affect the remedies available under the Merger Agreement
to the party receiving such notice.
No Shop Covenant. The Merger Agreement provides that the Company and its
Subsidiaries will not, directly or indirectly, through any officer, director,
agent, financial adviser, attorney, accountant or other representative or
otherwise, solicit, initiate or encourage submission of proposals or offers from
any Person relating to, or that could reasonably be expected to lead to, an
Acquisition Transaction (as defined below) or participate in any negotiations or
discussions regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
an Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Offer, the Merger or any other transaction contemplated by the Merger Agreement,
except that, prior to the purchase of and payment for Shares by Purchaser
pursuant to the Offer, the Company may, in response to an unsolicited written
proposal with respect to an Acquisition Transaction from a third party that the
Company Board determines, in its good faith and reasonable judgment, after
consultation with and the receipt of the advice of its financial advisor and
outside counsel, is a Superior Proposal (as defined below), (1) furnish
information to, pursuant to a customary confidentiality agreement, and
negotiate, explore or otherwise engage in substantive discussions with such
third party, in each case, only if the Company Board determines, in its good
faith and reasonable judgment, based upon and in conformity with the written
opinion of its outside legal counsel, that failing to take such action would
breach the fiduciary duties of the Company Board under applicable law and (2)
take and disclose to the Shareholders a position with respect to the Merger or
another Acquisition Transaction proposal, or amend or withdraw such position, as
required by Rules 14d-9 and 14e-2 under the Exchange Act.
The Merger Agreement provides that neither the Company Board nor any
committee thereof may (1) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Company Board or such committee of the Offer, the Merger
or the Merger Agreement, (2) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Transaction, or (3) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement related to any Acquisition Transaction.
Notwithstanding the foregoing, prior to the purchase of and payment for Shares
by Purchaser pursuant to the Offer, in response to an unsolicited Acquisition
Transaction proposal, if the Company Board determines, in its good faith and
reasonable judgment, based upon and in conformity with the written opinion of
its outside legal counsel, that such proposal is a Superior Proposal and that
failure to do any of the actions set forth in clauses (1) or (2) above would
breach the fiduciary duties of the Company Board under applicable law, the
Company Board may, if it gives Parent five Business Days prior written notice of
its intention to do so, withdraw or modify its approval or recommendation of the
Offer, the Merger or the Merger Agreement or approve or recommend an Acquisition
Transaction, except
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that the foregoing shall in no way limit or otherwise affect Parent's right to
terminate the Merger Agreement as provided therein. Any such withdrawal,
modification or change of the recommendation of the Company Board of the Merger
Agreement will not change the approval of the Company Board for purposes of
causing any state takeover statute or other state law to be inapplicable to the
transactions contemplated thereby, including the Offer and the Merger. Nothing
in the No Shop section of the Merger Agreement (x) permits the Company to
terminate the Merger Agreement, (y) permits the Company to enter into any
agreement with respect to any Acquisition Transaction, or (z) affects any other
obligation of the Company under the Merger Agreement.
The Merger Agreement requires the Company to (1) immediately (and in any
event, no later than one Business Day after receipt) advise Parent in writing of
the receipt of a request for information or any inquiries or proposals relating
to an Acquisition Transaction and any actions taken pursuant thereto, specifying
the material terms and conditions of such proposed Acquisition Transaction and
(2) keep Parent reasonably informed of the status of any such request or
proposed Acquisition Transaction. If any such inquiry or proposal is in writing,
the Company shall promptly deliver to Purchaser a copy of such inquiry or
proposal. In addition, the Merger Agreement provides that the Company shall
promptly (but in any event no later than one Business Day) advise Parent in
writing, if the Company Board makes any determination with respect to a Superior
Proposal.
For purposes of the Merger Agreement, (1) "Acquisition Transaction" means
(other than the transactions contemplated by the Merger Agreement) (x) a merger,
consolidation or other business combination, share exchange, sale of shares of
capital stock, tender offer or exchange offer or similar transaction involving
the Company or any of its Subsidiaries, (y) acquisition in any manner, directly
or indirectly, of a material interest in any voting securities of, or a material
equity interest in a substantial portion of the assets of, the Company or any of
its Subsidiaries, including any single or multi-step transaction or series of
related transactions which is structured to permit a third party to acquire
beneficial ownership of a majority or greater equity interest in the Company, or
(z) the acquisition in any manner, directly or indirectly, of any material
portion of the business or assets (other than immaterial or insubstantial assets
or inventory in the ordinary course of business or assets held for sale) of the
Company and (2) "Superior Proposal" means a proposed Acquisition Transaction
involving all of the shares of capital stock or substantially all of the assets
of the Company that the Company Board determines, after consulting with the
Company's financial advisors and outside counsel, to be economically superior to
the Offer, the Merger and the other transactions contemplated hereby.
Conditions to Obligations of Each Party to Effect the Merger. Pursuant to
the Merger Agreement, the respective obligations of Parent, Purchaser and the
Company to effect the Merger are subject to the satisfaction, on or prior to the
closing of the Merger on a date specified by the parties to the Merger Agreement
(the "Closing Date"), of each of the following conditions (any and all of which
may be waived by the parties to the Merger Agreement to the extent permitted by
applicable law): (1) Parent shall have made, or caused to be made, the Offer and
shall have purchased, or caused to be purchased, the Shares pursuant to the
Offer (this condition will be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Parent fails to
accept for payment or pay for the Shares pursuant to the Offer in violation of
the terms of the Offer or of the Merger Agreement), (2) the Merger and the
Merger Agreement shall have been approved and adopted by the requisite vote of
the Shareholders, if required by Texas Law, and (3) no statute, rule,
regulation, judgment, writ, decree, order or injunction (whether temporary,
preliminary or permanent) shall have been promulgated, enacted, entered or
enforced, and no other action shall have been taken, by any government or
governmental, administrative or regulatory authority or by any court of
competent jurisdiction, that in any of the foregoing cases has the effect of
making illegal, or directly or indirectly restraining, prohibiting or
restricting the consummation of, the Merger.
The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction or waiver of the following condition prior to the
Effective Time; the Company shall have performed in all material respects all
obligations and complied in all material respects with all agreements and
covenants of the Company required to be performed or complied with by it under
the Merger Agreement.
Termination. The Merger Agreement may be terminated and the Merger may be
terminated at any time prior to the Effective Time, whether before or after
Shareholder approval:
(1) By mutual written consent of the Boards of Directors of Parent
and the Company;
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(2) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Merger
Agreement;
(3) By either Purchaser or the Company if the Offer has not been
consummated by January 31, 2000 (unless otherwise extended by the parties
to the Merger Agreement) except that no party thereto may terminate the
Merger Agreement if that party's failure to fulfill any of its obligations
under the Merger Agreement was the reason that the Effective Time shall
not have occurred on or before January 31, 2000;
(4) By the Company if there shall be a material breach of any of
Parent's or Purchaser's representations or warranties under the Merger
Agreement, which breach shall not have been cured within ten days of the
receipt of written notice thereof by Parent from the Company, or if there
shall have been a material breach on the part of Parent or Purchaser of
any of their respective covenants or agreements under the Merger
Agreement, which breach shall not have been cured within ten days of the
receipt of written notice thereof by Parent from the Company;
(5) By Parent, if there shall be a material breach of any of the
Company's representations or warranties under the Merger Agreement, which
breach shall not have been cured within ten days of the receipt of written
notice thereof by the Company from Parent, or there shall have been a
material breach on the part of the Company of any of its covenants or
agreements under the Merger Agreement, which breach shall not have been
cured within ten days of the receipt of written notice thereof by the
Company from the Parent;
(6) By Parent, at any time prior to the purchase and payment for the
Shares pursuant to the Offer, if (w) the Company Board shall withdraw,
modify or change its recommendation or approval in respect of the Merger
Agreement, the Offer or the Merger, (x) the Company Board shall have
recommended any proposal other than by Parent in respect of an Acquisition
Transaction, (y) any Person or group (as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or any of their respective
subsidiaries or affiliates shall have become the beneficial owner of more
than 25% of the outstanding Shares (either on a primary or a fully diluted
basis), or (z) in the case of clauses (w) and (x), the Company Board shall
have resolved to take any such action (any such event, a "Fiduciary Out
Event"); and
(7) By either Parent or the Company if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being
purchased thereunder by Purchaser as a result of the failure of any of the
conditions or the occurrence of any of the events set forth in Section 14
(if the Company is obligated to pay Parent a termination fee, termination
by the Company under this clause (7) will not be effective unless and
until such fee is paid by the Company).
Effect of Termination. Pursuant to the Merger Agreement, in the event of
the termination of the Merger Agreement, the Merger Agreement will become void
and there shall be no liability on the part of Parent, Purchaser or the Company,
other than certain specified provisions, except that no party will be relieved
from liability for any breach of the Merger Agreement.
If the Merger Agreement is terminated pursuant to subparagraph (5) of the
preceding subsection, then (1) the Company shall promptly (but not later than
two Business Days after receipt of notice from Parent) pay to Parent an amount
equal to Parent's actual and reasonably documented expenses, not to exceed $1.5
million, except that, if the Merger Agreement is terminated by Parent as a
result of a willful breach by the Company, Parent may pursue any remedies
available to it at law or in equity and will, in addition to its expenses (which
shall be paid as specified above and will not be limited to $1.5 million), be
entitled to recover such additional amounts as Parent may be entitled to receive
at law or in equity, and (2) if (x) at the time of the Company's breach of the
Merger Agreement, there shall have been a third-party offer or proposal with
respect to an Acquisition Transaction which at the time of such termination
shall not have been rejected by the Company and the Company Board and withdrawn
by the third party, and (y) within two years of any termination by Parent, the
Company or an affiliate thereof becomes a subsidiary of such offeror or a
subsidiary of an affiliate of such offeror or accepts a written offer to
consummate or consummates an Acquisition Transaction with such offeror
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or an affiliate thereof, then the Company (jointly and severally with its
affiliates), upon the signing of a definitive agreement relating to such an
Acquisition Transaction, or, if no such agreement is signed then at the closing
(and as a condition to the closing) of the Company becoming such a subsidiary or
of such Acquisition Transaction, will pay to Parent a fee equal to $4.0 million
in cash.
If the Merger Agreement is terminated (1) by Parent following the
occurrence of a Fiduciary Out Event, (2) by either the Company or Parent
pursuant to clause (7) above and, prior to such termination, the Minimum
Condition shall not have been satisfied and a proposal for an Acquisition
Transaction shall have been made known to the Company or been made directly to
its Shareholders generally or any Person shall have publicly announced an
intention (whether or not conditional) to make a proposal for an Acquisition
Transaction, or (3) as a result of the Company's material breach of its
covenants with respect to the Shareholder meeting, then, in each such case, the
Company is required to promptly, but in no event later than two Business Days
after the date of such termination or Event, pay Parent a termination fee of
$4.0 million in cash plus an amount, not in excess of $1.5 million, equal to
Parent's actual and reasonably documented Expenses.
Except as described above, each party will bear its own expenses in
connection with the Merger Agreement and the transactions contemplated thereby.
Amendment. The Merger Agreement may be amended by the Company, Parent and
Purchaser at any time before the Effective Time and at anytime before or after
any approval of the Merger Agreement by the Shareholders of the Company, except
that, after any such approval, no amendment may be made which reduces the amount
or change the type of consideration into which each Share will be converted upon
consummation of the Merger. The Merger Agreement may not be amended except by an
instrument in writing signed by the parties.
Waiver. At any time before the Effective Time, any party may (1) extend
the time for the performance of any of the obligations or other acts of the
other parties, (2) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered pursuant to the
Merger Agreement, and (3) waive compliance with any of the agreements or
conditions contained in the Merger Agreement.
The Tender, Voting and Option Agreement
The following is a summary of the material terms of the Tender, Voting and
Option Agreement and is qualified in its entirety by reference to the complete
text of the Tender, Voting and Option Agreement, a copy of which is filed with
the Commission as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference. The Tender, Voting and Option Agreement should be read in its
entirety for a more complete description of the matters summarized below. The
Tender, Voting and Option Agreement may be examined, and copies obtained from
the offices of the Commission in the same manner as set forth in Section 8
above. Defined terms used below and not defined herein have the respective
meanings assigned to those terms in the Tender, Voting and Option Agreement.
In connection with the execution of the Merger Agreement, the Company,
certain Shareholders of the Company (each a "Subject Shareholder" and,
collectively, the "Subject Shareholders,"), the spouses of certain of such
Subject Shareholders, Purchaser and Parent have entered into the Tender, Voting
and Option Agreement. The Subject Shareholders include executive officers and
certain directors of the Company who beneficially own 22.5% of the outstanding
Shares and 21.9% of the Shares calculated on a fully diluted basis (assuming
exercise of Options and Warrants to purchase 95,000 Shares and 99,000 Shares,
respectively, held by these Shareholders.
Agreement to Tender Shares. Each Subject Shareholder has agreed to validly
tender (and not withdraw), pursuant to and in accordance with the Offer, not
later than the tenth business day after commencement of the Offer, all of such
Subject Shareholder's Subject Shares. In the event that, notwithstanding the
foregoing provision, any Subject Shares are for any reason withdrawn from the
Offer or are not purchased pursuant to the Offer, such Subject Shares remain
subject to the terms of the Tender, Voting and Option Agreement.
Agreement to Vote Subject Shares. Each Subject Shareholder has agreed that
at any meeting of the Shareholders called to consider and vote upon the adoption
of the Merger Agreement (and at any and all postponements and adjournments
thereof), and in connection with any action to be taken in respect of the
adoption of the Merger Agreement by written consent of Shareholders, such
Subject Shareholder will vote or cause to be voted (including by written
consent, if applicable) all of such Subject Shareholder's Subject Shares
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in favor of the adoption of the Merger Agreement and in favor of any other
matter necessary or appropriate for the consummation of the transactions
contemplated by the Merger Agreement that is considered and voted upon at any
such meeting or made the subject of any such written consent, as applicable.
Each Subject Shareholder further agreed that at any meeting of the Shareholders
called to consider and vote upon any Adverse Proposal (and at any and all
postponements and adjournments thereof), and in connection with any action to be
taken in respect of any Adverse Proposal by written consent of Shareholders,
each Subject Shareholder will vote or cause to be voted (including by written
consent, if applicable) all of such Subject Shareholder's Subject Shares against
the adoption of such Adverse Proposal. For purposes of the Tender, Voting and
Option Agreement, the term "Adverse Proposal" means any (x) Acquisition
Transaction, (y) proposal or action that would reasonably be expected to result
in a breach of any covenant, representation or warranty of the Company set forth
in the Merger Agreement, or (z) the following actions (other than the Offer, the
Merger and the other transactions contemplated by the Merger Agreement): (1) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its Subsidiaries, (2) a sale,
lease or transfer of a material amount of assets of the Company or one of its
Subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or any of its Subsidiaries, (3)(a) any change in a majority of
the persons who constitute the board of directors of the Company as of the date
hereof, (b) any change in the present capitalization of the Company or any
amendment of the Company's Articles of Incorporation or By-Laws, as amended to
date; (c) any other material change in the Company's corporate structure or
business, or (d) any other action that, in the case of each of the matters
referred to in clauses (3)(a), (b) and (c) is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or adversely affect the
Merger and the other transactions contemplated by the Tender, Voting and Option
Agreement and the Merger Agreement.
Irrevocable Proxy. Each Subject Shareholder agreed to appoint Parent and
any designee of Parent, each of them individually, such Subject Shareholder's
proxy and attorney-in-fact, with full power of substitution and resubstitution,
to vote or act by written consent with respect to all of such Subject
Shareholder's Subject Shares in accordance with the foregoing provision. Such
proxy was given to secure the performance of the duties of such Subject
Shareholder under the Tender, Voting and Option Agreement. Each proxy is coupled
with an interest and is irrevocable. Each Subject Shareholder agreed to take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy. For Subject Shares as to which such Subject
Shareholder is the beneficial but not the record owner, the Subject Shareholder
agreed to use his best efforts to cause any record owner of such Subject Shares
to grant to Parent a proxy to the same effect.
Grant of Option. Pursuant to the Tender, Voting and Option Agreement, each
Subject Shareholder granted to Parent an irrevocable option (each, a "Parent
Option" and, collectively, the "Parent Options") to purchase such Subject
Shareholder's Subject Shares on the terms and subject to the conditions set
forth therein at a purchase price per share equal to the Per Share Amount (the
"Purchase Price").
Exercise of Option. The Tender, Voting and Option Agreement provides that
(1) if (a) the Offer is consummated but (whether due to improper tender or
withdrawal of tender) Purchaser has not accepted for payment and paid for all of
the Subject Shares, (b) the Merger Agreement becomes terminable pursuant to the
events described in paragraph (4), (5) or (6) in the section entitled "The
Merger Agreement -- Termination" above (regardless of whether the Merger
Agreement is actually terminated), (c) a tender or exchange offer for some or
all of the Company's Shares shall have been publicly proposed to be made or
shall have been made by another person, or (d) it shall have been publicly
disclosed or Parent or Purchaser shall have otherwise learned that (w) any
person or "group" (as defined in Section 13(d)(3) of the Exchange Act) (other
than Parent or Purchaser) shall have acquired or proposed to acquire beneficial
ownership of more than 10% of any class or series of capital stock of the
Company (including the Shares), through the acquisition of stock, the formation
of a group or otherwise, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of more than
10% of any class or series of capital stock of the Company other than
acquisitions for bona fide arbitrage purposes only and other than as disclosed
in a Schedule 13D or 13G on file with the Commission on September 15, 1999, (x)
any such person or group which, prior to September 15, 1999, had filed such a
Schedule with the Commission shall have acquired or proposed to acquire
beneficial ownership of additional shares of any class or series of capital
stock of the Company, through the acquisition of stock, the formation of a group
or otherwise, constituting 5% or more of any such class or series, or shall have
been
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granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares) constituting 5% or more of any such
class or series, (y) any person (other than Parent or Purchaser) shall have
filed a Notification and Report Form under the HSR Act, or made a public
announcement reflecting an intent to acquire the Company or any assets or
securities of the Company, or (z) any person or group (other than Parent and
Purchaser) shall have entered into or offered to enter into a definitive
agreement or an agreement in principle with respect to a merger, consolidation
or other business combination with the Company (any of the events described in
clauses (a) through (d) above, a "Trigger Event"), the Parent Options will, in
any such case, become exercisable (in whole or in part) upon the first to occur
of any such Trigger Event and remain exercisable (in whole or in part)
thereafter until the Parent Options are terminated as provided in the Tender,
Voting and Option Agreement (the applicable period of exercisability being the
"Option Period"). The Company or any Subject Shareholder agreed to notify Parent
promptly in writing of the occurrence of any Trigger Event, it being understood
that the giving of such notice by the Company or any Subject Shareholder is not
a condition to the right of Parent to exercise the Parent Option. The Tender,
Voting and Option Agreement further provides that Parent may exercise all of the
Parent Options, in whole or in part, at any time or from time to time during the
Option Period. Notwithstanding anything in the Tender, Voting and Option
Agreement to the contrary, Parent will be entitled to purchase all Subject
Shares in respect of which it shall have exercised a Parent Option in accordance
with the terms thereof prior to the expiration of the Option Period, and the
expiration of the Option Period will not affect any rights thereunder which by
their terms do not terminate or expire prior to or as of such expiration.
Termination of Option. The Parent Options will terminate (1) if the
Tender, Voting and Option Agreement terminates pursuant to the terms thereof, or
(2) upon the earliest of: (a) the Effective Time, (b) termination of the Merger
Agreement other than upon or during the continuance of a Trigger Event, and (c)
180 days following any termination of the Merger Agreement upon or during the
continuance of a Trigger Event (or if, at the expiration of such 180 day period
any Parent Option cannot be exercised by reason of any applicable judgment,
decree, order, law or regulation, 10 business days after such impediment to
exercise has been removed or has become final and not subject to appeal).
Registration Rights. The Tender, Voting and Option Agreement provides
that, following termination of the Merger Agreement, Parent may by written
notice (the "Registration Notice") to the Company, which Registration Notice
Parent shall concurrently send to the Subject Shareholder, request the Company
to register under the Securities Act of 1933, as amended (the "Securities Act"),
all or any part of the Shares acquired under the Parent Options (the "Parent
Owned Shares" and such Parent Owned Shares requested to be registered for sale,
the "Registrable Securities") pursuant to a bona fide firm commitment
underwritten public offering in which Parent and the underwriters will effect as
wide a distribution of such Registrable Securities as is reasonably practicable
and will use their best efforts to prevent any person (including any "group" (as
used in Rule l3d-5 under the Exchange Act)) and its affiliates from purchasing
through such offering Shares representing more than 1% of the outstanding Shares
on a fully diluted basis.
Upon receipt of the Registration Notice, the Subject Shareholder will have
the option exercisable by written notice delivered to Parent and the Company
within nine business days after receipt of the Registration Notice, irrevocably
to agree to purchase all or any part of the Registrable Securities proposed to
be so sold for cash at a price (the "Shareholder Option Price") equal to the
product of (a) the number of Registrable Securities to be so purchased by the
Subject Shareholder and (b) the then Fair Market Value of such Shares.
Upon receipt of the Registration Notice, the Company (and/or any person
designated by the Company) will have the option exercisable by written notice
delivered to Parent within ten business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold and not purchased by the Subject
Shareholder pursuant to the preceding paragraph for cash at a price (the
"Company Option Price" and, together with the Shareholder Option Price, the
"Option Price") equal to the product of (a) the number of Registrable Securities
to be so purchased by the Company, and (b) the then Fair Market Value of such
Shares.
If the Subject Shareholder and the Company, collectively, do not elect to
exercise their respective options pursuant to the above provisions with respect
to all Registrable Securities, the Company will use commercially reasonable
efforts to effect, as promptly as practicable, the registration under the
Securities Act of the
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unpurchased Registrable Securities proposed to be so sold, except that (a)
Parent will be entitled to no more than an aggregate of two effective
registration statements hereunder and (b) the Company will not be required to
file any such registration statement during any period of time (not to exceed 40
days after such request in the case of clause (x) below or 90 days in the case
of clauses (y) and (z) below) when (x) the Company is in possession of material
non-public information that it reasonably believes would be detrimental to be
disclosed at such time and, in the opinion of outside counsel to the Company,
such information would have to be disclosed if a registration statement were
filed at that time; (y) the Company is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (z) the Company determines, in its reasonable
judgment, that such registration would interfere with any proposed financing,
acquisition or other material transaction involving the Company or any of its
affiliates. The Company will use its reasonable best efforts to cause any
Registrable Securities registered to be qualified for sale under the securities
or Blue-Sky laws of such jurisdictions as Parent may reasonably request and will
continue the registration or qualification in effect in such jurisdiction;
provided, however, that the Company will not be required to qualify to do
business in, or to consent to general service of process in, any jurisdiction by
reason of this provision.
A registration effected pursuant to the Tender, Voting and Option
Agreement will be effected at the Company's expense, except for underwriting
discounts and commissions and the fees and the expenses of counsel to Parent
(which will be paid by Parent), and the Company will provide to the underwriters
such documentation (including certificates, opinions of counsel and "comfort"
letters from auditors) as are customary in connection with underwritten public
offerings as the underwriters may reasonably require. In connection with any
such registration, the parties agree to (a) indemnify each other and the
underwriters in the customary manner, (b) enter into an underwriting agreement
in form and substance customary for transactions of like type with the Manager
and the other underwriters participating in the offering, and (c) take all
further actions that may be reasonably necessary to effect a registration and
sale (including, if the Manager deems it necessary, participating in road-show
presentations).
Unexercised Parent Options. If (1) the Parent Options shall have become
exercisable, (2) Parent has not exercised the Parent Options for all the Subject
Shares, and (3) not later than two years from the date of termination of the
Merger Agreement, (a) the Company consummates a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any sale of all or a substantial portion of the assets or equity
securities of, the Company (a "Business Combination"), (b) a Subject Shareholder
disposes of any or all of his Subject Shares to any person not an affiliate or
an associate of Parent or Purchaser or to the Company or any affiliate thereof
in connection with a Business Combination or (c) a Subject Shareholder realizes
cash proceeds in respect of his Subject Shares as a result of a distribution to
such Subject Shareholder by the Company following the sale of a material amount
of the Company's assets in connection with a Business Combination (each, a
"Subsequent Transaction"), in each case at a per share price or with equivalent
per share proceeds (including, in the case of clause (c), the remaining value of
the Subject Shares), as the case may be (the "Subsequent Price"), with a value
in excess of the Per Share Amount, then the Subject Shareholder will promptly
pay to Parent an amount equal to one-half of the product of (x) the excess of
the Subsequent Price over the Per Share Amount multiplied by (y) the greatest
number of Subject Shares beneficially owned by such Subject Shareholder between
the date hereof and the time a Business Combination is consummated (assuming for
this purpose that the Parent Option has not been exercised for any Subject
Shares) less the number of Subject Shares, if any, acquired by Parent upon
exercise of the Parent Option. In the event of any stock dividends, stock
splits, recapitalizations, combinations, exchanges of shares or the like or any
other action that would have the effect of changing the Subject Shareholder's
ownership of the Company's capital stock or other securities, the Per Share
Amount will be appropriately adjusted for the purpose of this section.
Restriction on Transfer of Subject Shares, Proxies and Noninterference.
Each Subject Shareholder has agreed that he will not directly or indirectly: (1)
except pursuant to the terms of the Tender, Voting and Option Agreement and for
the conversion of Subject Shares at the Effective Time pursuant to the terms of
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 Subject
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Shareholder's Subject Shares, (2) acquire any Shares or other securities of the
Company, or (3) except pursuant to the terms of the Tender, Voting and Option
Agreement, grant any proxies or powers of attorney, deposit any Subject Shares
into a voting trust or enter into a voting agreement with respect to any Subject
Shares.
No Solicitation. The Tender, Voting and Option Agreement provides that no
Subject Shareholder will take, or authorize or permit any of its officers,
directors, employees, agents or representatives (including any investment
banker, financial advisor, attorney or accountant) to take, any action that the
Company would be prohibited from taking under the first paragraph of the no shop
provision of the Merger Agreement (disregarding the proviso contained therein)
described in "-- The Merger Agreement -- No Shop Covenant." Each Subject
Shareholder has agreed to immediately advise Parent in writing of the receipt of
a request for information or any inquiries or proposals relating to an
Acquisition Transaction.
Termination. The Tender, Voting and Option Agreement will terminate (1)
upon the purchase of all the Subject Shares pursuant to the Offer in accordance
with the Tender, Voting and Option Agreement, (2) except for the provisions with
respect to (a) the granting and exercise of Parent Options, (b) unexercised
Parent Options and (c) registration rights, each of which will only terminate as
and when provided therein, on the earlier to occur of (x) the Effective Time, or
(y) the date the Merger Agreement is terminated in accordance with its terms, or
(3) by the mutual consent of the Company Board, the Board of Directors of Parent
and the Subject Shareholders representing a majority of the Subject Shares
subject to the Tender, Voting and Option Agreement. In the event of termination
of the Tender, Voting and Option Agreement, such agreement will become null and
void and of no effect with no liability on the part of any party and all proxies
granted thereby will be automatically revoked, except that no such termination
will relieve any party thereto from any liability for any breach of that
agreement occurring prior to such termination.
