<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
ANDROS INCORPORATED
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common stock, par value $.01 per share
(2) Aggregate number of securities to which transaction applies:
2,435,483
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $18.00
(4) Proposed maximum aggregate value of transaction: $43,838,694
(5) Total fee paid: $2,061.44 (At the time of the filing on February 21,
1996 of a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") by Andros Acquisition Inc. ("Purchaser") and Andros Holdings
Inc. in connection with Purchaser's offer to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of
Andros Incorporated (the "Company"), a fee of $16,660.99 was paid.
The current payment of $2,061.44 reflects an increase in the number
of issued and outstanding Shares from 4,628,054 at the time of the
filing of the Schedule 14D-1 to 5,200,675 as of the most recent date
for which the Company has an accurate number. The fee was calculated
by multiplying 572,621 (the number of additional Shares issued and
outstanding since February 21, 1996) by (i) $18.00 and (ii) 1/50 of
1%.)
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $16,660.99
<PAGE>
(2) Form, Schedule or Registration Statement No.: Schedule 14D-1
(3) Filing Party: Andros Holdings Inc.; Andros Acquisition Inc.
(4) Date Filed: February 21, 1996
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To approve the Merger of
ANDROS ACQUISITION INC.
with and into
ANDROS INCORPORATED
To the Record Holders of Common Stock
of Andros Incorporated:
NOTICE IS HEREBY GIVEN pursuant to Sections 222, 251 and 262 of the General
Corporation Law of the State of Delaware (the "General Corporation Law") that on
May 14, 1996 a special meeting (the "Special Meeting") of the stockholders
of Andros Incorporated, a corporation organized under the laws of the State of
Delaware (the "Company"), of record on April 11, 1996 (the "Record Date"), will
be held at the offices of the Company, 2332 Fourth Street, Berkeley, California
94710-2402, at 10:00 a.m., local time, to consider and vote upon (i) adoption
and approval of the agreement and plan of merger, dated as of February 14, 1996
(the "Merger Agreement"), among the Company, Andros Acquisition Inc., a
corporation organized under the laws of the State of Delaware ("Purchaser") and
a direct wholly owned subsidiary of Andros Holdings Inc., a corporation
organized under the laws of the State of Delaware ("Parent"), and Parent, and
the transactions contemplated thereby, including the merger (the "Merger") of
Purchaser into the Company, and (ii) such other matters as may properly be
brought before the Special Meeting. It is anticipated that the Merger will be
effected on May 14, 1996 or as soon thereafter as practicable.
Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer
(the "Offer") on February 21, 1996 for all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of the Company, at a price of $18.00
per Share, net to the seller in cash. The Offer expired at 5:00 p.m., New York
City time, on March 25, 1996, and as of 5:01 p.m., New York city time, on such
date Purchaser accepted for payment 2,765,192 Shares validly tendered pursuant
to the Offer and not withdrawn, representing approximately 58% of the total
number of outstanding Shares.
The board of directors of the Company (the "Board") has fixed the close of
business on the Record Date for the determination of stockholders entitled to
notice of and to vote at the Special Meeting or any adjournment thereof. Only
stockholders of record at the close of business on the Record Date are entitled
to notice of and to vote at the Special Meeting. A complete list of such
stockholders will be open to the examination of any stockholder, for any purpose
germane to the Special Meeting, during ordinary business hours, for a period of
10 days prior to the Special Meeting, at the offices of the Company, 2332 Fourth
Street, Berkeley, California 94710-2402.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE SPECIAL
MEETING, TO SIGN, DATE AND MAIL THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED. If a stockholder who has returned a proxy
attends the Special Meeting in person, such stockholder may revoke the proxy and
vote in person on all matters submitted at the Special Meeting.
<PAGE>
Under the General Corporation Law, the affirmative vote of the majority of
the issued and outstanding Shares, present in person or represented by proxy at
the Special Meeting and entitled to vote thereon, is required to adopt and
approve the Merger Agreement and the Merger. PURCHASER OWNS IN THE AGGREGATE
2,765,192 SHARES, REPRESENTING APPROXIMATELY 58% OF THE SHARES OUTSTANDING AS OF
THE RECORD DATE, AND THEREFORE HAS SUFFICIENT VOTING POWER TO ADOPT AND APPROVE
THE MERGER AGREEMENT AND THE MERGER WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER OF
THE COMPANY. Pursuant to the Merger Agreement, Parent has agreed to cause
Purchaser to vote all Shares beneficially owned thereby in favor of adoption and
approval of the Merger Agreement and the Merger. UNDER THE GENERAL CORPORATION
LAW AND THE CERTIFICATE OF INCORPORATION OF THE COMPANY, NO ACTION WILL BE
REQUIRED BY STOCKHOLDERS OF THE COMPANY (OTHER THAN PURCHASER) TO EFFECT THE
MERGER.
Pursuant to the Merger Agreement, each Share issued and outstanding
immediately prior to the effectiveness of the Merger (the "Effective Time") and
held by persons other than Purchaser, Parent or the Company, or any direct or
indirect subsidiary of any of them, will be converted into the right to receive
$18.00 in cash, without interest (the "Merger Consideration"), payable upon
surrender of the certificate formerly evidencing such share, subject to the
right of the holder of such Share (a "Dissenting Stockholder") to seek an
appraisal of the fair value thereof as described in the attached Proxy
Statement.
