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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 5, 1999
______________
BANCTEC, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 0-9859 75-1559633
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
4851 LBJ FREEWAY,
12TH FLOOR
DALLAS, TEXAS 75244
(Address of principal (Zip code)
executive offices)
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Registrant's telephone number, including area code: (972) 341-4000
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On April 5, 1999, BancTec, Inc., a Delaware corporation ("BancTec"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Colonial Acquisition Corp., a Delaware corporation ("Newco"). The Merger
Agreement contemplates the merger (the "Merger") of Newco with and into BancTec.
Under the terms of the Merger Agreement, approximately 97% of BancTec's common
stock, par value $0.01 per share ("BancTec Common Stock"), will be converted
into the right to receive $18.50 in cash per share. BancTec's current
stockholders will retain the remaining shares, which will be approximately 6.5%
of the post-Merger common stock. Newco has agreed to seek an independent third
party investor to buy an estimated 6.5% of BancTec's post-Merger common stock.
If Newco arranges for such an investor to make such a purchase, BancTec's
current stockholders will receive $18.50 in cash for 100% of their shares.
The Merger is conditioned upon, among other things, approval of the
stockholders of BancTec, receipt of financing and upon certain regulatory
approvals. A copy of the Merger Agreement is attached as an exhibit hereto and
is incorporated herein by reference in its entirety.
A copy of the press release issued by BancTec announcing the execution of
the Merger Agreement is attached as an exhibit hereto and is incorporated herein
by reference in its entirety.
Effective as of May 26, 1998, BancTec amended and restated its Rights
Agreement, dated as of May 26, 1998 (the "First Amended and Restated Rights
Agreement"). The text of the First Amended and Restated Rights Agreement is
attached hereto as an exhibit and is incorporated herein by reference in its
entirety. In addition, BancTec has amended the First Amended and Restated
Rights Agreement to provide, among other things, that Newco and its affiliates
will not be deemed an Acquiring Person (as such term is defined in the First
Amended and Restated Rights Agreement) and the First Amended and Restated Rights
Agreement will expire immediately prior to the effective time of the Merger.
The text of the amendment is attached hereto as an exhibit and is incorporated
herein by reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
2.1 -- Agreement and Plan of Merger, dated April 5, 1999, by and
between BancTec, Inc. and Colonial Acquisition Corp.
4.1 -- First Amended and Restated Rights Agreement, dated April 5,
1999, between BancTec, Inc. and American Stock Transfer &
Trust Company
4.2 -- Amendment No. 1 to Rights Agreement, dated April 5, 1999,
between BancTec, Inc. and American Stock Transfer & Trust
Company
99.1 -- Press release dated April 5, 1999
99.2 -- Letter agreement dated April 5, 1999, among Welsh, Carson,
Anderson & Stowe VIII, L.P., Colonial Acquisition Corp. and
BancTec, Inc.
99.3 -- Letter agreement dated April 5, 1999, between Welsh, Carson,
Anderson & Stowe VIII, L.P. and Colonial Acquisition Corp.
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99.4 -- Letter agreement dated April 5, 1999, between WCAS Capital
Partners III, L.P. and Colonial Acquisition Corp.
99.5 -- Letter agreement dated April 5, 1999, among Welsh, Carson,
Anderson & Stowe VIII, L.P., Chase Securities Inc. and Chase
Bank of Texas, N.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANCTEC, INC.
By: /s/ Tod V. Mongan
Name: Tod V. Mongan
Title: Senior Vice President
Date: April 7, 1999
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EXHIBIT INDEX
Exhibit
Number Exhibit Title
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2.1 -- Agreement and Plan of Merger, dated April 5, 1999, by and
between BancTec, Inc. and Colonial Acquisition Corp.
4.1 -- First Amended and Restated Rights Agreement, dated April 5,
1999, between BancTec, Inc. and American Stock Transfer & Trust
Company
4.2 -- Amendment No. 1 to Rights Agreement, dated April 5, 1999,
between BancTec, Inc. and American Stock Transfer & Trust
Company
99.1 -- Press release dated April 5, 1999
99.2 -- Letter agreement dated April 5, 1999, among Welsh, Carson,
Anderson & Stowe VIII, L.P., Colonial Acquisition Corp. and
BancTec, Inc.
99.3 -- Letter agreement dated April 5, 1999, between Welsh, Carson,
Anderson & Stowe VIII, L.P. and Colonial Acquisition Corp.
99.4 -- Letter agreement dated April 5, 1999, between WCAS Capital
Partners III, L.P. and Colonial Acquisition Corp.
99.5 -- Letter agreement dated April 5, 1999, among Welsh, Carson,
Anderson & Stowe VIII, L.P., Chase Securities Inc. and Chase
Bank of Texas, N.A.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
April 5, 1999
by and between
BANCTEC, INC.
and
COLONIAL ACQUISITION CORP.
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
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Section 1.01. The Merger.......................................................................... 2
Section 1.02. Closing............................................................................. 2
Section 1.03. Effective Time...................................................................... 2
Section 1.04. Effects of the Merger............................................................... 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock............................................................. 3
(a) Cancellation of Certain Stock.......................................................... 3
(b) Retention or Conversion of Company Common Stock........................................ 3
(c) Cancellation and Retirement of Company Common Stock.................................... 3
(d) Dissenting Shares...................................................................... 4
(e) Acquisition Common Stock............................................................... 4
Section 2.02. Common Stock Elections.............................................................. 4
Section 2.03. Proration........................................................................... 6
Section 2.04. Exchange of Certificates............................................................ 7
(a) Exchange Agent......................................................................... 7
(b) Exchange Procedures.................................................................... 7
(c) No Further Ownership Rights in Company Common Stock.................................... 8
(d) Termination of Exchange Fund........................................................... 8
(e) No Liability........................................................................... 8
(f) Investment of Exchange Fund............................................................ 8
(g) Lost Certificates...................................................................... 8
(h) Withholding Rights..................................................................... 9
Section 2.05. Stock Plans......................................................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company....................................... 9
(a) Organization, Qualifications and Corporate Power; Materiality.......................... 9
(b) Organizational Documents; Capital Stock and Securities Owned........................... 10
(c) Authorization of Agreement, Non-Contravention, Etc..................................... 10
(d) Capital Structure...................................................................... 11
(e) Subsidiaries........................................................................... 12
(f) Voting of Shares....................................................................... 12
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(g) SEC Documents; Financial Statements............................................... 12
(h) Disclosure Documents; Information Supplied........................................ 13
(i) Absence of Certain Changes or Events.............................................. 13
(j) No Undisclosed Material Liabilities............................................... 15
(k) Compliance with Law; Litigation................................................... 15
(l) Taxes............................................................................. 16
(m) Pension and Benefit Plans; ERISA.................................................. 17
(n) Environmental Matters............................................................. 18
(o) Intellectual Property............................................................. 19
(p) Real Properties................................................................... 19
(q) Tangible Personal Property........................................................ 20
(r) Insurance......................................................................... 20
(s) Contracts......................................................................... 21
(t) Labor Matters..................................................................... 21
(u) Transactions with Affiliates...................................................... 21
(v) Year 2000......................................................................... 22
(w) Rights Agreement.................................................................. 22
(x) Opinion of Financial Advisor...................................................... 22
(y) Brokers........................................................................... 22
(z) Board Recommendation.............................................................. 23
(aa) Vote Required.................................................................... 23
(bb) State Takeover Statute Inapplicable.............................................. 23
(cc) Stock Plans...................................................................... 23
Section 3.02. Representations and Warranties of Acquisition................................... 23
(a) Organization, Qualifications and Corporate Power.................................. 23
(b) Capital Structure................................................................. 23
(c) Authorization of Agreement, Non-Contravention, Etc................................ 24
(d) Information Supplied.............................................................. 24
(e) Subsidiaries...................................................................... 25
(f) Acquisition Not an Interested Stockholder......................................... 25
(g) Interim Operations of Acquisition................................................. 25
(h) Brokers........................................................................... 25
(i) Financing......................................................................... 25
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01. Covenants of the Company........................................................ 26
(a) Ordinary Course................................................................... 26
(b) Dividends; Change in Stock........................................................ 26
(c) Issuance of Securities............................................................ 26
(d) Governing Documents............................................................... 27
(e) No Acquisitions................................................................... 27
(f) No Dispositions................................................................... 27
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(g) Indebtedness........................................................................ 27
(h) Accounting Matters.................................................................. 27
(i) Advice of Changes; Filings.......................................................... 27
(j) Compensation; Benefit Plans......................................................... 28
(k) Discharges or Waiver of Claims...................................................... 28
(l) Leases and Lease Commitments........................................................ 28
(m) Liquidation Plan, Etc............................................................... 28
(n) Collective Bargaining Agreements.................................................... 28
(o) Transactions with Affiliates........................................................ 28
(p) Tax Matters......................................................................... 29
(q) Intellectual Property............................................................... 29
(r) Insurance........................................................................... 29
(s) Other Actions....................................................................... 29
Section 4.02. Covenants of Acquisition.......................................................... 29
(a) Other Actions....................................................................... 29
(b) Advice of Changes................................................................... 29
ARTICLE V
OTHER AGREEMENTS
Section 5.01. No Solicitation................................................................... 30
Section 5.02. Recapitalization.................................................................. 31
Section 5.03. Preparation of the Proxy Statement/Prospectus..................................... 31
Section 5.04. Company Stockholder Meeting....................................................... 32
Section 5.05. Access to Information............................................................. 32
Section 5.06. Reasonable Best Efforts........................................................... 32
Section 5.07. Indemnification and Insurance..................................................... 33
Section 5.08. Benefits Matters.................................................................. 35
Section 5.09. Resignations of Directors......................................................... 36
Section 5.10. Solvency at Closing............................................................... 36
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01. Conditions to Each Party's Obligation to Effect the Merger........................ 36
(a) Company Stockholder Approval........................................................ 36
(b) HSR Act and Other Approvals......................................................... 36
(c) Form S-4............................................................................ 36
(d) No Injunctions or Restraints; Illegality............................................ 36
Section 6.02. Conditions to the Obligations of Acquisition to Effect the Merger................. 36
(a) Representations and Warranties...................................................... 37
(b) Performance of Obligations of the Company........................................... 37
(c) Consents, Etc....................................................................... 37
(d) No Litigation....................................................................... 37
(e) Financing........................................................................... 37
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Section 6.03. Conditions to the Obligations of the Company to Effect the Merger.................. 38
(a) Representations and Warranties....................................................... 38
(b) Performance of Obligations of Acquisition............................................ 38
(c) Financing............................................................................ 38
(d) Solvency Letter...................................................................... 38
Section 6.04. Frustration of Closing Conditions.................................................. 38
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.01. Termination........................................................................ 38
Section 7.02. Effect of Termination.............................................................. 40
Section 7.03. Fees and Expenses.................................................................. 40
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Nonsurvival of Representations and Warranties...................................... 40
Section 8.02. Confidentiality Agreement.......................................................... 41
Section 8.03. Publicity.......................................................................... 41
Section 8.04. Amendment.......................................................................... 41
Section 8.05. Extension; Waiver.................................................................. 41
Section 8.06. Notices............................................................................ 41
Section 8.07. Counterparts....................................................................... 42
Section 8.08. Entire Agreement; No Third-Party Beneficiaries; Rights of Ownership
........................................................................................ 42
Section 8.09. Governing Law...................................................................... 43
Section 8.10. Successors and Assigns............................................................. 43
Section 8.11. Jurisdiction....................................................................... 43
Section 8.12. Headings; Interpretation........................................................... 43
Section 8.13. Severability....................................................................... 43
Section 8.14. WAIVER OF JURY TRIAL............................................................... 43
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DISCLOSURE SCHEDULE
Section 2.05 Stock Plans
Section 3.01(b) Shares of Capital Stock and Securities Owned
Section 3.01(c) Approvals and Consents Required
Section 3.01(e) Subsidiaries
Section 3.01(f) Registration Rights, Stockholder and Voting Agreements
Section 3.01(i)(1) Certain Changes or Events
Section 3.01(i)(6) Loans and Investments
Section 3.01(i)(8) Transactions, Commitments, Contracts or Agreements
Section 3.01(i)(10) Compensation and Benefits
Section 3.01(i)(10) Employment and Compensation Arrangements
Section 3.01(j) Material Liabilities
Section 3.01(l) Taxes
Section 3.01(m)(1) Pension and Benefit Plans; ERISA
Section 3.01(m)(5) Increases in Compensation
Section 3.01(n) Environmental Matters
Section 3.01(o) Intellectual Property
Section 3.01(p)(i) Owned Properties
Section 3.01(p)(ii) Leased Properties
Section 3.01(r) Insurance
Section 3.01(s) Contracts
Section 3.01(t) Labor Matters
Section 3.01(u) Transactions with Affiliates
Section 4.01(e) Mergers, Acquisitions, Etc.
Section 4.01(m) Liquidation Plan, Etc.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 5, 1999, by and
between BancTec, Inc., a Delaware corporation (the "COMPANY"), and Colonial
Acquisition Corp., a Delaware corporation ("ACQUISITION").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of each of Acquisition and the
Company have unanimously deemed it advisable and in the best interests of their
respective stockholders for Acquisition to merge with and into the Company (the
"MERGER") pursuant to Section 251 of the Delaware General Corporation Law upon
the terms and subject to the conditions set forth herein;
WHEREAS, the Boards of Directors of each of Acquisition and the
Company have unanimously adopted resolutions approving and declaring advisable
this Agreement and the Merger;
WHEREAS, Welsh, Carson, Anderson & Stowe VIII, L.P. ("WCAS VIII"), as
the holder of all the issued and outstanding common stock, par value $.01 per
share, of Acquisition ("ACQUISITION COMMON STOCK"), has approved and adopted
this Agreement, the Merger and the transactions contemplated hereby;
WHEREAS, the Merger requires the approval of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
common stock, $.01 par value per share, of the Company (the "COMPANY COMMON
STOCK");
WHEREAS, Acquisition and the Company desire that, upon the
consummation of the Merger, approximately 97% of the issued and outstanding
shares of capital stock of the Company be converted into cash in the amount of
$18.50 per share and the stockholders of the Company shall retain a number of
shares equal to approximately 6.5% of the total number of shares of outstanding
Common Stock of the surviving corporation immediately after the Effective Time;
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes and each of the parties, after
discussion with their respective auditors, believe that the Merger is eligible
for such accounting treatment; and
WHEREAS, each of Acquisition and the Company desires to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions for the Merger;
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NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Acquisition shall be merged with and into
the Company at the Effective Time (as defined in Section 1.03). Following the
Merger, the separate corporate existence of Acquisition shall cease and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and shall succeed to and assume all the rights and obligations of
Acquisition in accordance with the DGCL.
Section 1.02. Closing. Unless this Agreement shall have been
terminated and the transactions contemplated herein abandoned pursuant to
Section 7.01, and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "CLOSING") will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be no later
than the second business day following the satisfaction or waiver of all the
conditions set forth in Article VI (the "CLOSING DATE"), at the offices of
Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York,
New York 10111, unless another time, date or place is agreed to by the parties
hereto.
Section 1.03. Effective Time. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "CERTIFICATE OF MERGER") in accordance with the
relevant provisions of the DGCL with the Secretary of State of the State of
Delaware. The Merger shall become effective upon the completion of the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware or at such time thereafter as is provided in the Certificate of Merger
(the time the Merger becomes effective being hereinafter referred to as the
"EFFECTIVE TIME").
Section 1.04. Effects of the Merger. (a) The Merger shall have the
effects as set forth in the applicable provisions of the DGCL.
(b) The directors of Acquisition and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Acquisition, as amended
pursuant to the Certificate of Merger relating thereto, shall be the Certificate
of Incorporation of the Surviving
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Corporation following the Merger until thereafter changed or amended as provided
therein or by applicable law.
(d) The Bylaws of Acquisition as in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation following the Merger until
thereafter changed or amended as provided therein or by the Certificate of
Incorporation of the Surviving Corporation or applicable law.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the Company,
Acquisition or the holders of Company Common Stock or of any shares of capital
stock of Acquisition:
(a) Cancellation of Certain Stock. Each share of Company Common
-----------------------------
Stock that is owned by Acquisition or by the Company or any of its subsidiaries
(other than those held in connection with the Stock Plans (as defined in Section
2.05)) shall automatically be canceled and retired and shall cease to exist and
no consideration shall be delivered in exchange therefor.
(b) Retention or Conversion of Company Common Stock. Except as
-----------------------------------------------
otherwise provided in Section 2.01(a) or as provided in 2.01(d) with respect to
shares of Company Common Stock as to which appraisal rights have been exercised,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time shall be converted into the following:
(i) in the case of shares of Company Common Stock with
respect to which an election to retain has effectively been made and not
revoked or forfeited pursuant to Section 2.02(c) ("ELECTING SHARES"), and
subject to Section 2.03 below, the right to retain one fully paid and
nonassessable share of Company Common Stock (a "NON-CASH ELECTION SHARE");
and
(ii) in the case of shares of Company Common Stock other than
Electing Shares, and subject to Section 2.03 below, the right to receive
from the Surviving Corporation following the Merger an amount in cash equal
to $18.50 (the "CASH MERGER CONSIDERATION" and, together with the Non-Cash
Election Shares, the "MERGER CONSIDERATION").
(c) Cancellation and Retirement of Company Common Stock. All shares
---------------------------------------------------
of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares referred to in Section 2.01(a), which shall be
canceled and retired in accordance
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therewith, and Non-Cash Election Share) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to have any rights with
respect thereto except the right to receive the Merger Consideration, without
interest thereon.
(d) Dissenting Shares. Notwithstanding anything in this Agreement to
-----------------
the contrary, shares of Company Common Stock that are outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has validly demanded
appraisal for such shares in accordance with Section 262 of the DGCL shall not
be converted into a right to receive the Cash Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses its right to appraisal.
If after the Effective Time, any such holder fails to perfect or withdraws or
loses its right to appraisal, such Dissenting Shares shall be treated as if they
had been converted as of the Effective Time into the right to receive the Cash
Merger Consideration to which such holder is entitled, without interest thereon.
The Company shall give prompt notice to Acquisition of any demands, attempted
withdrawals of such demands and any other instruments served pursuant to
applicable law received by the Company for appraisal of shares of Company Common
Stock, and, prior to the Effective Time, Acquisition shall have the right to
direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Acquisition, make
any payment with respect to, or settle, offer to settle or approve any
withdrawal of any such demands.
(e) Acquisition Common Stock. The shares of Acquisition Common Stock
------------------------
issued and outstanding immediately prior to the Effective Time shall be
converted into a total number of shares of Company Common Stock equal to
8,500,919 shares of common stock of the Surviving Corporation as of the
Effective Time.
Section 2.02. Common Stock Elections. (a) Each person (as defined
in Section 8.12) who, on the Election Date (as hereinafter defined), is a record
holder of Company Common Stock will be entitled, with respect to all or any
portion of such shares, to make an unconditional election (a "NON-CASH
ELECTION") on or prior to the Election Date to retain Non-Cash Election Shares,
on the basis hereinafter set forth.
(b) The Company shall prepare a form of election, which form shall be
subject to the reasonable approval of Acquisition (as the same may be amended or
supplemented, the "FORM OF ELECTION"), to be mailed by the Company with the
Proxy Statement/Prospectus (as hereinafter defined) to the record holders of
Company Common Stock as of the record date for the Company Stockholder Meeting
(as hereinafter defined) and otherwise distributed in accordance with the
requirements of the Securities and Exchange Commission ("SEC"), which Form of
Election shall be used by each record holder of Company Common Stock who wishes
to elect, subject to the provisions of Section 2.03, to retain Non-Cash Election
Shares for any or all shares of Company Common Stock as to which it is the
record holder. The Company will use its reasonable best efforts to make the Form
of Election and the Proxy Statement/Prospectus available to all persons who
become holders of Company Common Stock during the period between the record date
and
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the Election Date. Any such holder's election to retain Non-Cash Election
Shares shall have been properly made only if the Exchange Agent (as hereinafter
defined) shall have received such election at its designated office, by 5:00
p.m., local time for the Exchange Agent, on the second business day prior to the
date of the Company Stockholder Meeting (the "ELECTION DATE"), pursuant to (i) a
Form of Election properly completed and signed and accompanied by certificates
representing the shares of Company Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable for transfer on
the books of the Company (or by an appropriate guarantee of delivery of such
certificates as set forth in such Form of Election from a firm that is an
"eligible guarantor institution" as defined in Rule 17Ad-15 under the Exchange
Act (as hereinafter defined) (an "ELIGIBLE INSTITUTION"), provided such
certificates are in fact delivered to the Exchange Agent within three business
days after the date of execution of such guarantee of delivery) or (ii) such
other procedures as may be set forth in the Proxy Statement/Prospectus.
(c) Any Form of Election may be revoked by the holder submitting it
to the Exchange Agent only by notice received by the Exchange Agent prior to
5:00 p.m., local time for the Exchange Agent, on the Election Date in accordance
with the procedures set forth in the Proxy Statement/Prospectus (unless
Acquisition and the Company determine not less than two business days prior to
the Election Date that the Closing Date is not likely to occur within five
business days following the Election Date, in which case any Form of Election
will remain revocable until a subsequent date which shall be a date prior to the
Closing Date determined by Acquisition and the Company). In addition, all Forms
of Election shall automatically be revoked if the Exchange Agent is notified in
writing by Acquisition and the Company that this Agreement has been terminated.
If a Form of Election is properly revoked, the certificate or certificates (or
guarantees of delivery, as appropriate) for the shares of Company Common Stock
to which such Form of Election relates shall be promptly returned by the
Exchange Agent to the stockholder submitting the same, or pursuant to such other
procedures as are set forth in the Proxy Statement/Prospectus.
(d) The determination of the Exchange Agent (or the Company, if the
Exchange Agent declines to make such determination) shall be binding as to
whether elections to retain Non-Cash Election Shares have been properly made or
revoked pursuant to this Section 2.02 with respect to shares of Company Common
Stock and as to when elections and revocations were received by it. If the
Exchange Agent reasonably determines in good faith that any election to retain
Non-Cash Election Shares was not properly made with respect to shares of Company
Common Stock, such shares shall be treated by the Exchange Agent as shares that
were not Electing Shares at the Effective Time, and such shares shall be
exchanged in the Merger for cash pursuant to Section 2.01(b)(ii), subject to
proration as provided in Section 2.03. The Exchange Agent (or the Company if
the Exchange Agent declines to make such determination) shall also make all
computations as to the allocation and the proration contemplated by Section
2.03, and any such computations shall be conclusive and binding on the holders
of Company Common Stock. The Exchange Agent may, with the mutual written
consent of the Company and
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Acquisition, establish procedures as are consistent with this Section 2.02 for
the implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
Section 2.03. Proration. (a) Notwithstanding anything in this
Agreement to the contrary, the aggregate number of shares of Company Common
Stock to be retained at the Effective Time pursuant to Section 2.01(b) shall be
equal to 590,973 shares of outstanding Common Stock of the Surviving Corporation
immediately after the Effective Time (the "NON-CASH ELECTION NUMBER").