Employment Agreements
At the request of Parent, the Company has entered into new employment
agreements with each of its three principal executive officers. The agreements
will become operative only upon the occurrence of the Effective Time and will
terminate without further action if the Merger Agreement is terminated. A
summary of certain material provisions of each of the agreements is included in
Item 3(b) of the Company's Schedule 14D-9. Such summary of the employment
agreements does not purport to be complete and is qualified in its entirety by
reference to the complete text of these agreements, copies of which are filed as
Exhibits 6 through 8 to the Schedule 14D-9 and are incorporated herein by this
reference.
Other Matters
Effects of Inability to Consummate the Merger. If Parent controls more
than 50% of the outstanding Shares following the consummation of the Offer but
the Merger is not consummated, Shareholders of the Company, other than those
affiliated with Parent, will lack sufficient voting power to elect directors or
to cause other actions to be taken which require majority approval. If for any
reason following completion of the Offer, the Merger is not consummated, Parent
and Purchaser reserve the right, subject to any applicable legal restrictions,
to acquire additional Shares through private purchases, market transactions,
tender or exchange offers or otherwise on terms and at prices that may be more
or less favorable than those of the Offer or, subject to any applicable legal
restrictions, to dispose of any or all Shares acquired by Parent and Purchaser.
Statutory Requirements. In general, under Texas Law a merger of two Texas
corporations requires the adoption of a resolution by the board of directors of
each of the corporations desiring to merge approving an agreement of merger
containing provisions with respect to certain statutorily specified matters and
the approval of such agreement of merger by the shareholders of each corporation
by the affirmative vote of the holders of at least two-thirds of all the
outstanding shares of stock entitled to vote on such merger. According to the
Company's Articles of Incorporation, the Shares are the only securities of the
Company which entitle the holders thereof to voting rights.
Texas Law also provides that if a parent company owns at least 90% of each
class of stock of a subsidiary, the parent company can effect a short-form
merger with that subsidiary without the action of the other shareholders of the
subsidiary. Accordingly, if as a result of the Offer or otherwise the Purchaser
acquires
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or controls the voting power of at least 90% of the Shares, the Purchaser could,
and intends to, effect the Merger without prior notice to, or any action by, any
other shareholder of the Company.
Dissenters' Rights. No dissenters' rights are available in connection with
the Offer. If the Merger is consummated, however, Shareholders who have not
tendered their Shares will have certain rights under Texas Law to dissent and
demand valuation of, and to receive payment in cash of the fair value of, their
Shares. Shareholders who perfect such rights by complying with the procedures
set forth in Article 5.12 or Article 5.16 of Texas Law, as applicable ("Texas
Dissenters Law"), will have the fair value of their Shares determined by a Texas
court of competent jurisdiction located in the county in which the principal
office of the Company is located and will be entitled to receive a cash payment
equal to such fair value from the Surviving Corporation. In addition, such
dissenting Shareholders would be entitled to receive payment of a fair rate of
interest beginning 91 days after the date of consummation of the Merger on the
amount determined to be the fair value of their Shares. The court will appoint
appraisers to value the shares. For purposes of valuing the Shares, such
appraisers are only obligated to investigate in such detail as seems proper to
them. Thereafter the appraisers will submit their report to the court and the
court will, by its judgment, determine the fair value of the Shares.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity. As a consequence of the foregoing,
the fair value determined in any appraisal proceeding could be the same as or
more or less than the Per Share Amount.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of dissenters rights by any Shareholder and the demand
for valuation of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in a dissenter's
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, Shareholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including Barings' Opinion described herein) are not
necessarily opinions as to "fair value" under Texas Dissenters Law.
The foregoing summary of the rights of dissenting shareholders under Texas
Law does not purport to be a complete statement of the procedures to be followed
by Shareholders desiring to exercise any dissenters rights available under Texas
Law.
The preservation and exercise of dissenters' rights require strict
adherence to the applicable provisions of Texas Law.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. However,
Purchaser believes that Rule 13e-3 will be inapplicable because it is
anticipated that (1) the Shares will be deregistered under the Exchange Act
prior to the Merger or other business combination or (2) the Merger or other
business combination will be consummated within one year after the purchase of
the Shares pursuant to the Offer and the amount paid per Share in the Merger or
other business combination is at least equal to the amount paid per Share in the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information regarding the Company and certain information regarding
the fairness of the Merger and the consideration offered to minority
Shareholders be filed with the Commission and disclosed to minority Shareholders
prior to consummation of the Merger.
13. Dividends and Distributions
If between the date of the Merger Agreement and the Effective Time the
outstanding Shares have been changed into a different number of shares or a
different class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the amount payable
in the Offer will be correspondingly adjusted on a per-share basis to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
The Merger Agreement provides that the Company will not without the
consent of Parent or Purchaser declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its
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capital stock; and neither the Company nor any of its subsidiaries will, without
the written consent of Parent (1) issue, sell, transfer, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or any of
its Subsidiaries, other than issuances of Shares pursuant to securities,
options, warrants, calls, commitments or rights existing at the date hereof and
previously disclosed to Parent in writing (including as disclosed in all reports
filed by the Company with the Commission since January 1, 1996) or (2) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock or
other securities.
14. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for and
(subject to any such rules or regulations) may delay the acceptance for payment
of any tendered Shares and (except as provided in the Merger Agreement) amend or
terminate the Offer as to any Shares not then paid for (1) unless the following
conditions shall have been satisfied: (y) the Minimum Condition and (z) any
applicable waiting period under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer, or (2) if at any time on or
after the date of the Merger Agreement and before the Expiration Date any of the
following conditions exist:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall have been promulgated, enacted, taken or threatened by
a governmental authority or a governmental, regulatory or administrative
agency or commission of competent jurisdiction which in any such case (A)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (B) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any
material portion of its or the Company's business or assets, or compels
Parent (or any of its affiliates or subsidiaries) to dispose of or hold
separate any material portion of its or the Company's business or assets,
(C) imposes material limitations on the ability of Parent effectively to
acquire or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
Parent on all matters properly presented to the Shareholders, (D) imposes
any material limitations on the ability of Parent or any of its affiliates
or subsidiaries effectively to control in any material respect the
business and operations of the Company, or (E) which otherwise would have
a Company Material Adverse Effect; or
(b) there shall be instituted or pending any action or proceeding
before any governmental, regulatory or administrative agency or commission
of competent jurisdiction seeking any injunction, order, decree, judgment
or ruling having any effect set forth in (a) above; or
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(d) (A) any representation or warranty made by the Company in the
Merger Agreement shall not have been true and correct in all material
respects when made, or shall have ceased to be true and correct in all
material respects as of the Expiration Date as if made as of such date
(without giving effect to the materiality, material adverse effect or
knowledge limitations contained therein), (B) as of the Expiration Date
the Company shall not in all material respects have performed any
obligation or agreement and complied with its material covenants to be
performed and complied with by it under the Merger Agreement, or (C) the
Company or any Shareholder party to the Tender, Voting and Option
Agreement shall have materially breached the Tender, Voting and Option
Agreement; or
(e) there shall have occurred (A) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or Nasdaq
(not including any suspension or limitation of trading in any particular
security or as a result of computerized trading limits or any intra-day
suspension due to "circuit breakers") or any setting of minimum prices for
trading on such exchange or (B) any banking moratorium
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declared by the U.S. Federal or New York authorities or any suspension of
payments in respect of banks in the United States; or
(f) Parent and the Company shall have agreed that Parent shall amend
the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
(g) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of Parent and may be asserted
by Parent regardless of the circumstances (including any action or inaction by
Parent) giving rise to any such conditions and such conditions, other than the
Minimum Condition, may be waived by Parent in whole or in part at any time and
from time to time, in each case, in the exercise of the good faith judgment of
Parent and subject to the terms of the Merger Agreement. The failure by Parent
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right and each such right will be deemed an ongoing right which may
be asserted at any time and from time to time.
A public announcement may be made of a material change in, or waiver of,
such conditions and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver.
Purchaser acknowledges that the Commission believes that (1) if Purchaser
is delayed in accepting the Shares it must either extend the Offer or terminate
the Offer and promptly return the Shares and (2) the circumstances in which a
delay in payment are permitted are limited and do not include unsatisfied
conditions of the Offer, except with respect to most required regulatory
approvals.
15. Certain Legal Matters and Regulatory Approvals
Except as described in this Offer To Purchase, based on a review of
publicly available filings made by the Company with the Commission and other
publicly available information concerning the Company, but without any
independent investigation, neither Purchaser nor Parent is aware of any license
or regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer To Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer To Purchase. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws." There can
be no assurance, however, that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or other actions were not taken or in order to obtain any such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, Purchaser could decline to accept for payment or
pay for any Shares tendered. See Section 14 above for certain conditions to the
Offer.
State Takeover Laws. A number of states throughout the United States
(including Texas where the Company is incorporated) have enacted takeover
statutes that purport, in varying degrees, to be applicable to attempts to
acquire securities of corporations that are incorporated or have assets,
shareholders, executive offices or places of business in those states. To the
extent that certain provisions of certain of these state takeover statutes
purport to apply to the Offer or the Merger, Parent and Purchaser believe that
such laws conflict with federal law and constitute an unconstitutional burden on
interstate commerce. In Edgar v. MITE Corp., the Supreme Court of the United
States invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made certain corporate acquisitions
more difficult. In CTS Corp. v. Dynamics Corp. of America, however, the Supreme
Court of the United States held that a state may, as a matter of corporate law
and, in particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided that
the laws were applicable only under certain conditions. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject
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such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc.
v. McReynolds, a Federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In December 1988, a Federal district court in
Florida held, in Grand Metropolitan PLC v. Butterworth, that the provisions of
the Florida Affiliated Transactions Act and Florida Control Share Acquisition
Act were unconstitutional as applied to corporations incorporated outside of
Florida.
Purchaser has not attempted to comply with any state takeover statutes in
connection with the Offer or the Merger although, pursuant to the Merger
Agreement, the Company has represented that the Company Board has taken
appropriate action to render Article 13 of Texas Law inapplicable to the Offer,
the Merger, the Merger Agreement and the Tender, Voting and Option Agreement and
the transactions contemplated by the Merger Agreement and the Tender, Voting and
Option Agreement. Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the Merger,
and nothing in this Offer To Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that it is asserted
that one or more state takeover statutes apply to the Offer or the Merger, and
it is not determined by an appropriate court that such statute or statutes do
not apply or are invalid as applied to the Offer or the Merger, as applicable,
Purchaser may be required to file certain documents with, or receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for purchase, or pay for, any Shares tendered. See
Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar-day waiting period following the filing by Purchaser
of a Notification and Report Form with respect to the Offer, unless Purchaser
receives a request for additional information or documentary material from the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") or unless early
termination of the waiting period is granted. Such filing is expected to be made
as soon as practicable after the date of this Offer To Purchase. If, however,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material from Purchaser
concerning the Offer, the waiting period will be extended and would expire 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Purchaser with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, the waiting period may be extended only by court order
or with the consent of Purchaser. In practice, complying with a request for
additional information or documentary material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while the negotiations continue. For information regarding the
obligations of the Company, Parent and Purchaser in this regard, see "Purpose of
the Offer and the Merger; Plans for the Company; the Merger Agreement; the
Tender, Voting and Option Agreement; Other Matters -- The Merger Agreement --
Consents, Approvals and Filings" in Section 12.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as Purchaser's proposed
acquisition of the Company. At any time before or after Purchaser's purchase of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by Purchaser or the divestiture of substantial assets of Purchaser or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. While
Parent and Purchaser believe that the Offer and the Merger do not involve a
violation of antitrust laws, there can be no assurance that a challenge to the
Offer on antitrust grounds will not be made or, if such a challenge is made, of
the result of that challenge. See Section 14 for certain conditions to the
Offer, including conditions with respect to litigation.
Foreign Approvals. According to publicly available information, the
Company conducts business in a number of other foreign countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to the
Offer or the Merger, the laws of certain of those foreign countries and
jurisdictions may require the filing of
31
<PAGE>
information with, or the obtaining of the approval or consent of, governmental
authorities in such countries and jurisdictions. The governments in such
countries and jurisdictions might attempt to impose additional conditions on the
Company's operations conducted in such countries and jurisdictions as a result
of the acquisition of the Shares pursuant to the Offer or the Merger. If such
approvals or consents are found to be required, the parties intend to make the
appropriate filings and applications. In the event such a filing or application
is made for the requisite foreign approvals or consents, there can be no
assurance that such approvals or consents will be granted and, if such approvals
or consents are received, there can be no assurance as to the date of such
approvals or consents. In addition, there can be no assurance that the Purchaser
will be able to cause the Company or its subsidiaries to satisfy or comply with
such laws or that compliance or noncompliance will not have adverse consequences
for the Company or any subsidiary after purchase of the Shares pursuant to the
Offer or the Merger.
16. Fees and Expenses
D.F. King & Co., Inc. has been retained by Purchaser as Information Agent
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward material
relating to the Offer to beneficial owners of Shares. Purchaser will pay the
Information Agent customary compensation for such services in addition to
reimbursing the Information Agent for reasonable out-of-pocket expenses in
connection therewith.
In addition, Harris Trust Company of New York has been retained as the
Depositary. Purchaser will pay the Depositary customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Except as set forth above, neither Parent nor Purchaser will pay any fees
or commissions to any broker dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.
17. Miscellaneous
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Shareholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of the jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to Shareholders in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-1 under the Exchange Act containing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments to the Schedule
14D-1, including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 8 above
(except that they will not be available at the regional offices of the
Commission).
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer To Purchase or
in the Letter of Transmittal and, if given or made, the information or
representation must not be relied upon as having been authorized.
Neither the delivery of the Offer To Purchase nor any purchase pursuant to
the Offer will under any circumstances create any implication that there has
been no change in the affairs of Parent, Purchaser, the Company or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer To Purchase.
ARMSTRONG ACQUISITION CORP.
October 4, 1999
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT
A. Directors and Executive Officers of Parent
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, (1) each individual has held his or her positions for
more than the past five years, (2) the business address of each person is 437
Madison Avenue, New York, New York 10022, (3) each individual is a citizen of
the United States of America, and (4) all directors and officers listed below
are citizens of the United States. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
Present Principal Occupation or
Name Employment and Five-Year Employment History
------ ---------------------------------------------
<S> <C>
Philip J. Angelastro ................... Controller of Parent (1999-Present); Vice President of Finance,
Diversified Agency Services (1997-1999); Partner, Coopers & Lybrand
* Bernard Brochand ....................... President, International Division of the DDB Needham Worldwide
Communications Group, Inc., a subsidiary of Parent (Citizen of France)
* Robert J. Callander .................... Executive-in-Residence, Columbia School of Business
* James A. Cannon ........................ Vice Chairman and Chief Financial Officer of BBDO Worldwide
* Leonard S. Coleman, Jr. ................ President, National League, Major League Baseball
* Bruce Crawford ......................... Chairman of Parent
* Susan S. Denison ....................... Partner, Cheyanne Group (1999-Present), Partner, TASA Worldwide/Johnson,
Smith & Knisley (1997-1999); Executive Vice President, Entertainment and
Marketing - Madison Square Garden (1995-1997); Executive Vice
President/General Manager, Showtime Satellite Networks (1990-1995)
* Peter Foy .............................. Chairman, Baring Brothers International (1996-1998); McKinsey & Co., Inc.,
various positions (Citizen of the United Kingdom)
* Thomas L. Harrison ..................... Chairman and Chief Executive Officer, Diversified Agency Services division
of Parent (1998-Present); President of same (1997 - 1998); Chairman,
Diversified Healthcare Communications Group (1994-Present)
Dennis E. Hewitt ....................... Treasurer of Parent
* John R. Murphy ......................... Vice Chairman, National Geographic Society (1998-Present); President and
Chief Executive Officer of same (1996-1998); Executive Vice President of
same (1993-1996)
* John R. Purcell ........................ Chairman and Chief Executive Officer, Grenadier Associates Ltd.
* Keith L. Reinhard ...................... Chairman and Chief Executive Officer of DDB Needham Worldwide
* Allen Rosenshine ....................... Chairman and Chief Executive Officer of BBDO Worldwide
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or
Name Employment and Five-Year Employment History
------ ---------------------------------------------
<S> <C>
* Gary L. Roubos ......................... Chairman, Dover Corporation
* Quentin I. Smith, Jr. .................. Retired Chairman and Chief Executive Officer of Towers, Perrin, Forster &
Crosby (retired since 1987)
Barry J. Wagner ........................ General Counsel and Secretary of Parent (1995-Present); Assistant
Secretary of Parent
Randall J. Weisenburger ................ Executive Vice President and Chief Financial Officer of Parent
(1999-Present); President and Chief Executive Officer, Wasserstein Perella
Management Partners
* John D. Wren ........................... Chief Executive Officer (1997-Present) and President (1995-Present) of
Parent; Chairman, Diversified Agency Services (1995-1997); Chief Executive
Officer of same (1993-1995)
* Egon P.S. Zehnder ...................... Chairman of Egon Zehnder International Inc. (Citizen of Switzerland)
</TABLE>
B. Directors and Executive Officers of Purchaser
The directors of Purchaser are Thomas L. Harrison and Barry J. Wagner and
the executive officers of Purchaser are Mr. Harrison, President, Mr. Wagner,
Secretary, and Randall J. Weisenburger, Vice President and Treasurer. Messrs.
Harrison, Wagner and Weisenburger are also executive officers of Parent.
Information concerning the name, present principal occupation or employment and
material occupation, positions, offices or employment for the past five years of
Messrs. Harrison, Wagner and Weisenburger is set forth in the table of the
directors and executive officers of Parent. The business address of each is 437
Madison Avenue, New York, New York 10022. All directors and officers of
Purchaser are citizens of the United States.
I-2
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each Shareholder of the Company or his broker dealer, commercial
bank, trust company or other nominee to the Depositary at one of the addresses
set forth below:
The Depositary for the Offer is:
Harris Trust Company of New York
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
By Facsimile Transmission:
(For Eligible Institutions only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number listed below. Additional copies of
this Offer To Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
(212) 269-5550 (call collect)
1-800-735-3591
Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender Common Shares
of
M/A/R/C Inc.
Pursuant to the Offer To Purchase
dated October 4, 1999
by
Armstrong Acquisition Corp.,
a wholly owned subsidiary
of
Omnicom Group Inc.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
Harris Trust Company of New York
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
By Facsimile Transmission:
(For Eligible Institutions only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmissions of instructions via facsimile transmission to a
number other than as set forth above will not constitute a valid delivery to the
Depositary. You must sign this Letter of Transmittal in the appropriate space
therefor provided below and complete the substitute form W-9 set forth below.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be completed by shareholders either if
certificates for Shares (as defined in the Offer To Purchase, dated October 4,
1999, (the "Offer To Purchase")) are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer To Purchase) is utilized, if tenders of
Shares are to be made by book-entry transfer to an account maintained by Harris
Trust Company of New York (the "Depositary") at The Depository Trust Company
("DTC") (the "Book-Entry Transfer Facility") pursuant to the procedures set
forth in Section 3 of the Offer To Purchase. Shareholders who tender Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders."
Holders of Shares ("Shareholders") whose certificates for such Shares (the
"Share Certificates") are not immediately available or who cannot deliver their
Share Certificates and all other required documents to the Depositary on or
prior to the Expiration Date (as defined in the Offer To Purchase) or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer To Purchase. See Instruction 2.
Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Depositary.
Note: Signatures must be provided on the inside and reverse back cover. Please
read the accompanying instructions carefully.
- --------------------------------------------------------------------------------
|_| Check here if Shares are being delivered by book-entry transfer made to
an account maintained by the Depositary with the Book-Entry Transfer
Facility and complete the following:
Name of Tendering Institution:__________________________________________
Account Number:_________________________________________________________
Transaction Code Number:________________________________________________
- --------------------------------------------------------------------------------
|_| Check here if Shares are being delivered pursuant to a Notice of
Guaranteed Delivery previously sent to the Depositary and complete the
following. Please enclose a photocopy of such Notice of Guaranteed
Delivery.
Name(s) of Registered Holder(s):________________________________________
Window Ticket Number (if any):__________________________________________
Date of Execution of Notice of Guaranteed Delivery:_____________________
Name of Institution that Guaranteed Delivery:___________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please Fill In, If Blank, Exactly as Name(s) Share Certificate(s) and Share(s) Tendered
Appear(s) on Share Certificate(s)) Attach Additional List, If Necessary)
- -----------------------------------------------------------------------------------------------------------
Number(s)*
Shares of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, it will be assumed that all Shares represented
by Share Certificates delivered to the Depositary are being tendered. See
Instruction 4.
|_| Check here if Certificates have been lost or mutilated. See Instruction
11.
Ladies and Gentlemen:
The undersigned hereby tenders to Armstrong Acquisition Corp.
("Purchaser"), a wholly owned subsidiary of Omnicom Group Inc. ("Parent"), the
above-described common shares (the "Shares") of M/A/R/C Inc. (the "Company")
pursuant to Purchaser's offer to purchase all outstanding Shares at a price of
$20.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer To Purchase, dated
October 4, 1999, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Offer To Purchase, constitute the
"Offer"). The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
subsidiaries or affiliates the right to purchase all or any portion of the
Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, Purchaser all right, title and interest in and to all
of the Shares that are being tendered hereby and any and all dividends on the
Shares (including, without limitation, the issuance of additional Shares
pursuant to a stock dividend or stock split, the issuance of other securities,
the issuance of rights for the purchase of any securities, or any cash
dividends) that are declared or paid by the Company on or after the date of the
Offer To Purchase and are payable or distributable to shareholders of record on
a date prior to the transfer into the name of Purchaser or its nominees or
transferees on the Company's stock transfer records of the Shares purchased
pursuant to the Offer (collectively "Distributions"), and constitutes and
irrevocably appoints the Depositary the true and lawful agent, attorney-in-fact
and proxy of the undersigned to the full extent of the undersigned's rights with
respect to such Shares (and Distributions) with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power coupled with
an interest), to (a) deliver Share Certificates (and Distributions), or transfer
ownership of such Shares on the account books maintained by the Book-Entry
Transfer Facility, together in either such case with all accompanying evidences
of transfer and authenticity, to or upon the order of Purchaser upon receipt by
the Depositary, as the undersigned's agent, of the purchase price, (b) present
such Shares (and Distributions) for transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and Distributions), all in accordance with the terms of the
Offer.
The undersigned hereby irrevocably appoints designees of Purchaser, each
of them individually, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his or her substitute shall, in his or her sole discretion, deem
proper, and otherwise act (including pursuant to written consent) with respect
to all of the Shares tendered hereby which have been accepted for payment by
Purchaser prior to the time of such vote or action (and Distributions) which the
undersigned is entitled to vote at any meeting of Shareholders of the Company
(whether annual or special and whether or not an adjourned meeting), or by
written consent in lieu of such meeting, or otherwise. This power of attorney
and proxy is coupled with an interest in the Company and in the Shares and is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke, without further action,
any other power of attorney or proxy granted by the undersigned at any time with
respect to such Shares (and Distributions) and no subsequent powers of attorney
or proxies will be given (and if given will be deemed not to be effective) with
respect thereto by the undersigned. The undersigned understands that Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser is able to exercise full voting rights with respect to such Shares and
Distributions, including voting at any meeting of shareholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and Distributions) and that when the same are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby (and
Distributions). In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of Purchaser any and all other Distributions
in respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer and, pending such remittance or appropriate assurance
thereof, Purchaser shall be entitled to all rights and privileges as owner of
such Distributions and may withhold the entire purchase price or deduct from the
purchase price of Shares tendered hereby the amount or value thereof, as
determined by Purchaser in its sole discretion.
All authority herein conferred or herein agreed to be conferred shall not
be affected by, and shall survive, the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Tenders of Shares pursuant to the Offer are irrevocable, except
that Shares tendered pursuant to the Offer may be withdrawn at any time on or
prior to the Expiration Date.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer To Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer To Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Share Certificates not tendered or accepted for payment (and accompanying
documents as appropriate) to the undersigned at the address shown below the
undersigned's signature. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any Share Certificates not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or return certificates to, the person or persons so indicated. Shareholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at the Book-Entry
Transfer Facility. The undersigned recognizes that Purchaser has no obligation
pursuant to the "Special Payment Instructions" to transfer any Shares from the
name of the registered holder thereof if Purchaser does not accept for payment
any of such Shares.
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be issued in
the name of someone other than the undersigned, or if Shares tendered by
book-entry transfer which are not purchased are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility other than that
designated on the front cover.
Issue check and/or certificates to:
Name:___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
|_| Credit unpurchased Shares tendered by book-entry transfer to the
Book-Entry Transfer Facility
________________________________________________________________________________
(ACCOUNT NUMBER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if Share Certificates not tendered or not purchased
and/or the check for the purchase price of Shares purchased are to be sent to
someone other than the undersigned, or to the undersigned at an address other
than that shown on the front cover.
Mail check and/or certificate to:
Name:___________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Taxpayer Identification or Social Security No.)
(See Substitute Form W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT -- SIGN HERE
SHAREHOLDER SIGN HERE AND COMPLETE
SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
Signatures(s) of Owner(s)
- --------------------------------------------------------------------------------
Dated: , 1999
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary information.
See Instruction 5.)
Name(s):________________________________________________________________________
________________________________________________________________________________
(Please Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number:_________________________________________________
Tax Identification or Social Security No:_______________________________________
(See Substitute Form W-9)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:___________________________________________________________
Name (Please print):____________________________________________________________
Title:__________________________________________________________________________
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number:_________________________________________________
Dated: _______________________, 1999
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (1) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares tendered herewith (which term, for purposes
of this document, includes any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares),
unless such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the inside
front cover hereof or (2) if such Shares are tendered for the account of a firm
that is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program (an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the Share Certificates are registered in the
name of a person other than the signer of this Letter of Transmittal or if
payment is to be made or Share Certificates not tendered or not accepted for
payment are to be returned to a person other than the registered holder of the
Share Certificates tendered, then the tendered Share Certificates must be
endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed by an Eligible Institution as provided in this Letter of
Transmittal. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in
Section 3 of the Offer To Purchase. Share Certificates, or timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date. Shareholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary prior to the Expiration Date or
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer To Purchase. Pursuant to such procedure: (1)
such tender must be made by or through an Eligible Institution; (2) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by Purchaser, must be received by the Depositary on or prior
to the Expiration Date; and (3) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile hereof), with any required signature guarantees (or in the case of a
book-entry delivery an Agent's Message) and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three Nasdaq
trading days after the date of execution of such Notice of Guaranteed Delivery.
A "Nasdaq trading day" is any day on which The Nasdaq Stock Market, Inc.'s
Nasdaq National Market is open for business. If Share Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or facsimile hereof) must accompany each such delivery.
The method of delivery of Share Certificates, this Letter of Transmittal
and all other required documents is at the option and sole risk of the tendering
shareholder, and the delivery will be deemed made only when actually received by
the Depositary. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted. The
Per Share Amount will be prorated for fractional Shares. All tendering
shareholders, by execution of this Letter of Transmittal or facsimile hereof,
waive any right to receive any notice of the acceptance of their Shares for
payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. Partial Tenders (Not Applicable to Shareholders Who Tender by
Book-entry Transfer). If fewer than all the Shares evidenced by any certificate
submitted are to be tendered, fill in the number of Shares that are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the appropriate
box marked "Special Payment Instructions" and/or "Special Delivery Instructions"
on this Letter of Transmittal, as soon as practicable after the Expiration Date.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in the name
of a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such person) payable on account
of the transfer to such person will be deducted from the purchase price received
by such holder(s) pursuant to this Offer (i.e., such purchase price will be
reduced) unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If (i) a check is to be
issued in the name of and/or (ii) certificates for unpurchased Shares are to be
returned to a person other than the signer of this Letter of Transmittal or if a
check is to be sent and/or such certificates are to be returned to someone other
than the signer of this Letter of Transmittal or to an address other than that
shown on the front cover hereof, the appropriate boxes on this Letter of
Transmittal should be completed. Shareholders tendering Shares by book-entry
transfer (i.e., Book-Entry Shareholders) may request that Shares not purchased
be credited to such account maintained at the Book-Entry Transfer Facility as
such Book Entry Shareholder may designate hereon. If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above. See Instruction 1.
8. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Information Agent at its addresses set forth below.
Requests for additional copies of the Offer To Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies. Such materials will be furnished at
Purchaser's expense.
9. Waiver of Conditions. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer To Purchase)), in whole or in part, at any time or from time to time,
in Purchaser's sole discretion.
10. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal income
tax law, a Shareholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such Shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, or an adequate basis for exemption, the
Internal Revenue Service may subject the Shareholder or other payee to a $50
penalty, and the gross proceeds of any payments that are made to such
Shareholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to 31% backup withholding. If withholding results in an
overpayment of taxes, a refund may be obtained.
Certain Shareholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the Shareholder must submit a Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the Shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding on payments that are made to a Shareholder
with respect to Shares purchased pursuant to the Offer, the Shareholder is
required to notify the Depositary of such Shareholder's correct TIN by
completing a Substitute Form W-9 certifying (a) that the TIN provided on
Substitute Form W-9 is correct (or that such Shareholder is awaiting a TIN), and
(b) that (1) such Shareholder is exempt from backup withholding or (2) such
Shareholder has not been notified by the Internal Revenue Service that such
Shareholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (3) the Internal Revenue Service has notified such
Shareholder that such Shareholder is no longer subject to backup withholding.
Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt holder
must enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" in
Part 2 of such form, and sign and date the form. See the enclosed Guidelines for
Certification of Taxpayer Identification Number of Substitute Form W-9 (the "W-9
Guidelines") for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8, "Certificate of Foreign Status" signed under penalties of perjury attesting
to such exempt status. Such forms may be obtained from the Payor.
If you do not have a TIN, consult the W-9 Guidelines for instructions on
applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of
the Substitute Form W-9, and sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number set forth herein. If you
do not provide your TIN to the Payor within 60 days, backup withholding will
begin and continue until you furnish your TIN to the Payor. Note: writing
"applied for" on the form means that you have already applied for a TIN or that
you intend to apply for one in the near future.
The Shareholder is required to give the Depositary the TIN of the record
owner of the Shares or of the last transferee appearing on the transfers
attached to, or endorsed on, the Shares. If the Shares are in more than one name
or are not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Shareholder should
promptly notify the Depositary. The Shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
Important: This Letter of Transmittal (or facsimile copy hereof) or an
Agent's Message together with Share Certificates or confirmation
of Book-Entry Transfer or a properly completed and duly executed
Notice of Guaranteed Delivery and all other required documents
must be received by the Depositary on or prior to the Expiration
Date.
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS OF SECURITIES
(SEE INSTRUCTION 9)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN _____________________
TIN IN THE BOX AT RIGHT AND (Social Security Number
CERTIFY BY SIGNING AND or Employer
Form W-9 DATING BELOW. Identification Number)
--------------------------------------------------------------------------------
Department of PART 2 -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
the Treasury (SEE INSTRUCTIONS)
Internal
Revenue Service --------------------------------------------------------------------------------
PART 3 -- CERTIFICATIONS -- UNDER PENALTIES OF PERJURY. I CERTIFY THAT: (1) The
number shown on this form is my correct Taxpayer Identification Number (or I am
Payer's Request for waiting for a number to be issued to me) and (2) I am not subject to backup
Taxpayer's Identification withholding either because: (a) I am exempt from backup withholding; or (b) I
Number ("TIN") have not been notified by the Internal Revenue Service (the "IRS") that I am
and Certification subject to backup withholding as a result of failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
Signature __________________________ Date _____________________
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return.
You must complete the following certificate if you wrote "applied for"
in Part 1 of Substitute Form W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor within 60
days, 31% of all reportable payments made to me will be withheld.
Signature:___________________________________ Date: ____________________________
- --------------------------------------------------------------------------------
Note: Failure to complete and return this form may result in backup
withholding of 31% of any payments made to you pursuant to the Offer.
Please review the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional details.
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
Certificates for Shares and any other required documents should be sent or
delivered by each Shareholder of the Company or his broker, dealer, commercial
bank, trust company or other nominee to the Depositary at one of its addresses
set forth below:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-102388 Pine Street, 19th Floor
New York, New York 10005
By Facsimile Transmission:
(For Eligible Institutions only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of the
Offer To Purchase, the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below, and will be
furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (call collect)
1-800-735-3591
Notice of Guaranteed Delivery
for
Tender of Common Shares
of
M/A/R/C Inc.
(Not to Be Used for Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Offer (as defined below) if certificates
representing common shares (the "Shares") of M/A/R/C Inc. (the "Company") are
not immediately available or time will not permit all required documents to
reach Harris Trust Company of New York (the "Depositary") on or prior to the
Expiration Date (as defined in the Offer To Purchase), or the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission or mailed to the Depositary. See Section 3 of the Offer To
Purchase.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand and Overnight Carrier:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
By Facsimile Transmission:
(For Eligible Institutions Only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via facsimile transmission to a
number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
The guarantee on the reverse side must be completed.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Armstrong Acquisition Corp., a wholly
owned subsidiary of Omnicom Group Inc., upon the terms and subject to the
conditions set forth in the Offer To Purchase, dated October 4, 1999 (the "Offer
To Purchase"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer"),
receipt of each of which is hereby acknowledged, the number of Shares indicated
below pursuant to the guaranteed delivery procedures set forth in Section 3 of
the Offer To Purchase.
- --------------------------------------------------------------------------------
Number of Shares: _______________________________________
Certificate No(s). (if available): _____________________________
If Share(s) will be tendered by book-entry transfer, check the box. |_|
Account Number: ________________________________________
Date: __________________ Area Code and Telephone Number(s): __________________
Name(s) of Record Holder(s): ___________________________________________________
(Please Print)
Signature(s):___________________________________________________________________
Address(es): ___________________________________________________________________
(Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to Be Used for Signature Guarantee)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, hereby guarantees to deliver to
the Depositary at one of its addresses set forth above either the certificates
representing all tendered Shares, in proper form for transfer, a Book-Entry
Confirmation (as defined in the Offer To Purchase), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of book-entry delivery of
Shares, an Agent's Message (as defined in the Offer To Purchase), and any other
documents required by the Letter of Transmittal within three Nasdaq trading days
after the date of execution of this Notice of Guaranteed Delivery. A "Nasdaq
trading day" is any day on which The Nasdaq Stock Market, Inc.'s Nasdaq National
Market is open for business.
Name of Firm:___________________________________________________________________
Authorized Signature
Address:________________________________ Name:________________________________
Print Type or Print
________________________________________ Title:_______________________________
Zip Code
Area Code and Tel. No:________________ Dated _________________________, 1999
Note: Do not send Certificates for Shares with this Notice of Guaranteed
Delivery. Certificates for Shares should be sent with your Letter of
Transmittal.
- --------------------------------------------------------------------------------
Exhibit (a)(4)
Offer To Purchase for Cash
All Outstanding Common Shares
of
M/A/R/C Inc.
at
$20.00 Net Per Share
by
Armstrong Acquisition Corp.,
a wholly owned subsidiary
of
Omnicom Group Inc.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
October 4, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Armstrong Acquisition Corp. ("Purchaser"), a
wholly owned subsidiary of Omnicom Group Inc. ("Parent"), to act as Information
Agent in connection with Purchaser's offer to purchase all outstanding common
shares (the "Shares") of M/A/R/C Inc. (the "Company") at a purchase price of
$20.00 per Share, net to the seller in cash, without interest, on the terms and
subject to the conditions set forth in Purchaser's Offer To Purchase, dated
October 4, 1999, and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"),
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares in your name or in the name of
your nominee.
Enclosed herewith for your information and for forwarding to your clients
are copies of the following documents:
1. Offer To Purchase, dated October 4, 1999.
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients, together with Guidelines of the Internal
Revenue Service for Certification of Taxpayer Identification Number on
Substitute Form W-9, which provides information relating to backup federal
income tax withholding. Manually signed facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. A letter to holders of Shares ("Shareholders") from Sharon M.
Munger, Chairman and Chief Executive Officer of the Company, together with
a Solicitation/Recommendation Statement on Schedule 14D-9.
4. Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if neither of the two procedures for tendering Shares set forth in
the Offer To Purchase can be completed on a timely basis.
<PAGE>
5. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer.
6. Return envelope addressed to Harris Trust Company of New York (the
"Depositary").
Your prompt action is requested. We urge you to contact your clients as
promptly as possible. Please note that the Offer and withdrawal rights will
expire at 12:00 midnight, New York City time, on Monday, November 1, 1999,
unless the Offer is extended.
Please note the following:
1. The tender price is $20.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer To Purchase.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date (as
defined in the Offer To Purchase) that number of Shares that, together
with any Shares to be acquired by Parent pursuant to the Tender, Voting
and Option Agreement (as defined in the Offer To Purchase) and any Shares
then owned by Parent or any of its subsidiaries, constitutes at least
two-thirds of the Shares outstanding on a fully diluted basis on the date
of purchase. The Offer is also subject to the conditions set forth in the
Offer To Purchase. See the Introduction and Sections 1, 14, and 15 of the
Offer To Purchase.
3. The Offer is being made for all of the outstanding Shares.
4. Tendering Shareholders will not be obligated to pay brokerage fees
or commissions to the Depositary or the Information Agent or, except as
set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on
the purchase of Shares by Purchaser pursuant to the Offer. However,
federal income tax backup withholding at a rate of 31% may be required,
unless an exemption is provided or unless the required tax identification
information is provided. See Instruction 10 of the Letter of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, November 1, 1999, unless the Offer is extended.
6. The Board of Directors of the Company has determined that the
Offer and the Merger (as such terms are defined in the Offer To Purchase),
are fair to and in the best interests of the Shareholders, has approved
the Offer and the Merger and recommends that Shareholders accept the Offer
and tender their Shares pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (a) certificates for
Shares (the "Certificates") or a timely Book-Entry Confirmation (as
defined in the Offer To Purchase) with respect to such Shares pursuant to
the procedures set forth in Section 3 of the Offer To Purchase, (b) the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed with any required signature guarantees (or, in
the case of book-entry transfers, an Agent's Message), and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may
not be made to all tendering Shareholders at the same time depending upon
when Certificates for or confirmations of book-entry transfer of such
Shares are actually received by the Depositary.
In order to take advantage of the Offer, (1) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) and any
required signature guarantees (or, in the case of book-entry transfers, an
Agent's Message) and any other required documents should be sent to the
Depositary and (2) either Certificates representing the tendered Shares or a
timely Book-Entry Confirmation (as defined in the Offer To Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Letter of Transmittal and the Offer To Purchase.
<PAGE>
If Shareholders wish to tender their Shares, but it is impracticable for
them to forward the Certificates for such Shares or other required documents or
complete the procedures for book-entry transfer prior to the Expiration Date, a
tender may be effected by following the guaranteed delivery procedures specified
in Section 3 of the Offer To Purchase.
Neither Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent or the
Depositary, as described in the Offer To Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
you for customary mailing and handling expenses incurred by you in forwarding
any of the enclosed materials to your clients. Purchaser will pay or cause to be
paid any stock transfer taxes payable on the transfer of the Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to D.F. King & Co., Inc., the Information Agent, at its address and telephone
number set forth on the back cover of the Offer To Purchase. Additional copies
of the enclosed materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
Very truly yours,
D.F. King & Co., Inc.
Nothing contained herein or in the enclosed documents shall constitute
you or any other person as an agent of Purchaser, Parent, the Company, the
Information Agent, the Depositary or any affiliate of any of them or authorize
you or any other person to use any document or make any statement on behalf of
any of them in connection with the Offer other than the documents enclosed
herewith and the statements contained therein.
Exhibit (a)(5)
Offer To Purchase for Cash
All Outstanding Common Shares
of
M/A/R/C Inc.
at
$20.00 Net Per Share
by
Armstrong Acquisition Corp.,
a wholly owned subsidiary
of
Omnicom Group Inc.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
October 4, 1999
To Our Clients:
Enclosed for your consideration are the Offer To Purchase, dated October
4, 1999 (the "Offer To Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") and other materials relating to the offer by Armstrong Acquisition
Corp. ("Purchaser"), a wholly owned subsidiary of Omnicom Group Inc. ("Parent"),
to purchase all outstanding common shares (the "Shares") of M/A/R/C Inc. (the
"Company") at a purchase price of $20.00 per Share, net to the seller in cash,
without interest, on the terms and subject to the conditions set forth in the
Offer To Purchase and the related Letter of Transmittal enclosed herewith.
Holders of Shares ("Shareholders") whose certificates for such Shares (the
"Certificates") are not immediately available or who cannot deliver their
Certificates and all other required documents to Harris Trust Company of New
York (the "Depositary") or complete the procedures for book-entry transfer on or
prior to the Expiration Date (as defined in the Offer To Purchase) must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer To Purchase.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A tender of such Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal accompanying
this letter is furnished to you for your information only and cannot be used by
you to tender Shares held by us for your account.
Accordingly, we request instructions as to whether you wish to have us
tender any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $20.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
2. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that
number of Shares that, together with any Shares to be acquired by
<PAGE>
Parent pursuant to the Tender, Voting and Option Agreement (as defined in
the Offer To Purchase) and any Shares then owned by Parent or any of its
subsidiaries, constitutes at least two-thirds of the Shares outstanding on
a fully diluted basis on the date of purchase. The Offer is also subject
to the conditions set forth in the Offer To Purchase. See the Introduction
and Sections 1, 14 and 15 of the Offer To Purchase.
3. The Offer is being made for all outstanding Shares.
4. Tendering Shareholders will not be obligated to pay brokerage fees
or commissions to the Depositary or the Information Agent or, except as
set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on
the purchase of Shares by Purchaser pursuant to the Offer. However,
federal income tax backup withholding at a rate of 31% may be required,
unless an exemption is provided or unless the required taxpayer
identification information is provided. See Instruction 10 of the Letter
of Transmittal.
5. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, November 1, 1999, unless the Offer is extended.
6. The Board of Directors of the Company has determined that the
Offer and the Merger (as such terms are defined in the Offer To Purchase),
are fair to and in the best interests of the Shareholders, has approved
the Offer and the Merger and recommends that Shareholders accept the Offer
and tender their Shares pursuant to the Offer.
7. Notwithstanding any other provision of the Offer, payment for
Shares accepted for payment pursuant to the Offer will in all cases be
made only after timely receipt by the Depositary of (a) Certificates for
Shares or a timely Book-Entry Confirmation (as defined in the Offer To
Purchase) with respect to such Shares pursuant to the procedures set forth
in Section 3 of the Offer To Purchase, (b) the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed
with any required signature guarantees (or, in the case of book-entry
transfers, an Agent's Message (as defined in the Offer To Purchase)), and
(c) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering Shareholders at the
same time depending upon when Certificates for or confirmations of
book-entry transfer of such Shares are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. Please
forward your instructions to us in ample time to permit us to submit a tender on
your behalf prior to the Expiration Date. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares, all
such Shares will be tendered unless otherwise specified on the instruction form
set forth below.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
<PAGE>
Instructions with Respect to the
Offer To Purchase for Cash
All Outstanding Common Shares
of
M/A/R/C Inc.
by
Armstrong Acquisition Corp.
a wholly owned subsidiary
of
Omnicom Group Inc.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer
To Purchase, dated October 4, 1999, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") in connection with the offer by Armstrong Acquisition
Corp. (the "Purchaser"), a wholly owned subsidiary of Omnicom Group Inc., to
purchase all outstanding common shares (the "Shares") of M/A/R/C Inc. at a
purchase price of $20.00 per Share, net to the seller in cash, without interest
thereon, on the terms and subject to the conditions set forth in the Offer To
Purchase.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
- --------------------------------------------------------------------------------
Number of Shares to be Tendered:*___________________________Shares
Date: ____________, 1999
SIGN HERE
Signature(s):___________________________________________________________________
Print Name(s):__________________________________________________________________
Print Address(es):______________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number(s):______________________________________________
Taxpayer Identification or Social Security Number(s):___________________________
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
This form must be returned to the brokerage firm maintaining your account.
Exhibit (a)(6)
Offer To Purchase for Cash
All Outstanding Common Shares
of
M/A/R/C Inc.
at
$20.00 Net Per Share
by
Armstrong Acquisition Corp.,
a wholly-owned subsidiary
of
Omnicom Group Inc.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
October 4, 1999
To Participants in the Dividend Reinvestment Plan of M/A/R/C Inc.:
Enclosed for your consideration are the Offer To Purchase, dated October
4, 1999 (the "Offer To Purchase") and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer") in
connection with the offer by Armstrong Acquisition Corp., a Texas corporation
(the "Purchaser") and a wholly-owned subsidiary of Omnicom Group Inc., a New
York corporation ("Parent") to purchase all outstanding common shares, par value
$1.00 per share (the "Shares"), of M/A/R/C Inc., a Texas corporation (the
"Company"), at a price of $20.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer.
Harris Trust Company of New York is the holder of record of Shares held on
your account as a participant in the Company's Dividend Reinvestment Plan (the
"Plan") and is the Administrator of the Plan on behalf of the Company. A tender
of such Shares can be made only by us as the holder of record and pursuant to
your instructions. The Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held in your Plan
account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held in your Plan account, upon the terms and
subject to the conditions set forth in the Offer.
Please note the following:
1. The tender price is $20.00 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth
in the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, November 1, 1999, unless the Offer is extended.
<PAGE>
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least two-thirds of the Shares outstanding on a fully diluted basis. The
Offer is also subject to other terms and conditions contained in the Offer
To Purchase. See the Introduction and Sections 1, 14 and 15 of the Offer
To Purchase.
5. Shareholders who tender Shares will not be obligated to pay
brokerage fees or commissions, solicitation fees or, except as set forth
in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of the Shares held in your Plan
account, please so instruct us by completing, executing and returning to us the
instruction form enclosed with this letter and the Substitute Form W-9 by 12:00
midnight, New York City time, on November 1, unless the Offer is extended. An
envelope in which to return your instructions to us is enclosed. If you
authorize tender of such Shares, all such Shares will be tendered unless
otherwise specified in your instructions. Your authorization should be forwarded
to us in ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction. However, Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
Very truly yours,
Harris Trust Company of New York
as Plan Administrator
(212) 701-7624
2
<PAGE>
Instructions with Respect to the Offer To Purchase
for Cash All Outstanding Common Shares
of
M/A/R/C Inc.
by
Armstrong Acquisition Corp.
a wholly owned subsidiary
of
Omnicom Group Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer To Purchase, dated October 4, 1999, and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
"Offer"), in connection with the offer by Armstrong Acquisition Corp., a Texas
corporation ("Purchaser") and a wholly owned subsidiary of Omnicom Group Inc., a
New York corporation, to purchase all outstanding common Shares, par value $1.00
per share (the "Shares") of M/A/R/C Inc., a Texas corporation (the "Company").
The undersigned understand(s) that the Offer applies to Shares allocated to the
account of the undersigned in the Company's Dividend Reinvestment Plan (the
"Plan").
This will instruct you, in your capacity as Administrator of the Plan, to
tender to Purchaser the number of Shares indicated below (or, if no number is
indicated below, all Shares) that are held by you for the Plan account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered: __________________ Shares*
Date: ____________________
* Unless otherwise indicated, it will be assumed that all Shares in your Plan
account are to be tendered.
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s): __________________________________________________________________
________________________________________________________________________________
Please type or print name(s)____________________________________________________
Please type or print address____________________________________________________
Area Code and Telephone Number__________________________________________________
Taxpayer Identification or Social Security Number_______________________________
- --------------------------------------------------------------------------------
3
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1) PLEASE PROVIDE YOUR TIN IN Social Security Number or
Form W-9 THE BOX AT RIGHT AND CERTIFY BY Employer ID Number
SIGNING AND DATING BELOW.
--------------------------------------------------------------------------------
Department of the
Treasury Internal PART 2) -- Certifications)Under penalties of perjury, I certify that:
Revenue Service (1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me and have checked the box
in Part 3) and
Payor's Request for Taxpayer (2) I am not subject to backup withholding because: (a) I am exempt from backup
Identification Number ("TIN") withholding, or (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
Certification Instructions) You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2).
--------------------------------------------------------------------------------
Part 3
Signature: ___________________Date: _________ Awaiting TIN
|_|
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
Signature: _________________________________________ Date: ____________________
- --------------------------------------------------------------------------------
4
Exhibit (a)(7)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
Give the
SOCIAL SECURITY
For this type of account number of ----
- --------------------------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(2)
6. Account in the name of The ward, minor or
guardian or committee for incompetent person(3)
a designated ward, minor
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
Give the EMPLOYER
IDENTIFICATION
For this type of account number of ----
- --------------------------------------------------------------------------------
8. Sole proprietorship The Owner(4)
account
9. A valid trust, estate or Legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The Corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a pubic
entity (such as a State
or local government,
school district or
prison) that receives
agricultural program
payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue
Service and apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include the
following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an
individual retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
o An international organization or any agency, or instrumentality
thereof.
o A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1).
o An entity registered at all times under the Investment Company Act
of 1940.
o A foreign central bank of issue.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 5041, 5041A(a),
6045, and 6050A.
Privacy Act Notice. Section 5109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Beginning January 1, 1993, payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
o Payments in patronage dividends where the amount received is not
paid in money.
o Payments made by certain foreign organizations. Payments made to a
nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $800 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt interest dividends
under section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free convenient bonds under section 1451.
o Payments made by certain foreign organizations. Payments made to a
nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THE FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS. ALSO
SIGN AND DATE THE FORM.
Exhibit (a)(8)
October 1, 1999
OMNICOM GROUP TO ACQUIRE M/A/R/C INC.
- -------------------------------------
NEW YORK, NEW YORK -- Omnicom Group Inc., (OMC:NYSE) and M/A/R/C Inc.
(NASDAQ:MARC) today announced a definitive merger agreement under which Omnicom
- -- through its Diversified Agency Services (DAS) Division -- will acquire
M/A/R/C, a leading integrated marketing services company headquartered in
Irving, Texas.
In the transaction, M/A/R/C shareholders will receive $20 per share in an all
cash tender offer to be commenced within a few days. The tender offer will be
subject to the condition that at least two-thirds of the outstanding M/A/R/C
shares are tendered and to other customary conditions. Holders of 20.5% of the
company's shares have agreed to tender their shares in the offer. The Boards of
Directors of both companies have approved the transaction.
ING Barings LLC has provided the Board of Directors of M/A/R/C with an opinion
as to the fairness, from a financial point of view, of the consideration to be
received by the common shareholders of M/A/R/C in the transaction. ING Barings
LLC also served as financial advisor to M/A/R/C in this transaction.
M/A/R/C has developed Customer Relationship Management (CRM) systems, primarily
using database marketing and market research technology. "Advances in computer
technology and the acceptance of the Internet as a global communications and
transactional medium is taking CRM to new levels," said M/A/R/C Chairperson
Sharon Munger. "With a technology landscape and marketplace undergoing such
radical transformation, the key will be to leverage technology, customer insight
and marketing resources into integrated solutions. The merger with Omnicom
offers an array of resources and capabilities to provide those integrated
solutions on a global scale for both existing and future clients."
DAS Chairman and Chief Executive Officer Tom Harrison said, "Attractive,
scalable business opportunities have developed as the concept of marketing
evolves from a mass approach to a one-to-one interactive approach. In a world of
brand proliferation, shorter product lifecycles and media fragmentation, M/A/R/C
fits very well within our overall strategy by offering a unique integration of
database, promotion and research capabilities."
M/A/R/C is one of the largest marketing intelligence firms in North America. The
company operates in two core businesses. Its M/A/R/C Research business provides
customer and brand marketing research for measuring and building a brand's
value. Targetbase is a customer relationship management agency specializing in
the delivery of the maximum return on the client's marketing communications
investment.
Omnicom, the leading marketing communications company in the world, consists of
advertising agency networks BBDO Worldwide, DDB Worldwide and TBWA Worldwide, as
well as Goodby, Silverstein & Partners; Diversified Agency Services (DAS), which
operates a number of leading, independently branded companies in marketing
services and specialty communications; and Communicade, a division of wholly
owned and significant minority investment interests in several leading
interactive and new media companies.
CONTACTS: M/A/R/C Inc.
Sharon Munger
(972) 506 - 3414
Jack D. Wolf
(972) 506 - 3412
Omnicom Group Inc.
Thomas L. Harrison
(212) 415 - 3064
* * *
Exhibit (c)(1)
================================================================================
===================================
M/A/R/C INC.
OMNICOM GROUP INC.
and
ARMSTRONG ACQUISITION CORP.