ON FEBRUARY 5, 1996, THE BOARD, AFTER RECEIVING THE RECOMMENDATION IN FAVOR
THEREOF (WITH ONE VOTE AGAINST AND ONE ABSTENTION) OF THE SPECIAL COMMITTEE OF
THE BOARD FORMED TO CONSIDER, AMONG OTHER THINGS, THE OFFER AND THE MERGER,
DETERMINED (WITH ONE VOTE AGAINST AND ONE ABSTENTION) THAT EACH OF THE OFFER AND
THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has delivered
to the Board its written opinion, dated February 14, 1996, that as of such date
the consideration to be received by the stockholders of the Company pursuant to
the Merger Agreement is fair to such stockholders from a financial point of
view. A copy of the opinion of DLJ, which sets forth the assumptions made,
matters considered and limitations on the review undertaken by DLJ, is contained
in the Proxy Statement which is being mailed to stockholders herewith.
Section 262 of the General Corporation Law provides a procedure by which
Dissenting Stockholders who were record holders of Shares immediately prior to
the Effective Time may seek an appraisal of the fair value of their shares,
exclusive of any element of value arising from the expectation or accomplishment
of the Merger, together with a fair rate of interest, if any, to be paid
thereon. Any Dissenting Stockholder who wishes to exercise this right to an
appraisal must do so by making written demand to the Company at the address set
forth in the Proxy Statement, which must be received before the taking of the
vote on the Merger, and by following certain other procedures set forth in
Section 262 of the General Corporation Law.
APPRAISAL DEMANDS WILL NOT BE ACCEPTED UNLESS MADE BY OR ON BEHALF OF
PERSONS WHO ARE RECORD HOLDERS OF SHARES IMMEDIATELY PRIOR TO THE EFFECTIVE
TIME.
ii
<PAGE>
Please see the section entitled "Appraisal Rights" in the attached Proxy
Statement and EXHIBIT C thereto (which sets forth the text of Section 262 of the
General Corporation Law) for a description of the procedures which must be
followed to perfect appraisal rights.
By order of the Board.
/s/ Dane Nelson
Dane Nelson
President and Chief Executive Officer
April 16, 1996
iii
<PAGE>
-------------------------------
ANDROS INCORPORATED
PROXY STATEMENT
-------------------------------
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of Andros
Incorporated, a corporation organized under the laws of the State of Delaware
(the "Company"), of record on April 11, 1996 (the "Record Date"), in connection
with the solicitation of proxies from holders of shares of common stock, par
value $.01 per share (the "Shares"), of the Company by the board of directors of
the Company (the "Board") for use at a special meeting (the "Special Meeting")
of stockholders of the Company to consider and vote upon (i) adoption and
approval of the agreement and plan of merger, dated as of February 14, 1996 (the
"Merger Agreement"), among the Company, Andros Acquisition Inc., a corporation
organized under the laws of the State of Delaware ("Purchaser") and a direct
wholly owned subsidiary of Andros Holdings Inc., a corporation organized under
the laws of the State of Delaware ("Parent"), and Parent, and the transactions
contemplated thereby, including the merger (the "Merger") of Purchaser into the
Company pursuant to the Merger Agreement, and (ii) such other matters as may
properly be brought before the Special Meeting. It is anticipated that the
Merger will be effected on May 14, 1996 or as soon thereafter as practicable.
The date of this Proxy Statement is April 16, 1996. This Proxy Statement
and the accompanying form of proxy are being furnished by the Company and were
first mailed on or about April 16, 1996 to stockholders of record of the Company
as of the close of business on the Record Date.
Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer
(the "Offer") on February 21, 1996 for all outstanding Shares at a price of
$18.00 per Share, net to the seller in cash. The Offer was made pursuant to an
Offer to Purchase, dated February 21, 1996 (the "Offer to Purchase"), the
related Letter of Transmittal and the Merger Agreement. The Offer expired at
5:00 p.m., New York City time, on March 25, 1996, and as of 5:01 p.m., New York
city time, on such date Purchaser accepted for payment 2,765,192 Shares validly
tendered pursuant to the Offer and not withdrawn, representing approximately 58%
of the total number of outstanding Shares.
The Merger will be consummated on the terms and subject to the conditions
set forth in the Merger Agreement, as a result of which at the effective time of
the Merger (the "Effective Time") (i) the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a direct wholly owned
subsidiary of Parent and (ii) each Share issued and outstanding (other than
Shares held by Purchaser, Parent or the Company, or any direct or indirect
subsidiary of any of them, and the Dissenting Shares (as defined below)) will be
converted into the right to receive $18.00 net per Share in cash, without
interest (the "Merger Consideration").
<PAGE>
The Special Meeting will be held at the offices of the Company, 2332 Fourth
Street, Berkeley, California 94710-2402, at 10:00 a.m., local time, on May 14,
1996, to consider approval and adoption of the Merger Agreement and the Merger.
ON FEBRUARY 5, 1996, THE BOARD, AFTER RECEIVING THE RECOMMENDATION IN FAVOR
THEREOF (WITH ONE VOTE AGAINST AND ONE ABSTENTION) OF THE SPECIAL COMMITTEE OF
THE BOARD (THE "SPECIAL COMMITTEE") FORMED TO CONSIDER, AMONG OTHER THINGS, THE
OFFER AND THE MERGER, DETERMINED (WITH ONE VOTE AGAINST AND ONE ABSTENTION) THAT
EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has delivered
to the Board its written opinion, dated February 14, 1996, that as of such date
the consideration to be received by the stockholders of the Company pursuant to
the Merger Agreement is fair to such stockholders from a financial point of
view. See "Recommendation of the Board; Reasons for the Board's Recommendation;
Opinion of Financial Advisor".