(b) If the number of Electing Shares exceeds the Non-Cash Election
Number, then each Electing Share shall be converted into the right to retain
Non-Cash Election Shares or receive cash in accordance with the terms of 2.01 in
the following manner:
(i) a proration factor (the "EXCESS PRORATION FACTOR")
shall be determined by dividing the Non-Cash Election Number by the total
number of Electing Shares;
(ii) the number of Electing Shares covered by each Non-Cash
Election shall be determined by multiplying the Excess Proration Factor by
the total number of Electing Shares covered by such Non-Cash Election
(subject to rounding, to avoid the issuance of fractional shares); and
(iii) all Electing Shares, other than those shares converted
into the right to retain Non-Cash Election Shares in accordance with
Section 2.03(b)(ii), shall be converted into cash in accordance with the
terms of Section 2.01(b)(ii), as if such shares were not Electing Shares.
(c) If the number of Electing Shares is less than the Non-Cash
Election Number, then:
(i) all Electing Shares shall be converted into the right
to retain shares of Company Common Stock in accordance with the terms of
Section 2.01(b)(i);
(ii) additional shares of Company Common Stock (other than
Electing Shares and Dissenting Shares) shall be converted into the right to
retain Non-Cash Election Shares in accordance with the terms of Section
2.01(b) in the following manner:
(A) a proration factor (the "SHORTFALL PRORATION
FACTOR") shall be determined by dividing (x) the difference between the No-
Cash Election Number and the number of Electing Shares, by (y) the total
number of shares of Company Common Stock outstanding at the Effective Time
(other than Electing Shares and Dissenting Shares); and
(B) the number of shares of Company Common Stock
(other than Electing Shares and Dissenting Shares) held by each stockholder
that shall be converted
6
<PAGE>
into the right to retain Non-Cash Election Shares shall be determined by
multiplying the Shortfall Proration Factor by the total number of shares of
Company Common Stock (other than Electing Shares and Dissenting Shares)
held by such holder (subject to rounding to avoid the issuance of
fractional shares); and
(iii) shares of Company Common Stock subject to clause (ii) of
this Section 2.03(c) shall be converted into the right to retain Non-Cash
Election Shares in accordance with Section 2.01(b)(i), as if such shares
were Electing Shares.
Section 2.04. Exchange of Certificates. (a) Exchange Agent. Prior
--------------
to the Effective Time, Acquisition shall appoint a bank or trust company that is
reasonably satisfactory to the Company to act as exchange and paying agent (the
"EXCHANGE AGENT") for the payment of cash and issuance of shares, if any,
constituting the Merger Consideration. As of the Effective Time, the Surviving
Corporation shall deposit with the Exchange Agent, for the benefit of the
holders of shares of Company Common Stock, cash in an amount sufficient to pay
the aggregate Cash Merger Consideration required to be paid pursuant to Section
2.01 in exchange for outstanding shares of Company Common Stock (such cash being
hereinafter referred to as the "EXCHANGE FUND").
(b) Exchange Procedures. As soon as reasonably practicable (and in
-------------------
any event no later than ten days) after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail or deliver to each person who
was, immediately prior to the Effective Time, a holder of record of Company
Common Stock that was converted into the right to receive the Merger
Consideration pursuant to Section 2.01(b), (i) a letter of transmittal in
customary form and containing customary provisions and (ii) instructions for use
in effecting the surrender of certificates representing such person's shares of
Company Common Stock in exchange for the Merger Consideration. Promptly after
the Effective Time, each holder of record of an outstanding certificate or
certificates which prior thereto represented shares of Company Common Stock (the
"CERTIFICATES") shall, upon surrender to the Exchange Agent of such Certificates
or, if such shares are held in book-entry or other uncertificated form, upon the
entry through a book-entry transfer agent of the surrender of such shares of
Company Common Stock on a book-entry account statement (any references herein to
Certificates shall be deemed to include references to book-entry account
statements relating to the ownership of Company Common Stock), and acceptance
thereof by the Exchange Agent, be entitled to receive in exchange therefor a
certificate representing the number of full shares of common stock of the
Surviving Corporation, if any, to be retained by the holder thereof as Non-Cash
Election Shares pursuant to this Agreement and an amount of cash equal to the
Cash Merger Consideration per share multiplied by the number of shares
represented by such Certificates which have not otherwise been retained as Non-
Cash Election Shares, and the Certificates so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock that
is not registered in the transfer records of the Company, the issuance of any
Non-Cash Election Shares and the payment of the Cash Merger Consideration may be
made to a person other than the person in whose name the Certificate so
surrendered is registered if, and only if, such
7
<PAGE>
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such issuance or payment shall pay any
transfer or other taxes required by reason of the issuance of any Non-Cash
Election Shares and the payment of the Cash Merger Consideration to a person
other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which the
holder thereof has the right to receive in respect of such Certificate pursuant
to this Article II. No interest shall be paid or will accrue on any cash payable
as Merger Consideration pursuant to this Article II.
(c) No Further Ownership Rights in Company Common Stock Exchanged For
-----------------------------------------------------------------
Cash. All cash paid upon the surrender therefor of Certificates in accordance
- ----
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
exchanged for cash theretofore represented by such Certificates, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time and which have been
converted, in whole or in part, pursuant to this Agreement into the right to
receive the Cash Merger Consideration, and if after the Effective Time such
Certificates are presented to the Company for transfer, they shall be canceled
against delivery of the Cash Merger Consideration and, if appropriate,
certificates for Non-Cash Election Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
----------------------------
that remains undistributed to the holders of the Certificates for more than six
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation (as general creditors thereof) for payment of their claim for Merger
Consideration.
(e) No Liability. None of the Company, Acquisition, the Surviving
------------
Corporation or the Exchange Agent shall be liable to any person in respect of
any cash or other property from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.01(c)), any such Merger
Consideration shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Exchange Agent shall invest any
---------------------------
cash included in the Exchange Fund as directed by the Surviving Corporation.
Any interest and other income resulting from investments shall be paid to the
Surviving Corporation.
8
<PAGE>
(g) Lost Certificates. If any Certificate shall have 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 and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable and customary amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect
thereto pursuant to this Agreement.
(h) Withholding Rights. The Surviving Corporation shall be entitled
------------------
to deduct and withhold from consideration otherwise payable to any holder of
Company Common Stock or Company Stock Options (as defined in Section 2.05)
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "CODE"), or under any provision of state, local or
foreign tax law.
Section 2.05. Stock Plans. Each of the Company's stock option or
stock purchase plans (the "COMPANY STOCK PLANS") and options to acquire shares
of Company Common Stock or shares of restricted stock of the Company outstanding
on the date hereof (the "COMPANY STOCK OPTIONS"), including without limitation
information concerning the date of vesting of such options or the lapse of
restrictions on such restricted stock and the acceleration of such vesting or
restrictions by virtue of the Merger or the transactions contemplated hereby, is
as previously delivered to Acquisition and listed in Section 2.05 of the
Disclosure Schedule. The Company shall take all actions necessary to provide
that, as of the Effective Time, (i) each Company Stock Option so surrendered for
cash shall be canceled, and (ii) in consideration for such cancellation, the
Company shall pay to each such holder of Company Stock Options an amount in cash
equal to the product of (1) the excess, if any, of the Cash Merger Consideration
over the per-share exercise price thereof and (2) the number of shares of
Company Common Stock subject thereto immediately prior to the Effective Time
(the "EXCESS OPTION PAYMENT AMOUNT").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company. The
Company represents and warrants as of the date hereof (or such other date as
shall be expressly specified) to Acquisition as follows:
(a) Organization, Qualifications and Corporate Power; Materiality.
-------------------------------------------------------------
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and is duly licensed or
qualified to do business as a foreign corporation and is in good standing in
each other jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such licensing or qualification necessary and
where the failure to so qualify would in the aggregate have a material adverse
effect (as defined) on the Company. As
9
<PAGE>
used in this Agreement, "MATERIAL ADVERSE EFFECT" means, when used in connection
with the Company, any change, effect, event, occurrence or development that is,
or is reasonably likely to be, materially adverse to the business, results of
operations or condition (financial or other) of the Company and its Subsidiaries
(as defined in Section 3.01(e)(i)), taken as a whole; "material adverse effect"
means, when used in connection with Acquisition, any change, effect, event,
occurrence or development that is materially adverse to Acquisition's ability to
consummate the transactions contemplated hereby.
(b) Organizational Documents; Capital Stock and Securities Owned.
------------------------------------------------------------
The Company has made available to Acquisition complete and correct copies of its
charter and bylaws and the charter and bylaws (or other organizational
documents) of each of its Subsidiaries, in each case as amended to the date of
this Agreement. The Company has the corporate power and authority to own and
hold its properties and to carry on its business as currently conducted. Except
as set forth in Section 3.01(b) of the Disclosure Schedule, the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprises.
(c) Authorization of Agreement, Non-Contravention, Etc. The Company
--------------------------------------------------
has all requisite corporate power and authority to enter into this Agreement
and, subject to obtaining the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock (the "COMPANY STOCKHOLDER
APPROVAL") with respect to the Merger, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
obtaining the Company Stockholder Approval with respect to the Merger. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Acquisition, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any breach or violation of, or result in the termination of,
or accelerate the performance required by, or give right to a right of
termination, cancellation or acceleration of any obligation under, or the
creation of a Lien (as defined in 3.01(d)) pursuant to (i) any provision of the
charter (or similar organizational documents) or bylaws of the Company or any
Subsidiary of the Company or (ii) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in the following sentence, any loan or credit agreement, note,
mortgage, indenture, lease, Company Benefit Plan (as defined in Section 3.01(m))
or other agreement, obligation, instrument, permit, concession, franchise,
license, or any judgment, order, decree, statute, law, ordinance, rule or
regulation (collectively "LAWS") applicable to the Company or any Subsidiary or
their respective properties or assets, in any case under this clause
10
<PAGE>
(ii) which would, individually or in the aggregate, have a material adverse
effect on the Company except as set forth in Section 3.01(c) of the Disclosure
Schedule. Except as set forth in Section 3.01(c) of the Disclosure Schedule, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality (a "GOVERNMENTAL ENTITY") is required
by or with respect to the Company or any Subsidiary in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, the failure of which to be
obtained or made would, individually or in the aggregate, have a material
adverse effect on the Company or would prevent or materially delay the
consummation of the transactions contemplated hereby, except for (A) the filing
with the Securities and Exchange Commission of (i) a Registration Statement on
Form S-4 covering the Electing Shares (the "FORM S-4") and the Proxy
Statement/Prospectus relating to the consideration of the Company Stockholder
Approval at a meeting (the "COMPANY STOCKHOLDER MEETING") of the stockholders of
the Company duly called and convened to consider the approval of this Agreement
and (ii) such reports under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "EXCHANGE ACT"), as may be
required in connection with this Agreement, the Merger and the other
transactions contemplated hereby, (B) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (C) filings required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR ACT"), (D) filings necessary to satisfy the applicable
requirements of state securities or "blue sky" laws and (E) those required under
the rules and regulations of the New York Stock Exchange, Inc. ("NYSE")
(collectively, the "REQUIRED FILINGS").
(d) Capital Structure. The authorized capital stock of the Company
-----------------
consists of 45,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, $.01 par value, of the Company ("COMPANY PREFERRED STOCK" and,
together with the Company Common Stock, the "COMPANY CAPITAL STOCK"). At the
close of business on March 29, 1999, (A) 19,461,601 shares of Company Common
Stock were outstanding, (B) no shares of Company Preferred Stock were
outstanding, (C) options to acquire 2,918,406 shares of Company Common Stock
from the Company pursuant to the Company Stock Plans were outstanding, and (D)
common stock purchase rights ("PURCHASE RIGHTS") to acquire certain shares of
Company Common Stock from the Company pursuant to the Rights Agreement (as
defined in Section 3.01(w)) were outstanding. Other than as set forth above, at
the close of business on March 9, 1999, there were outstanding no shares of
Company Capital Stock or options, warrants or other rights to acquire Company
Capital Stock from the Company. Since March 9, 1999, (x) there have been no
issuances by the Company of shares of Company Capital Stock other than issuances
of shares of Company Common Stock pursuant to the exercise of Company Stock
Options outstanding as of March 9, 1999 and (y) there have been no issuances by
the Company of options, warrants or other rights to acquire capital stock from
the Company except as expressly permitted by this Agreement. No bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into or exchangeable for securities having the right to vote) on any matters on
11
<PAGE>
which stockholders of the Company may vote are issued or outstanding. All
outstanding shares of Company Common Stock are, and any shares of Company Common
Stock that may be issued upon the exercise of Company Stock Options when issued
will be, duly authorized, validly issued, fully paid and nonassessable, and will
be delivered free and clear of all claims, liens, mortgages, encumbrances,
pledges or security interests (collectively, "LIENS") and not subject to
preemptive rights. Other than as set forth above, and except for this
Agreement, the Stock Option Agreement, the Company Stock Plans, the Company
Stock Options and the Purchase Rights, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements or undertakings of any
kind to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary is bound obligating the Company or any Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other equity or voting securities of the Company or of any
Subsidiary or obligating the Company or any Subsidiary to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement or undertaking. There are no outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries.
(e) Subsidiaries. (i) Each Subsidiary that is a corporation is duly
------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly licensed or qualified to do business
as a foreign corporation and is in good standing in each other jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such licensing or qualification necessary and where the failure to so
qualify would in the aggregate have a material adverse effect on the Company.
For purposes of this Agreement, "SUBSIDIARY" means any corporation or other
entity (including any partnership referred to in Section 3.01(e)(ii) below) of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by the Company. All Subsidiaries and
their respective jurisdictions of incorporation are identified in Section
3.01(e) of the Disclosure Schedule.
(ii) Each partnership (whether or not limited partnership) and each
limited liability company in which the Company directly or indirectly owns a
partnership interest or membership interest, as the case may be, entitling it to
50% or more of the voting interest therein, and each limited partnership for
which the Company or a Subsidiary is a general partner, has been duly organized
and is in good standing under the laws of its jurisdiction of organization, and
is duly licensed or qualified to do business and is in good standing in each
other jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such licensing or qualification necessary and
where the failure to so qualify would in the aggregate have a material adverse
effect on the Company. The Company has previously delivered to Acquisition a
list of all such partnerships and limited liability companies.
(iii) Except as set forth in Section 3.01(e) of the Disclosure
Schedule, all of the outstanding capital stock of, or other ownership interests
in, each Subsidiary is owned by the Company, directly or indirectly, free and
clear of any Lien and free of any other limitation or
12
<PAGE>
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests).
(f) Voting of Shares. As of the date hereof, there are not any
----------------
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting of
any shares of the Company. All registration rights agreements, stockholder
agreements and voting agreements to which the Company or any of its Subsidiaries
is a party are identified in Section 3.01(f) of the Disclosure Schedule.
(g) SEC Documents; Financial Statements. The Company has filed and
-----------------------------------
made available to Acquisition a correct and complete copy of each report,
schedule, registration statement and definitive proxy statement required to be
filed by the Company with the SEC since January 1, 1996 (the "COMPANY SEC
DOCUMENTS"). As of their respective dates, the Company SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended, or the Exchange Act, as the case may be, applicable to such Company SEC
Documents. None of the Company SEC Documents when filed contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis ("GAAP") during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited interim
financial statements, as permitted by Form 10-Q, or for normal year-end
adjustments that are not, in the aggregate, material) and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
(h) Disclosure Documents; Information Supplied. Each document
------------------------------------------
required to be filed by the Company with the SEC in connection with the
transactions contemplated by this Agreement (the "COMPANY DISCLOSURE
DOCUMENTS"), including without limitation the Form S-4, the Proxy
Statement/Prospectus and any amendments or supplements thereto, will, when it
becomes effective under the Securities Act, comply as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations thereunder, and each such document required to
be filed with any Governmental Entity other than the SEC will comply in all
material respects with the provisions of applicable law as to the information
required to be contained therein. At the time the Form S-4 becomes effective
under the Securities Act, the Form S-4 will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
13
<PAGE>
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. At the date the Proxy
Statement/Prospectus is first mailed to the stockholders of the Company or at
the time of the Company Stockholder Meeting, the Proxy Statement/Prospectus 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. At the time of the filing of any Company Disclosure Document
other than the Form S-4 and the Proxy Statement/Prospectus and at the time of
any distribution thereof, such Company Disclosure Document 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
representations and warranties contained in this Section 3.01(h) do not apply to
statements or omissions included or incorporated by reference in the Company
Disclosure Documents based upon information supplied to the Company by
Acquisition specifically in writing for inclusion or incorporation by reference
therein.
(i) Absence of Certain Changes or Events. Since December 31, 1998,
------------------------------------
the Company and its Subsidiaries have conducted their businesses only in the
ordinary course of business and in a manner consistent with past practice
(except in connection with the negotiation, execution and delivery of this
Agreement) and there has not been:
(1) any event, occurrence or development of a state of circumstances
or facts which has had a material adverse effect except as set forth in Section
3.01(i)(1) of the Disclosure Schedule;
(2) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of Company Capital Stock, or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary;
(3) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(4) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practice,
but in any event not in excess of $1,000,000 individually or $5,000,000 in the
aggregate;
(5) any creation or assumption by the Company or any Subsidiary of
any Lien on any material asset other than in the ordinary course of business
consistent with past practices, but in any event not securing any obligation in
excess of $5,000,000;
(6) any making of any loan, advance or capital contributions to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practice except as set forth in Section 3.01(i)(6)
of the Disclosure Schedule;
14
<PAGE>
(7) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or would reasonably
be expected to have a material adverse effect;
(8) except as set forth in Section 3.01(i)(8) of the Disclosure
Schedule, any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and its Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement;
(9) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by reason of
a concurrent change in GAAP;
(10) except as set forth in Section 3.01(i)(10) of the Disclosure
Schedule, any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) entering into of any
employment, deferred compensation or similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee of the Company
or any Subsidiary, other than, with respect to employees other than executive
officers only, in the ordinary course of business consistent with past practice,
(iii) increase in benefits payable under any existing severance or termination
pay policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company or any
Subsidiary, other than, with respect to employees other than executive officers
only, in the ordinary course of business consistent with past practice, in each
case except as set forth in Section 3.01(i)(10) of the Disclosure Schedule;
(11) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees; or
(12) any cancellation of any licenses, sublicenses, franchises,
permits or agreements to which the Company or any Subsidiary is a party, or any
notification to the Company or any Subsidiary that any party to any such
arrangements intends to cancel or not to renew such arrangements beyond its
expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had or reasonably could be
expected to have a material adverse effect.
(j) No Undisclosed Material Liabilities. There are no liabilities of
-----------------------------------
the Company or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, that could
reasonably be expected to have, individually or in the
15
<PAGE>
aggregate, a material adverse effect, other than (i) liabilities reflected in
the Company's financial statements (together with the related notes thereto)
filed with the Company's annual report on Form 10-K for the year ended December
31, 1998, (ii) liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1998, which in the aggregate
would not have a material adverse effect upon the Company and its Subsidiaries,
taken as a whole; (iii) liabilities under this Agreement or for professional
fees and expenses in connection with the transactions contemplated hereby; and
(iv) as previously disclosed and as set forth in Section 3.01(j) of the
Disclosure Schedule.
(k) Compliance with Law; Litigation. The Company and its
-------------------------------
Subsidiaries hold all permits, licenses, variances, exemptions, authorizations,
orders and approvals of all Governmental Entities (the "COMPANY PERMITS") that
are required for them to own, lease or operate their properties and assets and
to carry on their businesses as presently conducted, and there has occurred no
default under any such Company Permit, except for the lack of any Company Permit
or for defaults under any Company Permit which lack or default would not have,
individually or in the aggregate, a material adverse effect on the Company. The
conduct by the Company and its Subsidiaries of their respective businesses has
been in compliance with all Laws, with such exceptions as would not have,
individually or in the aggregate, a material adverse effect on the Company. As
of the date hereof, there is no claim, suit, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries that could reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary that would have,
individually or in the aggregate, a material adverse effect on the Company.
(l) Taxes. (i) Each of the Company, its Subsidiaries and any
-----
affiliated, combined or unitary group of which any such corporation or other
entity is or was a member (A) have duly and timely filed, or have caused to be
filed on their behalf, all material tax returns, reports, declarations,
estimates, information returns and statements required to be filed by them
(collectively, "TAX RETURNS"), or requests for extensions to file such Tax
Returns have been timely filed and granted and have not expired, and as of the
time of filing, such Tax Returns are correct and complete in all material
respects; (B) have duly and timely paid in full (or the Company has paid on its
behalf) or made adequate provision in the Company's accounting records for all
material Taxes for all past and current periods for which the Company or any of
its Subsidiaries is liable; and (C) has complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has in all material respects timely withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over. The most recent financial statements
contained in the Company SEC Documents reflect adequate accruals for all Taxes
payable by the Company and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements. Section 3.01(l)
of the Disclosure Schedule sets forth the last taxable period through which the
federal income tax returns of the Company and any of its Subsidiaries have been
examined by the Internal Revenue Service or otherwise closed. All deficiencies
asserted as a
16
<PAGE>
result of any such examinations and any examination by any applicable state,
local or foreign taxing authority which have not been or will not be appealed or
contested in a timely manner have been paid, fully settled or adequately
provided for in the most recent financial statements contained in the Company
SEC Documents. Except as set forth in Section 3.01(l) of the Disclosure
Schedule, no federal, state, local or foreign tax audits or other administrative
proceedings or court proceedings are currently pending with regard to any
federal, state, local or foreign Taxes for which the Company or any of its
Subsidiaries would be liable, and no deficiencies for any such Taxes have been
proposed, asserted or assessed or, to the best knowledge of the Company,
threatened against the Company or any of its Subsidiaries pursuant to such
examination of the Company or any of its Subsidiaries by such federal, state,
local or foreign taxing authority with respect to any period. Except as set
forth in Section 3.01(l) of the Disclosure Schedule, no requests for waivers of
the time to assess any Taxes against the Company or any of its Subsidiaries have
been granted or are pending, and neither the Company nor any of its Subsidiaries
has executed (or will execute prior to the Effective Time) any closing agreement
pursuant to Section 7121 of the Code, or any predecessor provision thereof or
any similar provision of state, local or foreign income tax law that relates to
the assets or operations of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of liability for any Taxes. The Company has made
available to Acquisition complete and accurate copies of all income and
franchise Tax Returns and all other material Tax Returns filed by or on behalf
of the Company or any of its Subsidiaries for the taxable years ending on or
prior to December 31, 1997. Except as set forth in Schedule 3.01(l) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries has made
any payments subject to Section 280G of the Code, or is obligated to make any
such payments that will not be deductible under Section 280G of the Code, or is
a party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Code.