===================================
AGREEMENT AND PLAN OF MERGER
===================================
Dated as of September 30, 1999
===================================
===================================
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
I. THE TENDER OFFER
1.1 The Offer...........................................................1
1.2 Company Action......................................................3
1.3 Directors...........................................................4
II. THE MERGER
2.1 The Merger..........................................................5
2.2 Effective Time......................................................5
2.3 Effect of the Merger; Closing.......................................5
2.4 Subsequent Actions..................................................5
2.5 Articles of Incorporation; By-Laws; Directors and Officers..........5
2.6 Conversion of Securities............................................6
2.7 Dissenting Shares...................................................6
2.8 Surrender of Shares; Stock Transfer Books...........................7
2.9 Stock Plans and Warrants............................................8
III. REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
3.1 Corporate Organization..............................................9
3.2 Authority Relative to this Agreement................................9
3.3 No Conflict; Required Filings and Consents..........................9
3.4 Financing..........................................................10
3.5 No Prior Activities................................................10
3.6 Brokers............................................................10
3.7 Offer Documents; Proxy Statement...................................10
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization and Qualification; Subsidiaries.......................11
4.2 Capitalization.....................................................11
4.3 Authority Relative to this Agreement...............................12
4.4 No Conflict; Required Filings and Consents.........................12
4.5 SEC Filings; Financial Statements..................................13
4.6 Absence of Certain Changes or Events...............................13
4.7 Litigation.........................................................14
4.8 Employee Benefit Plans.............................................14
4.9 Offer Documents; Proxy Statement...................................16
4.10 Brokers...........................................................16
4.11 Control Share Acquisition.........................................16
4.12 Conduct of Business...............................................16
4.13 Taxes.............................................................17
i
<PAGE>
Page
----
4.14 Intellectual Property.............................................18
4.15 Websites..........................................................19
4.16 Year 2000 Compliance..............................................20
4.17 Contracts.........................................................20
4.18 Environmental Matters.............................................22
4.19 Required Vote by Company Shareholders.............................23
4.20 Opinions of Financial Advisor.....................................23
4.21 Affiliate Transactions............................................24
4.22 Client Relations..................................................24
4.23 Disclosure........................................................24
V. CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business Pending the Merger.............................24
5.2 No Shop............................................................26
VI. ADDITIONAL AGREEMENTS
6.1 Proxy Statement....................................................28
6.2 Meeting of Shareholders of the Company.............................28
6.3 Notification of Certain Matters....................................28
6.4 Access to Information..............................................28
6.5 Public Announcements...............................................29
6.6 Best Efforts; Cooperation..........................................29
6.7 Agreement to Defend and Indemnify..................................30
6.8 Employee Benefits..................................................31
6.9 Transfer Taxes.....................................................31
6.10 Standstill Agreements; Confidentiality Agreements; Anti-takeover
Provisions ........................................................31
VII. CONDITIONS OF MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger.......31
7.2 Conditions to Obligations of Parent and Purchaser to Effect
the Merger ........................................................32
VIII. TERMINATION, AMENDMENT AND WAIVER
8.1 Termination........................................................32
8.2 Effect of Termination..............................................33
IX. GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and Agreements.........34
9.2 Notices............................................................34
9.3 Expenses...........................................................36
9.4 Certain Definitions................................................36
9.5 Headings...........................................................36
ii
<PAGE>
Page
----
9.6 Severability.......................................................36
9.7 Entire Agreement; No Third-Party Beneficiaries.....................37
9.8 Assignment.........................................................37
9.9 Governing Law......................................................37
9.10 Amendment..........................................................37
9.11 Waiver.............................................................37
9.12 Miscellaneous......................................................37
9.13 Counterparts.......................................................38
Annex I......................................................................I-1
iii
<PAGE>
TABLE OF DEFINED TERMS
Page
----
Acquisition Transaction.......................................................27
affiliate ....................................................................36
Agreement .....................................................................1
Board of Directors.............................................................1
Business Day...................................................................5
Certificate(s).................................................................7
Client Relations..............................................................24
Closing........................................................................5
Closing Date...................................................................5
Company........................................................................1
Company Common Stock..........................................................11
Company Material Adverse Effect...............................................11
Company Shareholders' Meeting.................................................16
Competition Laws..............................................................10
Computer Software.............................................................18
Confidentiality Agreement.....................................................29
control.......................................................................36
Disclosure Schedule...........................................................11
Dissenting Shares..............................................................6
Effective Time.................................................................5
Employee Plans................................................................14
Environmental Claim...........................................................23
Environmental Laws............................................................23
ERISA.........................................................................14
ERISA Affiliate...............................................................15
Exchange Act...................................................................2
Exchange Agent.................................................................7
Expenses......................................................................34
Expiration Date................................................................2
GAAP..........................................................................13
Hazardous Substance...........................................................23
HSR Act.......................................................................10
Identified Contracts..........................................................21
Indemnified Parties...........................................................30
Independent Directors..........................................................4
Intellectual Property.........................................................18
IRS...........................................................................14
Material Contracts............................................................21
Merger.........................................................................1
Minimum Condition............................................................I-1
Offer..........................................................................1
Offer Documents................................................................3
Offer to Purchase..............................................................2
Option Plans...................................................................8
iv
<PAGE>
Page
----
Options........................................................................8
Parent.........................................................................1
Parent Information............................................................10
Parent Material Adverse Effect.................................................9
Parent Representatives........................................................29
Per Share Amount...............................................................1
Permits.......................................................................17
Person........................................................................36
Processes.....................................................................20
Proxy Statement...............................................................16
Purchaser......................................................................1
Release.......................................................................23
Schedule 14D-1.................................................................2
Schedule 14D-9.................................................................3
SEC............................................................................2
SEC Reports ..................................................................13
Securities Act................................................................13
Shares.........................................................................1
Subsidiary....................................................................11
Superior Proposal.............................................................27
Surviving Corporation..........................................................5
Tax Return....................................................................18
Taxes.........................................................................18
Texas Law......................................................................1
Transfer Taxes................................................................31
URL...........................................................................19
Voting and Option Agreement....................................................1
Year 2000 Compliant...........................................................20
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 30, 1999 (this
"Agreement"), among M/A/R/C Inc., a Texas corporation (the "Company"), Omnicom
Group Inc., a New York corporation ("Parent"), and Armstrong Acquisition Corp.,
a Texas corporation and a wholly owned subsidiary of Parent ("Purchaser").
RECITALS
A. The Boards of Directors of the Company and Parent have each
determined that it is in the best interests of their respective shareholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein;
B. In furtherance thereof, it is proposed that Purchaser will make a
cash tender offer (the "Offer") to purchase all of the issued and outstanding
common shares, $1.00 par value, of the Company (the "Shares"), for $20.00 per
Share (such price or such higher price as may be paid in the Offer the "Per
Share Amount"), net to the seller in cash;
C. Also in furtherance thereof, the Boards of Directors of the
Company and Purchaser have each approved the merger (the "Merger") of Purchaser
into the Company following the Offer in accordance with the Texas Business
Corporation Act ("Texas Law") and upon the terms and subject to the conditions
set forth herein;
D. The Board of Directors of the Company (the "Board of Directors")
has resolved to recommend acceptance of the Offer and the Merger to the holders
of Shares and has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to the holders of such Shares and to recommend
that the holders of such Shares accept the Offer and approve the Merger, this
Agreement and the transactions contemplated hereby; and
E. In order to induce Parent and Purchaser to enter into this
Agreement, concurrently with the execution and delivery hereof, Parent,
Purchaser, the Company and certain of the Company's shareholders
("Shareholders") (who beneficially own approximately 20% of the outstanding
Shares), are entering into a Tender, Voting and Option Agreement, dated the date
hereof (the "Voting Agreement"):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Purchaser hereby agree as follows:
I. THE TENDER OFFER
1.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be continuing, as promptly as
practicable, but in no event later than five Business Days following the
execution of this Agreement, Purchaser shall commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the
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Offer whereby Purchaser will offer to purchase for cash all of the Shares at
$20.00 per Share, net to the seller in cash, without interest, and, subject to
the conditions of the Offer and this Agreement, shall use reasonable efforts to
consummate the Offer. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding Shares shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of Shares, the Per Share Amount will be correspondingly adjusted on a
per-Share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of Shares. The obligation of
Purchaser to consummate the Offer and to accept for payment any Shares tendered
pursuant thereto shall be subject to the satisfaction of only those conditions
set forth in Annex I. Parent expressly reserves the right to waive any such
condition or to increase the price per Share to be paid pursuant to the Offer.
The Per Share Amount shall be net to the seller in cash, subject to reduction
only for any applicable Federal back-up withholding or stock transfer taxes
payable by the seller. The Company agrees that no Shares held by the Company
will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company, Purchaser
shall not (i) decrease the price per Share to be paid pursuant to the Offer or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought, (iii) amend or waive satisfaction of the Minimum Condition (as
defined in Annex I), or (iv) impose additional conditions to the Offer or amend
any other term of the Offer in any manner adverse to the holders of Shares;
provided, however, that if on the initial expiration date of the Offer, which
will initially be 20 Business Days following commencement of the Offer (together
with any extensions thereof, the "Expiration Date"), all conditions to the Offer
shall not have been satisfied or waived, Purchaser may, in its sole discretion,
extend the Expiration Date for such additional period as it may determine to be
appropriate to permit such condition to be satisfied; provided further, however,
that, without the consent of the Company, if there have been validly tendered
and not withdrawn on or before the Expiration Date that number of Shares that,
together with any Shares to be acquired by Parent pursuant to the Voting
Agreement and any Shares then owned by Parent or any of its Subsidiaries,
constitute more than 80% but less than 90% of the outstanding Shares, calculated
on a fully diluted basis, Purchaser may extend the Expiration Date for up to ten
additional Business Days. Except as provided in this Section 1.1(b), Purchaser
will not, without the prior written consent of the Company, which consent shall
not be unreasonably withheld, extend the Expiration Date. Purchaser shall, on
the terms and subject to the prior satisfaction or waiver of the conditions of
the Offer, accept for payment and purchase, as soon as permitted under the terms
of the Offer, all Shares validly tendered and not withdrawn prior to the
expiration of the Offer.
(c) The Offer will be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. As
soon as practicable on the date the Offer is commenced, Purchaser shall file
with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer that will comply in all material
respects with the provisions of, and satisfy in all material respects the
requirements of, such Schedule 14D-1 and all applicable federal securities laws,
and will contain (including as an exhibit) or incorporate by reference the Offer
to Purchase and forms of the related letter of transmittal and, if applicable,
summary advertisement (which documents, together with any supplements or
amendments thereto, and any other SEC schedule or form which is filed in
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connection with the Offer and related transactions, are referred to collectively
herein as the "Offer Documents"). Each of Parent, Purchaser and the Company
agrees promptly to correct any information provided by it for use in the
Schedule 14D-1 or the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect and to supplement the
information provided by it specifically for use in the Schedule 14D-1 or the
Offer Documents to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and Purchaser further agrees to take all steps
necessary to cause the Schedule 14D-1, as so corrected or supplemented, to be
filed with the SEC and the Offer Documents, as so corrected or supplemented, to
be disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given a reasonable opportunity to review and comment on any Offer Documents
before they are filed with the SEC.
1.2 Company Action. (a) The Company hereby approves of and consents
to the Offer and represents and warrants that (i) the Board of Directors, at a
meeting duly called and held on September 30, 1999, at which a majority of the
Directors were present, duly (x) adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (such adoption being
sufficient to render Article 13 of Texas Law inapplicable to this Agreement and
the transactions contemplated hereby, including the Offer and the Merger), (y)
recommended that the Shareholders accept the Offer, tender their Shares pursuant
to the Offer and approve this Agreement and the transactions contemplated
hereby, including the Merger, (z) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the shareholders of the Company and (ii) ING
Barings LLC, the Company's financial advisor, has rendered to the Board of
Directors its opinion that the consideration to be received by the holders of
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view.
(b) The Company shall file with the SEC, simultaneously with the
filing by Purchaser of the Schedule 14D-1 with respect to the Offer, a Tender
Offer Solicitation/ Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the "Schedule 14D-9") that will comply in
all material respects with the provisions of all applicable Federal securities
laws. The Company shall mail such Schedule 14D-9 to the Shareholders along with
the Offer Documents promptly after the commencement of the Offer. The Schedule
14D-9 and the Offer Documents will contain the recommendations of the Board of
Directors described in Section 1.2(a) hereof. The Company agrees promptly to
correct the Schedule 14D-9 if and to the extent that it shall become false or
misleading in any material respect (and each of Parent and Purchaser, with
respect to written information supplied by it specifically for use in the
Schedule 14D-9, shall promptly notify the Company of any required corrections of
such information and cooperate with the Company with respect to correcting such
information) and to supplement the information contained in the Schedule 14D-9
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
Shareholders to the extent required by applicable Federal securities laws.
Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 before it is filed with the SEC.
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(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent with mailing labels containing the
names and addresses of all record holders of Shares and security position
listings of Shares held in stock depositories, each as of a recent date, and
shall promptly furnish Parent with such additional information, including
updated lists of Shareholders, mailing labels and security position listings,
and such other information and assistance as Parent or its agents may reasonably
request for the purpose of communicating the Offer to the record and beneficial
holders of Shares.
1.3 Directors. (a) Promptly upon the purchase by Purchaser of any
Shares pursuant to the Offer, and from time to time thereafter as Shares are
acquired by Purchaser, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
will give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors appointed or elected pursuant to
this sentence and including current directors serving as officers of the
Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company) bears to the number of Shares
outstanding. At such times, if requested by Parent, the Company will also cause
each committee of the Board of Directors to include persons designated by Parent
constituting the same percentage of each such committee as Parent's designees
are of the Board of Directors. The Company shall, upon request by Parent,
promptly increase the size of the Board of Directors or exercise its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent designees to be elected to the Board of Directors in accordance
with the terms of this Section 1.3 and shall cause Parent's designees to be so
elected; provided, however, that, in the event that Parent's designees are
appointed or elected to the Board of Directors, until the Effective Time, the
Board of Directors shall have at least two directors who are directors on the
date hereof and who are neither officers of the Company nor designees,
shareholders, affiliates or associates (within the meaning of the federal
securities laws) of Parent (such directors, the "Independent Directors");
provided further, that if no Independent Directors remain, the other directors
shall designate two persons to fill the vacancies neither of whom shall be
either an officer of the Company or a designee, shareholder, affiliate or
associate of Parent, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement.
(b) Subject to applicable law, the Company shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to shareholders of the
Company promptly after the commencement of the Offer (or an amendment thereof or
an information statement pursuant to Rule 14f-1 if Parent has not theretofore
designated directors) such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3. Parent will supply the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, prior to
the Effective Time, the affirmative vote of a majority of the Independent
Directors shall be required to (i) amend or terminate this Agreement on behalf
of the Company, (ii) exercise or waive any of the Company's rights or remedies
hereunder, (iii) extend the time for performance of
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Parent's obligations hereunder, or (iv) take any other action by the Company in
connection with this Agreement required to be taken by the Board of Directors.
II. THE MERGER
2.1 The Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and Texas Law, Purchaser will be merged
with and into the Company, the separate corporate existence of Purchaser will
cease and the Company will continue as the surviving corporation. The Company as
the surviving corporation after the Merger hereinafter sometimes is referred to
as the "Surviving Corporation."
2.2 Effective Time. On or as promptly as practicable after the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger with the Secretary of State of the State of Texas, in
such form as required by, and executed in accordance with the relevant
provisions of, Texas Law (the time of such filing being the "Effective Time").
2.3 Effect of the Merger; Closing. At the Effective Time, the effect
of the Merger will be as provided in the applicable provisions of Texas Law.
Without limiting the generality of the foregoing, at the Effective Time (i) all
liabilities and obligations and (ii) all rights, title and interest to all real
estate and other property of the Company and Purchaser will vest in the
Surviving Corporation. The closing of the Merger (the "Closing") shall take
place at a time and on a date (the "Closing Date") to be specified by the
parties, which will be no later than the third Business Day after satisfaction
or waiver of the latest to occur of the conditions precedent set forth in
Article VII, at the offices of Jones, Day, Reavis & Pogue, 599 Lexington Avenue,
New York, New York, unless another time, date or location is agreed to in
writing by the parties. "Business Day" means any day other than Saturday, Sunday
or a federal holiday.
2.4 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation will be authorized to execute and deliver, in the name
and on behalf of either the Company or Purchaser, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
2.5 Articles of Incorporation; By-Laws; Directors and Officers. (a)
Unless otherwise determined by Parent before the Effective Time, at the
Effective Time, the Articles of Incorporation of Purchaser, as in effect
immediately before the Effective Time, will be the Articles of Incorporation of
the Surviving Corporation (as the same may be amended from time to time) until
thereafter amended as provided by law and such Articles of Incorporation, except
that Article FIRST of the Articles of Incorporation of the Surviving Corporation
shall be amended to read in its entirety as follows: "The name of the
corporation is M/A/R/C Inc."
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(b) The By-Laws of Purchaser, as in effect immediately before the
Effective Time, will be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately before the Effective Time
will be the initial directors of the Surviving Corporation, and the officers of
the Company immediately before the Effective Time will be the initial officers
of the Surviving Corporation, in each case until their successors are elected or
appointed and qualified. If, at the Effective Time, a vacancy shall exist on the
board of directors of the Surviving Corporation or in any office of the
Surviving Corporation, such vacancy may thereafter be filled in the manner
provided by law.
2.6 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 2.6(b)
hereof and any Dissenting Shares) will be canceled and extinguished and be
converted into the right to receive the Per Share Amount in cash payable to the
holder thereof, without interest, upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.8 hereof. All such
Shares, when so converted, will no longer be outstanding and will automatically
be canceled and retired and will cease to exist, and each holder of a
certificate formerly representing any such Share will cease to have any rights
with respect thereto, except the right to receive the Per Share Amount therefor
upon the surrender of such certificate in accordance with Section 2.8 hereof.
Any payment made pursuant to this Section 2.6(a) will be made net of applicable
withholding taxes to the extent such withholding is required by law.
(b) Each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned subsidiary of Parent
immediately before the Effective Time will be canceled and extinguished and no
payment or other consideration will be made with respect thereto.
(c) Each common share, no par value, of Purchaser issued and
outstanding immediately before the Effective Time will thereafter represent one
validly issued, fully paid and nonassessable common share, no par value, of the
Surviving Corporation.
2.7 Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, any Shares held by a holder who has demanded and
perfected his right to dissent and demand payment in accordance with Texas Law
(including but not limited to Article 5.11 thereof) and as of the Effective Time
has neither effectively withdrawn nor lost his right to dissent and demand
payment ("Dissenting Shares") will not be converted into or represent a right to
receive cash pursuant to Section 2.6, but the holder thereof will be entitled to
only such rights as are granted by Texas Law.
(b) Notwithstanding the provisions of Section 2.7(a) hereof, if any
dissenting Shareholder who demands payment under Texas Law effectively withdraws
or loses (through failure to perfect or otherwise) his right to demand payment
then as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's Shares will automatically be
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converted into and represent only the right to receive cash as provided in
Section 2.6(a) hereof, without interest thereon, upon surrender of the
certificate or certificates formerly representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written
demands for payment of the fair value of any Shares, withdrawals of such
demands, and any other instruments served pursuant to Texas Law received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for payment under Texas Law. The Company shall not
voluntarily make any payment with respect to any demands for payment and shall
not, except with the prior written consent of Parent, settle or offer to settle
any such demands.
2.8 Surrender of Shares; Stock Transfer Books. (a) Before the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the holders of Shares in
connection with the Merger (the "Exchange Agent") to receive the funds necessary
to make the payments contemplated by Section 2.6 hereof. When and as needed,
Parent shall make available to the Exchange Agent for the benefit of holders of
Shares the consideration to which such holders will be entitled at the Effective
Time pursuant to Section 2.6 hereof.
(b) Each holder of a certificate or certificates representing any
Shares canceled upon the Merger pursuant to Section 2.6(a) (the
"Certificate(s)") may thereafter surrender such Certificate or Certificates to
the Exchange Agent, as agent for such holder, to effect the surrender of such
Certificate or Certificates on such holder's behalf for a period ending one year
after the Effective Time. Promptly after the Effective Time, Parent shall cause
the distribution to holders of record of Shares as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
Certificates for cancellation, together with such materials, Parent shall cause
the Exchange Agent to pay the holder of such Certificates in exchange therefor
cash in an amount equal to the Per Share Amount multiplied by the number of
Shares represented by such Certificate. Until so surrendered, each such
Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by Parent or in the treasury of the
Company) will represent solely the right to receive the aggregate Per Share
Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made
to a Person other than the Person in whose name a surrendered Certificate or
instrument is registered, it will be a condition to such payment that the
Certificate or instrument so surrendered be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other taxes required by reason of such payment in a name
other than that of the registered holder of the Certificate or instrument
surrendered or shall have established to the satisfaction of Parent or the
Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
will be closed and there will not be any further registration of transfers of
shares of any shares of capital stock thereafter on the records of the Company.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation, they will be canceled and exchanged for cash as provided in Section
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2.6(a). No interest will accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which immediately before the
Effective Time represented outstanding Shares.
(e) Promptly following the date which is one year after the
Effective Time, the Exchange Agent will deliver to Parent all cash, certificates
and other documents in its possession relating to the transactions contemplated
hereby, and the Exchange Agent's duties will terminate. Thereafter, each holder
of a Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares held by Parent or in the treasury of the
Company) may surrender such Certificate to Parent and (subject to applicable
abandoned property, escheat and similar laws) receive in consideration thereof
the aggregate Per Share Amount relating thereto, without any interest or
dividends thereon.
(f) The Per Share Amount paid in the Merger will be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 2.8(c) hereof, stock transfer
taxes payable by such holder.
(g) In the event any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Per Share Amount
deliverable in respect thereof as determined in accordance with Section 2.6
hereof if the Person to whom the Per Share Amount is paid, as a condition
precedent to the payment thereof, gives the Surviving Corporation a bond in such
sum as the Surviving Corporation may direct or otherwise indemnifies the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
2.9 Stock Plans and Warrants. (a) The Company shall take all actions
necessary (which include, but are not limited to, satisfying the requirements of
Rule 16b-3(e) promulgated under Section 16 of the Exchange Act, without
incurring any liability in connection therewith, and obtaining any consents
required of holders of Options) to provide that, upon consummation of the
Merger, (i) (A) subject to clause (ii), each then-outstanding option to purchase
Shares (the "Options") granted under any of the Company's stock option plans
referred to in Section 4.2 hereof, each as amended (collectively, the "Option
Plans"), and (B) each then-outstanding warrant to purchase Shares ("Warrants"),
whether or not then exercisable or vested, will either be (y) acquired by the
Company for cancellation in consideration of payment to the holders of such
Options or Warrants, as applicable, of an amount in respect thereof equal to the
product of (1) the excess, if any, of the Per Share Amount over the per Share
exercise price thereof and (2) the number of Shares subject thereto (such
payment to be net of applicable withholding taxes) or (z) converted into an
option or warrant, as applicable, to purchase the number of shares of common
stock of Parent equal to the number of Shares subject to such Option or Warrant,
as applicable, on terms which, giving effect to the Offer and the Merger,
preserve the existing terms of such Options and Warrants, and (ii) each then
outstanding Option that has been designated by the Company as an "Incentive
Stock Option" (an "ISO") will be converted into an option in accordance with
clause (i)(z), above. Any Options (other than ISOs) or Warrants not exercised or
converted prior to the Effective Time will, by reason of the Merger, thereafter
represent the right to receive, upon payment of the exercise price therefor, an
amount in cash, without interest, equal to the Per Share Amount times the number
of Shares subject thereto (such payment to be net of
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applicable withholding taxes). The adjustments, if any, provided herein with
respect to the Options will be and are intended to be effected in a manner that
is consistent with Section 424(a) of the Code.
(b) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company shall cause the Option Plans and Warrants to terminate
as of the Effective Time and (ii) the Company shall ensure that following the
Effective Time no person, including any holder of Options or Warrants or any
participant in the Option Plans, will have any right to acquire any equity
securities of the Company, the Surviving Corporation or any subsidiary thereof.
III. REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
3.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its jurisdiction of incorporation and has the corporate power
and authority and any necessary governmental authority to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted.
3.2 Authority Relative to this Agreement. The execution and delivery
of this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent and Purchaser and no other
corporate proceeding is necessary for the execution and delivery of this
Agreement by Parent or Purchaser, the performance by Parent or Purchaser of
their respective obligations hereunder and the consummation by Parent or
Purchaser of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Purchaser and, assuming due authorization,
execution and delivery of this Agreement by the Company, constitutes a legal,
valid and binding obligation of each such corporation, enforceable against each
of them in accordance with its terms.
3.3 No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate any law, regulation, court order, judgment or decree applicable
to Parent or Purchaser or by which any of their property is bound or affected,
(ii) violate or conflict with the Certificate of Incorporation or By-Laws of
Parent or the Articles of Incorporation or By-Laws of Purchaser, or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent or Purchaser pursuant to,
any contract, instrument, permit, license or franchise to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of their property is
bound or affected; except in the case of clauses (i) and (iii) for conflicts,
violations, breaches or defaults that individually and in the aggregate would
not be reasonably expected to prevent or materially impair or delay the
consummation by Parent or Purchaser of the transactions contemplated hereby
(each a "Parent Material Adverse Effect").
(b) Except for applicable requirements, if any, of the Exchange Act,
under Competition Laws, and filing and recordation of appropriate merger
documents as required by
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Texas Law, neither Parent nor Purchaser is required to submit any notice, report
or other filing with any governmental authority, domestic or foreign, in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, the failure of which to
submit would have a Parent Material Adverse Effect. No waiver, consent, approval
or authorization of any governmental or regulatory authority, domestic or
foreign, is required to be obtained or made by either Parent or Purchaser in
connection with its execution, delivery or performance of this Agreement the
failure of which to obtain or make would have a Parent Material Adverse Effect.
For the purposes of this Agreement, "Competition Laws" means statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines, and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization, lessening of competition or
restraint of trade, and includes the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and, to the extent applicable,
equivalent laws of the European Union or the member states thereof, Canada and
any other country in which the Company or its Subsidiaries has operations or
derives revenue.
3.4 Financing. Parent and Purchaser have, or will have, available
all of the funds or have the borrowing capacity necessary for the acquisition of
the outstanding Shares pursuant to the Offer and the Merger and to perform their
respective obligations under this Agreement.
3.5 No Prior Activities. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
3.6 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser that is or will be payable by the Company or
any of its Subsidiaries.
3.7 Offer Documents; Proxy Statement. None of the information
supplied by Parent, Purchaser, their respective officers, directors,
representatives, agents or employees (the "Parent Information"), for inclusion
in the Proxy Statement, or in any amendments thereof or supplements thereto,
will, on the date the Proxy Statement is first mailed to shareholders of the
Company or at the time of the Company Shareholders' Meeting, contain any
statement which, at such time and in light of the circumstances under which it
will be made, will be false or misleading with respect to any material fact, or
will omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Shareholders' Meeting which has become false or misleading. Neither the
Offer Documents nor any amendments thereof or supplements thereto will, at any
time the Offer Documents or any such amendments or supplements are filed with
the SEC or first published, sent or given to the Company's shareholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
Parent and Purchaser do not make any representation or warranty with respect to
any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the
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foregoing documents or extracted from reports or other documents filed by the
Company with the SEC. The Offer Documents and any amendments or supplements
thereto will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth (including an identification by section
reference to the representations and warranties to which such exceptions relate)
on the Disclosure Schedule to this Agreement (the "Disclosure Schedule"), the
Company hereby represents and warrants to Parent and Purchaser as follows:
4.1 Organization and Qualification; Subsidiaries. The Company (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power and authority
and any necessary governmental authority to own, operate or lease the properties
that it purports to own, operate or lease and to carry on its business as it is
now being conducted, and (ii) is duly qualified as a foreign corporation to do
business, and is in good standing, in each other jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except in the case of clause (ii)
for failures which, when taken together with all other such failures, would not
have a Company Material Adverse Effect. Section 4.1 of the Disclosure Schedule
lists each of the Company's Subsidiaries and their respective jurisdictions of
incorporation or organization. For the purposes of this Agreement, (i) the term
"Subsidiary" means any corporation or other legal entity of which the Company
(either alone or through or together with any other Subsidiary) owns, directly
or indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity, and
(ii) the term "Company Material Adverse Effect" means any change in or effect on
the business of the Company that is or can be reasonably expected to be
materially adverse to the business, assets, properties (including intangible
properties), condition (financial or otherwise), results of operations,
prospects, liabilities or regulatory status of the Company and the Subsidiaries
taken as a whole. The Company has previously delivered to Parent a complete and
correct copy of its and each of its Subsidiaries' Articles of Incorporation and
By-Laws, as currently in effect.
4.2 Capitalization. (a) The authorized capital stock of the Company
consists of 15,000,000 common shares, $1.00 par value (the "Company Common
Stock"). As of the close of business on the date one Business Day prior to the
date hereof, (i) 5,240,185 shares of Company Common Stock were issued and
outstanding, all of which were duly authorized, validly issued, fully paid and
nonassessable, (ii) 1,479,195 shares of Company Common Stock were held in the
treasury of the Company, (iii) 853,240 shares of Company Common Stock were
reserved for issuance under the Option Plans listed on Section 4.2(a) of the
Disclosure Schedule in the amounts stated in such schedule, and (iv) 156,500
shares of Company Common Stock were reserved for issuance under the Company's
Warrants listed on Section 4.2(a) of the Disclosure Schedule in the amounts
stated in such Schedule. There are no existing (i) options, warrants, calls,
preemptive rights, subscriptions or other rights, convertible securities,
agreements or commitments of any character obligating the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests,
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(ii) contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of the Company or any
Subsidiary of the Company, or (iii) voting trusts or similar agreements to which
the Company or any of its Subsidiaries is a party with respect to the voting of
the capital stock of the Company or any of its Subsidiaries.