Under the General Corporation Law of the State of Delaware (the "General
Corporation Law"), the affirmative vote of the majority of the issued and
outstanding Shares, present in person or represented by proxy at the Special
Meeting and entitled to vote thereon, is required to adopt and approve the
Merger Agreement and the Merger. PURCHASER OWNS IN THE AGGREGATE 2,765,192
SHARES, REPRESENTING APPROXIMATELY 58% OF THE SHARES OUTSTANDING AS OF THE
RECORD DATE, AND THEREFORE HAS SUFFICIENT VOTING POWER TO ADOPT AND APPROVE THE
MERGER AGREEMENT AND THE MERGER WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER OF THE
COMPANY. Pursuant to the Merger Agreement, Parent has agreed to cause Purchaser
to vote all Shares beneficially owned thereby in favor of adoption and approval
of the Merger Agreement and the Merger. UNDER THE GENERAL CORPORATION LAW AND
THE CERTIFICATE OF INCORPORATION OF THE COMPANY, NO ACTION WILL BE REQUIRED BY
STOCKHOLDERS OF THE COMPANY (OTHER THAN PURCHASER) TO EFFECT THE MERGER.
Any holder of Shares (a "Dissenting Stockholder") who does not wish to
accept the Merger Consideration for such holder's Shares (together with the
Shares held by all other such Dissenting Stockholders, the "Dissenting Shares")
has the right under the General Corporation Law to seek an appraisal of and be
paid the fair cash value of such holder's Shares, together with a fair rate of
interest, if any, to be paid thereon. To perfect this right of appraisal, a
Dissenting Stockholder must make written demand for such appraisal to the
Company before the taking of the vote on the Merger Agreement and the Merger.
Such demand must be delivered to the Company at 2332 Fourth Street, Berkeley,
California 94710-2402, Attention: Secretary. See "Appraisal Rights" and EXHIBIT
C.
The accompanying Notice of Special Meeting of Stockholders constitutes the
notice to Dissenting Stockholders required by Section 262(d)(2) of the General
Corporation Law.
DISSENTING STOCKHOLDERS ARE URGED TO CAREFULLY REVIEW THIS PROXY STATEMENT
AND THE EXHIBITS HERETO IN THEIR ENTIRETY IN CONSIDERING WHETHER TO SEEK AN
APPRAISAL PURSUANT TO THE GENERAL CORPORATION LAW. If a Dissenting Stockholder
does not perfect appraisal rights with respect to such holder's Shares before
the taking of the
<PAGE>
vote on the Merger Agreement and the Merger, such shares will be converted into
the right to receive the Merger Consideration at the Effective Time.
As of the Record Date, there were approximately 246 holders of record of
Shares, with 4,706,404 Shares issued and outstanding. Holders of record of
Shares at the close of business on the Record Date are entitled to one vote per
share held on all matters submitted to a vote of stockholders. The Shares are
currently traded on the Nasdaq National Market (the "NNM"). As a result of the
consummation of the Offer and the Merger, the registration of the Shares under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
trading of the Shares on the NNM, will be terminated.
iii
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CERTAIN INFORMATION CONCERNING THE COMPANY . . . . . . . . . . . . . . . . . 2
CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. . . . . . . . . . . . . 4
BACKGROUND OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RECOMMENDATION OF THE BOARD; REASONS FOR
THE BOARD'S CONCLUSIONS; OPINION OF FINANCIAL ADVISOR . . . . . . . . . 9
INTERESTS OF CERTAIN PERSONS IN THE MERGER . . . . . . . . . . . . . . . . . 12
STRUCTURE OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ACCOUNTING TREATMENT OF THE MERGER . . . . . . . . . . . . . . . . . . . . . 13
FINANCING THE ACQUISITION. . . . . . . . . . . . . . . . . . . . . . . . . . 13
CERTAIN EFFECTS OF THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . 14
CERTAIN FEDERAL TAX CONSEQUENCES OF THE MERGER . . . . . . . . . . . . . . . 14
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
REGULATORY AND OTHER APPROVALS . . . . . . . . . . . . . . . . . . . . . . . 18
APPRAISAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CERTAIN LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PRICE RANGE OF SHARES; DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 22
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 23
OTHER MATTERS TO COME BEFORE THE MEETING . . . . . . . . . . . . . . . . . . 23
STOCKHOLDERS' PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
INCORPORATION OF DOCUMENTS BY REFERENCE. . . . . . . . . . . . . . . . . . . 24
EXHIBITS
EXHIBIT A AGREEMENT AND PLAN OF MERGER
EXHIBIT B FAIRNESS OPINION OF DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
EXHIBIT C GENERAL CORPORATION LAW OF THE STATE OF DELAWARE, SECTION 262
"APPRAISAL RIGHTS"
<PAGE>
THE SPECIAL MEETING
The Special Meeting will be held at the offices of the Company, 2332 Fourth
Street, Berkeley, California 94710-2402, at 10:00 a.m., local time, on May 14,
1996, for the purposes of considering and voting upon (i) approval and adoption
of the Merger Agreement and the Merger, as required under the General
Corporation Law, and (ii) such other matters as may properly be brought before
the Special Meeting.
The Board has fixed the close of business on the Record Date for the
determination of stockholders entitled to notice of and to vote at the Special
Meeting or any adjournment thereof. Only stockholders of record at the close of
business on the Record Date are entitled to notice of and to vote at the Special
Meeting. A complete list of such stockholders will be open to the examination
of any stockholder, for any purpose germane to the Special Meeting, during
ordinary business hours, for a period of 10 days prior to the Special Meeting,
at the offices of the Company, 2332 Fourth Street, Berkeley, California 94710-
2402.