Neither the Company nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
As used in this Agreement, the terms "TAX" and "TAXES" include all federal,
state, local or foreign income, franchise, property, sales, use, ad valorem,
payroll, social security, unemployment, assets, value added, withholding,
excise, severance, transfer, employment, alternative or add-on minimum and other
taxes, charges, fees, levies, licenses or other assessments, including without
limitation obligations for withholding taxes from payments due or made to any
other person, together with any interest, penalties, additions to tax or
additional amounts imposed by any taxing authority.
(m) Pension and Benefit Plans; ERISA. Except as otherwise set forth
--------------------------------
in Section 3.01(m) of the Disclosure Schedule:
(1) Section 3.01(m)(1) of the Disclosure Schedule lists each
"employee benefit plan" (as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained by the
Company or any Subsidiary or to which the Company or any Subsidiary contributes
or is required to contribute or in which any employee or
17
<PAGE>
former employee of the Company or any Subsidiary participates or is otherwise
covered (a "COMPANY BENEFIT PLAN"). The only Company Benefit Plans that
individually or collectively would constitute an "employee pension benefit plan"
as defined in Section 3(2) of ERISA are identified as such in the list described
above. The Company and each Subsidiary have complied and currently are in
compliance, both as to form and operation in all material respects, with the
applicable provisions of ERISA and the Code, respectively, with respect to each
Company Benefit Plan.
(2) Each of the Company Benefit Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code does so qualify and
is exempt from taxation pursuant to Section 501(a) of the Code where the failure
to so qualify would have a material adverse effect on the Company.
(3) Neither the Company nor any Subsidiary has maintained,
contributed to or been required to contribute to a "multiemployer plan" (as
defined in Section 3(37) of ERISA). No amount is due or owing from the Company
or any Subsidiary on account of a "multiemployer plan" (as defined in Section
3(37) of ERISA) or on account of any withdrawal therefrom.
(4) Other than normal claims for benefits, there is no claim pending
against the Company or any Subsidiary under the Code, ERISA or other applicable
law with respect to any of the Company Benefit Plans. Full payment has been
made, or will be made in accordance with Section 404(a)(6) of the Code, of all
amounts that are required to be paid under Section 412 of the Code and the terms
of each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code; and none of the Company Benefit Plans nor any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code) whether or not
waived. The Company and the Subsidiaries have no current liability for plan
termination or withdrawal under Title IV of ERISA.
(5) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Company or any Subsidiary to severance pay, unemployment compensation or any
other payment or (ii) accelerate the time of payment or vesting (except as
provided in Section 2.05), or increase the amount of compensation due any such
employee or officer except as disclosed in Section 3.01(m)(5) of the Disclosure
Schedule.
(6) The Company has provided (or made available to) Acquisition with
correct and complete copies of (i) written plans and summary plan descriptions
for each of the Company Benefit Plans; (ii) each trust agreement, insurance
policy or other instrument relating to the funding of each of the Company
Benefit Plans; (iii) the two most recent Annual Reports (Form 5500 series) and
accompanying schedules filed with the Internal Revenue Service or United States
Department of Labor with respect to each of the Company Benefit Plans and (iv)
the most recent audited financial statement for each of the Company Benefit
Plans.
18
<PAGE>
(n) Environmental Matters. Except as set forth in Section 3.01(n) of
---------------------
the Disclosure Schedule, (i) the Company and its Subsidiaries operate their
assets, properties, businesses and operations in material compliance with all
applicable environmental laws, ordinances and regulations, (ii) neither the
Company nor any Subsidiary has knowledge of or has received written notice of
any claim, action, suit, proceeding, hearing or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or waste (collectively, an "ENVIRONMENTAL EVENT")
relating to their assets, properties, businesses and operations and (iii) to the
knowledge of the Company, no notice of any Environmental Event was given to any
person or entity that occupied the offices of the Company and its Subsidiaries
prior to the date such offices were occupied or used in their business. Without
limiting the generality of the foregoing, to the knowledge of the Company,
neither the Company nor any Subsidiary has disposed of or placed on or in such
offices any waste materials, hazardous materials or hazardous substances in
violation of law.
(o) Intellectual Property. Except as set forth in Section 3.01(o) of
---------------------
the Disclosure Schedule, each of the Company and its Subsidiaries owns or has a
valid right to use each trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design and copyright
required, owned or used in connection with the operation of its businesses,
including any registrations thereof and pending applications therefor, and each
license or other contract relating thereto that is material to the conduct of
its businesses (collectively, the "COMPANY INTELLECTUAL PROPERTY"), except where
the failure to own or have a right to use such property would not have,
individually or in the aggregate, a material adverse effect on the Company. All
material Company Intellectual Property (other than computer programs, databases
and commercially available software) is set forth in Section 3.01(o) of the
Disclosure Schedule. Except as set forth in Section 3.01(o) of the Disclosure
Schedule, the use of the Company Intellectual Property by the Company or its
Subsidiaries does not conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title, interest or goodwill, including
without limitation any trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design, copyright or any
pending application therefor of any other person, which in any case could result
in a material adverse effect on the Company. Except as set forth in Section
3.01(o) of the Disclosure Schedule, the Company's rights to the use of all
Company Intellectual Property will not be adversely affected by the transactions
contemplated in this Agreement. The Company has taken all reasonable
precautions to prevent disclosure of any confidential Company Intellectual
Property.
(p) Real Properties.
---------------
(i) Except as otherwise disclosed in the Company SEC Documents,
Section 3.01(p)(i) of the Disclosure Schedule sets forth a list of all material
real property owned in fee by the Company or any of its Subsidiaries
(individually, an "OWNED PROPERTY" and, collectively, the "OWNED PROPERTIES").
To the best knowledge of the Company, the Company has good and
19
<PAGE>
marketable fee title to each Owned Property, including the buildings, structures
and other improvements located thereon, in each case free and clear of all
Liens, except (i) Liens which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company and (ii)
Liens for Taxes and other governmental charges which are not yet due and
payable. There are no condemnations or eminent domain (which term, as used
herein, shall include other compulsory acquisitions or takings by Governmental
Entities) proceedings pending or threatened against any Owned Property or any
material portion thereof. The Company has not received any notice from any city,
village or other Governmental Entity of any zoning, ordinance, land use,
building, fire or health code or other legal violation in respect of any Owned
Property, other than violations which have been corrected or which, individually
or in the aggregate, would not reasonably be expected to have a material adverse
effect on the Company.
(ii) Except as otherwise disclosed in the Company SEC Documents,
Section 3.01(p)(ii) of the Disclosure Schedule sets forth a list of all material
real property (including land and buildings) that is leased by the Company or
any of its Subsidiaries as lessee or sublessee (the "LEASED REAL ESTATE"). The
Company has delivered or caused to be delivered to Acquisition complete and
accurate copies of the written lease and subleases that are described in Section
3.01(p)(ii) of the Disclosure Schedule or otherwise disclosed in the Company SEC
Documents. There are no condemnations or eminent domain proceedings pending or
threatened against any Leased Real Estate or any material portion thereof. The
Company has not received any notice from any city, village or other Governmental
Entity of any zoning, ordinance, land use, building, fire or health code or
other legal violation in respect of any Leased Real Estate, other than
violations which have been corrected or which, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on the
Company.
(iii) The Owned Properties and the Leased Real Estate constitute, in
the aggregate, all of the material real property used to conduct the business of
the Company and its Subsidiaries in the manner in which such business was
conducted during the fiscal year ended December 31, 1998.
(q) Tangible Personal Property. The Company and its Subsidiaries (A)
--------------------------
have good and valid title to all the tangible personal property material to the
operation of the business conducted by the Company and its Subsidiaries taken as
a whole and reflected in the latest audited financial statements included in the
Company SEC Documents as being owned by the Company and its Subsidiaries or
acquired after the date thereof (except properties sold or otherwise disposed of
in the ordinary course of business since the date thereof), free and clear of
all Liens except (1) statutory Liens securing payments not yet due and (2) such
imperfections and irregularities of title or Liens as do not affect the use of
the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties, in either case in such
a manner as to have, individually or in the aggregate, a material adverse effect
on the Company, and (B) are collectively the lessee of all tangible personal
property material to the operation of the business conducted by the Company and
its Subsidiaries and reflected as leased in the latest audited financial
statements included in the Company SEC Documents (or on the books
20
<PAGE>
and records of the Company as of the date thereof) or acquired after the date
thereof (except for leases that have expired by their terms) and are in
possession of the properties purported to be leased thereunder, and each such
leases is valid and in full force and effect without default thereunder by the
lessee or the lessor, other than defaults that would not, individually or in the
aggregate, have a material adverse effect on the Company. Each of the Company
and its Subsidiaries enjoys peaceful and undisturbed possession under all such
leases. Such owned and leased tangible personal property is in good working
order, reasonable wear and tear excepted, and is suitable for the use for which
it is intended, except that, which would not, individually or in the aggregate,
have a material adverse effect on the Company.
(r) Insurance. The Company and its Subsidiaries are covered by valid
---------
and currently effective insurance policies issued in favor of the Company or its
Subsidiaries that are customary for companies of similar size and financial
condition. Except as set forth in Section 3.01(r) of the Disclosure Schedule,
all such policies are in full force and effect, all premiums due thereon have
been paid and the Company has complied with the provisions of such policies.
All such policies will remain in full force and effect after giving effect to
this Agreement and the transactions contemplated hereby. Except as set forth in
Section 3.01(r) of the Disclosure Schedule, the Company has not been advised of
any defense to coverage in connection with any claim to coverage asserted or
noticed by the Company under or in connection with any of its extant insurance
policies. The Company has not received any written notice from or on behalf of
any insurance carrier issuing policies or binders relating to or covering the
Company and its Subsidiaries that there will be a cancellation or non-renewal of
existing policies or binders, or that alteration of any equipment or any
improvements to real estate occupied by or leased to or by the Company or its
Subsidiaries, purchase of additional equipment, or material modification of any
of the methods of doing business, will be required.
(s) Contracts. Except as set forth in Section 3.01(s) of the
---------
Disclosure Schedule, and except for matters that would not, individually or in
the aggregate, have a material adverse effect on the Company, (i) the Company
and any of its Subsidiaries are not party to or bound by any agreement that
materially limits the ability of the Company, the Surviving Corporation, or any
of their Subsidiaries to compete in any line of business in any geographic area;
(ii) neither the Company nor any of its Subsidiaries is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect under any agreement; (iii) to the best knowledge of the
Company, none of the other parties to any agreement is (with or without the
lapse of time or the giving of notice, or both) in breach or default in any
material respect under any contract and (iv) neither the Company nor any of its
Subsidiaries has received any written notice of the intention of any party to
terminate any agreement whether as a termination for convenience or for default
of the Company or any of its Subsidiaries thereunder.
(t) Labor Matters. Except as set forth in Section 3.01(t) of the
-------------
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to, or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is the
Company or any of its Subsidiaries currently the subject of a
21
<PAGE>
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or such Subsidiaries to bargain with any labor organization
as to wages and conditions of employment. There is (i) no strike, labor dispute,
slowdown or stoppage pending or threatened against the Company or any of its
Subsidiaries and (iii) no union representation question existing with respect to
the employees of the Company or any of its Subsidiaries.
(u) Transactions with Affiliates. Except as set forth in the Company
----------------------------
SEC Documents or Section 3.01(u) of the Disclosure Schedule, neither the Company
nor any officer, director, employee or affiliate of the Company, any Subsidiary
or any individual related by blood, marriage or adoption to any such individual
or any entity in which any such person or individual owns any beneficial
interest, is a party to any agreement, contract, commitment, transaction or
understanding with or binding upon the Company or any of its Subsidiaries or any
of their respective assets or has any material interest in any material property
owned by the Company or its Subsidiaries or has engaged in any transaction with
any of the foregoing within the last twelve months.
(v) Year 2000. The Company has reviewed its operations and has
---------
inquired of third parties with which the Company and its Subsidiaries have a
material relationship to evaluate the extent to which the business or operations
of the Company and its Subsidiaries will be affected by the Year 2000 Problem.
As a result of such review and inquiries, the Company has no reason to believe,
and does not believe, the Year 2000 Problem will have a material adverse effect
on the Company and its Subsidiaries, taken as a whole, or result in any material
loss or interference with any of the business or operations of the Company and
its Subsidiaries, taken as a whole. The "YEAR 2000 PROBLEM" as used herein
means any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
(w) Rights Agreement. Subject to the terms and conditions of this
----------------
Agreement, the Company has duly entered into an amendment to the First Amended
and Restated Rights Agreement dated as of May 26, 1998 (the "RIGHTS AGREEMENT")
between the Company and American Stock Transfer & Trust Company, as Rights
Agent, pursuant to which the Rights Agreement and the Rights will not be
applicable to the Merger, and the execution of this Agreement and the
consummation of the Merger shall not result in a "Distribution Date" under the
Rights Agreement and the consummation of the Merger shall not result in
Acquisition or its affiliates being an "Acquiring Person," result in the
occurrence of an event described in Section 11(a)(ii) or Section 13 of the
Rights Agreement or otherwise result in the ability of any person to exercise
any Purchase Rights under Rights Agreement or require the Purchase Rights to
separate from the shares of Company Common Stock to which they are attached. A
correct and complete copy of the Rights Agreement has been provided to
Acquisition.
22
<PAGE>
(x) Opinion of Financial Advisor. The Board of Directors of the
----------------------------
Company has received the oral opinion of Goldman, Sachs & Co. (the "FINANCIAL
ADVISOR") to the effect that, as of such date, the Merger Consideration to be
received by the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, and such opinion has not been withdrawn
or materially and adversely modified. The Financial Advisor has represented to
the Company that it will promptly deliver to the Company a written opinion
confirming in writing the oral opinion described above.
(y) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than the Financial Advisor, the fees and expenses of which
will be paid by the Company, is entitled any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The Company's arrangements with the Financial Advisor have been
fully disclosed to Acquisition prior to the date hereof.
(z) Board Recommendation. As of the date hereof, the Board of
--------------------
Directors of the Company, at a meeting duly called and held, by the unanimous
vote of the directors present at such meeting, (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable, fair to and in the best interests of the stockholders of the Company
and has approved the same and (ii) resolved to recommend, subject to their
fiduciary duties under applicable Law and Section 5.01, that the holders of
shares of Company Common Stock approve and adopt this Agreement.
(aa) Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary
(under applicable Law or otherwise) to approve this Agreement and the
transactions contemplated hereby.
(bb) State Takeover Statute Inapplicable. The Board of Directors of
-----------------------------------
the Company has approved this Agreement, the Merger and the transactions
contemplated hereby and such approval, assuming the accuracy of Acquisition's
representation in Section 3.02(f) hereof, is sufficient to render the provisions
of Section 203 of the DGCL inapplicable to the Merger, this Agreement and the
transactions contemplated hereby.
(cc) Stock Plans. All of the outstanding Company Stock Options shall
-----------
have vested pursuant to their terms at the Effective Time and shall not be
exercisable after the Effective Time.
Section 3.02. Representations and Warranties of Acquisition.
Acquisition represents and warrants as of the date hereof (or such other date as
shall be expressly specified) to the Company as follows:
23
<PAGE>
(a) Organization, Qualifications and Corporate Power. Acquisition is
------------------------------------------------
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and is duly licensed or qualified to do business
as a foreign corporation and is in good standing in each other jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such licensing or qualification necessary and where the failure to so
qualify would in the aggregate have a material adverse effect. Acquisition has
the corporate power and authority to own and hold its properties and to carry on
its business as currently conducted.
(b) Capital Structure. The authorized capital stock of Acquisition
-----------------
consists of 1,000 shares of Acquisition Common Stock and all of the authorized
shares of Acquisition have been validly issued, are fully paid and nonassessable
and are owned by WCAS VIII or its affiliates.
(c) Authorization of Agreement, Non-Contravention, Etc. Acquisition
--------------------------------------------------
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate and stockholder action on
the part of Acquisition. This Agreement has been duly executed and delivered by
Acquisition and constitutes a valid and binding obligation of Acquisition,
enforceable against Acquisition in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any breach or violation of, or
result in the termination of, or accelerate the performance required by, or give
right to a right of termination, cancellation or acceleration of any obligation
under, or the creation of a Lien pursuant to (i) any provision of the charter
(or similar organizational documents) or bylaws of Acquisition or (ii) subject
to obtaining or making the Required Filings, any loan or credit agreement, note,
mortgage, indenture, lease or other agreement, obligation, instrument, permit,
concession, franchise, license, or any Laws applicable to Acquisition or its
properties or assets, in any case under this clause (ii) which would,
individually or in the aggregate, have a material adverse effect on Acquisition.
No consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
Acquisition in connection with the execution and delivery of this Agreement by
Acquisition or the consummation by Acquisition of the transactions contemplated
hereby, the failure of which to be obtained or made would, individually or in
the aggregate, have a material adverse effect on Acquisition or would prevent or
materially delay the consummation of the transactions contemplated hereby,
except for the Required Filings.
(d) Information Supplied. The information supplied or to be supplied
--------------------
by Acquisition for inclusion or incorporation by reference in any Company
Disclosure Document will not contain any untrue statement of a material fact or
omit to state any material fact required to be
24
<PAGE>
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (i) in the case of
the Proxy Statement/Prospectus, at the date the Proxy Statement/Prospectus is
first mailed to the stockholders of the Company or at the time of the Company
Stockholder Meeting, (ii) in the case of the Form S-4, at the time the Form S-4
is filed with the SEC, at any time it is amended or supplemented and at the time
it becomes effective under the Securities Act, or (iii) in the case of any
Company Disclosure Document other than the Form S-4 and the Proxy
Statement/Prospectus, at the time of the filing of such Company Disclosure
Document and at the time of any distribution thereof. The representations and
warranties contained in this Section 3.02(d) do not apply to statements or
omissions included or incorporated by reference in the Company Disclosure
Documents based upon information supplied to Acquisition by the Company
specifically in writing for inclusion or incorporation by reference therein. Any
document required to be filed by Acquisition or its affiliates with any
Governmental Entity other than the SEC will comply in all material respects with
the provisions of applicable law as to the information required to be contained
therein.
(e) Subsidiaries. Acquisition does not own, directly or indirectly,
------------
any capital stock or other ownership interest in any person.
(f) Acquisition Not an Interested Stockholder. As of the date of
-----------------------------------------
this Agreement, neither Acquisition nor any of its affiliates or associates (as
such terms are defined under the Exchange Act) is an "interested stockholder" as
such term is defined in Section 203 of the DGCL.
(g) Interim Operations of Acquisition. Acquisition was formed on
---------------------------------
March 8, 1999 solely for the purpose of engaging in the transaction contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby. Except for (i) obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated hereby and (ii) this Agreement and any other
agreements or arrangements contemplated by this Agreement or in furtherance of
the transactions contemplated hereby, Acquisition has not incurred, directly or
indirectly, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person.
(h) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Chase Securities Inc., and except as contemplated by
the Commitment Letters (as defined in Section 3.02(i)), the fees and expenses of
which in each case will be paid by Acquisition or, if the Merger is consummated,
the Surviving Corporation, is entitled any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Acquisition.
(i) Financing. Acquisition (or WCAS VIII in the case of clause (i)
---------
below) has received and executed commitment letters, each dated as of the date
hereof (the "COMMITMENT LETTERS"), from (i) Chase Securities Inc. and Chase Bank
of Texas, N.A. (collectively, "CHASE"), pursuant to which Chase has committed,
subject to the terms and conditions set forth therein, to
25
<PAGE>
provide the Surviving Corporation with up to $120.0 million of financing under
available senior secured credit facilities; (ii) WCAS VIII, pursuant to which it
has committed, subject to the terms and conditions set forth therein, to provide
to Acquisition up to $145.0 million in equity; and (iii) WCAS Capital Partners
III, L.P. or an affiliate thereof, pursuant to which it has committed to provide
up to $160.0 million of senior subordinated financing (the financings referred
to in clauses (i), (ii) and (iii) above being collectively referred to as the
"FINANCING"). Such Financing is adequate to pay in full in cash at closing the
Merger Consideration, together with all fees and expenses of Acquisition and the
Surviving Corporation associated with the transactions contemplated hereby, and
to make any other payments necessary to consummate the transactions contemplated
hereby. True and complete copies of the Commitment Letters have been furnished
to the Company. WCAS VIII or Acquisition has fully paid any and all commitment
fees or other fees required by such Commitment Letters to be paid as of the date
hereof (and will duly pay any such fees after the date hereof); provided that,
--------
if the Merger is consummated, the Surviving Corporation will reimburse WCAS VIII
for such commitment fees or other fees required by such Commitment Letters. The
Commitment Letters are valid and in full force and effect and no event has
occurred which (with or without notice, lapse of time or both) would constitute
a default thereunder on the part of Acquisition, WCAS VIII or their affiliates
or would adversely affect the probability that such Financing will actually be
funded.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01. Covenants of the Company. During the period from the
date of this Agreement until the Effective Time, the Company agrees as to itself
and its Subsidiaries that (expressly as expressly contemplated, required or
permitted by this Agreement or as set forth in the Disclosure Schedule):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
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their respective businesses only in the ordinary course consistent with past
practice in all material respects and use their best efforts to preserve intact
their present businesses, maintain their rights and licenses, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them. The Company shall not, nor shall it permit any of its Subsidiaries to,
enter into any new line of business, or incur or commit to any capital
expenditures, other than capital expenditures and obligations or liabilities
incurred or committed to that are either (i) contemplated in the Company's
current capital budget, a copy of which has been furnished to Acquisition prior
to the date hereof (the "CAPITAL BUDGET"), or (ii) not in excess of $5,000,000
individually or in the aggregate.
(b) Dividends; Change in Stock. The Company shall not, nor shall it
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permit any of its Subsidiaries to, nor shall it propose to (i) declare, set
aside or pay any dividends on or make other distributions in respect of any
capital stock (except for cash dividends paid to the Company and its wholly-
owned Subsidiaries with regard to the Company's Subsidiaries' capital stock),
(ii)
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adjust, split, combine or reclassify any capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for capital stock or (iii) repurchase, redeem or otherwise acquire,
or permit any Subsidiary to purchase or otherwise acquire, any shares of capital
stock or any debt securities, warrants or options, in each case issued by the
Company or any of its Subsidiaries.
(c) Issuance of Securities. The Company shall not, nor shall it
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permit any of its Subsidiaries to, (i) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its or any of its
Subsidiaries' capital stock of any class or any securities convertible into or
exchange for, or any rights, warrants or options to acquire, any of the
foregoing, or any other securities or equity equivalents (including stock
appreciation rights), except for (x) shares issuable upon the exercise of
Company Stock Options outstanding as of the date hereof and (y) issuances of
capital stock of the Subsidiaries to the Company or to a wholly owned Subsidiary
of the Company; (ii) amend the terms of or reprice any Company Stock Option
outstanding on the date of this Agreement or amend the terms of any Stock Option
Plan in effect as of the date hereof.