(b) Except for directors' qualifying shares (i) all of the
outstanding shares of capital stock (or equivalent equity interests of entities
other than corporations) of each of the Company's Subsidiaries are beneficially
owned, directly or indirectly, by the Company and (ii) neither the Company nor
any of its Subsidiaries owns any shares of capital stock or other securities of,
or interest in, any other Person, or is obligated to make any capital
contribution to or other investment in any other Person.
4.3 Authority Relative to this Agreement. The Company has the
necessary corporate power and authority to enter into this Agreement and the
Voting Agreement and, subject to obtaining any necessary Shareholder approval of
the Merger, to carry out its obligations under this Agreement. The execution and
delivery of this Agreement and the Voting Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of this Agreement, to the approval of the Merger
by the Company's shareholders in accordance with Texas Law. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. The Voting Agreement has been duly
authorized, executed and delivered by the Company and, assuming the due
authorization, execution and delivery of the Voting Agreement by each of the
other parties thereto, constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
4.4 No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement and the Voting Agreement by the Company do not,
and the performance of this Agreement and the Voting Agreement by the Company
will not, (i) conflict with or violate any law, regulation, court order,
judgment or decree applicable to the Company or by which its property is bound
or affected, (ii) violate or conflict with the Articles of Incorporation or
By-Laws of the Company, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time of both would become a default)
under, or give to others any rights of termination or cancellation of, or result
in the creation of a lien or encumbrance on any of the properties or assets of
the Company pursuant to, any contract, instrument, permit, license or franchise
to which the Company is a party or by which the Company or its property is bound
or affected, except in the case of clauses (i) and (iii) for conflicts,
violations, breaches or defaults which, individually or in the aggregate, would
not have a Company Material Adverse Effect.
(b) Except for applicable requirements, if any, of the Exchange Act,
under Competition Laws and filing and recordation of appropriate merger or other
documents as required by Texas Law, "takeover" or "blue sky" laws of various
states, the Company is not required to submit any notice, report or other filing
with any governmental authority, domestic or foreign, in connection with the
execution, delivery or performance of this Agreement or the Voting Agreement or
the consummation of the transactions contemplated hereby and thereby the failure
of which to submit would have a Company Material Adverse Effect. No waiver,
consent, approval or authorization of any governmental or regulatory authority,
domestic or foreign, is
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required to be obtained or made by the Company in connection with its execution,
delivery or performance of this Agreement or the Voting Agreement the failure of
which to obtain or make would have a Company Material Adverse Effect.
4.5 SEC Filings; Financial Statements. (a) The Company has filed all
forms, reports and documents required to be filed with the SEC since January 1,
1996, and has heretofore delivered or made available to Parent, in the form
filed with the SEC, its (i) Annual Reports on Form 10-K for the fiscal years
ended December 31, 1996, 1997 and 1998, (ii) Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1999 and June 30, 1999, (iii) all proxy statements
relating to the Company's meetings of Shareholders (whether annual or special)
held since January 1, 1996 and (iv) all other forms, reports or registration
statements filed by the Company with the SEC pursuant to the Exchange Act since
January 1, 1996 (collectively, whether filed before, on or after the date
hereof, the "SEC Reports"). The SEC Reports (i) were prepared in accordance with
the requirements of the Exchange Act and the Securities Act of 1933 (the
"Securities Act"), as the case may be, and the applicable rules and regulations
of the SEC thereunder and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in the SEC
Reports were prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
presented the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and changes in financial position of the Company and its Subsidiaries
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which should not be materially adverse to the Company and its Subsidiaries taken
as a whole.
(c) Except as reflected or reserved against in the consolidated
financial statements contained in the SEC Reports filed prior to the date hereof
or otherwise disclosed in the SEC Reports filed prior to the date hereof,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which in the aggregate would have a Company Material Adverse Effect or which
would be required to be set forth in consolidated financial statements in
accordance with GAAP.
4.6 Absence of Certain Changes or Events. Since December 31, 1998,
except as contemplated by this Agreement or as set forth in the SEC Reports
filed prior to the date of this Agreement, (i) the Company and its Subsidiaries
have conducted their respective operations only in the ordinary course
consistent with past practices; (ii) there has not been:
(a) any change which would have a Company Material Adverse Effect;
(b) any strike, picketing, work slowdown or other labor disturbance
having a Company Material Adverse Effect;
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company having a Company
Material Adverse Effect;
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(d) any redemption or other acquisition of Company Common Stock by
the Company or any declaration or payment of any dividend or other distribution
in cash, stock or property with respect to Company Common Stock, except for
purchases heretofore made pursuant to the terms of the Company's employee
benefit plans before the date hereof; and
(e) any change by the Company in accounting principles except
insofar as may have been required by a change in generally accepted accounting
principles and disclosed in the SEC Reports; and
(iii) the Company and its Subsidiaries have not taken action that if taken after
the date of this Agreement would constitute a violation of Section 5.1.
4.7 Litigation. Except as disclosed in the SEC Reports filed prior
to the date of this Agreement, there are no claims, actions, suits, proceedings
or investigations of any nature pending or, to the knowledge of the Company,
threatened against the Company, or any properties or rights of the Company,
before any court, administrative, governmental or regulatory authority or body,
domestic or foreign, which would have a Company Material Adverse Effect. The
Company is not subject to any order, judgment, injunction or decree which has
had or would have a Company Material Adverse Effect.
4.8 Employee Benefit Plans. (a) Section 4.8(a) of the Disclosure
Schedule sets forth a list of all material employee welfare benefit plans (as
defined in Section 3(l) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), employee pension benefit plans (as defined in Section
3(2) of ERISA) and all other bonus, stock option, stock purchase, benefit,
profit sharing, savings, retirement, disability, insurance, incentive, deferred
compensation and other similar fringe or employee benefit plans, programs or
arrangements for the benefit of, or relating to, any employee of, or independent
contractor or consultant to, the Company or its Subsidiaries (together, the
"Employee Plans") and any employment severance or termination agreement. The
Company has made available to Parent true and complete copies of all Employee
Plans, as in effect, together with all amendments thereto which will become
effective at a later date, as well as the latest Internal Revenue Service
("IRS") determination letters obtained with respect to any Employee Plan
intended to be qualified under Section 401(a) or 501(a) of Code. True and
complete copies of the (i) most recent annual actuarial valuation report, if
any, (ii) last filed Form 5500 together with Schedule A and/or B thereto, if
any, (iii) summary plan description (as defined in ERISA), if any, and all
modifications thereto communicated to employees, (iv) most recent annual and
periodic accounting of related plan assets, if any, and (v) such other materials
with respect to the Employee Plans reasonably requested by Parent in each case,
relating to the Employee Plans, have been delivered to Parent and are correct in
all material respects.
(b) Except to the extent that any of the following (other than
clauses (viii), (ix), (x) or (xii)), either alone or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect: (i) neither
the Company nor, to the Company's knowledge, any of its directors, officers,
employees or agents has, with respect to any Employee Plan, engaged in or been a
party to any "prohibited transaction," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, which could result in the imposition of
either a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed
by Section 4975 of the Code, in each case applicable to the Company or any
Employee Plan; (ii) all Employee Plans are and have
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been at all times in compliance in all respects with the currently applicable
requirements prescribed by all statutes, orders, or governmental rules or
regulations currently in effect with respect to such Employee Plans, including,
but not limited to, ERISA and the Code (except for such requirements that are
not required to be adopted as of the effective date of the applicable
requirement), there are no pending or, to the knowledge of the Company,
threatened claims, lawsuits or arbitrations (other than routine claims for
benefits), relating to any of the Employee Plans, which have been asserted or
instituted against the Company, any Employee Plan or the assets of any trust for
any Employee Plan, nor, to the knowledge of the Company, is there any basis for
one; (iii) each Employee Plan intended to be qualified under Section 401(a) of
the Code is so qualified, and has heretofore been determined by the IRS to be so
qualified; (iv) neither the Company nor any trade or business which, together
with the Company, is treated as a single employer under Section 414(t) of the
Code (an "ERISA Affiliate") has, or at any time has had, an obligation to
contribute to a "defined benefit plan" as defined in Section 3(35) of ERISA, a
pension plan subject to the funding standards of Section 302 of ERISA or Section
412 of the Code, a "multiemployer plan" within the meaning of Section 3(37) or
4001(a)(13) of ERISA or Section 414(f) of the Code or a "multiple employer plan"
within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code; (v)
with respect to each group health plan benefitting any current or former
employee of the Company, or any ERISA Affiliate, that is subject to Section
4980B of the Code, the Company and any ERISA Affiliate, have complied with (A)
the continuation coverage requirements of Section 4980B of the Code and Part 6
of Subtitle B of Title I of ERISA and (B) the Health Insurance Portability and
Accountability Act of 1996; (vi) all (A) insurance premiums required to be paid
with respect to, (B) benefits, expenses, and other amounts due and payable
under, and (C) contributions, transfers or payments required to be made to, any
Employee Plan prior to the Effective Time will have been paid, made or accrued
on or before the Effective Time; (vii) with respect to any insurance policy
providing funding for benefits under any Employee Plan, (A) there is no
liability of the Company or any of its Subsidiaries, in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent liability, nor would there be any such liability if such insurance
policy was terminated on the date hereof, and (B) no insurance company issuing
any such policy is in receivership, conservatorship, liquidation or similar
proceeding and, to the knowledge of the Company, no such proceedings with
respect to any insurer are imminent; (viii) no Employee Plan provides benefits,
including, without limitation, death or medical benefits, beyond termination of
service or retirement other than (A) coverage mandated by law, (B) death or
retirement benefits under any qualified Employee Plan, or (C) deferred
compensation benefits reflected on the books of the Company; (ix) the execution
and performance of this Agreement will not (A) constitute an event under any
Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from the Company or any of its Subsidiaries to any
officer, employee, or former employee (or dependents of such employee) of the
Company or any of its Subsidiaries, or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due to any employee, officer or
director of the Company or any of its Subsidiaries; (x) any amount that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Employee Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code); (xi) the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to any
amount paid or payable by the Company or any
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affiliate of the Company under any contract, Employee Plan, program, arrangement
or understanding currently in effect; (xii) neither the Company nor any ERISA
Affiliate has any current or future liability with respect to any "employee
benefit plans" (within the meaning of Section 3(3) of ERISA), other than the
Employee Plans, previously maintained or contributed to by the Company, any
ERISA Affiliate or any predecessor to either thereof, or to which the Company,
any ERISA Affiliate or any such predecessor previously had an obligation to
contribute.
4.9 Offer Documents; Proxy Statement. The proxy statement to be sent
to the shareholders of the Company in connection with the meeting of the
Shareholders to consider the Merger (the "Company Shareholders' Meeting") or the
information statement to be sent to such Shareholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), at the date mailed to the shareholders of
the Company and at the time of the Company Shareholders Meeting (i) will comply
in all material respects with the applicable requirements of the Exchange Act
and the rules and regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Schedule 14D-9
will comply in all material respects with the Exchange Act and the rules and
regulations thereunder. Neither the Schedule 14D-9 nor any of the information
relating to the Company or its affiliates provided by or on behalf of the
Company specifically for inclusion in the Schedule 14D-1 or the Offer Documents
will, at the respective times the Schedule 14D-9, the Schedule 14D-1 and the
Offer Documents or any amendments or supplements thereto are filed with the SEC
and are first published, sent or given to Shareholders, 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 made therein, in
light of the circumstances under which they were made, not misleading. No
representation or warranty is made by the Company with respect to any
information supplied by Parent or Purchaser specifically for inclusion in the
Proxy Statement or the Schedule 14D-9.
4.10 Brokers. Except for ING Barings LLC, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent true and complete information concerning the
financial arrangements between the Company and ING Barings LLC pursuant to which
such firm would be entitled to any payment as a result of the transactions
contemplated hereunder.
4.11 Control Share Acquisition. The Board of Directors has taken all
action necessary to render Article 13 of Texas Law inapplicable to the Offer,
the Merger, this Agreement, the Voting Agreement and any of the transactions
contemplated hereby or thereby.
4.12 Conduct of Business. (a) Except as disclosed in the SEC Reports
filed prior to the date of this Agreement, the business of the Company is not
being conducted in default or violation of any term, condition or provision of
(i) its Articles of Incorporation or By-Laws, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease or other instrument or agreement of any
kind to which the Company is a party or by which the Company or any of its
properties or assets may be bound, or (iii) any federal, state, local or foreign
statute, law, ordinance, rule,
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regulation, judgment, decree, order, concession, grant, franchise, permit or
license or other governmental authorization or approval applicable to the
Company, except, with respect to the foregoing clauses (ii) and (iii), defaults
or violations that would not, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any notice, or has knowledge of any claim, alleging any such violation,
except for such violations that individually and in the aggregate would not have
a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions,
exemptions, orders, registrations and approvals of any governmental authority,
domestic or foreign, or other Persons necessary for the ownership, leasing,
operation, occupancy and use of their respective property and assets and the
conduct of their respective businesses as currently conducted ("Permits"),
except where the failure to hold such Permits individually and in the aggregate
would not have a Company Material Adverse Effect. Neither the Company nor any of
its Subsidiaries has received notice that any Permit will be terminated or
modified or cannot be renewed in the ordinary course of business, and the
Company has no knowledge of any reasonable basis for any such termination,
modification or nonrenewal, except for such terminations, modifications or
nonrenewals as individually and in the aggregate would not have a Company
Material Adverse Effect. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not violate any Permit, or result in any termination, modification or
nonrenewals thereof, except for such violations, terminations, modifications or
nonrenewals thereof as individually and in the aggregate would not have a
Company Material Adverse Effect.
4.13 Taxes. (a) Except as would not, either individually or in the
aggregate, have a Company Material Adverse Effect, (i) the Company has timely
filed with the appropriate governmental authorities all Tax Returns required to
be filed by or with respect to the Company, (ii) all Taxes shown to be due on
such Tax Returns, all Taxes required to be paid on an estimated or installment
basis, and all Taxes required to be withheld with respect to the Company have
been timely paid or, if applicable, withheld and paid to the appropriate taxing
authority in the manner provided by law, (iii) the reserve for Taxes set forth
on the consolidated balance sheet of the Company and its Subsidiaries as of
December 31, 1998 is adequate for the payment of all Taxes through the date
thereof and no Taxes have been incurred after December 31, 1998 which were not
incurred in the ordinary course of business, (iv) no federal, state, local or
foreign audits, administrative proceedings or court proceedings are pending with
regard to any Taxes or Tax Returns of the Company and there are no outstanding
deficiencies or assessments asserted or proposed, and (v) there are no
outstanding agreements, consents or waivers extending the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies against
the Company, and the Company is not a party to any agreement providing for the
allocation or sharing of Taxes.
(b) The Company has not filed a consent to the application of
Section 341(f) of the Code.
(c) The Company is not and has not been a United States real
property holding company (as defined in Section 897(c)(2) of the Code) during
the applicable period specified in Section 897(c)(1)(ii) of the Code.
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(d) No indebtedness of the Company is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code.
(e) The Company has not been a member of an affiliated group filing
consolidated or combined Tax Returns other than a federal income tax group the
common parent of which is the Company.
(f) For purposes of this Agreement, the term "Taxes" means all
taxes, charges, fees, levies or other assessments imposed by any United States
Federal, state, or local taxing authority or by any non-U.S. taxing authority,
including but not limited to, income, gross receipts, excise, property, sales,
use, transfer, payroll, license, ad valorem, value added, withholding, social
security, national insurance (or other similar contributions or payments),
franchise, estimated, severance, stamp, and other taxes (including any interest,
fines, penalties or additions attributable to or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments).
(g) For purposes of this Agreement, the term "Tax Return" means any
return, report, information return or other document (including any related or
supporting information and, where applicable, profit and loss accounts and
balance sheets) with respect to Taxes.
4.14 Intellectual Property. (a) Section 4.14(a) of the Disclosure
Schedule contains a true and complete list of all (i) patents and patent
applications, (ii) trademark and service mark registrations and applications,
(iii) Computer Software (excluding Computer Software generally available for
purchase by the public), (iv) copyright registrations and applications, (v)
Internet domain names, and (vi) all material licenses related to the foregoing,
in each case used or held for use in connection with the business of the
Company.
(b) For the purposes of this Agreement, the term "Computer Software"
means (i) any and all computer programs and applications consisting of sets of
statements and instructions to be used directly or indirectly in computer
software or firmware whether in source code or object code form, (ii) databases
and compilations, including without limitation any and all data and collections
of data, whether machine readable or otherwise, (iii) all versions of the
foregoing including, without limitation, all screen displays and designs
thereof, and all component modules of source code or object code or natural
language code therefor, and whether recorded on papers, magnetic media or other
electronic or non-electronic device, (iv) all descriptions, flowcharts and other
work product used to design, plan, organize and develop any of the foregoing,
and (v) all documentation, including without limitation all technical and user
manuals and training materials, relating to the foregoing.
(c) The Company owns or has the valid right to use all intellectual
property used by it in connection with its business, including (i) trademarks
and service marks (registered or unregistered) and trade names, and all goodwill
associated therewith, (ii) patents, patentable inventions, discoveries,
improvements, ideas, know-how, processes and computer programs, software and
databases (including source code), (iii) trade secrets and the right to limit
the use or disclosure thereof, (iv) copyrights in all works, including software
programs and mask works, and (v) domain names (collectively "Intellectual
Property"), except where the failure to own or have the valid right to use the
Intellectual Property would not have a Company Material Adverse Effect.
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(d) All grants, registrations and applications for Intellectual
Property that are used in and are material to the conduct of the businesses of
the Company as currently conducted (i) are valid, subsisting, in proper form and
have been duly maintained, including the submission of all necessary filings and
fees in accordance with the legal and administrative requirements of the
appropriate jurisdictions, and (ii) have not lapsed, expired or been abandoned.
(e) To the knowledge of the Company (i) there are no conflicts with
or infringements of any Intellectual Property by any third party, except for
conflicts or infringements which would not have a Company Material Adverse
Effect, and (ii) the conduct of the businesses of the Company as currently
conducted does not conflict with or infringe any proprietary right of any third
party, which conflict or infringement would have a Company Material Adverse
Effect. There is no claim, suit, action or proceeding pending or, to the
Company's knowledge, threatened against the Company (i) alleging any such
conflict or infringement with any third party's proprietary rights, or (ii)
challenging the ownership, use, validity or enforceability of the Intellectual
Property, except for claims, suits, actions or proceedings which would not have
a Company Material Adverse Effect.
(f) All consents, filings and authorizations by or with third
parties necessary with respect to the consummation of the transactions
contemplated hereby as they may affect the Intellectual Property have been
obtained, except where the failure to have obtained such consents, filings or
authorizations would not have a Company Material Adverse Effect.
(g) The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property, except for breaches which would not have a Company
Material Adverse Effect.
(h) No former or present employees, officers or directors of the
Company hold any right, title or interest directly or indirectly, in whole or in
part, in or to any Intellectual Property.
4.15 Websites. With respect to any website of the Company, the
Company has taken all commercially reasonable steps in connection with the
creation and operation of the website, including, without limitation, the
following:
(a) The Company (i) has obtained the required Universal Resource
Locator ("URL") under the domain name for such website, and the .org and .net
domains, (ii) has applied for the appropriate trademark registrations for each
URL, (iii) maintains adequate computer resources to ensure no service outages
will occur due to insufficient data storage, memory, server or other related
reasons, and (iv) has in place plans to permit and accommodate anticipated
increases in traffic levels (e.g., additional hardware, servers, software and/or
personnel).
(b) The Company (i) complies with all current privacy standards
regarding data collection of site visitors and customers (e.g., ETrust, BBB
Online), (ii) uses commercially reasonable efforts to market its websites both
offline and online, including, without limitation, submitting its websites and
the appropriate metatags to all of the major search engines (e.g., Yahoo,
Hotbot, Lycos, Excite and Infoseek), (iii) maintains complete control of the
design and
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content of its websites, including, without limitation, links to and from each
website, and (iv) maintains and keeps its websites operational 24 hours a day, 7
days a week.
4.16 Year 2000 Compliance. (a) To the knowledge of the Company, the
current Processes used by the Company are Year 2000 Compliant except where the
failure to be Year 2000 Complaint would not have a Company Material Adverse
Effect.
(b) The Company has used its best efforts so that its products will
be delivered and its respective services will be scheduled and performed in a
timely manner without interruptions caused by the date in time on which the
product is ordered or is actually delivered or the services are scheduled or
actually performed under normal procedures in the ordinary course, whether
before, on or after January 1, 2000. The Company has used its best efforts so
that its essential suppliers of products and services, including the suppliers
of its infrastructure systems, have Year 2000 compliance programs in place to
avoid interruptions in the supplier-customer trading relationship which would
have a Company Material Adverse Effect, whether before, on or after January 1,
2000.
(c) Definition. For the purposes of this Agreement, the term "Year
2000 Compliant" means:
(i) the functions, calculations and other computer processes
of all equipment, computer hardware, software and systems of the Company,
including, without limitation, internal and outsourced systems and embedded
computer features within other systems and equipment of the Company
(collectively, "Processes"), perform properly in an accurate and consistent
manner regardless of the date in time on which the Processes are actually
performed and regardless of the date of input, whether before, on or after
January 1, 2000 and whether or not the dates are affected by leap years;
(ii) the equipment, computer hardware, software and systems
accept, calculate, compare, sort, extract, sequence and otherwise process data
inputs and date values, and return and display date values, in an accurate and
consistent manner regardless of the dates used, whether before, on or after
January 1, 2000;
(iii) the equipment, computer hardware, software and systems
will function properly without interruptions or manual intervention caused by
the date in time on which the Processes are actually performed or by the date of
input to the software, whether before, on or after January 1, 2000;
(iv) the equipment, computer hardware, software and systems
accept and respond to two-digit year data input in the Processes in a manner
that resolves any ambiguities as to the century in a defined, predetermined and
appropriate manner; and
(v) the equipment, computer hardware, software and systems
store and display data information in the Processes in ways that are accurate
and unambiguous as to the determination of the century.
4.17 Contracts. (a) Other than the contracts or agreements of the
Company included as exhibits to the Company's Annual Report on Form 10-K for the
fiscal year ended
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December 31, 1998, the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1999 and June 30, 1999, or any periodic filing made
pursuant to the Exchange Act since December 31, 1998 (the "Material Contracts"),
and contracts or agreements between the Company and its wholly owned
Subsidiaries or between wholly owned Subsidiaries of the Company, Section 4.17
of the Disclosure Schedule sets forth each of the following contracts and
agreements to which the Company or any of its Subsidiaries is a party or by
which any of them is bound (contracts and agreements of the types described
below being "Identified Contracts"), in each case as such Identified Contract is
in effect on the date hereof:
(i) contracts and agreements for the purchase of inventories,
goods or other materials by, or for the furnishing of services to, the Company
or any of its Subsidiaries that (A) require payments by the Company or any of
its Subsidiaries in excess of $25,000, and (B) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty;
(ii) contracts and agreements for the sale of inventories,
goods or other materials, or for the furnishing of services, by the Company or
any of its Subsidiaries that (A) require payments to the Company or any of its
Subsidiaries in excess of $100,000, and (B) have a term of one year or more and
are not terminable by the Company or Subsidiary party thereto, as the case may
be, on notice of six months or less without penalty;
(iii) manufacturer's representative, sales agency and
distribution contracts and agreements that (A) have a term of one year or more
and are not terminable by the Company or Subsidiary party thereto, as the case
may be, on notice of six months or less without penalty, or (B) are otherwise
material;
(iv) contracts and agreements (A) governing the terms of
indebtedness, or guarantees of indebtedness, of, or secured by assets of, the
Company or any of its Subsidiaries in excess of $100,000 principal amount in the
aggregate, (B) governing the terms of "synthetic" or capital leases pursuant to
which the Company or any of its Subsidiaries has financial obligations in excess
of $100,000, or (C) providing for all obligations of the Company and its
Subsidiaries in respect of interest rate swap or similar agreements, commodity
swaps or options or similar agreements or foreign currency hedge, exchange or
similar agreements or any other derivative instrument;
(v) shareholder, voting trust or similar contracts and
agreements relating to the voting of shares or other equity or debt interests of
the Company or any of its Subsidiaries;
(vi) contracts and agreements entered into since January 1,
1997, providing for the acquisition or disposition of assets having a value in
excess of $500,000 other than sales or purchases of inventories in the ordinary
course of business and sales of obsolete equipment;
(vii) all of the leases, subleases, licenses and other
agreements relating to or constituting real property, each with a term of one
year or more and an annual payment obligation in excess of $50,000;
(viii) joint venture agreements, partnership agreements and
other similar contracts and agreements involving a sharing of profits and
expenses;
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(ix) contracts and agreements governing the terms of
indebtedness of third parties (A) owed to the Company or any of its
Subsidiaries, other than receivables arising from the sale of goods or services,
or loans or advances not exceeding $60,000 in the aggregate made to employees of
the Company or any of its Subsidiaries by the Company or such Subsidiary in the
ordinary course of business consistent with past practice, or (B) to or
guaranteed by the Company or any of its Subsidiaries;
(x) contracts and agreements prohibiting or materially
restricting the ability of the Company or any of its Subsidiaries to conduct its
business, to engage in any business or operate in any geographical area or to
compete with any Person, other than (A) distribution (including independent
sales representative) contracts and agreements that have a term of less than one
year or are terminable by the Company or any Subsidiary of the Company party
thereto, as the case may be, on notice of six months or less without penalty,
and, in each case, which are not material to the Company and its Subsidiaries
taken as a whole and (B) supplier and customer agreements relating to
non-disclosure of confidential information of the other party which are not
material to the Company and its Subsidiaries taken as a whole;
(xi) contracts and agreements providing for future payments
that are conditioned, in whole or in part, on a change in control of the Company
or any of its Subsidiaries; and
(xii) contracts and agreements that are material to the
business, operations, results of operations, condition (financial or otherwise),
assets or properties of the Company and its Subsidiaries taken as a whole.
(b) Each contract or agreement to which the Company or any of its
Subsidiaries is a party or by which any of them is bound is in full force and
effect, and neither the Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any other Person, is in breach of, or default under,
any such contract or agreement, and no event has occurred that with notice or
passage of time or both would constitute such a breach or default thereunder by
the Company or any of its Subsidiaries, or, to the knowledge of the Company, any
other Person, except for such failures to be in full force and effect and such
breaches and defaults as individually and in the aggregate would not have or
result in a Company Material Adverse Effect.
4.18 Environmental Matters. (a) Except as disclosed in the SEC
Reports filed prior to the date of this Agreement and except for those
noncompliance matters that have been and are resolved, the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws.
(b) Except as disclosed in the SEC Reports filed prior to the date
of this Agreement, there are no Environmental Claims pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries that individually or in the aggregate would have or result in a
Company Material Adverse Effect.
(c) The Company has disclosed and, where requested, made available
to Parent all material information, including such studies, analyses and test
results, in the possession, custody or control of or otherwise known and
available to the Company or any of its Subsidiaries relating to the
environmental conditions on, under or about any of the properties or assets
owned, leased,
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or operated by any of the Company and its Subsidiaries or any predecessor in
interest thereto at the present time or in the past.