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the outstanding Shares will constitute a quorum for the
transaction of business, and approval and adoption of the Merger Agreement and
the Merger requires the affirmative vote of a majority of the issued and
outstanding Shares. PURCHASER OWNS IN THE AGGREGATE 2,765,192 SHARES,
REPRESENTING APPROXIMATELY 58% OF THE SHARES OUTSTANDING AS OF THE RECORD DATE,
AND THEREFORE HAS SUFFICIENT VOTING POWER TO CONSTITUTE A QUORUM AT THE SPECIAL
MEETING AND TO ADOPT AND APPROVE THE MERGER AGREEMENT AND THE MERGER WITHOUT THE
PRESENCE OR THE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. In determining
whether the Merger Agreement and the Merger have received the requisite number
of affirmative votes, abstentions and broker non-votes will have the same effect
as a vote against the Merger Agreement and the Merger.
At the date of this Proxy Statement, the Board does not know of any
business to be presented at the Special Meeting other than as set forth in the
Notice of Special Meeting of Stockholders accompanying this Proxy Statement. If
any other matters should properly come before the Special Meeting, it is
intended that the Shares represented by proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting such proxies.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE SPECIAL
MEETING, TO SIGN, DATE AND MAIL THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED. All properly executed proxies that are not
revoked will be voted at the Special Meeting in accordance with the instructions
contained therein. If a holder of Shares executes and returns a proxy and does
not specify otherwise, the Shares represented by such proxy will be voted "for"
approval and adoption of the Merger Agreement and the Merger in accordance with
the recommendation of the Board. A holder of Shares who has executed and
returned a proxy may revoke it at any time before it is voted at the Special
Meeting by (i) executing and returning a proxy bearing a later date, (ii) filing
written notice of such revocation with the Secretary of the Company stating that
the proxy is revoked or (iii) attending the Special Meeting and voting in
person.
In addition to solicitation by mail, the directors, officers, employees and
agents of the Company may solicit proxies from stockholders of the Company by
personal interview, telephone, telegram or
1
<PAGE>
otherwise. The Company will bear the costs of the solicitation of proxies from
its stockholders. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries who hold of record securities of the
Company for the forwarding of solicitation materials to the beneficial owners
thereof. The Company will reimburse such brokers, custodians, nominees and
fiduciaries for the reasonable out-of-pocket expenses incurred by them in
connection therewith.
CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The Company is a corporation organized and existing under the laws
of the State of Delaware with its principal executive offices located at 2332
Fourth Street, Berkeley, California 94710-2402, telephone: (510) 849-5700. The
Company designs and manufactures non-dispersive infrared gas analyzers for sale
to original equipment manufacturers of automotive diagnostic equipment and
medical monitoring devices, and portable spectrum analysis instrumentation
designed to detect and measure selected elements in a material in its natural
location and condition using x-ray fluorescence technology.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1995
(the "Form 10-K") and the unaudited financial statements contained in the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended
October 29, 1995 and January 28, 1996 (the "Form 10-Q's"). More comprehensive
financial information is included in the Form 10-K, the Form 10-Q's and other
documents filed by the Company with the Securities and Exchange Commission (the
"Commission"). The financial information that follows is qualified in its
entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein. Such reports and other
documents may be examined and copies may be obtained from the offices of the
Commission in the manner set forth below under "Available Information".
2
<PAGE>
ANDROS INCORPORATED
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1994 1993 1996 1995
---- ---- ---- ---- ----
Fiscal Year Ended Six Months Ended
July 30/31/25, January 28/29,
-------------- --------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Sales . . . . . . . . . . . . . . . . . . . . $42,753.4 $57,741.7 $39,723.5 $20,850.7 $24,312.2
Cost of Sales. . . . . . . . . . . . . . . . . 25,427.7 33,790.2 22,547.7 13,382.9 14,049.4
----------- ---------- ---------- ---------- ----------
Gross Profit . . . . . . . . . . . . . . . . . 17,325.7 23,951.5 17,175.8 7,467.8 10,262.8
----------- ---------- ---------- ---------- ----------
Expenses and Other Income:
Research and Development . . . . . . . . . . . 5,100.9 4,297.3 3,528.5 2,572.4 2,485.1
Marketing, general and administrative. . . . . 10,201.8 8,765.8 5,580.7 3,938.4 4,835.4
Interest and other income. . . . . . . . . . . (1,354.9) (1,040.3) (898.0) (637.8) (709.8)
----------- ---------- ---------- ---------- ----------
Total. . . . . . . . . . . . . . . . . . . . . 13,947.8 12,022.8 8,211.2 5,873.0 6,610.7
----------- ---------- ---------- ---------- ----------
Income before income taxes . . . . . . . . . . 3,377.9 11,928.7 8,964.6 1,594.8 3,652.1
Income tax provision . . . . . . . . . . . . . 512.4 3,909.7 3,092.8 510.4 1,129.3
----------- ---------- ---------- ---------- ----------
Net Income . . . . . . . . . . . . . . . . . . 2,865.5 8,019.0 5,871.8 1,084.4 2,522.8
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
Net income per common and common
equivalent share . . . . . . . . . . . . . . $0.59 $1.67 $1.25 $0.22 $0.52
Average outstanding shares and outstanding
share equivalents. . . . . . . . . . . . . . 4,820.9 4,797.9 4,698.6 4,849.8 4,814.2
<CAPTION>
1995 1994 1996
---- ---- ----
At July 30/31 At January 28
------------- -------------
<S> <C> <C> <C>
Balance Sheet Data:
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . $51,856.0 $45,071.6 $52,675.9
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 63,870.5 58,097.5 66,089.3
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . 5,122.4 2,808.1 5,683.2
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 5,502.3 3,322.3 5,905.0
Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . 58,368.2 54,775.2 60,184.3
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . 63,870.5 58,097.5 66,089.3
</TABLE>
CERTAIN COMPANY PROJECTIONS. In connection with Parent's review of the
Company and in the course of the negotiations between the Company and Parent
described under "Background of the Merger" which led to the execution of the
Merger Agreement, the Company provided Parent with certain business and
financial information which the Company believes was not publicly available
prior to the filing by Parent and Purchaser on February 21, 1996 of a Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") in connection with the
Offer. The projections were prepared by the management of the Company for the
fiscal years ending July 31, 1996, 1997, 1998, 1999 and 2000 based on
assumptions as of January 1996, and projected total revenues of $45.0 million,
$48.5 million, $63.0 million,
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$75.1 million and $89.6 million, respectively, and net income of $4.4 million,
$6.0 million, $8.0 million, $10.6 million and $13.6 million, respectively.