(d) Governing Documents. The Company shall not, nor shall it permit
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any of its Subsidiaries to, amend or propose to amend its certificate of
incorporation or bylaws (or other organizational documents).
(e) No Acquisitions. Except as set forth in Section 4.01(e) of the
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Disclosure Schedule, the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) merge or consolidate with, or acquire any equity interest
in, or enter into an agreement with respect to the foregoing, except for (A) a
merger of a wholly-owned Subsidiary with or into the Company or another wholly-
owned Subsidiary or (B) the creation of a wholly-owned Subsidiary of the Company
in the ordinary course of business; or (ii) acquire or agree to acquire a
substantial portion of the assets of, any corporation, partnership, association
or other business organization or any division or business thereof.
(f) No Dispositions. The Company shall not, nor shall it permit any
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of its Subsidiaries to, sell, lease, mortgage, encumber or otherwise dispose of,
any material assets (including, without limitation, capital stock or other
ownership interest in any Subsidiary), other than sales or leases in the
ordinary course of business consistent with past practice.
(g) Indebtedness. The Company shall not, nor shall it permit any of
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its Subsidiaries to, (i) assume or incur any indebtedness for borrowed money
(except for lease obligations incurred in the ordinary course of business and
consistent with past practice or drawdowns by the Company under its existing
revolving credit facility or uncommitted lines of credit, if any, made in the
ordinary course of business consistent with past practice or as contemplated by
the Capital Budget), (ii) issue or sell any debt securities or warrants or
rights to acquire any debt securities or (iii) guarantee any debt obligations of
any other person.
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(h) Accounting Matters. The Company shall not, nor shall it permit
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any of its Subsidiaries to, change its fiscal year or make any material changes
with respect to its accounting methods, principles or practices in effect as of
December 31, 1998, except as required by the SEC, applicable Law or GAAP.
(i) Advice of Changes; Filings. The Company shall advise Acquisition
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of any change or event that would cause or constitute a material breach of any
of its representations or warranties contained herein. The Company shall file
all reports required to be filed by it with the SEC or NYSE between the date of
this Agreement and the Effective Time and shall deliver to Acquisition copies of
all such reports promptly after the same are filed. Any such report shall not
contain, as of the date of its filing, any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) Compensation; Benefit Plans. The Company shall not, nor shall it
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permit any of its Subsidiaries to, (i) enter into, adopt, amend or terminate any
Company Benefit Plan, any other employee benefit plan, any existing employment,
severance or termination agreement with any director, officer or employee,
except as may be required by applicable Law, or (ii) increase in any manner the
compensation (including, without limitation, salary, bonus or other benefits) of
any of its directors, officers or employees or provide any other benefit not
required by any plan and arrangement as in effect as of the date hereof, except
for increases made, with respect to employees other than executive officers, in
the ordinary course of business and consistent with past practice.
(k) Discharges or Waiver of Claims. The Company shall not, nor shall
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it permit any of its Subsidiaries to, (i) pay, discharge, or satisfy any claims
(including claims of stockholders), liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), except for the
payment, discharge or satisfaction of liabilities or obligations in the ordinary
course of business consistent with past practice; (ii) waive, release, grant or
transfer any rights of material value or modify or change in any material
respect rights of material value (including, without limitation, the waiver or
release of any rights under confidentiality or standstill agreements), or (iii)
settle or compromise any litigation (whether or not commenced prior to the date
of this Agreement), other than settlements or compromises of litigation where
the amount paid (after giving effect to insurance proceeds actually received) in
settlement or compromise does not exceed $3,500,000, provided that the aggregate
amount paid in connection with the settlement or compromise of all such
litigation matters shall not exceed $10,000,000.
(l) Leases and Lease Commitments. The Company shall not, nor shall
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it permit any of its Subsidiaries to, enter into or commit to enter into, or
assume, any operating or capital lease, other than any such lease contemplated
by the Capital Budget or the Company's operating budget, a copy of which has
been provided to Acquisition prior to the date hereof.
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(m) Liquidation Plan, Etc. Except as set forth in Section 4.01(m) of
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the Disclosure Schedule, the Company shall not, nor shall it permit any of its
Subsidiaries to, authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution.
(n) Collective Bargaining Agreements. The Company shall not, nor
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shall it permit any of its Subsidiaries to, enter into any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, except as may be required by applicable law.
(o) Transactions with Affiliates. The Company shall not, nor shall
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it permit any of its Subsidiaries to, enter into any agreement, contract,
commitment, transaction or understanding with any officer, director, employee or
affiliate of the Company, any Subsidiary or any individual related by blood,
marriage or adoption to any such individual or any entity in which any such
person or individual owns any beneficial interest that would be required to be
disclosed under Item 404 of Regulation S-K under the Exchange Act.
(p) Tax Matters. The Company shall not, nor shall it permit any of
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its Subsidiaries to, make any material Tax election, take any Tax position or
amend in a material respect any Tax Return, except in the ordinary course of
business consistent with past practice.
(q) Intellectual Property. The Company shall not, nor shall it
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permit any of its Subsidiaries to, enter into any license with respect to
Company Intellectual Property unless such license is non-exclusive and entered
into in the ordinary course consistent with past practice.
(r) Insurance. The Company shall not, nor shall it permit any of its
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Subsidiaries to, fail to keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it.
(s) Other Actions. The Company shall not, nor shall it permit any of
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its Subsidiaries to, agree to take, make any commitment (whether orally or in
writing) to take or take (i) any action that would result in any of the
representations and warranties of the Company set forth in this Agreement that
are qualified as to materiality being untrue, any of such representations and
warranties that are not so qualified being untrue in any material respect or any
of the conditions to the Merger set forth in Article VI not being satisfied, in
each case as of any time prior to the Effective Time, or (ii) any action
prohibited by this Agreement. The Company shall not, nor shall it permit any of
its Subsidiaries to, fail to take any action necessary to prevent any such
representation or warranty from being inaccurate (in the case of representations
and warranties that are qualified as to materiality) or inaccurate in any
material respect (in the case of representations and warranties that are not so
qualified) as of any time prior to the Effective Time.
Section 4.02. Covenants of Acquisition. During the period from the
date of this Agreement until the Effective Time, Acquisition agrees that:
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(a) Other Actions. Acquisition shall not agree to take, make any
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commitment (whether orally or in writing) to take or take (i) any action that
would result in any of its representations and warranties set forth in this
Agreement that are qualified as to materiality being untrue, any of such
representations and warranties that are not so qualified being untrue in any
material respect or any of the conditions to the Merger set forth in Article VI
not being satisfied, in each case as of any time prior to the Effective Time, or
(ii) any action prohibited by this Agreement. Acquisition shall not fail to
take any action necessary to prevent any such representations or warranty from
being inaccurate (in the case of representations and warranties that are
qualified as to materiality) or inaccurate in any material respect (in the case
of representations and warranties that are not so qualified) as of any time
prior to the Effective Time.
(b) Advice of Changes. Acquisition shall advise the Company of any
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change or event that would cause or constitute a material breach of any of its
representations or warranties contained herein or which it believes will result
in any of the debt or equity financing necessary for the consummation of the
Merger and the other transactions contemplated hereby not being available to it
on terms no less favorable than those set forth in the Commitment Letters.
ARTICLE V
OTHER AGREEMENTS
Section 5.01. No Solicitation. (a) The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its Subsidiaries
(collectively, "COMPANY REPRESENTATIVES") to, directly or indirectly, (i)
solicit, initiate, encourage or knowingly facilitate the submission of any
Acquisition Proposal (as defined in Section 5.01(d)) or (ii) enter into or
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, any Acquisition Proposal; provided,
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however, that notwithstanding any other provision of this Agreement, (A) the
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Company's Board of Directors may take and disclose to the stockholders of the
Company a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act and (B) following receipt from a third party, without any
solicitation, initiation or encouragement, directly or indirectly, by the
Company or any Company Representative, of a bona fide Acquisition Proposal, (w)
the Company may engage in discussions or negotiations with such third party and
may furnish such third party information concerning it, and its business,
properties and assets if such third party executes a confidentiality agreement
no less favorable to the Company than the existing confidentiality agreement
between the Company and WCAS VIII (the "CONFIDENTIALITY AGREEMENT") (except that
such third party confidentiality agreement need not require approval or request
of the Company's Board of Directors prior to the making of an offer or proposal
to such Board of Directors), (x) the Board of Directors of the Company may
withdraw, modify or not make its recommendation referred to in Section 3.01(z),
(y) terminate this Agreement in accordance with Article VII or (z) take any
combination of the actions described in clauses (w), (x) and (y) above, but in
each case referred to in clauses (A) and (B) only to the extent that the
Company's Board of Directors shall conclude in good faith, after consultation
with the Company's outside counsel, that
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such action is required in order for the Company's Board of Directors to act in
a manner consistent with its fiduciary duties under applicable Law.
(b) The Company will immediately cease and cause to be terminated any
existing activities, discussions and negotiations conducted heretofore with
respect to an Acquisition Proposal.
(c) The Company will promptly advise Acquisition orally and in
writing of any Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal and the identity of the person making any such Acquisition
Proposal and any determination by the Board of Directors of the Company pursuant
to the last proviso of Section 5.01(a) with respect to an Acquisition Proposal.
The Company will keep Acquisition informed, as promptly as reasonably
practicable, as to the status of any actions, including any discussions, taken
pursuant to such Acquisition Proposal.
(d) As used in this Agreement, "ACQUISITION PROPOSAL" means any
inquiry, proposal or offer from any person relating to (i) any direct or
indirect acquisition or purchase of assets or a business that constitutes 20% or
more of the net revenues, net income or assets of the Company and its
Subsidiaries, taken as a whole, or 20% or more of the outstanding Company Common
Stock, (ii) any tender offer or exchange offer (including by the Company or any
of its Subsidiaries) that if consummated would result in any person beneficially
owning 20% or more of the outstanding Company Common Stock, or (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries, other
than the transactions contemplated by this Agreement.
Section 5.02. Recapitalization. Each of the Company and Acquisition
shall use all reasonable best efforts to cause the transactions contemplated by
this Agreement, including the Merger, to be accounted for as a recapitalization
and such accounting treatment to be accepted by their respective accountants and
the SEC, and neither the Company nor Acquisition shall take any action that
would be reasonably likely to cause such accounting treatment not to be
obtained. In the event that Acquisition reasonably determines that it will not
be permitted to account for the transactions contemplated by this Agreement as a
recapitalization, the parties shall take all commercially reasonable actions to
amend this Agreement to cause the transactions contemplated hereby to be
accounted for as a recapitalization. Without limiting the generality of the
foregoing, the parties hereto shall, at the option of Acquisition at any time
prior to the mailing of the Proxy Statement/Prospectus (as hereinafter defined),
amend this Agreement to provide that, if a third party investor unaffiliated
with WCAS and reasonably satisfactory to the Company is willing to acquire,
together with its affiliates, the outstanding Company Common Stock that this
Agreement contemplates the Company's existing stockholders shall retain, such
third party investor shall either subscribe to acquire Company Common Stock from
the Company or acquire common stock of Acquisition from Acquisition and the
existing stockholders shall not retain any Company Common Stock. Acquisition
shall use its reasonable best efforts to identify such third party investor as
promptly as practicable following the date of this Agreement. The terms of this
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Agreement shall continue in effect in such amendment to the extent consistent
with the revised transaction structure. Any terms required to be revised to
accommodate such revised structure shall be reasonably acceptable to all parties
hereto.
Section 5.03. Preparation of the Proxy Statement/Prospectus. As
promptly as practicable following the date of this Agreement, the Company shall
prepare and file with the SEC the Form S-4 and a proxy or information statement
pertaining to the Merger, which shall also constitute the prospectus included in
the Form S-4 (the "PROXY STATEMENT/PROSPECTUS"). Acquisition will cooperate with
the Company in connection with preparation of the Proxy Statement/Prospectus,
including furnishing to the Company all information regarding Acquisition and
its affiliates as may be required to be disclosed therein. The Company shall
use its best efforts to have the Form S-4 declared effective by the SEC as
promptly as practicable and shall cause a definitive Proxy Statement/Prospectus
to be distributed to its stockholders as promptly as practicable thereafter. No
filing of, or amendment or supplement to, the Proxy Statement/Prospectus will be
made by the Company without providing Acquisition the opportunity to review and
comment thereon and to approve the same, provided that such approvals shall not
be unreasonably withheld or delayed. The Company will advise Acquisition,
promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement/Prospectus or comments thereon and responses
thereto or requests by the SEC for additional information. The Company and
Acquisition agree to notify the other party and to correct any information
provided by it that shall have become false or misleading and an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and, to the extent required by law, disseminated to the stockholders of
the Company.
Section 5.04. Company Stockholder Meeting. As promptly as
practicable after the date hereof, the Company shall, subject to its fiduciary
duties and Section 5.01, take all action necessary in accordance with all
applicable laws and its Certificate of Incorporation and By-laws, to duly call,
give notice of, convene and hold the Company Stockholder Meeting to consider and
vote upon the approval and adoption of this Agreement and the Merger and for
such other purposes as may be necessary or desirable. The Board of Directors of
the Company has determined that the Merger is advisable and in the best
interests of the stockholders of the Company and shall, subject to its fiduciary
duties and Section 5.01, recommend that the stockholders of the Company vote to
approve and adopt this Agreement and the Merger and any other matters to be
submitted to stockholders in connection therewith.
Section 5.05. Access to Information. Upon reasonable notice, the
Company shall, and shall cause its Subsidiaries and its and their respective
officers, directors, employees, representatives and agents to afford access to
the officers, employees, accountants, counsel and other representatives of
Acquisition (including financing sources and their employees, accountants,
counsel and other representatives), during normal business hours during the
period prior to the Effective Time, to all of the Company's and its
Subsidiaries' properties, books, leases, contracts, commitments, officers,
employees, accountants, counsel, other representatives and records. Acquisition
will, and will cause its advisors and representatives who receive nonpublic
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information regarding the Company to agree to, hold any such information in
confidence to the extent required by, and in accordance with, the terms of the
Confidentiality Agreement.
Section 5.06. Reasonable Best Efforts. (a) Subject to the terms and
conditions herein provided, each of the Company and Acquisition shall, and shall
cause its Subsidiaries to, use all reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate or make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the formation of subsidiaries and all other actions
necessary or advisable to consummate the Financing, (ii) the obtaining of any
necessary consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and/or any public or private third party which is required
to be obtained by such party or any of its subsidiaries in connection with the
Merger and the other transactions contemplated by this Agreement, and the making
or obtaining of all necessary filing and registrations with respect thereto
(including without limitation filings required under the HSR Act), (iii) the
defending of any lawsuits or other legal proceedings challenging this Agreement
and (iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement.
(b) Acquisition shall not, and shall cause WCAS VIII and their
affiliates not to, terminate, amend or modify in any respect the Commitment
Letters in a manner that could reasonably be expected to adversely affect the
probability that such Financing will actually be funded, or the timing thereof,
without prior written consent of the Company.
(c) The Company agrees to, and to cause its Subsidiaries and its and
their respective officers, directors, employees, advisors and accountants to,
reasonably cooperate with Acquisition in connection with the arrangement of any
financing to be consummated prior to or contemporaneously with the closing in
respect of the transactions contemplated by this Agreement, as may be reasonably
requested by Acquisition.
Section 5.07. Indemnification and Insurance. (a) Acquisition agrees
that all rights to indemnification now existing in favor of any officers,
directors, employees or agents of the Company or any of its Subsidiaries as
provided in their respective charters or bylaws (or similar organizational
documents) and any existing indemnification agreements or arrangements of the
Company or its Subsidiaries shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the Effective Time
(or such longer period as may be provided in any existing indemnification
agreement between the Company and any current or former officer or director
thereof); provided that, in the event any claim or claims are asserted or made
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within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until final disposition of any and all such
claims.
(b) The Company shall, and from and after the Effective Time, the
Surviving Corporation shall, for a period of six years after the Effective Time,
indemnify, defend and hold
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harmless each person who is now, or has been at any time prior to the date of
this Agreement or who becomes prior to the Effective Time, an officer, director,
employee or agent of the Company or any of its Subsidiaries (collectively, the
"INDEMNIFIED PARTIES") against all losses, expenses (including attorneys' fees),
claims, damages, liabilities or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of, or otherwise in connection with, any threatened or actual claim,
action, suit, proceeding or investigation (a "CLAIM"), based in whole or in part
on or arising in whole or in part out of the fact that the Indemnified Party (or
the person controlled by the Indemnified Party) is or was a director, officer,
employee or agent (including, without limitation, a trustee or fiduciary of any
Company Benefit Plan) of the Company or any of its Subsidiaries and pertaining
to any matter existing or arising out of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, any Claim arising
out of this Agreement or any of the transactions contemplated hereby), whether
asserted or claimed prior to, at or after the Effective Time, in each case to
the fullest extent permitted under Delaware law, and shall pay any expenses, as
incurred, in advance of the final disposition of any such action or proceeding
to each Indemnified Part to the fullest extent permitted under Delaware law. In
determining whether an Indemnified Party is entitled to indemnification under
this Section 5.07, if requested by such Indemnified Party, such determination
shall be made by special, independent counsel selected by the Surviving
Corporation and approved by the Indemnified Party (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Surviving Corporation or its affiliates within the last three years (other than
in connection with such matters). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against any
Indemnified Parties (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain the Company's regularly engaged independent
legal counsel or counsel satisfactory to them and reasonably satisfactory to the
Company (or satisfactory to them and reasonably satisfactory to the Surviving
Corporation after the Effective Time), and the Company (or after the Effective
Time, the Surviving Corporation) shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties as promptly as statements therefor are
received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent, which consent shall not unreasonably be withheld. In the event
of any Claim, any Indemnified Party wishing to claim indemnification will
promptly notify the Company (or after the Effective Time, the Surviving
Corporation) thereof (provided that failure to so notify the Surviving
Corporation will not affect the obligations of the Surviving Corporation except
to the extent that the Surviving Corporation shall have been prejudiced as a
result of such failure) and shall deliver to the Company (or after the Effective
Time, the Surviving Corporation) the undertaking contemplated by Section 145(e)
of the DGCL, but without any requirement for the posting of a bond. Without
limiting the foregoing, in the event any such Claim is brought against any of
the Indemnified Parties, such Indemnified Parties may retain only one law firm
(plus one local counsel, if necessary) to represent them with respect to each
such matter unless the use of counsel chosen to represent the Indemnified
Parties would present such counsel with a conflict of interest, or the
representation of all of the Indemnified Parties by the same counsel would be
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inappropriate due to actual or potential differing interests between them, in
which case such additional counsel as may be required (as shall be reasonably
determined by the Indemnified Parties and the Company or the Surviving
Corporation, as the case may be) may be retained by the Indemnified Parties at
the cost and expense of the Company (or the Surviving Corporation) and the
Company (or the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for such Indemnified Parties. The Company (or the
Surviving Corporation shall use all reasonable efforts to assist in the vigorous
defense of any such Claim, provided that the Company (or the Surviving
Corporation) shall not be liable for any settlement effected without its written
consent, which consent, however, shall not be unreasonably withheld.
Notwithstanding the foregoing, nothing contained in this Section 5.07 shall be
deemed to grant any right to any Indemnified Party which is not permitted to be
granted to an officer, director, employee or agent of the Company under Delaware
law, assuming for such purposes that the Company's certificate of incorporation
and bylaws provide for the maximum indemnification permitted by law.
(c) Acquisition agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that (i) the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are no less
advantageous; (ii) such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
(iii) the Surviving Corporation shall not be required to pay an annual premium
in excess of 200% of the last annual premium paid by the Company prior to the
date hereof and if the Surviving Corporation is unable to obtain the insurance
required by this Section 5.07(c) it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
(d) Following the Merger, 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 or conveys all or substantially all of
its properties and assets to any person or persons, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation, and any of their successors and assigns, assume the
obligations of the parties hereto and the Surviving Corporation set forth in
this Section 5.07.
(e) This Section 5.07 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties (each of whom may enforce the provisions
of this Section 5.07) and shall be binding on the successors and assigns of the
Surviving Corporation.
Section 5.08. Benefits Matters. (a) Acquisition agrees that the
Company will honor and, from and after the Effective Time, the Surviving
Corporation and its Subsidiaries will honor all obligations under employment
agreements, Company Benefit Plans and all other
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employee benefit plans, programs, policies and arrangements of the Company and
its Subsidiaries in accordance with the terms thereof.
(b) Acquisition agrees that the Surviving Corporation will take such
actions as are necessary so that, for a period of at least one year from the
Effective Time, employees of the Company and its Subsidiaries will be provided
cash compensation, employee benefit and incentive compensation and similar plans
and programs (other than equity-based compensation plans and programs) as will
provide compensation and benefits which in the aggregate are no less favorable
than those provided to such employees as of the date hereof.
(c) To the extent permitted under applicable Law, each employee of
the Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Surviving Corporation in which they participate
or in which they become participants for purposes of eligibility, vesting and
benefit accrual including, without limitation, for purposes of determining (1)
short-term and long-term disability benefits, (2) severance benefits, (3)
vacation benefits and (4) benefits under any retirement plan.
(d) This Section 5.08, which shall survive the consummation of the
Merger at the Effective Time and shall continue without limit except as
expressly set forth herein, is intended to benefit and bind the Company, the
Surviving Corporation and any person referenced in this Section 5.08, each of
whom may enforce the provisions of this Section 5.08 whether or not party to
this Agreement. Except as provided in clause (a) above, nothing contained in
this Section 5.08 shall create any beneficiary rights in any employee or former
employee (including any dependent thereof) of the Company, any of its
Subsidiaries or the Surviving Corporation in respect of continued employment for
any specified period of any nature or kind whatsoever. In addition, nothing in
this Section 5.08 shall be construed to limit the ability of the Surviving
Corporation or any of its Subsidiaries to review Company Benefit Plans and all
other employee benefit plans, programs, policies and arrangements from time to
time and make such changes as it or they deem appropriate.
Section 5.09. Resignations of Directors. Prior to the Effective
Time, the Company shall deliver to Acquisition evidence satisfactory to
Acquisition of the resignation of all directors of the Company, effective at the
Effective Time.
Section 5.10. Solvency at Closing. Acquisition agrees for the
benefit of the directors of the Company to take all actions necessary to ensure
that, immediately following the Effective Time, the Surviving Corporation will
be solvent for all purposes under federal bankruptcy and applicable state
fraudulent transfer and fraudulent conveyance laws.
ARTICLE VI
CONDITIONS PRECEDENT
36
<PAGE>
Section 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of the parties to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval
----------------------------
shall have been obtained.