(d) As used in this Agreement:
(i) the term "Environmental Claim" means any written claim,
demand, suit, action, proceeding, investigation or notice to the Company or any
of its Subsidiaries by any Person or entity alleging any potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, or
penalties) arising out of, based on, or resulting from the presence, or Release
into the environment, of any Hazardous Substance at any location, whether or not
owned, leased, operated or used by the Company or its Subsidiaries;
(ii) the term "Environmental Laws" means all Laws relating to
emissions, discharges, Releases or threatened Releases of Hazardous Substances,
or otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act
and the Occupational Safety and Health Act;
(iii) the term "Hazardous Substance" means (1) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances, and oil and
petroleum products, (2) any substance that is or contains friable asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials, (3) any
substance that requires removal or remediation under any Environmental Law, or
is defined, listed or identified as a "hazardous waste" or "hazardous substance"
thereunder, or (4) any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous; in each
case in clauses (1)-(4) above which is regulated under any Environmental Law;
and
(iv) the term "Release" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping,
emptying, migration, transporting, placing and the like, including into or upon,
any land, soil, surface water, ground water or air, or otherwise entering into
the environment.
4.19 Required Vote by Company Shareholders. The affirmative vote of
the holders of two-thirds of the outstanding Shares entitled to vote hereon is
the only vote of any class of capital stock of the Company required by Texas Law
or the Articles of Incorporation or the By-Laws of the Company to adopt this
Agreement and approve the transactions contemplated hereby. Each of the
directors and executive officers of the Company has informed the Company that he
or she intends to vote any Shares he or she owns in favor of approval and
adoption of the Merger Agreement.
4.20 Opinions of Financial Advisor. The Company has received an
opinion of ING Barings LLC to the effect that, as of the date of this Agreement,
the consideration to be received by the holders of Shares pursuant to the Offer
and the Merger is fair to such holders from a financial point of view.
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4.21 Affiliate Transactions. Section 4.21 of the Disclosure Schedule
contains a complete and correct list of all agreements, contracts, transfers of
assets or liabilities or other commitments or transactions, whether or not
entered into in the ordinary course of business, to or by which the Company or
any of its Subsidiaries, on the one hand, and a shareholder of the Company or
any of his affiliates (other than the Company or any of its Subsidiaries), on
the other hand, are or have been a party or otherwise bound or affected, and
that (i) are currently pending or in effect, or (ii) involve continuing
liabilities and obligations that, individually or in the aggregate, have been,
are or will be material to the Company and its Subsidiaries taken as a whole.
4.22 Client Relations. Section 4.22 of the Disclosure Schedule sets
forth the 20 largest clients (measured by revenues) of the Company and its
Subsidiaries and the revenues from each such client for the calendar year ended
December 31, 1998. As of the date of this Agreement, no client of the Company
has advised the Company in writing that it is (a) terminating or considering
terminating the handling of its business by the Company as a whole or in respect
of any particular product, project or service, or (b) planning to reduce its
future spending with the Company in any material manner; and to the knowledge of
the Company (without making any special inquiry of any clients), no client has
orally advised any of the Company's executive officers of any of the foregoing
events.
4.23 Disclosure. To the knowledge of the Company, this Agreement and
each certificate or other instrument required to be furnished by or on behalf of
the Company to Parent or Purchaser pursuant hereto at or prior to the Closing,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
V. CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business Pending the Merger. Except as set forth on
the Disclosure Schedule (including an identification by section reference to the
covenants to which such exceptions relate), the Company covenants and agrees
that, between the date of this Agreement and the Effective Time or earlier
termination of this Agreement, unless Parent otherwise consents in writing:
(a) the business of the Company will be conducted only in, and the
Company shall not take any action except in, the ordinary course of business and
in a manner consistent with past practice, and the Company will use its
reasonable efforts to preserve substantially intact the business organization of
the Company, to keep available the services of the present officers, employees
and consultants of the Company and to preserve the present relationships of the
Company with customers, suppliers and other Persons with which the Company has
significant business relations;
(b) the Company will not amend its Articles of Incorporation or
By-Laws;
(c) the Company will not declare, set aside or pay any dividend or
other distribution payable in cash, securities or property with respect to its
capital stock, and neither the Company nor any of its Subsidiaries will (i)
issue, sell, transfer, pledge, dispose of or encumber
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any additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or any of its Subsidiaries,
other than issuances of Shares pursuant to securities, options, warrants, calls,
commitments or rights existing at the date of this Agreement and previously
disclosed to Parent in writing (including as disclosed in the SEC Reports), (ii)
incur any long-term indebtedness (whether evidenced by a note or other
instrument, pursuant to a financing lease, sale-leaseback transaction, or
otherwise) or incur short-term indebtedness other than under lines of credit
existing on the date of this Agreement, (iii) redeem, purchase or otherwise
acquire directly or indirectly any of its capital stock or other securities, or
(iv) enter into, amend, terminate, renew or fail to use reasonable efforts to
renew in any material respect any (A) Material Contract or (B) Identified
Contract except in the ordinary course of business consistent with past
practice;
(d) neither the Company nor any of its Subsidiaries will, except
pursuant to employment contracts in effect on the date hereof, (i) grant any
increase in the compensation payable or to become payable by the Company or any
of its Subsidiaries to any employee, except that, solely with respect to
non-officer employees, the Company may grant increases in base compensation in
the ordinary course of business consistent with past practice, (ii) adopt, enter
into, amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement, or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director, employee or consultant of
the Company or any of its Subsidiaries;
(e) neither the Company nor its Subsidiaries will change the
accounting principles used by it unless required by GAAP (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting principles);
(f) neither the Company nor any of its Subsidiaries will acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business consistent
with past practice) for an amount in excess of $100,000, individually or in the
aggregate;
(g) neither the Company nor any of its Subsidiaries will sell,
lease, exchange, transfer or otherwise dispose of, or agree to sell, lease,
exchange, transfer or otherwise dispose of, any of its assets except in the
ordinary course of business consistent with past practice;
(h) the Company and its Subsidiaries will not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets;
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(i) neither the Company nor its Subsidiaries will compromise,
settle, grant any waiver or release relating to or otherwise adjust any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any litigation, except for any such
compromise, settlement, waiver, release or adjustment in the ordinary course of
business consistent with past practice and involving a payment by the Company or
any of its Subsidiaries not in excess of $50,000 in the aggregate following
prior notice to and consultation with Parent; and
(j) neither the Company nor any of its Subsidiaries will enter into
an agreement, contract, commitment or arrangement to do any of the foregoing.
5.2 No Shop. (a) The Company and its Subsidiaries will not, directly
or indirectly, through any officer, director, agent, financial adviser,
attorney, accountant or other representative or otherwise, solicit, initiate or
encourage submission of proposals or offers from any Person relating to, or that
could reasonably be expected to lead to, an Acquisition Transaction or
participate in any negotiations or discussions regarding, or furnish to any
other Person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek an Acquisition Transaction or enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Offer, the Merger or any other transaction
contemplated by this Agreement; provided, however, that, prior to the purchase
of and payment for Shares by Purchaser pursuant to the Offer, the Company may,
in response to an unsolicited written proposal with respect to an Acquisition
Transaction from a third party that the Board of Directors determines, in its
good faith and reasonable judgment, after consultation with and the receipt of
the advice of its financial advisor and outside counsel, is a Superior Proposal,
(i) furnish information to such third party pursuant to a customary
confidentiality agreement not more favorable to the recipient of such
information that the Confidentiality Agreement and negotiate, explore or
otherwise engage in substantive discussions with such third party, in each case
only if the Board of Directors determines, in its good faith and reasonable
judgment, based upon and in conformity with the written opinion of outside legal
counsel, that failing to take such action would breach the fiduciary duties of
the Board of Directors under applicable law and (ii) take and disclose to the
Company's shareholders a position with respect to the Merger or another
Acquisition Transaction proposal, or amend or withdraw such position, required
by Rules 14d-9 and 14e-2 under the Exchange Act.
(b) Except as expressly permitted by this Section 5.2(b), neither
the Board of Directors nor any committee thereof may (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by the Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Acquisition Transaction, or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Acquisition Transaction. Notwithstanding the foregoing, prior to the purchase of
and payment for Shares by Purchaser pursuant to the Offer, in response to an
unsolicited Acquisition Transaction proposal, if the Board of Directors
determines, in its good faith and reasonable judgment, based upon and in
conformity with the written opinion of outside legal counsel, that such proposal
is a Superior Proposal and that failure to do any of the actions set forth in
clauses (i) or (ii) above would breach the fiduciary duties of the Board of
Directors under applicable law, the Board of Directors may, if it gives Parent
five Business Days
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prior written notice of its intention to do so, withdraw or modify its approval
or recommendation of the Offer, the Merger or this Agreement or approve or
recommend an Acquisition Transaction; provided, however, that the foregoing
shall in no way limit or otherwise affect Parent's right to terminate this
Agreement pursuant to Section 8.1(f)(i),(ii) or (iv) at such time as the
requirements of such subsection have been met. Any such withdrawal, modification
or change of the recommendation of the Board of Directors of this Agreement will
not change the approval of the Board of Directors for purposes of causing any
state takeover statute or other state law to be inapplicable to the transactions
contemplated hereby, including the Offer and the Merger. Nothing in this Section
5.2 (x) permits the Company to terminate this Agreement, (y) permits the Company
to enter into any agreement with respect to any Acquisition Transaction or (z)
affects any other obligation of the Company under this Agreement.
(c) The Company will immediately cease all existing activities,
discussions and negotiations with any parties conducted heretofore with respect
to any proposal for an Acquisition Transaction and request the return of all
confidential information regarding the Company provided to any such parties
prior to the date hereof pursuant to the terms of any confidentiality agreement
or otherwise. The Company will (i) immediately (and in any event, no later than
one Business Day after receipt) advise Parent in writing of the receipt of
request for information or any inquiries or proposals relating to an Acquisition
Transaction and any actions taken pursuant to Section 5.2(a) hereof, specifying
the material terms and conditions of such proposed Acquisition Transaction and
the identity of the other party or parties involved and (ii) keep Parent
reasonably informed of the status of any such request or proposed Acquisition
Transaction. If any such inquiry or proposal is in writing, the Company shall
promptly deliver to Parent a copy of such inquiry or proposal. In addition, the
Company shall promptly (but in any event no later than one Business Day) advise
Parent in writing if the Board of Directors makes any determination as to any
Acquisition Transaction as contemplated by the proviso to Section 5.2(a) hereof.
(d) For purposes of this Agreement, (i) "Acquisition Transaction"
means (other than the transactions contemplated by this Agreement) (A) a merger,
consolidation or other business combination, share exchange, sale of shares of
capital stock, tender offer or exchange offer or similar transaction involving
the Company or any of its Subsidiaries, (B) acquisition in any manner, directly
or indirectly, of a material interest in any voting securities of, or a material
equity interest in a substantial portion of the assets of, the Company or any of
its Subsidiaries, including any single or multi-step transaction or series of
related transactions which is structured to permit a third party to acquire
beneficial ownership of a majority or greater equity interest in the Company, or
(C) the acquisition in any manner, directly or indirectly, of any material
portion of the business or assets (other than immaterial or insubstantial assets
or inventory in the ordinary course of business or assets held for sale) of the
Company, and (ii) "Superior Proposal" means a proposed Acquisition Transaction
involving all of the shares of capital stock or substantially all of the assets
of the Company that the Board of Directors determines, after consulting with the
Company's financial advisors and outside counsel, to be economically superior to
the Offer, the Merger and the other transactions contemplated hereby.
VI. ADDITIONAL AGREEMENTS
6.1 Proxy Statement. If required by applicable law in order to
consummate the Merger, as promptly as practicable after the purchase of and
payment for Shares by Purchaser pursuant to the Offer, the Company shall prepare
and file with the SEC, and shall use all
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reasonable efforts to have cleared by the SEC, and promptly thereafter shall
mail to its shareholders, the Proxy Statement. The Proxy Statement will contain
the recommendation of the Board of Directors that shareholders of the Company
approve this Agreement and the Merger and the other transactions contemplated
hereby. The Company will not mail the Proxy Statement to its shareholders until
Parent confirms that the information provided by Parent continues to be
accurate. If at any time prior to the Company Shareholders Meeting any event or
circumstance relating to the Company or any of its Subsidiaries or affiliates,
or its or their respective officers or directors, should be discovered by the
Company that is required to be set forth in a supplement to the Proxy Statement,
the Company shall promptly inform Parent and Purchaser, so supplement the Proxy
Statement and mail such supplement to its shareholders.
6.2 Meeting of Shareholders of the Company. (a) If required by
applicable law in order to consummate the Merger, following the purchase of and
payment for Shares by Purchaser pursuant to the Offer, the Company shall
promptly take all action necessary in accordance with Texas Law and its Articles
of Incorporation and By-Laws to convene the Company Shareholders Meeting. The
Company shall use its best efforts to solicit from shareholders of the Company
proxies in favor of the Merger and shall take all other action necessary or, in
the reasonable opinion of Parent, advisable to secure any vote or consent of
Shareholders required by Texas Law to effect the Merger. Parent will vote, or
cause to be voted, all Shares directly or indirectly beneficially owned by it in
favor of the Merger.
(b) Notwithstanding Section 6.2(a) hereof, in the event that Parent,
Purchaser or any other Subsidiary of Parent acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto will,
at the request of Parent or Purchaser, take all necessary and appropriate action
to cause the Merger to become effective in accordance with Article 5.16 of Texas
Law without a meeting of Shareholders as soon as practicable after the
acceptance for payment and purchase of Shares by Purchaser pursuant to the
Offer.
6.3 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or non-occurrence of any event whose occurrence or non-occurrence
would be likely to cause either (A) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time, or (B) any condition set forth in
Article VII or Annex I to be unsatisfied in any material respect at any time
from the date hereof to the date Purchaser purchases Shares pursuant to the
Offer, and (ii) any material failure of the Company, Parent or Purchaser, as the
case may be, or any officer, director, employee or agent thereof, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.3 will not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.4 Access to Information. (a) From the date hereof to the Effective
Time, the Company shall, and shall cause each of its Subsidiaries, its officers,
directors, employees, auditors and agents to, afford Parent Representatives
reasonable access at all reasonable times to its officers, employees, agents,
properties, offices and other facilities and to all books and records, and shall
furnish Parent and Purchaser with all financial, operating and other data and
information as Parent or Purchaser, through Parent Representatives, may
reasonably request.
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(b) Parent shall, and shall cause its affiliates and each of their
respective officers, directors, employees, financial advisors, agents and other
authorized representatives (the "Parent Representatives"), to hold in strict
confidence all data and information obtained by them from the Company (unless
such information is or becomes publicly available without the fault of any of
Parent Representatives or public disclosure of such information is required by
law in the opinion of counsel to Parent) and shall insure that the Parent
Representatives do not disclose such information to others without the prior
written consent of the Company. Notwithstanding anything herein to the contrary,
the terms of the Confidentiality Agreement, dated December 17, 1998 (the
"Confidentiality Agreement"), executed by Parent shall remain in full force and
effect; provided, however, that from and after the date of this Agreement the
provisions of the second and third full paragraphs on page 3 of the
Confidentiality Agreement will cease to be applicable to Parent and its
affiliates.
(c) In the event of the termination of this Agreement, Parent shall,
and shall cause its affiliates to, return promptly every document furnished to
them by the Company or any of its representatives in connection with the
transactions contemplated hereby and any copies thereof which may have been
made, and shall cause Parent Representatives to whom such documents were
furnished promptly to return such documents and any copies thereof any of them
may have made, other than documents filed with the SEC or otherwise publicly
available.
6.5 Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger and shall not issue any such
press release or make any such public statement before such consultation, except
as may be required by law or applicable stock exchange rules.
6.6 Best Efforts; Cooperation. The Company, Parent and Purchaser
will each comply in all material respects with all applicable laws and with all
applicable rules and regulations of any governmental authority in connection
with its execution, delivery and performance of this Agreement and the
transactions contemplated hereby. Upon the terms and subject to the conditions
hereof, each of the parties hereto will use its best efforts to take or cause to
be taken all actions and to do or cause to be done all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement and
will use its best efforts to obtain all necessary waivers, consents and
approvals, and to effect all necessary filings under the Exchange Act and the
Competition Laws. Each of the parties hereto will furnish to the other party
such necessary information and reasonable assistance as the other party may
request in connection with the preparation of any required governmental filings
or submissions and will cooperate in responding to any inquiry from any
governmental authority, including immediately informing the other party of such
inquiry, consulting in advance before making any presentations or submissions to
a governmental authority, and supplying each other with copies of all material
correspondence, filings or communications between either party and any
governmental authority with respect to this Agreement. Nothing in this Agreement
will, however, require any party to agree to any hold-separate, divestiture or
other similar undertaking in order to consummate the transactions contemplated
hereby.
6.7 Agreement to Defend and Indemnify. (a) The Articles of
Incorporation and By-Laws of the Surviving Corporation shall contain
indemnification provisions identical to those contained in the Articles of
Incorporation and By-laws of the Company that were provided to
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Parent in accordance with this Agreement and shall not be amended, repealed or
otherwise modified for a period of seven years after the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who as
of the date hereof were directors or officers of the Company or otherwise
entitled to indemnification under the Articles of Incorporation, By-Laws or
indemnification agreements (the "Indemnified Parties"). The Company shall, to
the fullest extent permitted under Texas Law and regardless of whether the
Merger becomes effective, indemnify, defend and hold harmless, and after the
Effective Time, Parent will cause the Surviving Corporation, to the fullest
extent permitted under Texas Law, to indemnify, defend and hold harmless, each
Indemnified Party against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, including, without limitation, liabilities arising out of this
transaction, to the extent that it was based on the fact that such Indemnified
Party is or was a director or officer of the Company and arising out of actions
or omissions or alleged actions or omissions occurring at or prior to the
Effective Time, and in the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Company or the Surviving Corporation, as applicable, shall pay the reasonable
fees and expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to the Company or the Surviving Corporation,
promptly as statements therefor are received and (ii) the Company and the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that neither the Company nor the Surviving Corporation will
be liable for any settlement effected without its written consent (which consent
will not be unreasonably withheld); and provided, further, that neither the
Company nor the Surviving Corporation will be obliged pursuant to this Section
6.7 to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action. For seven
years after the Effective Time, the Surviving Corporation will be required to
maintain or obtain officers' and directors' liability insurance covering the
Indemnified Parties who are currently covered by the Company's officers and
directors liability insurance policy on terms not less favorable than those in
effect on the date hereof in terms of coverage and amounts; provided, however,
that the Surviving Corporation will not be required to expend in any year an
amount in excess of 150% of the annual aggregate premiums currently paid by the
Company for such insurance; and provided, further, that if the annual premiums
of such insurance coverage exceed such amount, the Surviving Corporation will be
obligated to obtain a policy with the best coverage available, in the reasonable
judgment of its Board of Directors, for a cost not exceeding such amount.
Nothing in this Agreement will prohibit the Surviving Corporation from complying
with its obligations under the preceding sentence by obtaining insurance
coverage under any policy maintained by Parent or any of its Subsidiaries. This
Section 6.7 will survive the consummation of the Merger. Parent shall cause
Surviving Corporation to reimburse all expenses, including reasonable attorney's
fees and expenses, incurred by any person to enforce the obligations of Parent
and the Surviving Corporation under this Section 6.7. Notwithstanding Section
9.7 hereof, this Section 6.7 is intended to be for the benefit of and to grant
third party rights to Indemnified Parties whether or not parties to this
Agreement, and each of the Indemnified Parties will be entitled to enforce the
covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and
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assets to any Person, then and in each such case, proper provision shall be made
so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 6.7.
6.8 Employee Benefits. At the Effective Time, the Surviving
Corporation will continue as the plan sponsor of each Employee Plan. For at
least one year following the Effective Time, employees of the Company and its
Subsidiaries will receive employee benefits that, in the aggregate, are
substantially comparable to the employee benefits provided immediately prior to
the date of this Agreement, except (i) to the extent provided in Section 2.9,
(ii) as required by applicable law (including as required to preserve any
favorable tax treatment afforded such benefits as of the Effective Time), (iii)
resulting from the substitution of benefits applicable to employees of
Diversified Agency Services, a division of Parent, or (iv) changes effective on
or after September 30, 2000. Thereafter, such participants will, in any event,
be credited with their service with the Company in determining their right to
participate and vesting under any successor Employee Plans.
6.9 Transfer Taxes. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, applications or other
documents regarding any real property transfer, stamp, recording, documentary or
other taxes (including, without limitation, any New York State Real Estate
Transfer Tax) and any other fees and similar taxes which become payable in
connection with the Merger (collectively, "Transfer Taxes"). From and after the
Effective Date, Parent shall pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of Shares, all Transfer
Taxes.
6.10 Standstill Agreements; Confidentiality Agreements;
Anti-takeover Provisions. During the period from the date of this Agreement
through the Effective Time, the Company will not terminate, amend, modify or
waive any provision of any confidentiality or standstill agreement to which it
or any of its Subsidiaries is a party, other than the Confidentiality Agreement
pursuant to its terms or by written agreement of the parties thereto. During
such period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including by obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
of America or of any state having jurisdiction. In addition, the Company will
not approve an Acquisition Transaction, other than the Offer, the Merger and the
other transactions contemplated by this Agreement, for purposes of Article 13 of
the Texas Law.
VII. CONDITIONS OF MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
(any or all of which may be waived by the parties hereto in writing, in whole or
in part, to the extent permitted by applicable law):
(a) Offer. Purchaser shall have made, or caused to be made, the
Offer and shall have purchased, or caused to be purchased, the Shares pursuant
to the Offer; provided, however, that this condition will be deemed to have been
satisfied with respect to the obligation of Parent and Purchaser to effect the
Merger if Parent fails to accept for payment or pay for Shares pursuant to the
Offer in violation of the terms of the Offer or of this Agreement.
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(b) Shareholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the Shareholders, if required
by Texas Law.
(c) No Challenge. No statute, rule, regulation, judgment, writ,
decree, order or injunction (whether temporary, preliminary or permanent) shall
have been promulgated, enacted, entered or enforced, and no other action shall
have been taken, by any government or governmental, administrative or regulatory
authority or by any court of competent jurisdiction, that in any of the
foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
7.2 Conditions to Obligations of Parent and Purchaser to Effect the
Merger. The obligations of Parent and Purchaser to effect the Merger are further
subject to the satisfaction or waiver of the following condition prior to the
Effective Time: the Company shall have performed in all material respects all
obligations and complied in all material respects with all agreements and
covenants of the Company required to be performed or complied with by it under
this Agreement, including, without limitation, its obligations under Section 5.1
hereof.
VIII. TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time before
the Effective Time, whether before or after shareholder approval:
(a) By mutual written consent of the Boards of Directors of Parent
and the Company; or
(b) By either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their reasonable best
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
(c) By either Purchaser or the Company if the Offer has not been
consummated by January 31, 2000 (unless otherwise extended by the parties
hereto); provided that no party may terminate this Agreement pursuant to this
paragraph (c) if such party's failure to fulfill any of its obligations under
this Agreement shall have been the reason that the Effective Time shall not have
occurred on or before said date; or
(d) By the Company if (i) there shall be a breach of any of Parent's
or Purchaser's representations or warranties hereunder, which breach shall not
have been cured within ten days of the receipt of written notice thereof by
Parent from the Company or (ii) there shall have been a material breach on the
part of Parent or Purchaser of any of their respective covenants or agreements
hereunder, which breach shall not have been cured within ten days of the receipt
of written notice thereof by Parent from the Company; or
(e) By Parent, if (i) there shall be a breach of any of the
Company's representations or warranties hereunder, which breach shall not have
been cured within ten days of the receipt of written notice thereof by the
Company from Parent or (ii) there shall have been a material breach on the part
of the Company of any of its covenants or agreements hereunder,
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which breach shall not have been cured within ten days of the receipt of written
notice thereof by the Company from Parent; or
(f) By Parent, at any time prior to the purchase of and payment for
the Shares pursuant to the Offer, if (i) the Board of Directors shall withdraw,
modify or change its recommendation or approval in respect of this Agreement,
the Offer or the Merger, (ii) the Board of Directors shall have recommended any
proposal other than by Parent in respect of an Acquisition Transaction, (iii) if
the Company shall take any action in breach of Section 5.2 or that would be
prohibited by Section 5.2 but for the exception therein for Superior Proposals,
(iv) any Person or group (as defined in Section 13(d)(3) of the Exchange Act)
other than Parent, Purchaser or any of their respective subsidiaries or
affiliates shall have become the beneficial owner of more than 25% of the
outstanding Shares (either on a primary or a fully diluted basis), or (iv) in
the case of clauses (i), (ii) and (iii), the Board of Directors shall have
resolved to take any such action; or
(g) By either Parent or the Company if the Offer expires or is
terminated or withdrawn pursuant to its terms without any Shares being purchased
thereunder by Purchaser as a result of the failure of any of the conditions or
the occurrence of any of the events set forth in Annex I hereto; provided,
however, that if the Company is obligated to pay Parent the fee described in
Section 8.2(b), any termination by the Company under this Section 8.1(g) will
not be effective unless and until such fee is paid by the Company.
8.2 Effect of Termination. (a) In the event of termination of this
Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of Parent, Purchaser or
the Company, except (i) as set forth in Section 6.4(b), Section 6.4(c), Section
8.2(b) and Section 9.3 hereof and (ii) nothing herein shall relieve any party
from liability for any breach of this Agreement.
(b) (i) If this Agreement is terminated at such time that this
Agreement is terminable pursuant to Section 8.1(e) hereof, then (A) the Company
shall promptly (but not later than two Business Days after receipt of notice
from Parent) pay to Parent an amount equal to Parent's actual and reasonably
documented Expenses, not to exceed $1.5 million; provided, however, that, if
this Agreement is terminated by Parent as a result of a willful breach by the
Company, Parent may pursue any remedies available to it at law or in equity and
will, in addition to its Expenses (which will be paid as specified above and
will not be limited to $1.5 million), be entitled to recover such additional
amounts as Parent may be entitled to receive at law or in equity; and (B) if (x)
at the time of the Company's breach of this Agreement, there shall have been a
third-party offer or proposal with respect to an Acquisition Transaction which
at the time of such termination shall not have been rejected by the Company and
the Board of Directors and withdrawn by the third party, and (y) within two
years of any termination by Parent, the Company or an affiliate thereof becomes
a subsidiary of such offeror or a subsidiary of an affiliate of such offeror or
accepts a written offer to consummate or consummates an Acquisition Transaction
with such offeror or an affiliate thereof, then the Company (jointly and
severally with its affiliates), upon the signing of a definitive agreement
relating to such an Acquisition Transaction, or, if no such agreement is signed
then at the closing (and as a condition to the closing) of the Company becoming
such a subsidiary or of such Acquisition Transaction, will pay to Parent a fee
equal to $4.0 million in cash, which amount will be payable by wire transfer to
such account as Parent may designate in writing to the Company.
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(ii) If this Agreement is terminated (A) by Parent pursuant to
Section 8.1(f) hereof, (B) by either the Company or Parent pursuant to Section
8.1(g) hereof and, prior to such termination, the Minimum Condition shall not
have been satisfied and a proposal for an Acquisition Transaction shall have
been made known to the Company or been made directly to its Shareholders
generally or any Person shall have publicly announced an intention (whether or
not conditional) to make a proposal for an Acquisition Transaction or (C) as a
result of the Company's material breach of Section 6.2 hereof, then, in each
such case, the Company shall promptly, but in no event later than two Business
Days after the date of such termination or event, pay Parent a termination fee
of $4.0 million in cash plus an amount, not in excess of $1.5 million, equal to
Parent's actual and reasonably documented Expenses, which amount will be payable
by wire transfer to such account as Parent may designate in writing to the
Company.