THE COMPANY DOES NOT AS A MATTER OF COURSE MAKE PUBLIC ANY PROJECTIONS AS
TO FUTURE PERFORMANCE OR EARNINGS, AND THE PROJECTIONS SET FORTH ABOVE ARE
INCLUDED IN THIS PROXY STATEMENT ONLY BECAUSE THE INFORMATION WAS MADE AVAILABLE
TO PARENT AND PURCHASER BY THE COMPANY. THESE PROJECTIONS WERE NOT PREPARED
WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF
THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS. THE COMPANY'S
INTERNAL FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO PARENT AND
PURCHASER WERE BASED IN PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE
AND CAPITAL BUDGETING AND OTHER MANAGEMENT DECISION-MAKING PURPOSES AND ARE
SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO VARIOUS INTERPRETATIONS AND
PERIODIC REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS THAT
ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY OR ITS FINANCIAL ADVISORS. MANY OF THE
ASSUMPTIONS UPON WHICH THE FOREGOING PROJECTIONS WERE BASED ARE DEPENDENT UPON
ECONOMIC FORECASTING (BOTH GENERAL AND SPECIFIC TO THE COMPANY'S BUSINESSES),
WHICH IS INHERENTLY UNCERTAIN AND SUBJECTIVE. NONE OF THE COMPANY, PARENT OR
PURCHASER, NOR ANY OF THEIR RESPECTIVE FINANCIAL ADVISORS ASSUMES ANY
RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF ANY OF SUCH PROJECTIONS.
INCLUSION OF THE FOREGOING PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION
THAT THE COMPANY OR ANY OTHER PERSON WHO RECEIVED SUCH INFORMATION CONSIDERS IT
AN ACCURATE PREDICTION OF FUTURE EVENTS.
CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
Parent and Purchaser were organized under the laws of the State of Delaware
on December 5, 1995, in connection with the Offer, and neither Parent nor
Purchaser has carried on any activities other than in connection with the Offer
and the Merger. The principal offices of Parent and Purchaser are located at
Metro Tower, Suite 1170, 950 Tower Lane, Foster City, California 94404-2121,
telephone: (415) 286-2350. Purchaser is a direct wholly owned subsidiary of
Parent.
Parent and Purchaser were formed for the purpose of acquiring the Company.
Until immediately prior to the time that Purchaser purchased Shares pursuant to
the Offer, neither Parent nor Purchaser had any significant assets or
liabilities or engaged in activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer. Because each
of Parent and Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Parent or
Purchaser is available.
BACKGROUND OF THE MERGER
In the period preceding and immediately following the conclusion of the
Company's fiscal year ending July 31, 1994, there developed a general view among
the members of the Board that, while the Company's financial performance had
improved significantly as compared with recent periods, this improvement was
generally not reflected in the market price for the Shares. In addition, it was
noted that relatively few research analysts followed the Company and the trading
volume in the Shares remained relatively low. There was also a broadly held view
among the members of the Board that, because the
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Company operated in a number of different market sectors, the market did not
truly understand the Company and its operations and business plan. Consequently,
the members of the Board believed that the market valuation of the Company did
not adequately reflect the Company's financial performance and prospects and
that there was not a significant likelihood that the market would begin to
recognize the true value of the Company at anytime in the near future. In
response to these factors and after numerous informal discussions among its
members, the Board authorized the formation of a Special Committee, consisting
of two members of the Board (Eugene Kleiner and John M. Huneke), which was
charged with the responsibility of exploring various alternatives to maximize
stockholder value. The Special Committee was further empowered to contact
possible financial advisors to assist it in the performance of this assignment.
The Board was of the view that it was advisable to form a Special Committee
to consider various strategic and financial alternatives for the Company,
including a possible sale of the Company, given that if a transaction involving
a sale of the Company were pursued, there existed a substantial likelihood that
Dane Nelson, the President and Chief Executive Officer of the Company as well as
a member of the Board, would be asked by any potential acquirer to join with it
following the completion of the transaction as an equity participant or as a key
employee or both. It was also determined at the outset of this process that
Mr. Nelson would abstain from the consideration by the Board of any proposed
transaction involving the sale of the Company.