(b) HSR Act and Other Approvals. Any waiting period applicable to
---------------------------
the Merger under the HSR Act shall have expired or been terminated and the
approvals listed in Section 3.01(c) of the Disclosure Schedule shall have been
obtained.
(c) Form S-4. The Form S-4 shall have been declared effective and no
--------
stop order with respect thereto shall be in effect at the Effective Time.
(d) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order or decree
issued by any Governmental Entity of competent jurisdiction enjoining or
otherwise preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall use reasonable best efforts to
- -------- -------
prevent the entry of any such injunction or other order or decree and to cause
any such injunction or other order or decree that may be entered to be vacated
or otherwise rendered of no effect. No statute, rule, regulation or other Law
shall have been enacted, promulgated or otherwise issued by any Governmental
Entity that prohibits the consummation of the Merger.
Section 6.02. Conditions to the Obligations of Acquisition to Effect
the Merger. The obligations of Acquisition to effect the Merger shall be subject
to the satisfaction of the following conditions unless waived by Acquisition:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement (i) to the extent
qualified by materiality or material adverse effect qualifiers, shall be true
and correct and (ii) to the extent not qualified by materiality or material
adverse effect qualifiers, shall be true and correct in all material respects,
in each of cases (i) and (ii), as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time, except (x) as
contemplated or permitted by this Agreement and (y) to the extent that such
representations or warranties shall have been expressly made as of an earlier
date, in which case such representations and warranties shall have been true and
correct as of such earlier date, and Acquisition shall have received a
certificate to such effect signed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer.
(b) Performance of Obligations of the Company. The Company shall
-----------------------------------------
have performed or complied with in all material respects all material
obligations required to be performed or complied with by it under this Agreement
at or prior to the Effective Time, and Acquisition shall have received a
certificate to such effect signed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer.
37
<PAGE>
(c) Consents, Etc. Acquisition shall have received evidence, in form
-------------
and substance reasonably satisfactory to it, that such consents, approvals,
authorizations, qualifications and orders of Governmental Entities and other
third parties as are necessary in connection with the transactions contemplated
hereby have been obtained, other than those the failure of which to be obtained,
individually or in the aggregate, would not have a material adverse effect on
the Company.
(d) No Litigation. There shall not be pending any suit, action or
-------------
proceeding brought by any Governmental Entity seeking to prohibit or limit in
any material respect the ownership or operation by the Company, Acquisition or
any of their respective affiliates of a substantial portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or to require any
such person to dispose of or hold separate any material portion of the business
or assets of the Company and its Subsidiaries, taken as a whole, as a result of
the Merger or any of the other transactions contemplated by this Agreement or
seeking to impose limitations on the ability of WCAS VIII or any of its
affiliates or any third party investor contemplated by Section 5.02 to acquire
or hold, or exercise full rights of ownership of, any shares of Company Common
Stock, including, without limitation, the right to vote the Company Common Stock
on all matters properly presented to the stockholders of the Company or seeking
to prohibit WCAS VIII or any of its affiliates or any such investor from
effectively controlling in any material respect a substantial portion of the
business or operations of the Company or its Subsidiaries, in each case after
giving effect to any actions required to be taken pursuant to Section 5.06.
(e) Financing. Acquisition shall have arranged the Financing
---------
substantially on the terms contemplated by the Commitment Letters or alternative
financing on terms no less favorable than those set forth in the Commitment
Letters, unless the failure to arrange the Financing was the result of a failure
by Acquisition to perform any covenant or condition contained therein or herein,
a failure by WCAS VIII or its affiliates to perform its obligations contained
therein or the inaccuracy of any representation or warranty of Acquisition.
Section 6.03. Conditions to the Obligations of the Company to Effect
the Merger. The obligations of the Company to effect the Merger shall be subject
to the satisfaction of the following conditions unless waived by the Company:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Acquisition set forth in this Agreement (i) to the extent
qualified by materiality or material adverse effect qualifiers, shall be true
and correct and (ii) to the extent not qualified by materiality or material
adverse effect qualifiers, shall be true and correct in all material respects,
in each of cases (i) and (ii), as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time, except (x) as
contemplated or permitted by this Agreement and (y) to the extent that such
representations or warranties shall have been expressly made as of an earlier
date, in which case such representations and warranties shall have been true and
correct as of such earlier date, and the Company shall have received a
certificate to such effect signed on behalf of
38
<PAGE>
Acquisition by a director thereof who shall also be a managing member of the
sole general partner of WCAS VIII.
(b) Performance of Obligations of Acquisition. Acquisition shall
-----------------------------------------
have performed or complied with in all material respects all material
obligations required to be performed or complied with by it under this Agreement
at or prior to the Effective Time, and the Company shall have received a
certificate to such effect signed on behalf of Acquisition by a director thereof
who shall also be a managing member of the sole general partner of WCAS VIII.
(c) Financing. Acquisition shall have arranged the Financing
---------
substantially on the terms contemplated by the Commitment Letters or alternative
financing on terms no less favorable than those set forth in the Commitment
Letters, unless the failure to arrange the Financing was the result of a failure
by the Company to perform any covenant or condition contained herein or the
inaccuracy of any representation or warranty of the Company.
(d) Solvency Letter. Acquisition shall have caused the valuation
---------------
firm which has delivered a solvency letter to the financial institutions
providing the debt financing for the Merger (or, if no such letter has been
provided thereto, a valuation firm reasonably acceptable to the Company) to have
delivered to the Company a letter addressed to its Board of Directors in form
and substance reasonably satisfactory thereto as to the solvency of the Company
and its Subsidiaries after giving effect to the Merger, the financing
arrangements contemplated by Acquisition with respect to the Merger and the
other transactions contemplated hereby.
Section 6.04. Frustration of Closing Conditions. Neither Acquisition
nor the Company may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use all reasonable best efforts to consummate
the Merger and the other transactions contemplated hereby.
ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval is obtained:
(a) by mutual written consent of Acquisition and the Company;
(b) by Acquisition or the Company upon written notice to the other
party:
(i) if any Governmental Entity of competent jurisdiction
shall have issued a permanent injunction or other order or
decree enjoining or otherwise preventing the consummation of
the Merger and such injunction or other order or decree shall
have become final and nonappealable; provided that the party
seeking to terminate this Agreement pursuant to
39
<PAGE>
this clause (i) shall have used its reasonable best efforts to
prevent or contest the imposition of, or seek the lifting or stay
of, such injunction, order or decree;
(ii) unless the party seeking to terminate this Agreement
is in material breach of its obligations hereunder, if the
Company or Acquisition breaches or fails to perform any of its
representations, warranties, covenants or other agreements
hereunder, which breach or failure to perform (A) would give rise
to the failure of a condition set forth in Section 6.02, in the
case of such a breach or failure to perform on the part of the
Company, or Section 6.03, in the case of such a breach or failure
to perform on the part of Acquisition, and (B) is incapable of
being cured by the party so breaching or failing to perform or is
not cured within 10 days after the terminating party gives
written notice of such breach to the other party and such a cure
is not effected during such period;
(iii) if the Merger shall not have been consummated on or
before September 15, 1999, unless the failure to consummate the
Merger is the result of a material breach of this Agreement by
the party seeking to terminate this Agreement; or
(iv) if, upon a vote at a duly held Company Stockholder
Meeting or any adjournment thereof, the Company Stockholder
Approval shall not have been obtained;
(c) by Acquisition upon written notice to the Company if the Board of
Directors of the Company or any committee thereof shall have withdrawn or
modified in a manner adverse to Acquisition its approval or recommendation of
the Merger or this Agreement, approved or recommended any Acquisition Proposal
or resolved to do any of the foregoing; or
(d) by the Company, if the Board of Directors of the Company
determines, in the exercise of its good faith judgment as to fiduciary duties to
its stockholders imposed by law, after consultation with outside counsel, that
such termination is required by reason of an Acquisition Proposal being made in
order for the Company's Board of Directors to act in a manner consistent with
its fiduciary duties under applicable law; provided that the Company shall
--------
notify Acquisition promptly of its intention to terminate this Agreement or
enter into a definitive agreement with respect to any Acquisition Proposal,
Section 7.02. Effect of Termination. In the event of termination of
this Agreement by either party hereto as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, and, except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement, there shall be no liability or obligation on the part
of
40
<PAGE>
Acquisition or the Company, except with respect to Section 3.01(h), Section
3.01(y), Section 3.02 (d), Section 3.02(h), the second sentence of 5.05, this
Section 7.02, Section 7.03 and Article VIII, which provisions shall survive such
termination.
Section 7.03. Fees and Expenses. (a) Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
(b) If a Payment Event (as hereinafter defined) occurs, the Company
shall, within two business days following such Payment Event, pay Acquisition,
or its designee, a termination fee of $12,000,000 in cash. A "PAYMENT EVENT"
means (i) the termination of this Agreement by Acquisition pursuant to Section
7.01(c), (ii) the termination of this Agreement by the Company pursuant to
Section 7.01(d), or (iii) the Company (x) enters into, (y) agrees to enter into
or (z) consummates a transaction within one year after the date of termination
of this Agreement (other than pursuant to Section 7.01(a) or Section 7.01(b)(i),
or by reason of Acquisition's failure to comply with or perform, or breach, in
any material respect, of any of its covenants or agreements contained herein)
that is the subject of an inquiry, proposal or offer that is an Acquisition
Proposal that was publicly announced or submitted to the Company prior to the
termination of this Agreement.
(c) The Company acknowledges that the agreements contained in this
Section 7.03 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Acquisition would not enter into
this Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 7.03, and, in order to obtain such payment, Acquisition
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 7.03, the Company shall also pay to Acquisition its costs
and expenses incurred in connection with such litigation.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant hereto shall survive the Effective Time, provided that this
--------
Section 8.01 shall not limit any covenant or agreement of the parties that by
its terms contemplates performance after the Effective Time.
Section 8.02. Confidentiality Agreement. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement or any
termination of this Agreement, and the provisions of the Confidentiality
Agreement shall apply to all information and material delivered by any party
hereunder.
41
<PAGE>
Section 8.03. Publicity. The Company and Acquisition agree that they
will not issue any press release or make any other public announcement
concerning this Agreement or the transactions contemplated hereby without the
prior consent of the other party, which consent shall not be unreasonably
withheld, except that the Company or Acquisition may make such public disclosure
that it believes in good faith to be required by law (in which event such party
shall consult, to the extent possible, with the other party prior to making such
disclosure).
Section 8.04. Amendment. This Agreement may be amended, modified or
supplemented only by written agreement by the parties hereto at any time before
the Effective Time; provided that, after receipt of the Company Stockholder
--------
Approval, no amendment shall be made which by law requires further approval by
such stockholders without so obtaining such further approval.
Section 8.05. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (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 or warranties
contained herein or in any document delivered pursuant hereto and (c) subject to
the provisions of Section 8.04, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 8.06. Notices. All notices, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally, telecopied (with confirmation) or sent by
overnight or same-day courier (providing proof of delivery) or sent by certified
or registered mail, postage prepaid, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to the Company, to it at:
4851 LBJ Freeway
Suite 1100
Dallas, Texas 75244
Attention: President
Facsimile: (972) 341-4882
with a copy to:
Jim A. Watson, Esq.
A. Winston Oxley, Esq.
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
42
<PAGE>
2001 Ross Avenue
Dallas, Texas 75201-2975
Facsimile: (214) 999-7716; and
(b) if to Acquisition, to it at:
c/o Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Attention: Robert A. Minicucci
Facsimile: (212) 893-9575
with a copy to:
Robert A. Schwed, Esq.
Joshua A. Leuchtenburg, Esq.
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Facsimile: (212) 841-5725
Section 8.07. Counterparts. This Agreement may be executed in two
counterparts, both of which shall be considered one and the same agreement and
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto.
Section 8.08. Entire Agreement; No Third-Party Beneficiaries; Rights
of Ownership. This Agreement, together with the Confidentiality Agreement, (a)
constitute the entire agreement and supersede all prior agreements with respect
to the subject matter hereof and of the Confidentiality Agreement and (b) other
than Section 5.07, Section 5.08 and Section 5.10 of this Agreement, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.09. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware applicable to
agreements entered into and to be performed wholly within such State.
Section 8.10. Successors and Assigns. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, in whole or
in part, by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, and any such assignment
that is not so consented to shall be null and void; provided that Acquisition
--------
may assign its rights hereunder to any of its affiliates, but no such assignment
43
<PAGE>
shall relieve Acquisition of its obligations hereunder. If Acquisition shall
assign its rights under this Agreement, then the parties hereto shall enter into
a reasonable and appropriate amendment to this Agreement to reflect such
assignment and the substitution of the assignee as Acquisition for purposes of
this Agreement. Subject to the first sentence of this Section 8.10, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.11. Jurisdiction. Each of the parties hereto (a) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or the transactions contemplated hereby, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a federal or state court sitting in the State of
Delaware.
Section 8.12. Headings; Interpretation. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. References in this Agreement
to Sections, Schedules, Exhibits or Articles mean a Section, Schedule, Exhibit
or Article of this Agreement or the Disclosure Schedule unless otherwise
indicated. References to this Agreement shall be deemed to include all Exhibits
and Sections of the Disclosure Schedule, unless the context otherwise requires.
The term "PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, a governmental entity or an unincorporated
organization.
Section 8.13. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 8.14. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND
Acquisition HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
44
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Merger as of the day and year first above written.
BANCTEC, INC.
By /s/ Tod V. Mongan
----------------------------------
Name: Tod V. Mongan
Title: Senior Vice President
COLONIAL ACQUISITION CORP.
By /s/ Anthony J. de Nicola
----------------------------------
Name: Anthony J. de Nicola
Title: Vice President
45
<PAGE>
EXHIBIT 4.1
BANCTEC, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
Rights Agent
First Amended and Restated Rights Agreement Dated as of May 26, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
Section 1. Certain Definitions......................................................................1
Section 2. Appointment of Rights Agent..............................................................4
Section 3. Issue of Right Certificates..............................................................4
Section 4. Form of Right Certificates...............................................................6
Section 5. Countersignature and Registration........................................................7
Section 6. Transfer. Split-up, Combination, and Exchange of Right Certificates; Mutilated,
Destroyed, Lost, or Stolen Certificates..................................................7
Section 7. Exercise of Rights, Purchase Price, Expiration Date of Rights............................8
Section 8. Cancellation and Destruction of Right Certificates......................................10
Section 9. Reservation, Registration, and Listing..................................................10
Section 10. Common Stock Record Date................................................................11
Section 11. Adjustment of Purchase Price. Number of Shares, or Number of Rights.....................11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..............................18
Section 13. Consolidation, Merger. or Sale or Transfer of Assets or Earning Power...................18
Section 14. Fractional Rights and Fractional Shares.................................................20
Section 15. Rights of Action........................................................................21
Section 16. Agreement of Right Holders..............................................................21
Section 17. Right Certificate Holder Not Deemed a Stockholder.......................................22
Section 18. Concerning the Rights Agent.............................................................22
Section 19. Merger or Consolidation or Change of Name of Rights Agent...............................22
Section 20. Duties of Rights Agent..................................................................23
Section 21. Change of Rights Agent..................................................................24
Section 22. Issuance of New Right Certificates......................................................25
Section 23. Redemption and Termination..............................................................25
Section 24. Notice of Certain Events................................................................26
Section 25. Notices.................................................................................27
Section 26. Supplements and Amendments..............................................................27
Section 27. Successors..............................................................................28
Section 28. Determinations and Actions by the Board of Directors etc................................28
Section 29. Benefits of this Agreement..............................................................28
Section 30. Severability............................................................................28
Section 31. Governing Law...........................................................................29
Section 32. Counterparts............................................................................29
Section 33. Descriptive Headings....................................................................29
Section 34. Entire Agreement........................................................................29
</TABLE>
ii
<PAGE>
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
This First Amended and Restated Rights Agreement, dated as of May 26, 1998
(the "Agreement"), is entered into between BancTec, Inc., a Delaware corporation
(the "Company") and American Stock Transfer & Trust Company (the "Rights
Agent").
WHEREAS, on May 21, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the close of
business on May 26, 1998 (the "Record Date"), each Right representing the right
to purchase one share of Common Stock, upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined);
WHEREAS, the Rights are governed by a Rights Agreement, dated as of May 26,
1998 (the "Prior Agreement"), between the Company and the Rights Agent;
WHEREAS, the Company and the Rights Agent desire to amend and restate the
Prior Agreement as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the shares of
Common Stock then outstanding, but shall not include the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company, or any Person or entity holding
shares of Common Stock for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no person shall become an "Acquiring Person" as
the result of an acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such person to 20% or more of the shares of Common
Stock of the Company then outstanding; provided, however, that if a person
-----------------
becomes the Beneficial Owner of 20% or more of the shares of Common Stock of the
Company then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock of the Company, then such person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring
<PAGE>
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, as in effect on the date of
this Agreement (the "Exchange Act" ).
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities (without duplication):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately or only after the passage of time, compliance with regulatory
requirements, the fulfillment of a condition or otherwise) pursuant to any
agreement, arrangement, or understanding (whether or not in writing) (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities or in
connection with a placement of securities pursuant to Rule144A under the
Securities Act), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
-----------------
Beneficial Owner of, or to beneficially own (A) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to any Person becoming
an Acquiring Person;
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person
-----------------
shall not be deemed the Beneficial Owner of, or to "beneficially own," any
security under this subparagraph (iii) as a result of an agreement,
arrangement, or understanding to vote such security (a) which arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (b) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement, or understanding, whether or
not in writing (other than customary
2
<PAGE>
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities or in connection with
a placement of securities pursuant to Rule 144A under the Securities Act),
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to subparagraph (iii) of this paragraph) of
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P. M.,
Dallas, Texas time, on such date; provided, however, that if such date is not a
-----------------
Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next succeeding
Business Day.
(f) "Common Stock," when used with reference to the Company, shall
mean the shares of common stock, presently $0.01 per value, of the Company.
"Common Stock," when used with reference to any Person other than the Company,
shall, if used with reference to a corporation, mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person and, if used with reference to
any other Person, mean the equity interest in such Person (or, if the net worth
determined in accordance with generally accepted accounting principles of
another Person (other than an individual) which controls such first-mentioned
Person is greater than such first-mentioned Person, then such other Person) with
the greatest voting power or managerial power with respect to the business and
affairs of such Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, trust or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(j) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute thereto.
(l) "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) or Section 16(a) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
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<PAGE>
(m) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(n) "Voting Shares" shall mean (a) the Common Stock of the Company
and (b) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
Common Stock in respect of any merger or consolidation of the Company, any sale
of all or substantially all of the Company's assets or any liquidation,
dissolution or winding up of the Company. Whenever any provision of this
Agreement requires a determination of whether a number of Voting Shares
comprising a specified percentage of such Voting Shares is, was or will be
beneficially owned or has been voted, tendered, acquired, sold or otherwise
disposed of or a determination of whether a Person has offered or proposed to
acquire a number of Voting Shares comprising such specified percentage, the
number of Voting Shares comprising such specified percentage of Voting Shares
shall in every such case be deemed to be the number of Voting Shares comprising
the specified percentage of all the Company's then outstanding Voting Shares.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
---------------------------
(a) Until the earlier of (i) the tenth Business Day after the
Shares Acquisition Date (or, if the tenth Business Day after the Shares
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors of the Company prior to such time
as any Person becomes an Acquiring Person) after the date of a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan) is first published or sent or given within the meaning
of Rule 14d-2(a) of the Exchange Act, the consummation of which would result in
any Person becoming the Beneficial Owner of Common Stock aggregating 20% or more
of the then outstanding Voting Shares of the Company (the earlier of (i) and
(ii) being herein referred to as the "Distribution Date"); provided, however,
-----------------
that an occurrence described in clause (ii) above shall not cause the occurrence
of the Distribution Date if the Board of Directors of the Company shall, prior
to such tenth Business Day (or such later date as described in clause (ii)
above), determine that such tender or exchange offer is spurious, unless,
thereafter, the Board of Directors of the Company shall make a contrary
determination, in which event the Distribution Date shall occur on the later to
occur of such tenth Business Day (or such later date as described in clause (ii)
above) and the date of such latter determination, (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
evidencing the Common Stock registered in the names of the holders thereof
(which certificates for Common Stock shall also be deemed to be Right
Certificates) and not by separate
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<PAGE>
Right Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying shares of
Common Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of the Common Stock as
of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit A hereto (a "Right Certificate"), evidencing one Right for each
share of Common Stock so held, subject to adjustments as provided herein. From
and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, in substantially the form of
Exhibit B hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with a copy
of the Summary of Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or Final Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the Common Stock
represented thereby.
(c) Certificates of Common Stock which become outstanding (including,
without limitation, reacquired Common Stock referred to in the last sentence of
this subparagraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, or the Final Expiration Date shall have
impressed on, printed on, written on, or otherwise affixed to them to the extent
practicable the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the First
Amended and Restated Rights Agreement between BancTec,
Inc. and American Stock Transfer & Trust Company, dated
as of May 26, 1998 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference
and a copy of which is on file at the principal
executive offices of BancTec, Inc. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
BancTec, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person or any Affiliate
or Associate thereof (each as defined in the Rights
Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Final Expiration Date, the Rights
associated with the Common Stock represented by such
5
<PAGE>
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Stock represented thereby. In the event that
the Company purchases or acquires any shares of Common Stock after the Record
Date but prior to the Distribution Date, any Rights associated with Common Stock
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Stock which are no longer
outstanding.
(d) The Company agrees that, at any time after the Record Date and
prior to the Distribution Date (or, if earlier, the Redemption Date or Final
Expiration Date) at which it issues any of its Common Stock upon original issue
or out of treasury, it will concurrently distribute to the holder of such Common
Stock one Right for each such Common Stock, which Right shall be subject to the
terms and provisions of this Agreement and will evidence the right to purchase
the same number of shares of Common Stock at the same Purchase Price as the
Rights then outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES.
--------------------------
(a) The Right Certificates (and the forms of election to purchase
Common Stock and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11,
Section 13 and Section 23 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of shares of Common Stock as shall be
set forth therein at the price set forth therein (such exercise price per one
share of Common Stock, the "Purchase Price"), subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (1) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement, or understanding regarding the transferred Rights or (2) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement, or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof,
6
<PAGE>
and any Right Certificate hereunder, upon transfer, exchange, replacement, or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such
Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board,
President, or any Vice President, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a facsimile thereof, and shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date and prior to the earlier of the Redemption
Date and the Final Expiration Date, the Rights Agent will keep or cause to be
kept, at its principal office, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER. SPLIT-UP, COMBINATION, AND EXCHANGE OF RIGHT
------------------------------------------------------
CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN
---------------------------------------------------
CERTIFICATES.