(iii) This Section 8.2(b) will survive any termination of this
Agreement. For purposes of this Agreement, the term "Expenses" means all
out-of-pocket fees, costs and other expenses incurred or assumed by Parent or
Purchaser or incurred on their behalf in connection with this Agreement or any
of the transactions contemplated hereby, including without limitation, in
connection with the negotiation, preparation, execution and performance of this
Agreement, the structuring and financing of the Merger and the other
transactions contemplated hereby, or any commitments or agreements relating to
such financing, including, without limitation, fees and expenses payable to all
banks, investment banking firms, other financial institutions and other Persons
and their respective agents and counsel for arranging, committing to provide or
providing any financing for the Merger and any other transactions contemplated
hereby or structuring, negotiating or advising with respect to such transactions
or such financing, and all fees and expenses of counsel, accountants, experts
and environmental, actuarial, insurance and other consultants to Parent or
Purchaser.
IX. GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement will terminate at
the Effective Time or the termination of this Agreement pursuant to Section 8.1
hereof, as the case may be, except that the agreements set forth in Article II
and Section 6.7 hereof will survive the Effective Time indefinitely and those
set forth in Section 6.4(b), Section 6.4(c), Section 8.2(b) and Section 9.3
hereof shall survive termination indefinitely.
9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and will be deemed to have been duly given
or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third Business Day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address
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for a party as specified by like notice, except that notices of changes of
address will be effective upon receipt):
(a) if to Parent or Purchaser:
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Attention: Dale Adams
Facsimile: (212) 415-3530
With a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Facsimile: (212) 755-7306
(b) if to the Company:
M/A/R/C Inc.
7850 North Belt Line Road
Irving, Texas 75063
Attention: Harold R. Curtis
Facsimile: (972) 506-3416
With a copy to:
Bradley Luce Bradley LLC
1256 Main Street, Suite 252
Southlake, Texas 76092
Attention: Scott Bradley, Esq.
Facsimile: (817) 481-5230
9.3 Expenses. Except as expressly set forth in Section 8.2(b)
hereof, all fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby will be paid by the party incurring
such fees, costs and expenses.
9.4 Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person;
(b) "Control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the
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management and policies of a Person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise; and
(c) "Person" means an individual, corporation, partnership, limited
liability company, association, trust or any unincorporated organization.
9.5 Headings. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
9.6 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the maximum extent possible.
9.7 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Voting Agreement and the Confidentiality Agreement constitute the entire
agreement and supersede any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, this
Agreement is not intended to confer upon any other Person any rights or remedies
hereunder.
9.8 Assignment. This Agreement may not be assigned by operation of
law or otherwise, except that Parent and Purchaser may assign all or any of
their rights hereunder to any affiliate of Parent provided that no such
assignment will relieve the assigning party of its obligations hereunder.
9.9 Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Texas applicable to contracts
executed in and to be performed entirely within that State.
9.10 Amendment. This Agreement may be amended by the parties hereto
by action taken by Parent and Purchaser, and by action taken by or on behalf of
the Company's Board of Directors at any time before the Effective Time and at
any time before or after approval by the shareholders of the Company; provided,
however, that, after approval of the Merger by the shareholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration into which each Share will be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
9.11 Waiver. At any time before the Effective Time, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
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conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only as against such party and only if
set forth in an instrument in writing signed by such party. Any such waiver will
constitute a waiver only with respect to the specific matter described in such
writing and will in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, will be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity.
9.12 Miscellaneous. As used in this Agreement, (i) references to
Sections, Annexes and Schedules are to Sections, Annexes or Schedules of or to
this Agreement, (ii) terms used herein with initial capital letters have the
meanings ascribed to them herein, (iii) the word "or" is disjunctive but not
exclusive, (iv) no provision hereof will be interpreted in favor of or against
any party by reason of which party drafted such provision or this Agreement as
an entirety, and (v) terms used herein which are defined in GAAP have the
meanings ascribed to them therein.
9.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which will
constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
M/A/R/C INC.
By: /s/ Harold R. Curtis
-----------------------------------------
Name: Harold R. Curtis
Title: Secretary and Chief Financial Officer
OMNICOM GROUP INC.
By:/s/ Barry J. Wagner
-----------------------------------------
Name: Barry J. Wagner
Title: General Counsel and Secretary
ARMSTRONG ACQUISITION CORP.
By: /s/ Barry J. Wagner
-----------------------------------------
Name: Barry J. Wagner
Title: Secretary
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ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the
Offer, Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in this Agreement) amend
or terminate the Offer as to any Shares not then paid for (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares that, together with any Shares to be acquired pursuant to the Voting
Agreement and any Shares then owned by Parent or any of its Subsidiaries,
constitutes at least two-thirds of the number of Shares outstanding calculated
on a fully diluted basis ("on a fully diluted basis" having the following
meaning as of any date: the number of Shares outstanding, together with the
number of Shares the Company is then required to issue pursuant to obligations
outstanding at that date under employee stock options, warrants, benefit plans
or other rights to purchase or acquire Shares, assuming the absence of any
vesting requirements or conditions) (the "Minimum Condition"), and (ii) any
applicable waiting period under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer, or (B) if at any time on or
after the date of this Agreement and before the Expiration Date any of the
following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall have been promulgated, enacted, taken or threatened by
a governmental authority or a governmental, regulatory or administrative
agency or commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or Subsidiaries) of any
material portion of its or the Company's business or assets, or compels
Parent (or any of its affiliates or Subsidiaries) to dispose of or hold
separate any material portion of its or the Company's business or assets,
(iii) imposes material limitations on the ability of Parent effectively to
acquire or to hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by
Parent on all matters properly presented to the shareholders of the
Company, (iv) imposes any material limitations on the ability of Parent or
any of its affiliates or Subsidiaries effectively to control in any
material respect the business and operations of the Company, or (v) which
otherwise would have a Company Material Adverse Effect; or
(b) there shall be instituted or pending any action or proceeding
before any governmental, regulatory or administrative agency or commission
of competent jurisdiction seeking any injunction, order, decree, judgment
or ruling having any effect set forth in (a) above; or
(c) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
I-1
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(d) (i) any representation or warranty made by the Company in this
Agreement shall not have been true and correct in all material respects
when made, or shall have ceased to be true and correct in all material
respects as of the Expiration Date (as defined in the Offer Documents) as
if made as of such date (without giving effect to the materiality,
material adverse effect or knowledge limitations contained therein), (ii)
as of the Expiration Date the Company shall not in all material respects
have performed any obligation or agreement and complied with its material
covenants to be performed and complied with by it under this Agreement, or
(iii) the Company or any Shareholder party to the Voting Agreement shall
have materially breached the Voting Agreement; or
(e) there shall have occurred (i) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or Nasdaq
Stock Market (not including any suspension or limitation of trading in any
particular security or as a result of computerized trading limits or any
intra-day suspension due to "circuit breakers") or any setting of minimum
prices for trading on such exchange, or (ii) any banking moratorium
declared by the U.S. Federal or New York authorities or any suspension of
payments in respect of banks in the United States; or
(f) Parent and the Company shall have agreed that Parent shall amend
the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
(g) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely
in the future to have a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of Parent and may be asserted
by Parent regardless of the circumstances (including any action or inaction by
Parent) giving rise to any such conditions and such conditions, other than the
Minimum Condition, may be waived by Parent in whole or in part at any time and
from time to time, in each case, in the exercise of the good faith judgment of
Parent and subject to the terms of this Agreement. The failure by Parent at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
such right and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
I-2
Exhibit (c)(2)
- --------------------------------------------------------------------------------
TENDER, VOTING AND OPTION AGREEMENT
by and among
OMNICOM GROUP INC.
ARMSTRONG ACQUISITION CORP.
M/A/R/C INC.
CERTAIN SHAREHOLDERS OF M/A/R/C INC.
and
SPOUSES OF THE SHAREHOLDERS
dated as of
September 30, 1999
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I. TENDER OF SUBJECT SHARES
1.1 Agreement to Tender Shares..........................................1
II. VOTING OF SUBJECT SHARES
2.1 Agreement to Vote Subject Shares....................................2
2.2 Irrevocable Proxy...................................................2
(a) Grant of Proxy.................................................2
(b) Other Proxies Revoked.........................................3
III. PURCHASE OPTION
3.1 Grant of Option.....................................................3
3.2 Exercise of Option..................................................3
3.3 Termination of Option...............................................4
3.4 Payment and Delivery of Certificates................................4
3.5 Adjustment upon Changes in Capitalization, Etc......................5
3.6 Registration Rights.................................................5
3.7 Unexercised Options.................................................7
IV. REPRESENTATIONS AND WARRANTIES
4.1 Certain Representations and Warranties of the Shareholders..........8
(a) Ownership.....................................................8
(b) Power and Authority; Execution and Delivery...................8
(c) No Conflicts..................................................8
(d) Brokers.......................................................9
4.2 Affiliate Transactions..............................................9
4.3 Representations and Warranties of the Company.......................9
(a) Organization; Authority.......................................9
(b) Execution and Delivery........................................9
(c) No Conflicts..................................................9
(d) Antitakeover Statutes........................................10
4.4 Representations and Warranties of Parent...........................10
(a) Organization; Authority......................................10
(b) Execution and Delivery.......................................10
(c) No Conflicts.................................................10
(d) Securities Law Compliance....................................10
V. CERTAIN COVENANTS OF SHAREHOLDERS
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5.1 Restriction on Transfer of Subject Shares, Proxies and
Noninterference ...................................................11
5.2 Adjustments........................................................11
5.3 No Solicitation....................................................11
5.4 Waiver of Appraisal Rights.........................................11
5.5 Nonexercise of Rights of First Refusal.............................12
5.6 Cooperation........................................................12
VI. MISCELLANEOUS
6.1 Fees and Expenses..................................................12
6.2 Amendment; Termination.............................................12
6.3 Spousal Consent....................................................12
6.4 Extension; Waiver..................................................12
6.5 Entire Agreement; No Third-Party Beneficiaries.....................12
6.6 Governing Law......................................................13
6.7 Notices............................................................13
6.8 Assignment.........................................................14
6.9 Further Assurances.................................................14
6.10 Publicity.........................................................14
6.11 Enforcement.......................................................15
6.12 Severability......................................................15
6.13 Counterparts......................................................15
6.14 Headings..........................................................15
6.15 Remedies Not Exclusive............................................15
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TABLE OF DEFINED TERMS
Page
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Adverse Proposal...............................................................2
Agreement......................................................................1
Business Combination...........................................................7
Company........................................................................1
Company Option Price...........................................................6
Exercise Notice................................................................4
Fair Market Value..............................................................6
Manager........................................................................5
Merger.........................................................................1
Merger Agreement...............................................................1
Option Closing.................................................................4
Option Closing Date............................................................4
Option Period..................................................................4
Option Price...................................................................6
Options........................................................................3
Parent.........................................................................1
Parent Owned Shares............................................................5
Permitted Offering.............................................................5
Purchase Price.................................................................3
Purchaser......................................................................1
Registrable Securities.........................................................5
Registration Notice............................................................5
Selling Stockholder............................................................4
Shareholders...................................................................1
Stockholder Option Price.......................................................5
Subject Shares.................................................................1
Subsequent Price...............................................................7
Subsequent Transaction.........................................................7
Trigger Event..................................................................3
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TENDER, VOTING AND OPTION AGREEMENT
This TENDER, VOTING AND OPTION AGREEMENT, dated as of September 30, 1999
(this "Agreement"), is made and entered into among Omnicom Group Inc., a New
York corporation ("Parent"), Armstrong Acquisition Corp., a Texas corporation
and wholly owned subsidiary of Omnicom Group Inc. ("Purchaser"), M/A/R/C Inc., a
Texas corporation (the "Company"), each of the shareholders and their spouses
set forth on Schedule A hereto (each, a "Shareholder" and, collectively, the
"Shareholders").
RECITALS:
A. Parent, Purchaser and the Company propose to enter into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
pursuant to which Purchaser will merge with and into the Company (the "Merger")
on the terms and subject to the conditions set forth in the Merger Agreement.
Except as otherwise defined herein, terms used herein with initial capital
letters have the respective meanings ascribed thereto in the Merger Agreement.
B. As of the date hereof, each Shareholder beneficially owns and is
entitled to dispose of (or to direct the disposition of) and to vote (or to
direct the voting of) the number of Shares set forth opposite such Shareholder's
name on Schedule A hereto (such Shares, together with any other Shares the
beneficial ownership of which is acquired by such Shareholder during the period
from and including the date hereof through and including the date on which this
Agreement is terminated pursuant to Section 6.2 hereof, are collectively
referred to herein as such Shareholder's "Subject Shares").
C. As a condition and inducement to their willingness to enter into the
Merger Agreement, Parent and Purchaser have requested that each Shareholder
agree, and each Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
I. TENDER OF SUBJECT SHARES
1.1 Agreement to Tender Shares. Each Shareholder will cause to be validly
tendered (and not withdrawn) pursuant to and in accordance with the terms of the
Offer, not later than the tenth business day after commencement of the Offer,
all of such Shareholder's Subject Shares. Each Shareholder hereby acknowledges
that Purchaser's obligation to accept for payment and pay for Shares (including
such Shareholder's Subject Shares) pursuant to the Offer is subject to the terms
and conditions of the Offer set forth in the Merger Agreement. Upon the purchase
of all the Subject Shares by Purchaser pursuant to the Offer in accordance with
this Section 1.1, this Agreement will terminate. In the event, notwithstanding
the provisions of the first sentence of this Section 1.1, any Subject Shares are
for any reason withdrawn from the Offer or are not purchased pursuant to the
Offer, such Subject Shares will remain subject to the terms of this Agreement.
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II. VOTING OF SUBJECT SHARES
2.1 Agreement to Vote Subject Shares. At any meeting of the shareholders
of the Company called to consider and vote upon the adoption of the Merger
Agreement (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of the adoption of the Merger
Agreement by written consent of shareholders of the Company, each Shareholder
will vote or cause to be voted (including by written consent, if applicable) all
of such Shareholder's Subject Shares in favor of the adoption of the Merger
Agreement and in favor of any other matter necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement that is
considered and voted upon at any such meeting or made the subject of any such
written consent, as applicable. At any meeting of the shareholders of the
Company called to consider and vote upon any Adverse Proposal (and at any and
all postponements and adjournments thereof), and in connection with any action
to be taken in respect of any Adverse Proposal by written consent of
shareholders of the Company, each Shareholder will vote or cause to be voted
(including by written consent, if applicable) all of such Shareholder's Subject
Shares against the adoption of such Adverse Proposal. For purposes of this
Agreement, the term "Adverse Proposal" means any (x) Acquisition Transaction,
(y) proposal or action that would reasonably be expected to result in a breach
of any covenant, representation or warranty of the Company set forth in the
Merger Agreement, or (z) the following actions (other than the Offer, the Merger
and the other transactions contemplated by the Merger Agreement): (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its Subsidiaries; (ii) a sale,
lease or transfer of a material amount of assets of the Company or one of its
Subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or any of its Subsidiaries; (iii) (A) any change in a majority of
the persons who constitute the board of directors of the Company as of the date
hereof; (B) any change in the present capitalization of the Company or any
amendment of the Company's articles of incorporation or bylaws, as amended to
date; (C) any other material change in the Company's corporate structure or
business; or (D) any other action that, in the case of each of the matters
referred to in clauses (iii)(A), (B) and (C) is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or adversely affect the
Merger and the other transactions contemplated by this Agreement and the Merger
Agreement.
2.2 Irrevocable Proxy. (a) Grant of Proxy. Each Shareholder hereby
appoints Parent and any designee of Parent, each of them individually, such
Shareholder's proxy and attorney-in-fact, with full power of substitution and
resubstitution, to vote or act by written consent with respect to all of such
Shareholder's Subject Shares in accordance with Section 2.1 hereof. This proxy
is given to secure the performance of the duties of such Shareholder under this
Agreement. Each Shareholder affirms that this proxy is coupled with an interest
and is irrevocable. Each Shareholder will take such further action or execute
such other instruments as may be necessary to effectuate the intent of this
proxy. For Subject Shares as to which the Shareholder is the beneficial but not
the record owner, the Shareholder will use his best efforts to cause any record
owner of such Subject Shares to grant to Parent a proxy to the same effect as
that contained herein.
(b) Other Proxies Revoked. Each Shareholder represents that any
proxies heretofore given in respect of such Shareholder's Subject Shares are not
irrevocable, and hereby revokes all such proxies.
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III. PURCHASE OPTION
3.1 Grant of Option. Each Shareholder hereby grants to Parent an
irrevocable option (each, an "Option" and, collectively, the "Options") to
purchase such Shareholder's Subject Shares on the terms and subject to the
conditions set forth herein at a purchase price per share equal to the Per Share
Amount (the "Purchase Price").
3.2 Exercise of Option. (a) If (i) the Offer is consummated but (whether
due to improper tender or withdrawal of tender) Purchaser has not accepted for
payment and paid for all of the Subject Shares, (ii) the Merger Agreement
becomes terminable pursuant to Section 8.1(d), Section 8.1(e) or Section 8.1(f)
thereof (regardless of whether the Merger Agreement is actually terminated),
(iii) a tender or exchange offer for some or all of the Company's Shares shall
have been publicly proposed to be made or shall have been made by another
person, or (iv) it shall have been publicly disclosed or Parent or Purchaser
shall have otherwise learned that (A) any person or "group" (as defined in
Section 13(d)(3) of the Exchange Act) (other than Parent or Purchaser) shall
have acquired or proposed to acquire beneficial ownership of more than 10% of
any class or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of more than 10% of any class or series of
capital stock of the Company other than acquisitions for bona fide arbitrage
purposes only and other than as disclosed in a Schedule 13D or 13G on file with
the SEC on September 15, 1999, (B) any such person or group which, prior to
September 15, 1999, had filed such a Schedule with the SEC shall have acquired
or proposed to acquire beneficial ownership of additional shares of any class or
series of capital stock of the Company, through the acquisition of stock, the
formation of a group or otherwise, constituting 5% or more of any such class or
series, or shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Shares) constituting 5% or
more of any such class or series, (C) any person (other than Parent or
Purchaser) shall have filed a Notification and Report Form under the HSR Act, or
made a public announcement reflecting an intent to acquire the Company or any
assets or securities of the Company; or (D) any person or group (other than
Parent and Purchaser) shall have entered into or offered to enter into a
definitive agreement or an agreement in principle with respect to a merger,
consolidation or other business combination with the Company (any of the events
described in clauses (i) through (iv) above, a "Trigger Event"), the Options
will, in any such case, become exercisable (in whole or in part) upon the first
to occur of any such Trigger Event and remain exercisable (in whole or in part)
thereafter until the Options are terminated as set forth in Section 3.3 (the
applicable period of exercisability being the "Option Period"). The Company or
any Shareholder shall notify Parent promptly in writing of the occurrence of any
Trigger Event, it being understood that the giving of such notice by the Company
or any Shareholder is not a condition to the right of Parent to exercise the
Option. Parent may exercise all of the Options, in whole or in part, at any time
or from time to time during the Option Period. Notwithstanding anything in this
Agreement to the contrary, Parent will be entitled to purchase all Subject
Shares in respect of which it shall have exercised an Option in accordance with
the terms hereof prior to the expiration of the Option Period, and the
expiration of the Option Period will not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such expiration.
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(b) If Parent wishes to exercise an Option, it will deliver to the
applicable Shareholder (each a "Selling Shareholder") a written notice (an
"Exercise Notice") to that effect which specifies (a) the total number of
Subject Shares it wishes to purchase and (b) a date (an "Option Closing Date"),
not earlier than three business days after the date such Exercise Notice is
delivered, for the consummation of the purchase and sale of such Subject Shares
(an "Option Closing"); provided, however, that Parent will exercise the Option
in accordance with the federal securities laws. If the Option Closing cannot be
effected on the Option Closing Date specified in the Exercise Notice by reason
of any applicable judgment, decree, order, law or regulation, or because any
applicable waiting period under the HSR Act shall not have expired or been
terminated, (i) the Shareholders will promptly take all such actions as may be
requested by Parent, and will otherwise fully cooperate with Parent, to cause
the elimination of all such impediments to the Option Closing and (ii) the
Option Closing Date specified in the Exercise Notice will be extended to the
third business day following the elimination of all such impediments. The place
of the Option Closing will be at the offices of Jones, Day, Reavis & Pogue, 599
Lexington Avenue, 32nd Floor, New York, New York 10022, and the time of the
Option Closing will be 10:00 a.m. (Eastern Time) on the Option Closing Date.
Upon the giving by Parent to the Selling Shareholder of the Exercise Notice and
the tender of the aggregate Purchase Price, Parent will be deemed to be the
holder of record of the Subject Shares transferrable upon such exercise,
notwithstanding that the stock transfer books of the Company are then closed or
that certificates representing such Subject Shares have not been actually
delivered to Parent.
3.3 Termination of Option. The Options will terminate (a) if this
Agreement terminates pursuant to Section 1.1 or (b) upon the earliest of: (i)
the Effective Time; (ii) termination of the Merger Agreement other than upon or
during the continuance of a Trigger Event; or (iii) 180 days following any
termination of the Merger Agreement upon or during the continuance of a Trigger
Event (or if, at the expiration of such 180 day period any Option cannot be
exercised by reason of any applicable judgment, decree, order, law or
regulation, 10 business days after such impediment to exercise has been removed
or has become final and not subject to appeal).
3.4 Payment and Delivery of Certificates. At any Option Closing, Parent
will deliver to each Selling Shareholder, by wire transfer of immediately
available funds to the account designated by such Selling Shareholder to Parent
prior to the Option Closing, the Purchase Price payable in respect of the
Subject Shares to be purchased from such Selling Shareholder at the Option
Closing, and each Selling Shareholder will deliver to Parent such Subject
Shares, free and clear of all Liens, with the certificate or certificates
evidencing such Subject Shares being duly endorsed for transfer by such Selling
Shareholder and accompanied by all powers of attorney and/or other instruments
necessary to convey valid and unencumbered title thereto to Parent. The Selling
Shareholder will pay all expenses, and any and all United States federal, state
and local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 3.4 in
the name of Parent or its designee.
3.5 Adjustment upon Changes in Capitalization, Etc. In the event of any
change in the capital stock of the Company by reason of a stock dividend,
subdivision, reclassification, recapitalization, split, combination, exchange of
shares, extraordinary distribution or similar transaction, the type and number
or amount of shares, securities or other property subject to each of the
Options, and the Purchase Price payable therefor, will be adjusted
appropriately, and
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proper provision will be made in the agreements governing such transaction, so
that (a) Parent will receive upon exercise of any Option the type and number or
amount of shares, securities or property that Parent would have retained and/or
been entitled to receive in respect of the applicable Selling Shareholder's
Subject Shares if the Option had been exercised immediately prior to such event
relating to the Company or the record date therefor, as applicable, and (b) the
applicable Selling Shareholder will receive upon exercise of any Option granted
by such Selling Shareholder the amount of cash that such Selling Shareholder
would have received as a result of the exercise of the Option if the Option had
been exercised immediately prior to such event relating to Parent or the record
date therefor, as applicable. The provisions of this Section 3.5 will apply in a
like manner to successive stock dividends, subdivisions, reclassifications,
recapitalizations, splits, combinations, exchanges of shares, extraordinary
distributions or similar transactions.
3.6 Registration Rights. (a) (i) Following termination of the Merger
Agreement, Parent may by written notice (the "Registration Notice") to the
Company, which Registration Notice the Parent shall concurrently send to the
Selling Shareholder, request the Company to register under the Securities Act
all or any part of the Shares acquired under the Option (the "Parent Owned
Shares" and such Parent Owned Shares requested to be registered for sale, the
"Registrable Securities") pursuant to a bona fide firm commitment underwritten
public offering in which Parent and the underwriters will effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
will use their best efforts to prevent any person (including any group (as used
in Rule l3d-5 under the Exchange Act)) and its affiliates from purchasing
through such offering Shares representing more than 1% of the outstanding Shares
on a fully diluted basis (a "Permitted Offering"). The Registration Notice will
include a certificate executed by Parent and its proposed managing underwriter,
which underwriter will be an investment banking firm of nationally recognized
standing (the "Manager"), stating that (A) they have a good faith intention to
commence promptly a Permitted Offering and (B) the Manager in good faith
believes that, based on the then prevailing market conditions, it will be able
to sell the Registrable Securities at a per share price equal to at least 80% of
the then Fair Market Value of such Shares.
(ii) Upon receipt of the Registration Notice, the Selling
Shareholder will have the option exercisable by written notice delivered to
Parent and the Company within nine business days after receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a price (the
"Shareholder Option Price") equal to the product of (i) the number of
Registrable Securities to be so purchased by the Selling Shareholder and (ii)
the then Fair Market Value of such Shares.
(iii) Upon receipt of the Registration Notice, the Company
(and/or any person designated by the Company) will have the option exercisable
by written notice delivered to Parent within ten business days after the receipt
of the Registration Notice, irrevocably to agree to purchase all or any part of
the Registrable Securities proposed to be so sold and not purchased by the
Selling Shareholder pursuant to clause (ii) above for cash at a price (the
"Company Option Price" and, together with the Shareholder Option Price, the
"Option Price") equal to the product of (i) the number of Registrable Securities
to be so purchased by the Company and (ii) the then Fair Market Value of such
Shares.
(iv) Any such purchase of Registrable Securities by the
Selling Shareholder or the Company (or its designee) hereunder will take place
at a closing to be held at
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the principal executive offices of the Company or at the offices of its counsel
at any reasonable date and time designated by the Selling Shareholder, the
Company and/or its designee in the notice within 20 business days after delivery
of such notice. Any payment for the Shares to be purchased will be made by
delivery at the time of such closing of the Option Price in immediately
available funds. As used herein, "Fair Market Value" means the average of the
daily closing sales price for the Shares during the ten trading days prior to
the fifth trading day preceding the date of such closing.
(b) If the Selling Shareholder and the Company, collectively, do not
elect to exercise their respective options pursuant to Section 3.6(a) with
respect to all Registrable Securities, the Company will use commercially
reasonable efforts to effect, as promptly as practicable, the registration under
the Securities Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that (i) Parent will be entitled to no more than an
aggregate of two effective registration statements hereunder and (ii) the
Company will not be required to file any such registration statement during any
period of time (not to exceed 40 days after such request in the case of clause
(A) below or 90 days in the case of clauses (B) and (C) below) when (A) the
Company is in possession of material non-public information that it reasonably
believes would be detrimental to be disclosed at such time and, in the opinion
of outside counsel to the Company, such information would have to be disclosed
if a registration statement were filed at that time; (B) the Company is required
under the Securities Act to include audited financial statements for any period
in such registration statement and such financial statements are not yet
available for inclusion in such registration statement; or (C) the Company
determines, in its reasonable judgment, that such registration would interfere
with any proposed financing, acquisition or other material transaction involving
the Company or any of its affiliates. The Company will use its reasonable best
efforts to cause any Registrable Securities registered pursuant to this Section
3.6 to be qualified for sale under the securities or Blue-Sky laws of such
jurisdictions as Parent may reasonably request and will continue the
registration or qualification in effect in such jurisdiction; provided, however,
that the Company will not be required to qualify to do business in, or to
consent to general service of process in, any jurisdiction by reason of this
provision.
(c) The registration rights set forth in this Section 3.6 are
subject to the condition that Parent provide the Company with such information
with respect to Parent's Registrable Securities, the plans for the distribution
thereof, and such other information as, in the reasonable judgment of counsel
for the Company, is necessary to enable the Company to include in a registration
statement all material facts required to be disclosed with respect to a
registration thereunder.