In September 1994, the Special Committee (to which Moshe Alafi, a director
of the Company who did not stand for re-election in 1995, had been added)
approached DLJ concerning a possible engagement to consider various strategic
and financial alternatives for the Company. On October 25, 1994, a letter
agreement (the "Engagement Letter") was entered into between the Special
Committee (to which Karl H. Schimmer, M.D. had been added) and DLJ, pursuant to
which the Special Committee engaged DLJ to consider and advise it with respect
to various strategic and financial alternatives and to evaluate, and as
appropriate to render a "fairness opinion" regarding, (i) any proposal which the
Company might receive for the acquisition of all or a substantial amount of its
business, stock or assets, whether by means of merger, consolidation, or other
business combination, tender or exchange offer, public or private purchase of
the Company's securities or assets, or otherwise, or (ii) any other similar
transaction, including any leveraged buyout, recapitalization, recapitalization
involving management or employee stock or stock option plans and incentives,
divestiture, sale or spinoff. At the time DLJ was retained to serve as the
Company's financial advisor, the Special Committee also retained special outside
counsel to advise it with respect to any strategic or financial proposals that
it might be asked to consider.
Following a presentation in December 1994 by DLJ to the Board regarding
various strategic and financial alternatives that the Board might consider, the
Board (upon the recommendation of the Special Committee and with Mr. Nelson
abstaining) directed DLJ to begin exploring a possible sale of the Company,
among other financial alternatives. Acting on that direction, the Company and
DLJ prepared a descriptive memorandum regarding the Company which set forth
certain information regarding the Company's operations and its financial
performance and prospects. DLJ, on behalf of the Company, contacted
approximately 75 corporations and other entities which the Company and DLJ
believed might have an interest in purchasing the Company ("Potential
Purchasers"), and based upon interest expressed by certain of such Potential
Purchasers, distributed to 21 Potential Purchasers copies of the descriptive
memorandum on a confidential basis.
From time to time thereafter, Potential Purchasers who expressed interest
in a transaction were given the opportunity to tour the Company's facilities,
talk with management and conduct other due
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diligence inquiries. The Company, through DLJ, invited such Potential Purchasers
to submit proposals regarding an acquisition. The invitation stated that the
proposals should include, among other things, the proposed purchase price and
form of consideration, as well as a description of sources of financing and
evidence of firm lending commitments, if any. No assurances were given that the
Company would enter into an agreement with any party, it being the Company's
intention to enter into a definitive agreement only on the basis of a proposal
which it, in its sole discretion, considered satisfactory.
From December 1994 until it entered into the Letter of Intent (as defined
below) pursuant to which it committed to the Exclusivity Period (as defined
below), the Company entertained proposals from and engaged in discussions with
several Potential Purchasers. No definitive agreement was reached with any such
Potential Purchaser. Also, during the summer months of 1995, Robert C. Wilson
was appointed to the Special Committee and Mr. Alafi ceased to be a member at
the time he ceased to be a member of the Board.
In the last week of September 1995, DLJ received, on behalf of the Company,
two formal acquisition proposals, one of which was a proposal (the "GCLLC
Proposal") from Genstar Capital LLC, a limited liability company organized under
the laws of the State of Delaware ("GCLLC") and the sole general partner of
GCP II (as defined below), regarding an acquisition of the Company in a
leveraged buy-out transaction for $20.00 per Share. The second formal proposal
contemplated a recapitalization of the Company in which the offeror would
initially acquire 25% of the Company's fully diluted equity at a price of
approximately $4.00 per Share and receive warrants with a ten-year term to raise
its ownership level to 51% and in which the Company would incur certain
additional indebtedness in order to pay a one-time extraordinary dividend of
$14.00 per Share to its stockholders. The Potential Purchaser making the offer
recited its belief that the transaction would have a nominal value in excess of
$20.00 per Share in the near term. DLJ informed the Board, however, that it was
DLJ's view that it was likely that the transaction would have a value of less
than $18.00 per Share due to the lack of liquidity for the stub share of Shares
to be held by the Company's stockholders post-transaction and the anticipated
adverse market reaction to the relatively small capitalization of the Company
following the transaction. DLJ also had received as of that time several
informal indications of interest from seven other Potential Purchasers; however,
no formal proposals were forthcoming during this period from any of them. The
Company believes that its declining financial performance during this time
period was a factor in dissuading these Potential Purchasers from presenting a
formal acquisition proposal to the Company at that time.
The GCLLC Proposal set forth a plan pursuant to which an affiliate of GCLLC
would commence a tender offer for all of the Shares at $20.00 per Share, payable
in cash, subject to certain conditions, to be followed by a merger of such
affiliate with and into the Company. The GCLLC Proposal was conditioned upon
completion of financing arrangements, execution of a definitive merger agreement
and reaching understandings with senior management of the Company as to their
future levels of compensation and their equity investments in Parent.
The Board (upon the recommendation of the Special Committee and with
Mr. Nelson abstaining), with the advice and assistance of its legal and
financial advisors, determined that of the acquisition proposals received, the
GCLLC Proposal provided the most value to the Company's stockholders, given the
immediate value to the stockholders provided by GCLLC's proposal, the
requirement that the Company incur significant amounts of indebtedness under the
recapitalization proposal, the characteristics of the equity arrangements under
the recapitalization proposal, including the ten-year term of the proposed
warrants, and the perceived likelihood that the transaction would be completed
given similar successful past transactions by affiliates of GCLLC. At this
point, continuing contact with the offeror proposing the
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recapitalization was terminated in order to permit the Company to devote the
necessary resources to pursuing a transaction with GCLLC.