------------
(a) Subject to the provisions of Section 4(b), Section 7(e), and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of shares of Common Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine, or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined,
7
<PAGE>
or exchanged at the principal office of the Rights Agent. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination, or exchange of a Right Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Right Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed, or mutilated.
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE, EXPIRATION DATE OF RIGHTS.
-------------------------------------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby in whole or in part
at any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with
payment of the aggregate Purchase Price with respect to the total number of
shares of Common Stock (or other securities, cash, or other assets, as the case
may be) as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on May 20, 2008 (the "Final Expiration Date") or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date").
(b) The Purchase Price for each share of Common Stock pursuant to
the exercise of a Right shall initially be $85.00 and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares of Common Stock (or other shares,
securities, cash, or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate by certified check, cashier's check, bank draft, or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i)requisition from any transfer agent of the Common Stock certificates
(or make available if the Rights Agent is the transfer agent
8
<PAGE>
for such shares) for the number of shares of Common Stock to be purchased, and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates, cause the same to
be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and iv. when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate. In the event that
the Company is obligated to issue other securities (including Common Stock) of
the Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that other
securities, cash, and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if
any Person shall become an Acquiring Person, thereafter any Rights beneficially
owned by
(i) such Acquiring Person or an Associate or Affiliate of
such Acquiring Person;
(ii) a transferee of such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement, or understanding which has a primary purpose or
effect the avoidance of this Section 7(e),
shall become null and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with but shall have no liability to any holder
of Right Certificates or other Person as a result of its failure to make any
determinations with respect to any Acquiring Person or its Affiliates,
Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered
9
<PAGE>
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates and, in such
case, shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION, REGISTRATION, AND LISTING.
--------------------------------------
(a) Following the Distribution Date, the Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock or out of its authorized and
issued shares held in its treasury, the number of shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) Following the Distribution Date, the Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Common Stock delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such Common Stock (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and non-
assessable shares.
(c) So long as the Common Stock issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to promptly cause, from and after such time
as the Rights become exercisable, all shares of Common Stock and other
securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(d) The Company shall use its best efforts to (i) file, as soon as
is required by law following the Distribution Date, a registration statement
under the Securities Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after the filing, and (iii)
cause such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for such securities
and (B) the Final Expiration Date. The Company will also take all action
necessary to ensure compliance with the securities laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to
10
<PAGE>
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(d), the exercisability of the Rights in order to
prepare and file such registration statements. Upon any suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in that jurisdiction shall have
been obtained.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Common Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates for the Common Stock in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or to deliver any certificates for
Common Stock upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE. Each person in whose name any
------------------------
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Stock represented thereon, and such certificate shall be dated the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
- -----------------
which the Common Stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Stock transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitations, the
right to vote, to receive dividends or other distributions, or to exercise any
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE. NUMBER OF SHARES, OR NUMBER OF
------------------------------------------------------------
RIGHTS. The Purchase Price, the number of shares of Common Stock covered by each
- ------
Right, and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares of
Common Stock, or (D) issue any shares of its capital stock in a
reclassification of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e)
11
<PAGE>
hereof, the Purchase Price in effect the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, and the number of kind of shares of Common Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase Price,
the aggregate number and kind of shares of Common Stock or capital stock,
as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Common Stock transfer books of
the Company were open, he would have owned upon such date and been entitled
to receive by virtue of such dividend, subdivision, combination, or
reclassification; provided, however, that in no event shall the
-----------------
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) Subject to any action of the Board of Directors of the
Company pursuant to Section 23 of this Agreement, if any Person shall
become an Acquiring Person, proper provision shall be made so that each
holder of a Right (except as provided below) shall thereafter have the
right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of shares of
Common Stock for which a Right is then exercisable, and (y) dividing that
product by 50% of the current market price (determined pursuant to Section
11(d) hereof) per share of Common Stock on the date (such number of shares,
the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (a) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (b) the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units
of shares, of preferred stock which the Board of Directors of the Company
has deemed to have the same value as shares of Common Stock (such shares of
preferred stock, "common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
-----------------
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the date on which the
12
<PAGE>
Company's right of redemption pursuant to Section 23(a) expires, then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Distribution Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need be taken pursuant
to the first and/or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Distribution Date, and the
value of any "common stock equivalent" shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options, or warrants to all holders of Common Stock entitling them (for
a period expiring within 45 calendar days after such record date) to subscribe
for or purchase shares of Common Stock (or shares having the same rights,
privileges and preferences as the Common Stock ("common stock equivalents")) or
securities convertible into Common Stock or common stock equivalents at a price
per share of Common Stock or common stock equivalents (or having a conversion
price per share, if a security convertible into Common Stock or common stock
equivalents) less than the then current market price per share of the Common
Stock (as defined in Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock which
the aggregate offering price of the total number of Common Stock and/or common
stock equivalents so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the number of shares
of Common Stock outstanding on such record date plus number of additional shares
of Common Stock and/or common stock equivalents to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration, part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Common Stock owned by or held for the account of
the
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<PAGE>
Company shall not be deemed outstanding for the purpose of any computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Common
Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the then current
market price per share of the Common Stock (as defined in Section 11(d) hereof)
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Common Stock and the denominator of which shall be
such current per share market price of the Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" of any security (a "Security" for the purpose of this Section 11(d)) on
any date shall be deemed to be the average of the daily closing prices per share
of such Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date, provided, however,
-----------------
that in the event that the current market price per share of the Security is
determined during a period following the announcement by the issuer of such
Security of (1) a dividend or distribution on such Security payable in shares of
such Security of securities convertible into such shares (other than the
Rights), or (2) any subdivision, combination, or reclassification of such
Security and prior to the expiration of the requisite thirty (30) Trading Days
or ten (10) Trading Days, as set forth above, or after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination, or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to reflect the ex-dividend
trading. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange ("NYSE") or, if the
Security is not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last closing price or, if
14
<PAGE>
no such sale takes place on such day, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Company. If on such date no market maker is making a
market in the Security, the fair value of each share of such on such date as
determined in good faith by the Board of Directors of the issuer of such
Security shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
If shares of Common Stock are not publicly held or so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) No such adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
-----------------
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Common Stock or any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which requires such adjustment or
(ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Subsections 11 (a), (b), (c), (e), (g), (h), (i), (j),
(k), and (m), and the provisions of Sections 7, 9, 10, 13, and 14 with respect
to the shares of Common Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of
15
<PAGE>
Common Stock (calculated to the nearest one ten-thousandth) obtained by (i)
multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any date
thereafter, but, if the Right Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares of Common Stock which were expressed
in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Common Stock
and other capital stock or securities of the Company, if
16
<PAGE>
any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
-----------------
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Stock, issuance wholly
for cash of any Common Stock at less than the current market price, issuance
wholly for cash of Common Stock or securities which by their terms are
convertible into or exchangeable for Common Stock, stock dividends or issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Common Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with, (ii) merge with or into, or
(iii) sell or transfer to, in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole, any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o) hereof) if (x) at the
time of or immediately after such consolidation, merger, or sale there are any
rights, warrants or other instruments outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) the shareholders of the Person who constitutes, or
would constitute the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Shares
Acquisition Date, it will not, except as permitted by Section 23 or Section 26
hereof, take any action the purpose or effect of which is to substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, unless such action is approved by a majority of the Continuing
Directors.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any event shall equal the
result obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
17
<PAGE>
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall promptly a. prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment, b.
file with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate, and c. mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25 hereof.
SECTION 13. CONSOLIDATION, MERGER. OR SALE OR TRANSFER OF ASSETS OR
-------------------------------------------------------
EARNING POWER.
- -------------
(a) In the event that, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company), (y) any Person (other than a Subsidiary of the
Company) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions),
then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal, or other adverse claims, as shall be
equal to the result obtained by (A) multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right is then
exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii)) and dividing that product by (B) 50% of the
current market price (determined pursuant to Section 11(d) hereof) per
share of the Common Stock or other securities of such Principal Party on
the date of consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and
shall automatically assume by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party; and
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions
18
<PAGE>
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock or other securities thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation;
and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (a) if the Common Stock or other
- -----------------
securities of such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, "Principal
Party" shall refer to such other Person; and (b) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stocks
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale, or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Final Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations, or sales or other transfers.
19
<PAGE>
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Date immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if the Rights are not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock and, in lieu thereof, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common Stock. For purposes
of this Section 14(b), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
(d) Should any adjustment contemplated by Section 11(a)(ii) occur,
the Company shall not be required to issue fractions of shares of Common Stock
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. If after any such adjustment a Person would
otherwise be entitled to receive a fractional share of Common Stock of the
Company upon exercise of any Right Certificate, the Company shall, in lieu
thereof, pay to such Person at the time such Right is exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Common Stock. For purposes of this Section 14(d), the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock for the Trading Day immediately prior to the date of such
exercise.
20
<PAGE>
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
----------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or preceding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificate is
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) subject to Section 7(e) hereof, the Company and the Rights
Agent may deem and treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory, or administrative agency or
commission, or any statute, rule, regulation, or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
-----------------
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
21
<PAGE>
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends, or be deemed for any purpose the holder of a share of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith, or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
---------------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
22
<PAGE>
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) The Rights Agent shall not be deemed to have knowledge of any
fact or matter pertaining to the performance of its duties under this Agreement,
except such facts or matters as are evidenced by records which are required to
be created and maintained by it hereunder, until it shall have been advised
thereof in writing by the Company or by a holder of Rights. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the President, any Vice President, the
Treasurer, or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by
23
<PAGE>
the Rights Agent) or in respect of the validity of execution of any Right
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method, or amount thereof) provided for in Section
11 or Section 13 hereof or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Common Stock will, when issued, be validly
authorized and issued, fully paid, and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct, provided, reasonable care was exercised in the selection
--------
and continued employment thereof.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent
24
<PAGE>
of the Common Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or of the States of New York or Texas (or of any other
state in the United States so long as such corporation is authorized to do
business as a banking institution in the States of New York or Texas), in good
standing, having an office in the States of New York or Texas) which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $10 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties, and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act, or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
--------------------------
(a) The Board of Directors of the Company may, at its option, at
any time prior to the time any Person becomes an Acquiring Person, redeem all
but not less than all the then outstanding Rights at a redemption price of $.05
per Right, subject to appropriate adjustment to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). Any such
redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent
25
<PAGE>
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the Transfer
Agent for the Common Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made.
SECTION 24. NOTICE OF CERTAIN EVENTS.
------------------------
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to the
holders of its Common Stock or to make any other distribution to the holders of
its Common Stock (other than a regular quarterly cash dividend),(ii) to offer
all of the holders of its outstanding shares of Common Stock rights or warrants
to subscribe for or to purchase any additional shares of Common Stock or shares
of stock of any class or any other securities, rights, or options, (iii) to
effect any reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (v) to effect the liquidation, dissolution,
or winding up of the Company, or (vi) to declare or pay any dividend on the
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination, or consolidation of the Common Stock (by reclassification or
otherwise that by payment of dividends in Common Stock), then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Stock, if any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the Common Stock
for purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Stock, whichever
shall be the earlier.
(b) If any Person shall become an Acquiring Person, then the
Company shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
26
<PAGE>
SECTION 25. NOTICES. Notices or demand authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
BancTec, Inc.
4851 LBJ Freeway
Suite 1100
Dallas, Texas 75244
Attention: Corporate Secretary
With a copy to:
Vinson & Elkins, L.L.C.
2100 Ross Avenue
Dallas, Texas 75201
Attention: Jim Watson
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Notices or demand authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
--------------------------
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates; provided, this Agreement may not be supplemented
--------
or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable, or
27
<PAGE>
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of shares of Common Stock for which a Right is exercisable. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 27. SUCCESSORS. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS ETC.
--------------------------------------------------------
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations, and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by
the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, and all other parties, and
(y) not subject the Board to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
exclusive benefit of the Company, the Rights Agent, and the registered holders
of the Right Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
SECTION 30. SEVERABILITY. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable present or future laws, but if any provision of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
illegal, or unenforceable, in any respect under any such applicable law, such
invalidity, illegality, or unenforceability will not affect the remaining
provisions of this Agreement, but this Agreement will be reformed, construed,
and enforced in such jurisdiction or by such authority as if such invalid,
illegal, or unenforceable provision had never been contained herein.
28
<PAGE>
SECTION 31. GOVERNING LAW. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any number
------------
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 34. ENTIRE AGREEMENT. This Agreement contains the entire
----------------
understanding of the parties with respect to the subject matter hereof. This
Agreement supersedes the Prior Agreement and any other prior agreements with
respect to the subject matter hereof.
[Remainder of page intentionally left blank.]
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the 5th day of April, 1999, to be effective as of the date and year
first above written.
BANCTEC, INC.
By: /s/ Tod V. Mongan
--------------------------------
Name: Tod V. Mongan
------------------------------
Title: Senior Vice President
-----------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert Lemmer
--------------------------------
Herbert Lemmer
Vice President
30
<PAGE>
EXHIBIT A
---------
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MAY 20, 2008 OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.05 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
BANCTEC, INC.
This certifies that ___________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions, and
conditions of the First Amended and Restated Rights Agreement, dated as of May
26, 1998 (the "Rights Agreement"), between BancTec, Inc., a Delaware corporation
(the "Company"); and American Stock Transfer & Trust Company (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on May 20, 2008 at the principal office of the Rights Agent or at the
office of its successor as Rights Agent, one fully paid non-assessable share of
Common Stock ("Common Stock") of the Company, at a purchase price of $85.00 per
share of Common Stock (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of shares
of Common Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
May 26, 1998, based on the Common Stock as constituted at such date. As provided
in the Rights Agreement, the Purchase Price and the number of shares of Common
Stock which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
A-1
<PAGE>
The Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase like aggregate number of
shares of Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
If any person shall become an Acquiring Person (as such term is defined in
the Rights Agreement), thereafter if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) such Acquiring Person or an Affiliate
or Associate of such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of such Acquiring Person, Associate, or Affiliate,
or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of a person who, after such transfer, became an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, such Rights shall become null
and void, and no holder hereof shall have any right with respect to such Rights.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
[Remainder of page intentionally left blank.]
A-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of __________________, 19__.
ATTEST: BANCTEC, INC.
_______________________________ By: ___________________________
Secretary Its: ___________________________
Countersigned:
By: ___________________________
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer Right Certificate)
FOR VALUE RECEIVED ________________________________________________ hereby
sells, assigns, and transfers unto ____________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ________________, 19___
_____________________________
Signature
Signature Guaranteed:
- -------------------------------------------------------------------------------
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [_] is [_] is not being sold, assigned, and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[_] did [_] did not acquire the Right evidenced by this Right Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Associate or Affiliate of an Acquiring Person.
Dated: ________________, 19___
_____________________________
Signature
Signature Guaranteed:
A-4
<PAGE>
NOTICE
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right represented
by the Right Certificate.
To: BANCTEC, INC.
The undersigned hereby irrevocably elects to exercise ___________________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares of Common Stock be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ________________, 19___
_____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-6
<PAGE>
Form of Reverse Side of Right Certificate - continued
- --------------------------------------------------------------------------------
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [_] is [_] is not being sold, assigned, and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [_]
did [_] did not acquire the Right evidenced by this Right Certificate from any
Person who is, was, or subsequently became an Acquiring Person or an Associate
or Affiliate of an Acquiring Person.
Dated: ________________, 19___
___________________________
Signature
Signature Guaranteed:
- --------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
A-7
<PAGE>
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On May 21, 1998, the Board of Directors of BancTec, Inc. (the "Company")
declared a dividend distribution of one Right for each outstanding share of
Common Stock, $.01 par value, of the Company to stockholders of record at the
close of business on May 26, 1998. Each Right entitles the registered holder to
purchase from the Company one share of Common Stock of the Company, at a
Purchase Price of $85.00 per share of Common Stock, subject to adjustment. The
description and terms of the Rights are set forth in the First Amended and
Restated Rights Agreement (the "Rights Agreement") between the Company and
American Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Shares
Acquisition Date"), or (ii) ten (10) business days following the commencement of
a tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the Record Date
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on May 20, 2008, unless earlier redeemed by the Company
as described below.
As soon as practicable after the Distribution Date, Right Certificates will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, and except in certain circumstances described in the Rights
Agreement, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that any Person shall become an Acquiring Person, each holder
of a Right will thereafter have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property, or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any Person
becoming an Acquiring Person, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by an
Acquiring Person will be null and void.
B-1
<PAGE>
In the event that (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation
(other than a merger described in the preceding paragraph or a merger which
follows an offer described in the preceding paragraph), or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock, or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment in cash may be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
At any time until fifteen days following the Shares Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.05 per
Right, payable in cash. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.05 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
--------
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available
B-2
<PAGE>
free of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
B-3
<PAGE>
EXHIBIT 4.2
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO RIGHTS AGREEMENT (this "Amendment"), dated as
of April 5, 1999, is between BancTec, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Recitals
--------
WHEREAS, the Company and the Rights Agent are parties to the First
Amended and Restated Rights Agreement, dated as of May 26, 1998 (the "Rights
Agreement");
WHEREAS, Colonial Acquisition Corp., a Delaware corporation ("Merger
Sub") and the Company propose to enter into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Merger Sub will merge with and into the
Company (the "Merger"), the Board of Directors of the Company having approved
the Merger Agreement and the Merger; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Board of
Directors of the Company has determined that an amendment to the Rights
Agreement as set forth herein is necessary and desirable in connection with the
foregoing, and the Company and the Rights Agent desire to evidence such
amendment in writing;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as follows:
(a) Amendment of Section 1(a). Section 1(a) of the Rights Agreement
-------------------------
is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, neither Merger
Sub nor any of its affiliates shall be deemed to be an Acquiring Person
solely by virtue of (i) the execution of the Merger Agreement or (ii) the
consummation of the Merger."
(b) Amendment of Section 1. Section 1 of the Rights Agreement is
----------------------
amended to add the following at the end thereof:
(o) "Merger" shall have the meaning set forth in the recital to
Amendment No. 1 to Rights Agreement.
(p) "Merger Agreement" shall mean that certain Agreement and
Plan of Merger, dated as of April 5, 1999, by and between
Merger Sub and the Company, as amended from time to time.
(q) "Merger Sub" shall mean Colonial Acquisition Corp., a
Delaware corporation.
<PAGE>
(c) Amendment of Section 3(a). Section 3(a) of the Rights Agreement
-------------------------
is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, a Distribution
Date shall not be deemed to have occurred solely as the result of (i) the
execution of the Merger Agreement or (ii) the consummation of the Merger."
(d) Amendment of Section 18(a). Section 18(a) of the Rights Agreement
--------------------------
is amended to read as follows:
"(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending
against any claim of liability in the premises. The indemnity
provided herein shall survive the termination of this Agreement
and the termination and the expiration of the Rights. The costs
and expenses incurred in enforcing this right of indemnification
shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or
damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage. Any liability of the Rights
Agent under this Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent."
(e) The parties hereto hereby amend the Rights Agreement by adding
the following Section 35 to the Rights Agreement:
"Section 35. Termination. Immediately prior to the effective
-----------
time of the Merger, (i) the Agreement shall be terminated and be
without any further force or effect, (ii) none of the parties to
the Agreement will have any rights, obligations or liabilities
thereunder, provided however, Section 18 of the Agreement shall
survive termination of the Agreement, and (iii) the holders of
the Rights shall not be entitled to any benefits, rights or other
interests under the Agreement, including without limitation, the
right to purchase or otherwise acquire shares of the Preferred
Stock or any other securities of the Company."
(f) Effectiveness. This Amendment shall be deemed effective as of the
-------------
date first written above, as if executed on such date. Except as amended hereby,
the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
(i) Miscellaneous. This Amendment shall be deemed to be a contract
-------------
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such state applicable
to contracts to be made and performed entirely within such state.
2
<PAGE>
This Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any
provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be fully executed, all as of the date and year first above written.
BANCTEC, INC.
By: /s/ Tod V. Mongan
-------------------------------
Name: Tod V. Mongan
Title: Senior Vice President
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ Herbert Lemmer
-------------------------------
Herbert Lemmer
Vice President
4
<PAGE>
EXHIBIT 99.1
BANCTEC.
IMMEDIATE
RELEASE.
BancTec Announces Definitive Agreement to Merge with Welsh, Carson, Anderson &
Stowe Affiliate
DALLAS, April 5 /PRNewswire/ -- BancTec, Inc. (NYSE: BTC) today announced
that it has signed a definitive agreement to merge with a corporation formed
by Welsh, Carson, Anderson & Stowe (WCAS), a leading New York - based private
investment firm.
The transaction is valued at an estimated $525 million, including BancTec's
current indebtedness of approximately $150 million.
BancTec will continue to operate as an independent company under its
current name and management. The company's Board of Directors unanimously
approved the transaction.
Under the terms of the merger agreement, approximately 97% of BancTec
common stock will be converted into the right to receive $18.50 in cash per
share. BancTec's current stockholders will retain the remaining shares, which
will be approximately 6.5% of the post-merger common stock. There are
approximately 19,460,000 million shares of BancTec common stock currently
outstanding.
WCAS has agreed to seek an independent third party investor to buy an
estimated 6.5% of the Company's post-merger common stock. If WCAS arranges for
such an investor to make such a purchase, BancTec's current shareholders will
receive $18.50 in cash for 100% of their shares. The transaction is structured
to be accounted for as a recapitalization.
The merger is expected to be completed during the third quarter of 1999 and
is subject to approval by BancTec's shareholders, the expiration of the
applicable waiting period under the Hart-Scott-Rodino Act and other customary
conditions.
A special meeting of BancTec's shareholders will take place as soon as
practical following approval of proxy materials by the Securities and Exchange
Commission.
In the event the merger agreement is terminated under certain
circumstances, BancTec has agreed to pay WCAS a termination fee of $12 million.
The investment firm Goldman Sachs & Co. served as financial advisor to the
BancTec Board of Directors. WCAS was advised by Chase Securities Inc.
Founded in 1979, WCAS currently manages over $7 billion in private equity
capital and focuses primarily on the information services and healthcare
industries.
(more)
[LOGO OF BANCTEC(R) APPEARS HERE]
ENTERPRISING SOLUTIONS THAT KEEP BUSINESS MOVING
<PAGE>
-2-
BancTec is a worldwide systems integration and services company
specializing in transaction management solutions for the banking, financial
services, insurance, healthcare, government, utility, telecommunications and
retail industries. The company is also a leading provider of computer and
network services for major computer companies, government and corporate
customers. BancTec employs more than 4,000 people worldwide and is headquartered
in Dallas, Texas.
SOURCE BancTec, Inc.
-0- 04/05/98
/CONTACT: Susan Seiter, Investor Relations of BancTec, Inc.,
972-341-4904/
(BTC)
-0-
<PAGE>
EXHIBIT 99.2
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
320 Park Avenue, Suite 2500
New York, N.Y. 10022
April 5, 1999
Colonial Acquisition Corp.
c/o Welsh, Cason, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
BancTec, Inc.