(d) A registration effected under this Section 3.6 will be effected
at the Company's expense, except for underwriting discounts and commissions and
the fees and the expenses of counsel to Parent (which will be paid by Parent),
and the Company will provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as are
customary in connection with underwritten public offerings as the underwriters
may reasonably require. In connection with any such registration, the parties
agree (i) to indemnify each other and the underwriters in the customary manner,
(ii) to enter into an underwriting agreement in form and substance customary for
transactions of like type with the Manager and the other underwriters
participating in the offering and (iii) to take all further
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actions that may be reasonably necessary to effect a registration and sale
(including, if the Manager deems it necessary, participating in road-show
presentations).
(e) The Company will be entitled to include (at its expense)
additional Shares in a registration effected pursuant to this Section 3.6 only
if and to the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of the offering.
3.7 Unexercised Options. If (a) the Options become exercisable pursuant to
Section 3.2 hereof, (b) Parent has not exercised the Options for all the Subject
Shares, and (c) not later than two years from the date of termination of the
Merger Agreement, (i) the Company consummates a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any sale of all or a substantial portion of the assets or equity
securities of, the Company (a "Business Combination"), (ii) a Shareholder
disposes of any or all of his Subject Shares to any person not an affiliate or
an associate of Parent or Purchaser or to the Company or any affiliate thereof
in connection with a Business Combination or (iii) a Shareholder realizes cash
proceeds in respect of his Subject Shares as a result of a distribution to such
Shareholder by the Company following the sale of a material amount of the
Company's assets in connection with a Business Combination (each, a "Subsequent
Transaction"), in each case at a per share price or with equivalent per share
proceeds (including, in the case of clause (iii), the remaining value of the
Shares), as the case may be (the "Subsequent Price"), with a value in excess of
the Per Share Amount, then the Shareholder will promptly pay to Parent an amount
equal to one-half of the product of (x) the excess of the Subsequent Price over
the Per Share Amount multiplied by (y) the greatest number of Subject Shares
beneficially owned by such Shareholder between the date hereof and the time a
Business Combination is consummated (assuming for this purpose that the Option
has not been exercised for any Shares) less the number of Subject Shares, if
any, acquired by Parent upon exercise of the Option. In the event of any stock
dividends, stock splits, recapitalizations, combinations, exchanges of shares or
the like or any other action that would have the effect of changing the
Shareholder's ownership of the Company's capital stock or other securities, the
Per Share Amount will be appropriately adjusted for the purpose of this Section
3.7.
IV. REPRESENTATIONS AND WARRANTIES
4.1 Certain Representations and Warranties of the Shareholders. Each
Shareholder, severally and not jointly, represents and warrants to Parent and
Purchaser, as of the date hereof and as of the Closing Date, as follows:
(a) Ownership. Such Shareholder is the sole record and beneficial
owner of the number of Shares set forth opposite such Shareholder's name on
Schedule A hereto and has full and unrestricted power to dispose of and to vote
such Shares. Such Shares are now, and at all times during the term hereof will
be, held by such Shareholder, or by a nominee or custodian for the benefit of
such Shareholder, free and clear of all Liens and proxies, except for any Liens
or proxies arising hereunder. The transfer by such Shareholder of its Subject
Shares to Purchaser or Parent pursuant to the Offer or the applicable Option,
respectively, will pass to and unconditionally vest in Purchaser or Parent good
and valid title to those Subject Shares, free and clear of all Liens other than
restrictions set forth under applicable securities laws. Except as set forth
opposite the Shareholder's name on Schedule A hereto, such Shareholder (i) does
not
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beneficially own any securities of the Company on the date hereof; (ii) does
not, directly or indirectly, beneficially own or have any option, warrant or
other right to acquire any securities of the Company that are or may by their
terms become entitled to vote or any securities that are convertible or
exchangeable into or exercisable for any securities of the Company that are or
may by their terms become entitled to vote, nor is the Shareholder subject to
any contract, commitment, arrangement, understanding or relationship (whether or
not legally enforceable), other than this Agreement, that allows or obligates
him to vote, dispose of or acquire any securities of the Company; and (iii)
holds exclusive power to vote the Shares and has not granted a proxy to any
other Person to vote the Shares, subject to the limitations set forth in this
Agreement.
(b) Power and Authority; Execution and Delivery. Such Shareholder
has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. In the case of each Shareholder
that is not a natural person, the execution and delivery of this Agreement by
such Shareholder and the consummation by such Shareholder of the transactions
contemplated hereby have been duly authorized by all necessary action, if any,
on the part of such Shareholder. This Agreement has been duly executed and
delivered by the Shareholder and, assuming that this Agreement constitutes a
valid and binding obligation of the other parties hereto, constitutes a valid
and binding obligation of the Shareholder, enforceable against the Shareholder
in accordance with its terms.
(c) No Conflicts. The execution and delivery of this Agreement do
not, and, subject to compliance with the HSR Act and appropriate filings under
securities laws (which each Shareholder agrees to make promptly), to the extent
applicable, the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, result in a
breach or violation of or default (with or without notice or lapse of time or
both) under, or give rise to a material obligation, a right of termination,
cancellation, or acceleration of any obligation or a loss of a material benefit
under, or require notice to or the consent of any person under any agreement,
instrument, undertaking, law, rule, regulation, judgment, order, injunction,
decree, determination or award binding on the Shareholder, other than such
conflicts, breaches, violations, defaults, obligations, rights or losses that
individually or in the aggregate would not (i) impair the ability of the
Shareholder to perform such Shareholder's obligations under this Agreement or
(ii) prevent or delay the consummation of any of the transactions contemplated
hereby.
(d) Brokers. Except with respect to the contract between the Company
and ING Barings LLC dated April 28, 1998, with respect to the engagement of ING
Barings LLC by the Company, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or the Merger Agreement based upon
arrangements made by or on behalf of the Shareholder that is or will be payable
by the Company or any of its Subsidiaries.
4.2 Affiliate Transactions. All agreements, contracts, transfers of assets
or liabilities or other commitments or transactions, whether or not entered into
in the ordinary course of business, to or by which the Company or any of its
Subsidiaries, on the one hand, and the Shareholder or any of its affiliates
(other than the Company or any of its Subsidiaries), on the other hand, are or
have been a party or otherwise bound or affected, that (i) are currently pending
or in effect or (ii) involve continuing liabilities and obligations that,
individually or in the
8
<PAGE>
aggregate, have been, are or will be material to the Company or any of its
Subsidiaries taken as a whole, have either been disclosed in the Company SEC
Reports or are set forth in Section 4.22 of the Disclosure Schedule referred to
in the Merger Agreement.
4.3 Representations and Warranties of the Company. The Company represents
and warrants to Parent and Purchaser, as of the date hereof and as of the
Closing Date, as follows:
(a) Organization; Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
(b) Execution and Delivery. This Agreement has been duly executed
and delivered by the Company and, assuming that this Agreement constitutes a
valid and binding obligation of the other parties hereto, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the performance by the Company of its obligations hereunder will
conflict with, result in a violation or breach of, or constitute a default (or
an event that, with notice or lapse of time or both, would result in a default)
or give rise to any right of termination, amendment, cancellation, or
acceleration under, (i) the Company's articles of incorporation or bylaws, (ii)
any contract, commitment, agreement, understanding, arrangement or restriction
of any kind to which the Company is a party or by which the Company is bound or
(iii) any judgment, writ, decree, order or ruling applicable to the Company;
except in the case of clauses (ii) and (iii) for conflicts, violations, breaches
or defaults that would not (i) impair the ability of the Company to perform its
obligations under this Agreement or (ii) prevent or delay the consummation of
any of the transactions contemplated hereby.
(d) Antitakeover Statutes. The Company's Board of Directors has
approved the Offer, the Merger, the Merger Agreement, this Agreement and the
transactions contemplated thereby and hereby and such approval is sufficient to
render the provisions of Article 13 of the Texas Business Corporation Act
inapplicable to the Offer, the Merger, the Merger Agreement, this Agreement and
the transactions contemplated thereby and hereby. No other "fair price," "merger
moratorium," "control share acquisition" or other anti-takeover statute or
similar statute or regulation applies or purports to apply to the Offer, the
Merger, the Merger Agreement, this Agreement or any of the transactions
contemplated thereby or hereby.
4.4 Representations and Warranties of Parent. Each of Parent and Purchaser
hereby represents and warrants, jointly and severally, to each Shareholder, as
of the date hereof and as of the Closing Date, that:
(a) Organization; Authority. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
9
<PAGE>
(b) Execution and Delivery. This Agreement has been duly executed
and delivered by Parent and Purchaser and, assuming that this Agreement
constitutes a valid and binding obligation of the other parties hereto,
constitutes a valid and binding obligation of Parent and Purchaser, enforceable
against Parent and Purchaser in accordance with its terms.
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the performance by Parent or Purchaser of its respective
obligations hereunder will conflict with, result in a violation or breach of, or
constitute a default (or an event that, with notice or lapse of time or both,
would result in a default) or give rise to any right of termination, amendment,
cancellation, or acceleration under, (i) Parent's certificate of incorporation
or bylaws or Purchaser's articles of incorporation or bylaws, (ii) any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Parent or Purchaser is a party or by which Parent or Purchaser is bound or
(iii) any judgment, writ, decree, order or ruling applicable to Parent or
Purchaser; except in the case of clauses (ii) and (iii) for conflicts,
violations, breaches or defaults that would not (i) impair the ability of Parent
or Purchaser to perform its respective obligations under this Agreement or (ii)
prevent or delay the consummation of any of the transactions contemplated
hereby.
(d) Securities Law Compliance. The Options and the Subject Shares to
be acquired upon exercise of the Options are being and will be acquired by
Parent without a view to public distribution thereof otherwise than in
compliance with the Securities Act and applicable state securities laws and will
not be transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act and in compliance with
applicable state securities laws. Neither Parent nor Purchaser will effect any
offer or sale of Subject Shares which would cause any Shareholder to violate the
registration requirements of the Securities Act or the registration or
qualification requirements of the securities laws of any jurisdiction.
V. CERTAIN COVENANTS OF SHAREHOLDERS
5.1 Restriction on Transfer of Subject Shares, Proxies and
Noninterference. No Shareholder will, directly or indirectly: (A) except
pursuant to the terms of this Agreement and for the conversion of Subject Shares
at the Effective Time pursuant to the terms of 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
Shareholder's Subject Shares; (B) acquire any Shares or other securities of the
Company; (C) except pursuant to the terms of this Agreement, grant any proxies
or powers of attorney, deposit any Subject Shares into a voting trust or enter
into a voting agreement with respect to any Subject Shares; or (D) take any
action that would reasonably be expected to make any representation or warranty
contained herein untrue or incorrect or have the effect of impairing the ability
of such Shareholder to perform such Shareholder's obligations under this
Agreement or preventing or delaying the consummation of any of the transactions
contemplated hereby.
5.2 Adjustments. (a) In the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of the Company on, of or affecting the Shares or the
like or any other action that would have the effect
10
<PAGE>
of changing a Shareholder's ownership of the Company's capital stock or other
securities or (ii) a Shareholder becomes the beneficial owner of any additional
Shares or other securities of the Company, then the terms of this Agreement will
apply to the shares of capital stock held by the Shareholder immediately
following the effectiveness of the events described in clause (i) or the
Shareholder becoming the beneficial owner thereof, as described in clause (ii),
as though they were Shares hereunder.
(b) Each Shareholder hereby agrees, while this Agreement is in
effect, to promptly notify Parent of the number of any new Shares acquired by
the Shareholder, if any, after the date hereof.
5.3 No Solicitation. No Shareholder will take, or authorize or permit any
of its officers, directors, employees, agents or representatives (including any
investment banker, financial advisor, attorney or accountant) to take, any
action that the Company would be prohibited from taking under the first sentence
of Section 5.2(a) of the Merger Agreement (disregarding for purposes of this
Section 5.3 the proviso to such sentence). Each Shareholder will immediately
advise Parent in writing of the receipt of a request for information or any
inquiries or proposals relating to an Acquisition Transaction.
5.4 Waiver of Appraisal Rights. Each Shareholder hereby waives any rights
of appraisal or rights to dissent from the Merger that such Shareholder may
have.
5.5 Nonexercise of Rights of First Refusal. No Shareholder will exercise
any purchase right or right of first refusal that it may have with respect to
any Shares of any other Person in connection with any tender by such other
Person of such Shares pursuant to the Offer.
5.6 Cooperation. Each Shareholder will cooperate fully with Parent and the
Company in connection with their respective reasonable best efforts to fulfill
the conditions to (a) the Offer set forth in Annex I to the Merger Agreement and
(b) the Merger set forth in Article VI of the Merger Agreement, except, if
applicable, to the extent that a Shareholder determines in his or her good faith
judgment that an action required by this provision would conflict with his or
her fiduciary duties as a director of the Company.
VI. MISCELLANEOUS
6.1 Fees and Expenses. Each party hereto will pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
6.2 Amendment; Termination. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. This
Agreement will terminate (a) upon the purchase of all the Subject Shares
pursuant to the Offer in accordance with Section 1.1, (b) except for Article III
hereof, which will only terminate as and when provided therein, on the earlier
to occur of (x) the Effective Time or (y) the date the Merger Agreement is
terminated in accordance with its terms, or (c) by the mutual consent of the
Board of Directors of the Company, the Board of Directors of Parent and the
Shareholders representing a majority of the Subject Shares subject to this
Agreement. In the event of termination of this Agreement pursuant to this
Section 6.2, this Agreement will become null and void and of no effect with no
11
<PAGE>
liability on the part of any party hereto and all proxies granted hereby will be
automatically revoked; provided, however, that no such termination will relieve
any party hereto from any liability for any breach of this Agreement occurring
prior to such termination, and provided further that the representations and
warranties set forth in Article IV and covenants set forth in Section 6.1 will
survive the termination of this Agreement.
6.3 Spousal Consent. By executing this Agreement, the spouses set forth on
Schedule A hereto hereby consent to the sale of the applicable Shareholder's
Subject Shares and consent to, and agree to be bound by, all provisions of this
Agreement.
6.4 Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for any performance
hereunder, will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
6.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement and the
Merger Agreement constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to such
matters. Neither the Merger Agreement nor this Agreement is intended to confer
upon any Person other than the parties hereto any rights or remedies.
6.6 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
6.7 Notices. Any notice required to be given hereunder will be sufficient
if in writing, and sent by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Parent or Purchaser:
Omnicom Group Inc.
437 Madison Avenue
New York, New York 10022
Attn: Dale Adams
Fax No.: (212) 415-3530
With copies to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attn: Robert A. Profusek, Esq.
Fax No.: 212-755-7306
12
<PAGE>
If to the Company, any Shareholder or any Spouse:
M/A/R/C Inc.
7850 North Belt Line Road
Irving, Texas 75063-6098
Attn: Harold Curtis
Fax No.: (972) 506-3416
With copies to:
Bradley, Luce, Bradley LLC
1256 Main Street, Suite 252
Southlake, Texas 76092
Attn: Scott Bradley
Fax No.: (817) 481-5230
or to such other address as any party specifies by written notice, such notice
being deemed to have been delivered as of the date so telecommunicated,
personally delivered or mailed.
6.8 Assignment. Neither this Agreement nor any of the rights, interests,
or obligations under this Agreement may be assigned or delegated, in whole or in
part, by operation of law or otherwise, by any Shareholder without the prior
written consent of Parent, and any such assignment or delegation that is not
consented to will be null and void. This Agreement, together with any rights,
interests, or obligations of Parent hereunder, may be assigned or delegated, in
whole or in part, by Parent without the consent of or any action by any
Shareholder upon notice by Parent to each Shareholder affected thereby as herein
provided. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns (including, without limitation, any Person to
whom any Subject Shares are sold, transferred or assigned).
6.9 Further Assurances. Each Shareholder will execute and deliver such
other documents and instruments and take such further actions as may be
necessary or appropriate or as may be reasonably requested by Parent in order to
ensure that Parent and Purchaser receive the full benefit of this Agreement.
6.10 Publicity. Parent, Purchaser, the Company and each Shareholder will
consult with each other party before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger
Agreement or the other transactions contemplated hereby or thereby and will not
issue any such press release or make any such public statement before such
consultation, except as may be required by law or applicable stock exchange
rules.
6.11 Enforcement. Irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.
13
<PAGE>
6.12 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such a 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.
6.13 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same instrument and
will become effective when one or more counterparts have been signed by each
party and delivered to the other parties.
6.14 Headings. The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement.
6.15 Remedies Not Exclusive. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity will be cumulative and not alternative, and the exercise of any thereof
by either party will not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
14
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the day and year first written above.
OMNICOM GROUP INC.
By: /s/ Barry J. Wagner
--------------------------------------------
Name: Barry J. Wagner
Title: General Counsel and Secretary
ARMSTRONG ACQUSITION CORP.
By: /s/ Barry J. Wagner
--------------------------------------------
Name: Barry J. Wagner
Title: Secretary
M/A/R/C INC.
By: /s/ Harold R. Curtis
--------------------------------------------
Name: Harold R. Curtis
Title: Secretary and Chief Financial Officer
SHAREHOLDERS:
By: /s/ Cecil B. Phillips
--------------------------------------------
Cecil B. Phillips, Individually and as
Beneficiary of the Self-Directed Cecil B.
Phillips IRA
Ron Kris Limited Partnership
By: Ron Kris Management Company L.C.,
General Partner
By: /s/ Cecil B. Phillips
--------------------------------------------
Cecil B. Phillips
Sole Member
/s/ Cathy C. Phillips
--------------------------------------------
Catherine Cook Phillips, Individually and as
Beneficiary of the Self-Directed
Catherine Cook Phillips IRA
/s/ Sharon M. Munger
/s/ Daniel J. Sutherland
/s/ Corinne Maginnis
/s/ Jack D. Wolf
/s/ Harold R. Curtis
/s/ Elmer L. Taylor Jr.
/s/ Rolan G. Tucker
SPOUSES:
/s/ Robert Munger
/s/ Nancy Sutherland
/s/ Dee Maginnis
/s/ Jeanna R. Wolf
/s/ Billy Faye Curtis
/s/ Joanne M. Taylor
/s/ Shirley J. Tucker
15
<PAGE>
SCHEDULE A
Total
-----
Cecil B. Phillips IRA 11,900
RonKris Limited Partnership 176,721
(controlled by Cecil B. Phillips)
Catherine Cook Phillips 175,413
(former wife of Cecil B. Phillips)
Catherine Cook Phillips IRA 4,284
Sharon M. Munger 466,190(1)
Jack D. Wolf 292,140(2)
Harold R. Curtis 49,754(3)
Elmer L. Taylor, Jr 27,168
Rolan G. Tucker 9,405
Corinne Maginnis 55,351(4)
Daniel J. Sutherland 102,175(5)
---------
Total 1,370,501
- ------------
(1) Includes 168,000 restricted Shares, 49,000 Shares subject to a Warrant and
28,799 Shares allocated to her account with the Employee Stock Ownership
Trust (the "ESOT").
(2) Includes 84,000 restricted Shares, 50,000 Shares subject to a Warrant and
25,742 Shares allocated to his account with the ESOT.
(3) Includes Options for 5,000 Shares and 7,754 Shares allocated to his
account with the ESOT.
(4) Includes 12,813 Shares allocated to her account with the ESOT.
(5) Includes Options for 90,000 Shares and 175 Shares allocated to his account
with the ESOT.
A-1
Exhibit (c)(3)
CONFIDENTIAL
December 17, 1999
Diversified Agency Services, a division of
Omnicom Group Inc.
437 Madison Avenue
New York, NY 10022
Attention: Dale Adams
Chief Financial Officer
In connection with your consideration of a possible negotiated transaction
with ARMSTRONG (the "Company"), the Company is prepared to make available to you
certain information concerning the business, financial condition, operations,
assets and liabilities of the Company. As a condition to such information being
furnished to you and your directors, officers, employees, agents or advisors
(including without limitation, attorneys, accountants, consultants, bankers and
financial advisors) (collectively, "Representatives"), you agree to treat any
information concerning the Company (whether prepared by the Company, its
advisors or otherwise and irrespective of the form of communication), which is
furnished to you or to your Representatives now or in the future by or on behalf
of the Company (herein collectively referred to as the "Evaluation Material") in
accordance with the provisions of this letter agreement, and to take or abstain
from taking certain other actions hereinafter set forth.
The term "Evaluation Material" also shall be deemed to include all notes,
analyses, compilations, studies, interpretations or other documents prepared by
you or your Representatives which contain, reflect or are based upon, in whole
or in part, the information furnished to you or your Representatives pursuant
hereto. The term Evaluation Material does not include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or your Representatives; (ii) was within your possession prior
to its being furnished to you by or on behalf of the Company pursuant hereto,
provided that the source of such information was not known by you to be bound by
a confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect to
such information or (iii) becomes available to you on a
<PAGE>
Omnicom Group Inc.
December 17, 1999
Page 2
nonconfidential basis from a source other than the Company or any of its
Representatives, provided that such source is not bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Company or any other party with respect to such
information.
You hereby agree that you and your Representatives shall use the
Evaluation Material solely for the purpose of evaluating a possible negotiated
transaction between the Company and you, that the Evaluation Material will be
kept confidential and that you and your Representatives will not disclose any of
the Evaluation Material in any manner whatsoever; provided, however, that any of
such information may be disclosed to your Representatives who need to know such
information for the sole purpose of evaluating a possible negotiated transaction
with the Company, who agree to keep such information confidential and who are
provided with a copy of this letter agreement and agree to be bound by the terms
hereof to the same extent as if they were parties hereto. In any event, you
shall be responsible for any breach of this letter agreement by any of your
Representatives and you agree, at your sole expense, to take all reasonable
measures (including but not limited to court proceedings) to restrain your
Representatives from prohibited or unauthorized disclosure or use of the
Evaluation Material. You will not have any discussions or contacts with the
Company concerning a possible negotiated transaction except through management
and advisors designated by the Company.
In addition, you agree that, without the prior written consent of the
Company, you and your Representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to you, that
discussions or negotiations are taking place concerning a possible transaction
involving the Company or any of the terms, conditions or other facts with
respect thereto (including the status thereof); provided, however, that you may
make such disclosure if you have received the written opinion of your counsel
that such disclosure must be made by you in order that you not commit a
violation of law.
In the event that you or any of your Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, you shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, you or any of your Representatives are nonetheless, in the written
opinion of counsel, legally compelled to disclose Evaluation Material to any
<PAGE>
Omnicom Group Inc.
December 17, 1999
Page 3
tribunal or else stand liable for contempt or suffer other censure or penalty,
you or your Representative may, without liability hereunder, disclose to such
tribunal only that portion of the Evaluation Material which such counsel advises
you is legally required to be disclosed; provided, however, that you exercise
your best efforts to preserve the confidentiality of the Evaluation Material,
including, without limitation, by cooperating with the Company to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Evaluation Material by such tribunal.
If you decide that you do not wish to proceed with a transaction with the
Company, you will promptly inform the Company of that decision. In that case, or
at any time upon the request of the Company for any reason, you will promptly
deliver to the Company all Evaluation Material (and all copies thereof)
furnished to you or your Representatives by or on behalf of the Company pursuant
hereto. In the event of such a decision or request, all other Evaluation
Material prepared by you or your Representatives shall be destroyed and no copy
thereof shall be retained. Notwithstanding the return or destruction of the
Evaluation Material, you and your Representatives will continue to be bound by
your obligations of confidentiality and other obligations hereunder.
You understand and acknowledge that neither the Company nor any of its
Representatives (including without limitation any of the Company's directors,
officers, employees, or agents) make any representation or warranty, express or
implied, as to the accuracy or completeness of the Evaluation Material. You
agree that neither the Company nor any of its Representatives (including without
limitation any of the Company's directors, officers, employees, or agents) shall
have any liability to you or to any of your Representatives relating to or
resulting from the use of the Evaluation Material or any errors therein or
omissions therefrom. Only those representations or warranties which are made in
a final definitive agreement regarding any transactions contemplated hereby,
when, as and if executed, and subject to such limitations and restrictions as
may be specified therein, will have any legal effect.
You hereby acknowledge that you are aware, and that you will advise your
directors, officers, employees and Representatives who are informed as to the
matters which are the subject of this letter, that the United States securities
laws prohibit any person who has received from an Issuer material, non-public
information concerning the matters which are the subject of this letter from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
<PAGE>
Omnicom Group Inc.
December 17, 1999
Page 4
In consideration of the Evaluation Material being furnished to you, you
hereby agree that, for a period of one year from the date hereof, neither you
nor any of your affiliates who have knowledge of this letter agreement will
hire, solicit to employ or entice away or in any other manner persuade or
attempt to persuade any of the Company's current officers or employees to
terminate their employment with the Company.
In addition, you hereby agree that the Evaluation Material is being
furnished to you in consideration of your agreement that you will not propose to
the Company or to any other person any transaction between you and the Company
and/or its security holders or involving any of its securities or security
holders unless the Company shall have requested in writing that you make such a
proposal, and that you will not acquire, or assist, advise or encourage any
other persons in acquiring, directly or indirectly, control of the Company or
any of the Company's securities, businesses or assets for a period of three
years from the date of this letter unless the Company shall have consented in
advance in writing to such acquisition. You also agree that the Company shall be
entitled to equitable relief, including an injunction, in the event of any
breach of the provisions of this paragraph and that you shall not oppose the
granting of such relief.
You understand and agree that unless and until a final definitive
agreement regarding a transaction between the Company and you has been executed
and delivered, neither the Company nor you will be under any legal obligation of
any kind whatsoever with respect to such a transaction by virtue of this letter
agreement except for the matters specifically agreed to herein. You further
acknowledge and agree that the Company reserves the right, in its sole
discretion, to reject any and all proposals made by you or any of your
Representatives with regard to a transaction between the Company and you, and to
terminate discussions and negotiations with you at any time.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
It is further understood and agreed that money damages would not be a
sufficient remedy for any breach of this letter agreement by you or any of your
Representatives and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such breach.
Such remedies shall not be deemed to be the exclusive remedies for a breach by
you of this letter agreement but shall be in addition to all other remedies
available at law or equity to the
<PAGE>
Omnicom Group Inc.
December 17, 1999
Page 5
Company. In the event of litigation relating to this letter agreement, if a
court of competent jurisdiction determines that you or any of your
Representatives have breached this letter agreement, then you shall be liable
and pay to the Company the reasonable legal fees incurred by the Company in
connection with such litigation, including any appeal therefrom.
This letter agreement is for the benefit of the Company and its
directors, officers, stockholders, affiliates, and agents, and shall be governed
by and construed in accordance with the laws of the State of New York. You also
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America located in the State of New York for any actions, suits or proceedings
arising out of or relating to this letter agreement and the transactions
contemplated hereby (and you agree not to commence any action, suit or
proceeding relating thereto except in such courts), and further agree that
service of any process, summons, notice or document by U.S. registered mail to
your address set forth above shall be effective service of process for any
action, suit or proceeding brought against you in any such court. You hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this agreement or the transactions
contemplated hereby, in the courts of the State of New York or the United States
of America located in the State of New York, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
<PAGE>
Omnicom Group Inc.
December 17, 1999
Page 6
Please confirm your agreement with the foregoing by signing and returning
one copy of this letter to the undersigned, whereupon this letter agreement
shall become a binding agreement between you and the Company.
Very truly yours,
ING BARING FURMAN SELZ LLC
(as financial advisor to, and on behalf of,
the Company)
By: /s/ Linda J. Bornhuetter
--------------------------
Linda J. Bornhuetter
Managing Director
Accepted and agreed as of the
date first written above:
Diversified Agency Services, a division of
Omnicom Group Inc.
By: /s/ Dale Adams
--------------------------
Dale Adams
Chief Financial Officer