A letter of intent between the Company and GCLLC was signed on
September 29, 1995 (the "Letter of Intent"). The Letter of Intent contemplated
that the Offer would be made at a price of $20.00 per Share and provided that
consummation of the proposed transaction would be conditioned upon, among other
things, satisfactory completion by GCLLC of a due diligence review of the
Company and completion of financing arrangements by GCLLC. The Letter of Intent
also provided that the Company would not solicit, encourage or negotiate with
others concerning any proposal for the sale of the Company until November 14,
1995 (the "Exclusivity Period") and that the Company would reimburse GCLLC for
up to $75,000 of GCLLC's expenses in the event that the Company elected not to
proceed with the contemplated transactions for any reason.
Between September 29, 1995 and November 10, 1995, GCLLC and its
representatives continued their due diligence investigation of the Company and
their efforts to complete their financing arrangements. On November 10, 1995, an
amendment to the Letter of Intent was executed pursuant to which (i) the Offer
price was set at $20.25, (ii) certain conditions, including the condition
regarding due diligence, were deleted, and (iii) the Exclusivity Period was
extended until December 21, 1995, by which time the parties contemplated that
the Offer would be commenced.
Between November 10, 1995 and December 21, 1995, GCLLC, its representatives
and financing sources continued their due diligence investigations of the
Company. On December 21, 1995, another amendment to the Letter of Intent was
signed pursuant to which the Exclusivity Period was extended until January 10,
1996 and the Company's obligation to reimburse GCLLC for expenses was deleted.
On January 8, 1996, certain prospective purchasers of subordinated debt of
Purchaser notified GCLLC that they were no longer interested in providing
financing to Purchaser in connection with the Offer and the Merger on the terms
originally contemplated under their financing proposal in light of certain
developments with respect to the Company, including its deteriorating operating
performance and regulatory and market uncertainties with respect to its
products. On January 10, 1996, GCLLC informed the Company of the development,
and that therefore the Offer and the Merger could not be consummated at a price
of $20.25. GCLLC further stated that, while it would not be possible to enter
into a transaction at $20.25 per Share, it remained interested in pursuing a
transaction with the Company and accordingly asked it be given several days to
make arrangements to put forward a revised proposal. Given the large number of
Potential Purchasers that had been contacted by DLJ, on behalf of the Company,
over the preceding year and the fact that none of such Potential Purchasers
remained interested in pursuing a transaction with the Company other than GCLLC,
the Board granted GCLLC's request. In order to ascertain that there was no
continuing interest in the Company on the part of any of the Potential
Purchasers who had expressed interest at an earlier time, DLJ contacted during
this period, and at various other times during the months of January and
February 1996, three of the other Potential Purchasers who had indicated an
interest in a transaction in or prior to September 1995. None of these Potential
Purchasers, including the party who had proposed the recapitalization of the
Company, indicated any continuing interest in a transaction with the Company.
At GCLLC's request, the Special Committee convened a meeting on January 13,
1996 to consider a revised proposal from GCLLC. At that meeting GCLLC made an
oral presentation of alternatives which it believed addressed the Company's
changed circumstances and would be satisfactory to prospective financing
sources. On January 23, 1996, GCLLC reiterated in writing its proposal to the
Company that
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the cash tender offer price for all of the Shares would be reduced to $18.00 per
Share. At a meeting of the Board held on January 26, 1996, the Board voted (upon
the recommendation of the Special Committee and with Mr. Nelson abstaining and
with Mr. Huneke voting against the proposal, both in his capacity as a member of
the Special Committee and as a member of the Board) to pursue an agreement with
Parent and Purchaser based on an all cash tender offer for all outstanding
Shares at a price of $18.00 per Share. Mr. Huneke's reasons for his vote against
the proposed Offer were that (i) the Company had commenced recruiting additional
management talent who would assist in focusing and enhancing the Company's
strategic direction; (ii) the Company should employ that talent and its other
assets to continue as a stand alone organization and to grow its targeted
technologies and markets through both acquisition and internal development; and
(iii) the increased size of the Company and the diversification of its business
from this potential expansion might result in the Shares being valued higher
than the $18.00 per Share offered in the transaction.
Between January 26, 1996 and February 14, 1996, the parties completed
negotiations regarding the Merger Agreement and GCLLC completed its arrangement
of financing. At a meeting on February 5, 1996, the Board, after presentations
by the Special Committee's financial and legal advisors and the Company's
outside counsel, voted (upon the recommendation of the Special Committee and
with Mr. Nelson abstaining and with Mr. Huneke voting against the proposal, both
in his capacity as a member of the Special Committee and as a member of the
Board, for the reasons previously stated) to approve the form of Merger
Agreement presented to it, as well as the Offer and the Merger. On February 14,
1996, Parent, Purchaser and the Company executed the Merger Agreement, and the
financing commitment letters were signed and delivered to Genstar Capital
Partners II, L.P., a limited partnership organized under the laws of the State
of Delaware ("GCP II") and the holder of a majority of the issued and
outstanding capital stock of Parent.
On February 21, 1996, Purchaser commenced the Offer.
On March 4, 1996, a putative class action was filed in the Court of
Chancery of the State of Delaware (the "Chancery Court") on behalf of the
stockholders of the Company alleging causes of action arising out of the Offer
and the Merger. Pursuant to a preliminary settlement agreement, the pending
legal proceedings against the Company and the Board are to be dismissed with
prejudice. See "Certain Litigation".
On March 15, 1996, Purchaser extended the Offer until 5:00 p.m., New York
City time, on Monday, March 25, 1996.