4851 LBJ Freeway
Dallas, Texas 75244
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of the
date hereof (the "Agreement"), between Colonial Acquisition Corp.
("Acquisition") and BancTec, Inc. (the "Company"). Capitalized terms used
herein and not otherwise defined herein have the meanings given to them in the
Agreement.
We agree with Acquisition and the Company that, if at any time between
the date hereof and the Effective Time, Acquisition shall have any obligations
or liabilities, whether under the Agreement of otherwise, that cannot be
satisfied out of the assets of Acquisition, the undersigned shall make an equity
investment in Acquisition in an amount equal to such obligations or liabilities,
(i) up to $134,087,500 or (ii) in the event that an Independent Investor (as
hereinafter defined) agrees to invest in Acquisition in connection with an
Alternative Transaction (as hereinafter defined), up to $145.0 million, in each
case in the aggregate. Any such investment shall reduce by an equal amount any
investment commitment the undersigned may have to Acquisition. The
undersigned's obligation hereunder may be satisfied by an investment by any
other affiliate of Welsh, Carson, Anderson & Stowe or a third party.
We also agree that we shall use our commercially reasonable efforts to
(i) consummate the Financing substantially on the terms of the Commitment
Letters, (ii) identify a third party that is independent of, and not affiliated
with Welsh, Carson, Anderson & Stowe (the "Independent Investor"), which will
invest in Acquisition in a manner designed to permit the Merger to be
restructured to achieve recapitalization accounting treatment and (iii) effect
the purchase by Acquisition of 100% of the shares of Company Common Stock
outstanding immediately prior to the
<PAGE>
Effective Time for the Cash Election Price (such restructured transaction being
referred to as the "Alternative Transaction"). We are highly confident that we
will obtain a definitive commitment from an Independent Investor prior to the
filing with the Securities and Exchange Commission of the Form S-4.
Notwithstanding anything that may be expressed or implied in the
foregoing provisions of this letter agreement, Acquisition and the Company, by
their acceptance of the benefits hereof, covenant, agree and acknowledge that no
person or entity other than Welsh, Carson, Anderson & Stowe VIII, L.P. ("WCAS
VIII"), shall have any obligation hereunder and that, notwithstanding that WCAS
VIII is a partnership, no recourse hereunder shall be had against any current or
future officer, director, agent or employee of WCAS VIII, against any current or
future general or limited partner of WCAS VIII or against any current or future
director, officer, employee, general or limited partner, member, affiliate or
assignee of any of the foregoing, whether by the enforcement of any assessment
or by any legal or equitable proceeding or by virtue of any statute, regulation
or other applicable law. Without limiting the generality of the foregoing, it
is expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise incurred by any current or future officer,
agent or employee of WCAS VIII, any current or future general or limited partner
of WCAS VIII or any current or future dire tor, officer, employee, general or
limited partner, member affiliate or assignee of any of the foregoing, as such
for any obligations of WCAS VIII under this letter agreement or for any claim
based on, in respect of or by reason of such obligations or their creation.
Very truly yours,
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC
General Partner
By /s/ Robert A. Minicucci
-----------------------------------------
Managing Member
Accepted and Agreed to By:
COLONIAL ACQUISITION CORP.
By /s/ Anthony J. de Nicola
-------------------------------
Title: Vice President
BANCTEC, INC.
By /s/ Tod V. Mongan
-------------------------------
Title: Senior Vice President
<PAGE>
EXHIBIT 99.3
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
April 5, 1999
Colonial Acquisition Corp.
c/o Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of the
date hereof (the "Agreement"), between BancTec, Inc. (the "Company") and
Colonial Acquisition Corp. ("Acquisition"). Capitalized terms used and not
otherwise defined herein have the meanings ascribed to them in the Agreement.
We agree that, subject to the satisfaction or waiver of the conditions
precedent set forth in Sections 6.01 and 6.02 of the Agreement and the other
conditions described below, Acquisition (and its assignees, if any), at the
Effective Time, will be capitalized with common equity in an aggregate amount
equal to $134,087,500 or, in the event that the transaction is restructured so
that 100% of the outstanding common stock of the Company is to be acquired for
cash in the Merger, $145.0 million (such aggregate amount is referred to herein
as the "Equity Commitment") from Welsh, Carson, Anderson & Stowe VIII, L.P.
("WCAS VIII") and certain investors (together with WCAS VIII, the "Investors")
to be used by Acquisition (and its assignees, if any) to consummate the Merger
and related transactions as set forth in the Agreement; provided, that such
obligation shall be conditioned upon the Company (i) entering into and receiving
the proceeds from the senior credit facility with Chase Securities Inc. and
Chase Bank of Texas, N.A. (collectively, "Chase") as described in and
substantially on the terms of the Commitment Letter dated April 5, 1999 from
Chase to WCAS VIII and (ii) receiving the proceeds from the purchase of senior
subordinated notes as described in and on substantially the terms of the letter
<PAGE>
attached hereto as Exhibit A. The Investors will be under no obligation under
any circumstances to capitalize Acquisition with equity in the aggregate greater
than the Equity Commitment.
Notwithstanding anything that may be expressed or implied in this
letter agreement, Acquisition, by its acceptance of the benefits hereof,
covenants, agrees and acknowledges that, no person other than WCAS VIII shall
have any obligation hereunder and that, notwith standing that WCAS VIII and
certain of the other Investors are partnerships, no recourse hereunder or under
any documents or instruments delivered in connection herewith shall be had
against any current or future officer, agent or employee of WCAS VIII or of any
other Investor, against any current or future general or limited partner of WCAS
VIII or of any other Investor or against any current or future director,
officer, employee, general or limited partner, member, affiliate or assignee of
any of the foregoing, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of WCAS VIII or of any other
Investor or any current or future general or limited partner of WCAS VIII or of
any Investor or any current or future director, officer, employee, general or
limited partner, member, affiliate or assignee of any of the foregoing, as such
for any obligations of WCAS VIII or of any Investor under this letter agreement
or any documents or instruments delivered in connection herewith or for any
claim based on, in respect of or by reason of such obligations or their
creation.
Very truly yours,
WELSH, CARSON, ANDERSON &
STOWE VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By /s/ Robert A. Minicucci
---------------------------
Managing Member
Accepted and Agreed to By:
COLONIAL ACQUISITION CORP.
By Anthony J. de Nicola
----------------------------
Title: Vice President
<PAGE>
EXHIBIT 99.4
EXHIBIT A
---------
WCAS CAPITAL PARTNERS III, L.P.
320 Park Avenue, Suite 2500
New York, New York 10022
April 5, 1999
Colonial Acquisition Corp.
c/o Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of the
date hereof (the "Agreement"), between BancTec, Inc. (the "Company") and
Colonial Acquisition Corp. ("Acquisition"). Capitalized terms used and not
otherwise defined herein have the meanings ascribed to them in the Agreement.
This will confirm that, subject to the satisfaction or waiver of the
conditions precedent set forth in Sections 6.01 and 6.02 of the Agreement and
the other conditions described below, WCAS Capital Partners III, L.P. ("WCAS CP
III") will purchase or cause an affiliate or other person (together with WCAS CP
III, the "Sub Debt Investors") to purchase at the Effective Time, $160.0 million
in aggregate principal amount of senior subordinated notes ("Notes"); provided,
that such obligation shall be conditioned upon the Company entering into and
receiving the proceeds from the senior credit facility with Chase Securities
Inc. and Chase Bank of Texas, N.A. (collectively, "Chase") as described in and
substantially on the terms of the Commitment Letter dated April 5, 1999 from
Chase to Welsh, Carson, Anderson & Stowe VIII, L.P.
We will be under no obligation under any circumstances to purchase
Notes in aggregate principal amount greater than $160.0 million.
Notwithstanding anything that may be expressed or implied in this
letter agreement, Acquisition, by its acceptance of the benefits hereof,
covenants, agrees and acknowledges that, no person other than WCAS CP III shall
have any obligation hereunder and that, notwithstanding that WCAS CP III and
certain of the other Sub Debt Investors may be partnerships, no recourse
hereunder or under any documents or instruments delivered in
<PAGE>
connection herewith shall be had against any current or future officer, agent or
employee of WCAS CP III or of any other Sub Debt Investor, against any current
or future general or limited partner of WCAS CP III or of any other Sub Debt
Investor or against any current or future director, officer, employee, general
or limited partner, member, affiliate or assignee of any of the foregoing,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any statute, regulation or other applicable law, it
being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by any current or future
officer, agent or employee of WCAS CP III or of any other Sub Debt Investor or
any current or future general or limited partner of WCAS CP III or of any Sub
Debt Investor or any current or future director, officer, employee, general or
limited partner, member, affiliate or assignee of any of the foregoing, as such
for any obligations of WCAS CP III or of any Sub Debt Investor under this letter
agreement or any documents or instruments delivered in connection herewith or
for any claim based on, in respect of or by reason of such obligations or their
creation.
Very truly yours,
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates L.L.C.,
General Partner
By /s/ Robert A. Minicucci
------------------------------------
Managing Member
Accepted and Agreed to By:
COLONIAL ACQUISITION CORP.
By /s/ Anthony J. de Nicola
----------------------------
Title: Vice President
<PAGE>
EXHIBIT 99.5
CHASE SECURITIES INC.
CHASE BANK OF TEXAS, N.A.
2200 Ross Avenue
Dallas, Texas 75201
April 5, 1999
$125,000,000
------------
Senior Secured Credit Facilities
--------------------------------
Commitment Letter
-----------------
Welsh, Carson, Anderson & Stowe VIII, L.P.
320 Park Avenue
Suite 2500
New York, New York 10022-6815
Attention: Anthony deNicola, General Partner
Robert Minicucci, General Partner
Gentlemen:
You have advised Chase Securities Inc. ("CSI") and Chase Bank of
---
Texas, N.A. ("Chase") that you, together with your affiliates (collectively,
-----
"WCAS"), will form a new corporation ("Newco") for the purposes of effecting a
---- -----
recapitalization (the "Acquisition") of BancTec, Inc. ("BancTec"). The
----------- -------
Acquisition will be effected by merging Newco with and into BancTec, with
BancTec continuing as the surviving corporation (the "Surviving Corporation"). A
---------------------
payment of cash consideration will be made for a specified proportion of the
outstanding common stock of BancTec (the "Electing Shares"), while the remaining
---------------
outstanding common stock of BancTec will remain outstanding (the "Retained
--------
Shares") as shares of the Surviving Corporation. As a result of the Acquisition,
- ------
each Electing Share will be converted into the cash consideration per share, the
Retained Shares will remain outstanding as shares of common stock of the
Surviving Corporation, and the outstanding shares of Newco will be converted
into approximately 93.5% (expressed as a percentage of the Surviving Corporation
following the Acquisition) of the outstanding common stock of the Surviving
Corporation. Alternatively, if able to be accounted for as a recapitalization,
WCAS and one or more other investors (collectively, the "Other Investor") will
--------------
effect the Acquisition by permitting the Other Investor to acquire approximately
6.5% of Newco and merging Newco with and into BancTec, as a result of which WCAS
will become the owner of approximately 93.5% of the common stock of the
<PAGE>
2
Surviving Corporation, the Other Investor will become the owner of approximately
6.5% of such common stock (the "Alternative Acquisition"), and the existing
-----------------------
stockholders of BancTec will receive cash consideration in exchange for all of
their common stock in BancTec. Immediately after the Acquisition, BancTec USA,
Inc. will merge with or be liquidated into (the "Subsidiary Merger") the
-----------------
Surviving Corporation (after giving effect to the Subsidiary Merger, the
"Borrower"). In connection with the Acquisition and the Subsidiary Merger,
--------
approximately $6,300,000 of the existing indebtedness of BancTec will be
refinanced (the "Refinancing"; together with the Acquisition and the Subsidiary
-----------
Merger, the "Transactions").
------------
In connection with the Transactions, you have advised us that you
propose to finance such Transactions with (i) senior secured credit facilities
in an aggregate amount of up to $125,000,000 (the "Facilities") of the
----------
Borrower, comprised of a term loan facility aggregating up to $75,000,000 (the
"Term Facility") and a $50,000,000 revolving credit facility (the "Revolving
------------- ---------
Facility"), (ii) senior subordinated financing in an aggregate amount of
- --------
$160,000,000 of the Borrower on terms and conditions acceptable to the Agent (as
defined below), (iii) proceeds from the exercise by BancTec management of stock
options previously issued by BancTec of $23,300,000 and (iv) common equity in
Newco consisting of $145,000,000 in cash contributed by WCAS and the Other
Investor or $134,087,500 in cash contributed by WCAS and the Retained Shares.
The Revolving Facility will be used to finance a portion of the Transactions and
the continuing operations and general corporate purposes of the Borrower and its
subsidiaries, including the making of acquisitions and investments in other
entities subject to restrictions and limitations to be determined.
CSI is pleased to advise you that it is willing to act as sole and
exclusive advisor, lead arranger and book manager for the Facilities (in such
capacity, the "Arranger"), and Chase is pleased to advise you that it is willing
--------
to serve as administrative agent for the Facilities (in such capacity, the
"Administrative Agent"). In addition, Chase is pleased to advise you that it is
--------------------
willing to act as syndication agent for the Facilities (in such capacity, the
"Syndication Agent"; together with the Administrative Agent, collectively, the
-----------------
"Agent"). Furthermore, Chase is pleased to advise you of its commitment to
-----
provide up to $125,000,000 of the Facilities, upon the terms and subject to the
conditions set forth or referred to in this commitment letter (the "Commitment
----------
Letter") and in the Summary of Terms and Conditions attached hereto as Exhibit A
- ------
(the "Term Sheet").
----------
It is agreed that CSI will act as the Arranger and that Chase will act
as the Administrative Agent and Syndication Agent for the Facilities. You agree
that no other agents, co-agents, arrangers or managers will be appointed, no
other titles will be awarded and no compensation will be paid in connection with
the Facilities unless you and CSI and Chase shall so agree (with CSI and Chase
to reasonably consider any requests by you).
CSI and Chase intend to syndicate the Facilities to a group of
financial institutions (together with Chase, the "Lenders") identified by CSI
-------
and Chase in consultation with you. CSI and Chase intend to commence syndication
efforts promptly upon your entering into definitive documentation with respect
to the Acquisition, and you agree actively to assist CSI and Chase in completing
a syndication satisfactory to them. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the
<PAGE>
3
existing lending relationships of WCAS and BancTec, (b) direct contact between
senior management and advisors of WCAS, BancTec and the Borrower and the
proposed Lenders, (c) assistance in the preparation of a Confidential
Information Memorandum and other marketing materials to be used in connection
with the syndication and (d) the hosting, with CSI and Chase, of one or more
meetings of prospective Lenders.
CSI and Chase will manage all aspects of the syndication of the
Facilities, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders in consultation with you. To assist CSI and Chase in their syndication
efforts, you agree promptly to prepare and provide to CSI and Chase all
information with respect to WCAS, the Borrower, the Transactions and the other
transactions contemplated hereby and to obtain the agreement of BancTec to
prepare and provide all information with respect to it, in each case, including
all reasonable financial information and projections (the "Projections"), as we
-----------
may reasonably request in connection with the arrangement and syndication of the
Facilities. You hereby represent and covenant that, to your knowledge, (a) all
information other than the Projections (the "Information") that has been or will
-----------
be made available to CSI and Chase by you or any of your representatives is or
will be, when furnished, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to CSI and Chase by you or any of your representatives have been
or will be prepared in good faith based upon assumptions that you believe in
good faith to be reasonable. CSI and Chase understand that BancTec is not your
representative. You understand that in arranging and syndicating the Facilities
we may use and rely on the Information and Projections without independent
verification thereof.
As consideration for the commitments of Chase hereunder and the
agreements of the Agent to perform the services described herein, you agree to
pay, and to cause the Borrower to pay, the nonrefundable fees set forth in Annex
I to the Term Sheet and in the Fee Letter, dated the date hereof and delivered
herewith (the "Fee Letter").
----------
CSI and Chase shall be entitled, after consultation with you, to
change the pricing, terms, structure or amounts of any of the Facilities if the
syndication has not been completed and if CSI and Chase reasonably determine
that such changes are advisable to ensure a successful syndication of the
Facilities; provided that (a) the total amount of the Facilities shall remain
unchanged, (b) the interest rate margins and letter of credit fees respectively
applicable to the Facilities shall not be increased by more than 0.75% per annum
and (c) the Term Facility (as defined in the Term Sheet) shall not be revised to
include a "Tranche B" term loan facility of more than $40,000,000. Chase's
commitment hereunder is subject to the agreements in this paragraph.
The commitments hereunder and the agreements to perform the services
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition
<PAGE>
4
(financial or otherwise) or prospects of BancTec and its subsidiaries, taken as
a whole since December 31, 1998, (b) our not becoming aware after the date
hereof of any information or other matter affecting BancTec, the Borrower or the
transactions contemplated hereby which is inconsistent in a material and adverse
manner with any such information or other matter disclosed to us prior to the
date hereof, (c) there not having occurred a material disruption of or material
adverse change in financial, banking or capital market conditions that, in the
judgment of CSI and Chase, could materially impair the syndication of credit
facilities similar or comparable to the Facilities, (d) our satisfaction that
prior to and during the syndication of the Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of WCAS, BancTec or the Borrower or any of their
respective affiliates (except for any such debt securities as contemplated
hereby and for any debt securities or bank financing by or on behalf of WCAS and
its other affiliates as are reasonably coordinated with the syndication of the
Facilities in consultation with CSI and Chase), (e) the negotiation, execution
and delivery of definitive documentation with respect to the Facilities
satisfactory to CSI, Chase and their respective counsels, and the closing of the
transactions thereunder and the Transactions on or before September 15, 1999,
and (f) the other conditions set forth or referred to in the Term Sheet.
You agree (a) to indemnify and hold harmless CSI, Chase and their
respective affiliates and their respective officers, directors, employees,
advisors, and agents (each, an "indemnified person") from and against any and
------------------
all losses, claims, damages and liabilities to which any such indemnified person
may become subject arising out of or in connection with this Commitment Letter,
the Facilities, the use of the proceeds thereof, the Transactions or any other
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for any
reasonable legal or other expenses incurred in connection with investigating or
defending any of the foregoing, provided that the foregoing indemnity will not,
--------
as to any indemnified person, apply to losses, claims, damages, liabilities or
related expenses to the extent they are found by a final, non-appealable
judgment of a court to arise from the willful misconduct or gross negligence of
such indemnified person, and (b) to reimburse CSI, Chase and their respective
affiliates on demand for all reasonable out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant's fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Facilities and any related documentation (including this
Commitment Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
No indemnified person shall be liable for any damages arising from the use by
others of Information (provided that such indemnified person is not in breach of
the confidentiality provisions hereof) or other materials obtained through
electronic, telecommunications or other information transmission systems or for
any special, indirect, consequential or punitive damages in connection with the
Facilities.
You acknowledge that we and our respective affiliates (the term "we"
being understood to refer hereinafter in this paragraph to include such
affiliates) may be providing debt financing, equity capital or other services
(including financial advisory services) to other companies in respect of which
you may have conflicting interests regarding the transactions described herein
and otherwise. We will not use confidential information obtained from you by
<PAGE>
5
virtue of the transactions contemplated by this Commitment Letter or our other
relationships with you in connection with the performance by us of services for
other companies, and we will not furnish any such information to other
companies. You also acknowledge that we have no obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained from other companies.
This Commitment Letter shall not be assignable by any party hereto
(other than an assignment by you to the Surviving Corporation) without the prior
written consent of the other parties hereto (and any purported assignment
without such consent shall be null and void), is intended to be solely for the
benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any person other than the parties hereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you, CSI and Chase. This Commitment Letter may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof. This
Commitment Letter and the Fee Letter are the only agreements that have been
entered into among us with respect to the Facilities and set forth the entire
understanding of the parties with respect thereto. This Commitment Letter shall
be governed by, and construed in accordance with, the laws of the State of New
York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) you may disclose this Commitment Letter, the Term Sheet
and the Fee Letter (i) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (ii) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law, including
public disclosures required under United States securities rules and regulations
(in which case you agree to inform us promptly thereof) and (b) you may disclose
this Commitment Letter and the Term Sheet, and their terms and substance (but
not the Fee Letter or their terms and substance) to BancTec, its officers,
agents and advisors who are directly involved in the consideration of the
Transactions on a confidential basis.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or the commitments hereunder; provided, that your obligations under this
--------
Commitment Letter, other than those arising under the fourth, fifth, sixth and
thirteenth paragraphs hereof, shall automatically terminate and be superseded by
the provisions of the definitive documentation relating to the Facilities upon
the initial funding thereunder, and you shall automatically be released from all
liability in connection therewith at such time. Subject to the foregoing, this
Commitment Letter shall automatically terminate if the closing of the Facilities
shall not occur by reason of any condition described in clause (c) or (d) in the
ninth paragraph hereof not being satisfied or waived, as of the date on which
the parties hereto mutually agree that such closing would otherwise occur.
<PAGE>
6
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter not later
than 5:00 p.m., New York City time, on Wednesday, April 7, 1999. The commitments
and the agreements herein will expire at such time in the event Chase has not
received such executed counterparts and such amounts in accordance with the
immediately preceding sentence.
<PAGE>
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CHASE SECURITIES INC.
By: /s/ Brian Turrentine
------------------------------
Name: Brian Turrentine
Title: Vice President
CHASE BANK OF TEXAS, N.A.
By: /s/ Mike Lister
------------------------------
Name: Mike Lister
Title: Vice President
Accepted and agreed to
as of the date first
written above by:
WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
By: WCAS VIII ASSOCIATES LLC, its
General Partner
By: /s/ Robert Minicucci
-----------------------------------
Name: Robert Minicucci
Title: Managing Member
<PAGE>
Exhibit A
SENIOR SECURED CREDIT FACILITIES
Summary of Terms and Conditions
April 5, 1999
-----------------
Welsh, Carson, Anderson & Stowe VIII, L.P., together with its
affiliates (collectively "WCAS"), will form a new corporation ("Newco") for the
---- -----
purposes of effecting a recapitalization (the "Acquisition") of BancTec, Inc.
-----------
("BancTec"). The Acquisition will be effected by merging Newco with and into
- ---------
BancTec, with BancTec continuing as the surviving corporation (the "Surviving
---------
Corporation"). A payment of cash consideration will be made for a specified
- -----------
proportion of the outstanding common stock of BancTec (the "Electing Shares"),
---------------
while the remaining outstanding common stock of BancTec will remain outstanding
(the "Retained Shares") as shares of the Surviving Corporation. As a result of
---------------
the Acquisition, each Electing Share will be converted into the cash
consideration per share, the Retained Shares will remain outstanding as shares
of common stock of the Surviving Corporation, and the outstanding shares of
Newco will be converted into approximately 93.5% (expressed as a percentage of
the Surviving Corporation following the Acquisition) of the outstanding common
stock of the Surviving Corporation. Alternatively, if able to be accounted for
as a recapitalization, WCAS and one or more other investors (collectively, the
"Other Investor") will effect the Acquisition by permitting the Other Investor
--------------
to acquire approximately 6.5% of Newco and merging Newco with and into BancTec,
as a result of which WCAS will become the owner of approximately 93.5% of the
common stock of BancTec, the Other Investor will become the owner of
approximately 6.5% of such common stock (the "Alternative Acquisition"), and the
-----------------------
existing stockholders of BancTec will receive cash consideration in exchange for
their common stock in BancTec. Immediately after the Acquisition, BancTec USA,
Inc. will merge with or be liquidated into (the "Subsidiary Merger") the
-----------------
Surviving Corporation (after giving effect to the Subsidiary Merger, the
"Borrower"). In connection with the Acquisition and the Subsidiary Merger,
- ---------
approximately $6,300,000 of the existing indebtedness of BancTec will be
refinanced (the "Refinancing"; together with the Acquisition and the Subsidiary
-----------
Merger, the "Transactions").
------------
I. Parties
-------
Borrower: The surviving corporation of the Acquisition and the Subsidiary
Merger (the "Borrower").
--------
Guarantors: To the extent permitted by BancTec's 7.5% Senior Notes due 2008
(the "Senior Notes"), all obligations of the Borrower under the
------------
Senior Secured Credit Facility and hedging arrangements entered
into with any Lender (as defined below) or any affiliate of any
Lender shall be unconditionally guaranteed by each of the
Borrower's existing and future direct and indirect wholly-owned
domestic subsidiaries (the
<PAGE>
2
"Guarantors"; the Borrower and the Guarantors, collectively, the
----------
"Loan Parties").
------------
Sole and
Exclusive
Advisor, Lead
Arranger and
Book Manager: Chase Securities Inc. ("CSI" and, in such capacity, a
---
"Arranger").
--------
Administrative
Agent: Chase Bank of Texas, N.A. ("Chase" and, in such capacity, the
-----
"Administrative Agent").
--------------------
Syndication
Agent: Chase (in such capacity, the "Syndication Agent"; together with
-----------------
the Administrative Agent, the "Agent").
-----
Lenders: A syndicate of banks, financial institutions and other entities,
including Chase, to be arranged by CSI and the Administrative
Agent in consultation with the Borrower (the "Lenders").
-------
II. Types and Amounts of Credit Facilities
--------------------------------------
1. Term Facility
-------------
Type and
Amount of
Facility: A five year term loan facility to the Borrower (the "Term
----
Facility") in an aggregate principal amount of $75,000,000 (the
--------
loans thereunder, the "Term Loans"). The Term Loans shall be
----------
repayable in equal quarterly installments in each of the first
four 12-month periods following the first anniversary of the
Closing Date in an aggregate amount for each such 12-month period
to be determined.
Availability: The Term Loans shall be made in a single drawing on the Closing
Date (as defined below).
Purpose: The proceeds of the Term Loans shall be used to finance the
Transactions and to pay related fees and expenses.
2. Revolving Facility
------------------
Type and
Amount of
Facility: Five-year revolving credit facility (the "Revolving Facility";
------------------
together with the Term Facility, the "Credit Facilities") in the
-----------------
amount of $50,000,000 (the loans thereunder, the "Revolving
---------
Loans"; together with the Term Loans, the "Loans").
----- -----
<PAGE>
3
Availability: The Revolving Facility shall be fully available on a revolving
basis during the period following the Closing Date and ending on
the fifth anniversary thereof (the "Revolving Termination Date").
--------------------------
A portion of the Revolving Facility not in excess of $7,500,000
shall be available for borrowing on the Closing Date.
Letters of
Credit: A portion of the Revolving Facility not in excess of an amount to
be determined shall be available for the issuance of letters of
credit (the "Letters of Credit") by Chase (in such capacity, the
-----------------
"Issuing Lender"). No Letter of Credit shall have an expiration
--------------
date after the earlier of (a) one year after the date of issuance
(unless approved by Lenders holding not less than a majority of
the Revolving Facility) and (b) five business days prior to the
Revolving Termination Date, provided that any Letter of Credit
--------
with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend
beyond the date referred to in clause (b) above).
Drawings under any Letter of Credit shall be reimbursed by the
Borrower (whether with its own funds or with the proceeds of the
Revolving Loans) on the next business day. To the extent that the
Borrower does not so reimburse the Issuing Lender, the Lenders
under the Revolving Facility shall be irrevocably and
unconditionally obligated to reimburse the Issuing Lender on a
pro rata basis.
--- ----
Maturity: The Revolving Termination Date.
Purpose: The proceeds of the Revolving Loans shall be used to finance a
portion of the Transactions and for general corporate purposes of
the Borrower and its subsidiaries, including the making of
acquisitions and investments in other entities subject to
restrictions and limitations to be determined.
III. Certain Payment Provisions
--------------------------
Fees and
Interest
Rates: As set forth on Annex I.
Optional
Prepayments
and
Commitment
Reductions: Loans may be prepaid and commitments may be reduced by the
Borrower in minimum amounts to be agreed upon. Optional
prepayments of the Term Loans shall be applied to
<PAGE>
4
the installments thereof ratably in accordance with the then
outstanding amounts thereof (except that the first $7,500,000 of
optional and mandatory prepayments allocated to the Term Loans
may be applied to installments thereof at the direction of the
Borrower) and may not be reborrowed.
Mandatory
Prepayments
and
Commitment
Reductions: The following amounts shall be applied to prepay the Term Loans
and reduce the Revolving Facility:
(a) 50% of the net proceeds of any sale or issuance of equity
after the Closing Date by the Borrower (excluding equity issued
to directors and employees under benefit plans, equity issued to
sellers as consideration in acquisitions and equity issued to the
existing shareholders of BancTec or in a private placement to
investors arranged by WCAS to finance acquisitions);
(b) 100% of the net proceeds of any incurrence of certain
indebtedness (excluding Senior Subordinated Notes (as defined
below) the net proceeds of which are used to refinance the
Borrower Notes (as defined below)) after the Closing Date by the
Borrower or any of their subsidiaries;
(c) 100% of the net after tax proceeds of any sale or other
disposition (other than as a result of casualty or condemnation
where such proceeds are used to repair or replace assets up to a
maximum amount to be determined) by the Borrower or any of their
subsidiaries of any assets (except for the sale of inventory in
the ordinary course of business and certain other exceptions to
be agreed upon and subject to threshold and limitations to be
determined); provided that, upon the achievement of performance
targets to be agreed, a percentage to be agreed of any such net
proceeds of any sale or other disposition of the assets of PC &
Network Services may be used to prepay the Senior Subordinated
Notes or the Borrower Notes; and
(d) 50% of excess cash flow (to be defined in a mutually
satisfactory manner) for each fiscal year of the Borrower
commencing with the first full fiscal year after the Closing
Date).
All such amounts shall be applied, first, to the prepayment of
-----
the Term Loans and, second, to the permanent reduction of the
------
<PAGE>
5
Revolving Facility. Each such prepayment of the Term
Loans shall be applied to the installments thereof
ratably in accordance with the then outstanding
amounts thereof (except that the first $7,500,000 of
optional and mandatory prepayments allocated to the
Term Loans may be applied to installments thereof at
the direction of the Borrower) and may not be
reborrowed. The Revolving Loans shall be prepaid and
the Letters of Credit shall be cash collateralized or
replaced to the extent such extensions of credit
exceed the amount of the Revolving Facility.
IV. Collateral The obligations of each Loan Party in respect of the
----------
Credit Facilities and any hedging arrangements
entered into with any Lender (or any affiliate of any
Lender) shall be secured by perfected first priority
security interests in all of its tangible and
intangible assets (including, without limitation, its
intellectual property and real property and all of
the capital stock of each of the direct domestic
subsidiaries of the Borrower and 65% of the capital
stock of each of its direct foreign subsidiaries),
excluding assets subject to certain permitted liens
and rights under non-assignable contracts of types to
be agreed upon. To the extent required by the Senior
Notes (with the APermitted Lien@ basket being
reserved for other uses in a manner to be
determined), the security interests in the tangible
and intangible assets of the Borrower (other than its
inventories and accounts receivable) shall be held,
on an equal and ratable basis, for the benefit of the
holders of the Senior Notes.
V. Certain Conditions
------------------
Initial Conditions: The availability of the Credit Facilities shall be
conditioned upon satisfaction of, among other things,
the following conditions precedent (the date upon
which all such conditions precedent shall be
satisfied, the "Closing Date"):
------------
(a) Each Loan Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit Facilities
(the "Credit Documentation").
--------------------
(b) Newco shall have received at least $145,000,000
in cash from the issuance of its common stock (which
amount includes the cash purchase price for shares in
Newco purchased by WCAS and the Other Investor and
contributed to
<PAGE>
6
Newco, each as set forth in the Sources and Uses Table in
Annex II hereto, and the value of any Retained Shares),
and the Borrower shall have received no more than
$160,000,000 from the issuance of subordinated unsecured
notes to an affiliate of WCAS and other investors
arranged by it satisfactory to the Administrative Agent
(the "Borrower Notes") or from the issuance of its senior
--------------
subordinated debt (the "Senior Subordinated Notes"), each
-------------------------
on satisfactory terms and conditions to the
Administrative Agent, including, with respect to the
Borrower Notes, a maximum interest rate of 10% per annum
and a final maturity no sooner than one year and a day
after the stated maturity of the Term Loans. The
ownership and capital structure of each Loan Party after
the Transactions, and the terms applicable thereto, shall
be reasonably satisfactory in all respects.
(c) The Transactions shall have been consummated in a
manner consistent with the Sources and Uses Table
attached as Annex II hereto and pursuant to reasonably
satisfactory documentation, and no provision of such
documentation shall have been waived, amended,
supplemented or otherwise modified in any material
respect. BancTec and its subsidiaries shall not have any
indebtedness (other than immaterial indebtedness on terms
and conditions satisfactory to the Administrative Agent)
immediately prior to or immediately after the Closing
Date other than the Borrower Notes, the indebtedness
refinanced as contemplated on such Sources and Uses Table
and the Senior Notes which shall remain outstanding.
(d) The Lenders, the Arranger, and the Administrative
Agent shall have received all fees required to be paid,
and all expenses required to be reimbursed and for which
invoices have been presented, on or before the Closing
Date.
(e) All governmental and third party approvals
(including material landlords' and other material
consents) necessary or, in the discretion of the
Administrative Agent, advisable in connection with the
Transactions, the financing contemplated hereby and the
continuing operations of the Borrower and its
subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods
shall have expired without any action being taken or
threatened by any competent authority that would
restrain, prevent or otherwise impose
<PAGE>
7
adverse conditions on the Transactions or the financing
thereof.
(f) The Lenders shall have received (i) satisfactory
audited consolidated financial statements of BancTec for
its fiscal year ended December 31, 1998 and satisfactory
unaudited consolidating (on a business unit basis)
financial statements of BancTec for such fiscal year and
(ii) satisfactory unaudited interim consolidated and
consolidating (on a business unit basis) financial
statements of BancTec for each quarterly period and
satisfactory unaudited interim consolidated financial
statements of BancTec for each fiscal quarter, ended
subsequent to December 31, 1998, and for each fiscal
month, ended subsequent to the fiscal quarter most
recently completed prior to the Closing Date, as to which
such financial statements are available.
(g) BancTec shall have consolidated EBITDA (excluding
non-recurring charges not to exceed an amount to be
agreed upon and $37,500,000 in pre-tax expenses and
charges accrued for the quarter ended December 31, 1998)
for the twelve months ending with the fiscal quarter most
recently completed prior to the Closing Date as to which
financial statements are available of not less than
$88,000,000 calculated in a manner consistent with GAAP.
(h) The Lenders shall have received a satisfactory pro
---
forma consolidated balance sheet of the Borrower as at
-----
the date of the most recent consolidated balance sheet
delivered pursuant to paragraph (f) above, adjusted to
give effect to the consummation of the Transaction and
the financings contemplated hereby as if such
transactions had occurred on such date.
(i) The Lenders shall have received a satisfactory
business plan and a satisfactory written analysis of the
business and prospects of the Borrower and its
subsidiaries for the period from the Closing Date through
the final maturity of the Term Loans.
(j) The Lenders shall have received the results of a
recent lien search in each relevant jurisdiction with
respect to BancTec, the Borrower and their subsidiaries,
and such search shall reveal no liens on any of the
assets of the Borrower or its
<PAGE>
8
subsidiaries except for liens permitted by the Credit
Documentation or liens to be discharged on or prior to
the Closing Date pursuant to documentation satisfactory
to the Administrative Agent.
(k) The fees and expenses to be incurred in connection
with the Transaction and the financing thereof shall not
exceed $18,000,000 in the aggregate, in the event that
Borrower Notes are issued or $23,000,000, in the
aggregate, in the event that Senior Subordinated Notes
are issued.
.
(l) The Lenders shall have received a satisfactory
solvency opinion from an independent valuation firm
reasonably satisfactory to the Administrative Agent that
shall document the solvency of the Borrower and its
subsidiaries after giving effect to the Transaction and
the other transactions contemplated hereby.
(m) The Lenders shall have received such legal opinions
(including opinions (i) from counsel to the Borrower and
its subsidiaries, (ii) delivered to Newco by counsel to
BancTec, accompanied by reliance letters in favor of the
Lenders as reasonably available and (iii) from such
special and local counsel as may be required by the
Administrative Agent, and such other documents as are
customary for transactions of this type or as they may
reasonably request.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all representations
and warranties in the Credit Documentation (including,
without limitation, the material adverse change and
litigation representations) and (b) there being no
default or event of default in existence at the time of,
or after giving effect to the making of, such extension
of credit. As used herein and in the Credit
Documentation a "material adverse change" shall mean any
event, development or circumstance that has had or could
reasonably be expected to have a material adverse effect
on (a) the Transactions, (b) the business, property,
operations, condition (financial or otherwise) or
prospects of the Borrower and its subsidiaries taken as a
whole or (c) the validity or enforceability of any of the
Credit Documentation.
VI. Certain Documentation Matters
-----------------------------
<PAGE>
9
The Credit Documentation shall contain representations,
warranties, covenants and events of default customary for
financings of this type and other terms deemed
appropriate by the Lenders, including, without
limitation:
Representations and
Warranties: Financial statements (including pro forma financial
statements); absence of material undisclosed liabilities;
no material adverse change; corporate existence;
compliance with law; corporate power and authority;
enforceability of Credit Documentation; no conflict with
law or contractual obligations; no material litigation;
no default; ownership of property; liens; intellectual
property; no material burdensome restrictions; taxes;
Federal Reserve regulations; ERISA; Investment Company
Act; subsidiaries; environmental matters; solvency; labor
matters; year 2000 matters; accuracy of disclosure in all
material respects; and creation and perfection of
security interests.
Affirmative Covenants: Delivery of financial statements, reports, accountants'
letters, projections, officers' certificates and other
information reasonably requested by the Lenders; payment
of other material obligations; continuation of business
and maintenance of existence and material rights and
privileges; compliance with laws and material contractual
obligations; maintenance of property and insurance;
maintenance of books and records; right of the Lenders to
inspect property and books and records; notices of
defaults, litigation and other material events;
compliance in all material respects with environmental
laws; further assurances (including, without limitation,
with respect to security interests in after-acquired
property); and agreement to obtain, within a period
following the Closing Date to be agreed upon, interest
rate protection for a portion of the Credit Facilities on
terms and conditions satisfactory to the Administrative
Agent.
Financial Covenants: Financial covenants (including, without limitation, an
asset coverage ratio, a minimum interest coverage ratio,
a fixed charge coverage ratio and a maximum leverage
ratio).
Negative Covenants: Limitations on (with exceptions to be agreed upon with
respect to): indebtedness; liens; guarantee obligations;
mergers, consolidations, liquidations and dissolutions;
sales of assets; leases; dividends and other payments in
respect of capital
<PAGE>
10
stock; capital expenditures; investments, loans and
advances; optional payments and modifications of
subordinated and other debt instruments; transactions
with affiliates; sale and leasebacks; changes in fiscal
year; negative pledge clauses; and changes in lines of
business.
Events of Default: Nonpayment of principal when due; nonpayment of interest,
fees or other amounts after a grace period to be agreed
upon; material inaccuracy of representations and
warranties; violation of covenants (subject, in the case
of certain affirmative covenants, to a grace period to be
agreed upon); cross-default (subject to a threshold to be
agreed upon); bankruptcy events; certain ERISA events;
material judgments; actual or asserted invalidity of any
guarantee or security document, subordination provisions
or security interest; and a change of control (the
definition of which is to be agreed upon).
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate amount
of the Credit Facilities, except that (a) the consent of
each Lender directly affected thereby shall be required
with respect to (i) reductions in the amount or
extensions of the scheduled date of amortization or final
maturity of any Loan, (ii) reductions in the rate of
interest or any fee or extensions of any due date thereof
and (iii) increases in the amount or extensions of the
expiry date of any Lender's commitment and (b) the
consent of 100% of the Lenders shall be required with
respect to (i) modifications to any of the voting
percentages and (ii) releases of all or substantially all
of the Guarantors or all or substantially all of the
collateral. In addition, "class" voting requirements will
apply to modifications affecting certain payment matters.
Assignments
and Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments, subject,
in the case of assignments (other than to another Lender
or to an affiliate of a Lender), to the consent of the
Administrative Agent and the Borrower (which consent in
each case shall not be unreasonably withheld). Non-pro
rata assignments shall be permitted. In the case of
partial assignments (other than to
<PAGE>
11
another Lender or to an affiliate of a Lender), the
minimum assignment amount shall be $5,000,000 unless
otherwise agreed by the Borrower and the Administrative
Agent. Participants shall have the same benefits as the
Lenders with respect to yield protection and increased
cost provisions. Voting rights of participants shall be
limited to those matters with respect to which the
affirmative vote of the Lender from which it purchased
its participation would be required as described under
"Voting" above. Pledges of Loans in accordance with
applicable law shall be permitted without restriction.
Promissory notes shall be issued under the Credit
Facilities only upon request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against increased
costs or loss of yield resulting from changes in reserve,
tax, capital adequacy and other requirements of law and
from the imposition of or changes in withholding or other
taxes and (b) indemnifying the Lenders for "breakage
costs" incurred in connection with, among other things,
any prepayment of a Eurodollar Loan (as defined in Annex
I) on a day other than the last day of an interest period
with respect thereto with the foregoing subject to the
right of the Borrower to replace any Lender who has
incurred material increased costs.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable out-of-pocket
expenses of the Administrative Agent and the Arranger
associated with the syndication of the Credit Facilities
and the preparation, execution, delivery and
administration of the Credit Documentation and any
amendment or waiver with respect thereto (including the
reasonable fees, disbursements and other charges of
counsel) and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders (including the fees,
disbursements and other charges of counsel) in connection
with the enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and the Lenders
(and their affiliates and their respective officers,
directors, employees, advisors and agents) will have no
liability for, and will be indemnified and held harmless
against, any losses, claims, damages, liabilities or
expenses incurred in respect of the financing
contemplated hereby or the use or the proposed
<PAGE>
12
use of proceeds thereof, except to the extent they are
found by a final, non-appealable judgment of a court
to arise from the gross negligence or willful
misconduct of the indemnified party.
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
<PAGE>
Annex I
-------
Interest and Certain Fees
-------------------------
Interest Rate Options: The Borrower may elect that the Loans comprising
each borrowing bear interest at a rate per annum
equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
---
interest publicly announced by Chase as its prime
rate in effect at its principal office in New York
City (the "Prime Rate") and (ii) the federal funds
----------
effective rate from time to time plus 0.5%.
"Applicable Margin" means (a) in the case of ABR
-----------------
Loans (as defined below), 1.75%, and (b) in the
case of Eurodollar Loans (as defined below),
2.75%. The foregoing margins shall be subject to
change following the six month anniversary of the
Closing Date in accordance with a pricing grid to
be determined based on the ratio of Total Debt to
EBITDA and provided that no event of default has
occurred and is continuing.
"Eurodollar Rate" means the rate (adjusted for
---------------
statutory reserve requirements for eurocurrency
liabilities) for eurodollar deposits for a period
equal to one, two, three or six months (as
selected by the Borrower) appearing on Page 3750
of the Dow Jones Markets screen.
Interest Payment Dates: In the case of Loans bearing interest based upon
the ABR ("ABR Loans"), quarterly in arrears.
---------
In the case of Loans bearing interest based upon
the Eurodollar Rate ("Eurodollar Loans"), on the
----------------
last day of each relevant interest period and, in
the case of any interest period longer than three
months, on each successive date three months after
the first day of such interest period.
<PAGE>
2
Commitment Fees: The Borrower shall pay a commitment fee calculated at the
rate of 2 of 1% per annum on the average daily unused
portion of the Revolving Facility, payable quarterly in
arrears. The commitment fee rate shall be subject to
change after the six month anniversary of the Closing
Date in accordance with a pricing grid to be determined
based on the ratio of Total Debt to EBITDA and provided
that no event of default has occurred and is continuing.
Letter of Credit Fees: The Borrower shall pay a fee on all outstanding Letters
of Credit at a per annum rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans on
the average daily undrawn face amount of each such Letter
of Credit. Such fee shall be shared ratably among the
Lenders participating in the Revolving Facility and shall
be payable quarterly in arrears.
A fronting fee equal to 0.125% per annum on the average
daily undrawn face amount of each Letter of Credit shall
be payable quarterly in arrears to the Issuing Lender for
its own account. In addition, customary administrative,
issuance, amendment, payment and negotiation charges
shall be payable to the Issuing Lender for its own
account.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the Credit
Facilities, all outstanding Loans shall bear interest at
2% above the rate otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear interest at
2% above the rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the basis of a
year of 360 days (or 365/366 days, in the case of ABR
Loans the interest rate payable on which is then based on
the Prime Rate) for actual days elapsed.
<PAGE>
Annex II
--------
Sources and Uses Table
----------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
($ in millions)
SOURCES USES
- ------- ----
<S> <C> <C> <C>
Cash from BancTec $ 14.7 Purchase Price for Shares and $369.5
Options in BancTec (including
Retained Shares)
Term Loans 75.0 Financing Fees--Chase 3.1
Financing Fees--WCAS 6.0
Working Capital Revolver 3.2 Transaction Expenses 7.5
Senior Subordinated Notes 160.0 Refinancing for Existing Debt 6.3
Common Equity (including any
Retained Shares) 145.0 Severance Trust 5.5
------ ------
Total Sources $397.9 Total Uses $397.9
====== ======
- ----------------------------------------------------------------------------------------------------
</TABLE>