On March 25, 1996, Purchaser entered into (i) a definitive credit agreement
(the "Credit Agreement") with Banque Paribas, The Bank of Nova Scotia and
certain other financial institutions as lenders thereunder (collectively, the
"Banks"), and (ii) a definitive senior subordinated loan agreement (the "Loan
Agreement") with BG Services Limited, a corporation organized under the laws of
Guernsey ("BG Services"), substantially on the terms set forth in Section 9
("Financing of the Offer and the Merger") on pages 14-25 of the Offer to
Purchase. See "Financing the Acquisition".
The Offer expired at 5:00 p.m., New York City time, on March 25, 1996, at
which time Purchaser accepted for payment 2,765,192 Shares validly tendered
pursuant to the Offer and not withdrawn, representing approximately 58% of the
total number of outstanding Shares.
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Upon consummation of the Offer on March 25, 1996, and pursuant to the terms
of the Merger Agreement, three members of the Board resigned and three new
directors nominated by Purchaser--Richard D. Paterson, Mark E. Bandeen and Jean-
Pierre L. Conte--were appointed to the Board. Subsequently on March 25, 1996,
the Board, by duly adopted resolutions thereof, increased the number of
directors constituting the Board from five to six and appointed an additional
director nominated by Purchaser--Daniel J. Boverman--to the Board. Information
with respect to each new director is included in SCHEDULE I to the
Solicitation/Recommendation Statement on Schedule 14D-9, as amended (the
"Schedule 14D-9"), filed by the Company on February 21, 1996 in connection with
the Offer. The directors who resigned from the Board are Messrs. Nelson and
Huneke and Dr. Schimmer. Two independent directors--Messrs. Kleiner and Wilson-
- -remain on the Board.
RECOMMENDATION OF THE BOARD;
REASONS FOR THE BOARD'S CONCLUSIONS;
OPINION OF FINANCIAL ADVISOR
On February 5, 1996, the Board approved the Merger Agreement and the
transactions contemplated thereby and determined that each of the Offer and the
Merger is fair to, and in the best interests of, the stockholders of the
Company. The Board recommended that all holders of Shares accept the Offer and
tender their Shares pursuant to the Offer, and recommends that all holders of
Shares vote to approve and adopt the Merger Agreement and the Merger.
In approving the Merger Agreement and the transactions contemplated thereby
at its February 5, 1996 meeting, and recommending that all stockholders tender
their Shares pursuant to the Offer, the Board considered a number of factors,
including:
- Information relating to the financial condition and results of
operations of the Company and management's estimates of the prospects of the
Company which, in the Board's view, supported a determination that the Offer and
the Merger were fair to the Company's stockholders;
- The Board's general belief that the market price for the Shares would
not adequately reflect the true value of the Company and its business (with
reference to its financial performance and prospects) for the foreseeable future
due to the fact or Board's perception, among other things, that
(i) relatively few research analysts follow the Company, (ii) trading volume in
the Shares remains relatively low and is anticipated to remain relatively low in
the foreseeable future, and (iii) because the Company will continue to operate
in a number of different market sectors, the market does not, and would continue
not to, truly understand the Company and its operations and business plan;
- The fact that the Company had made a public announcement in April 1995
that it had retained DLJ to explore strategic and financial alternatives on the
Company's behalf, thereby alerting the market that the Company would be open to
inquiries and possible proposals from potential purchasers or partners;
- The relationship of the Offer price to recent historical market prices
of the Shares, particularly that the $18.00 per share Offer price represents a
premium of approximately 22% over the closing sales price for shares in the NNM
on February 5, 1996, the last trading day prior to the approval of the Merger
Agreement and the transactions contemplated thereby by the Board, and a premium
of
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approximately 16% over the closing sales price for shares in the NNM on
February 14, 1996, the last trading day prior to the public announcement of the
execution of the Merger Agreement;
- The financial and valuation analyses presented to the Board by DLJ,
the financial advisor to the Company, at various Board meetings beginning in
December 1994 and continuing through February 1996, including market prices and
financial data relating to other companies engaged in business considered
comparable to the Company, and the prices and premiums paid in recent selected
acquisitions of companies engaged in business considered by DLJ to be comparable
to that of the Company;
- The written opinion (the "Fairness Opinion") of DLJ, dated
February 14, 1996, that the consideration to be received by the stockholders of
the Company pursuant to the Merger Agreement, is fair to the Company's
stockholders from a financial point of view. The Fairness Opinion contains a
description of the factors considered, the assumptions made and the scope of
review undertaken by DLJ in rendering the Fairness Opinion and is attached
hereto as EXHIBIT B and is incorporated herein by reference. STOCKHOLDERS ARE
URGED TO READ THE FAIRNESS OPINION CAREFULLY AND IN ITS ENTIRETY;
- The likelihood that the proposed acquisition would be consummated,
including the experience, reputation and financial condition of GCLLC and its
affiliates; and
- The terms and conditions of the Merger Agreement, including, without
limitation, the fact that, the Company is not prohibited from responding to any
unsolicited proposal made in writing to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination, or other similar
transaction or to acquire all or substantially all of the assets of the Company,
to the extent the Board, after consultation with independent legal counsel,
determines in good faith that such action is required for the Board to comply
with its fiduciary duty to the Company's stockholders imposed by the General
Corporation Law.
The members of the Board evaluated the factors listed above in light of
their knowledge of the business and operations of the Company and their business
judgment. In view of the wide variety of factors considered in connection with
its evaluation of the Offer and the Merger, the Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination. The
Board recognized that the Merger is not structured to require the approval of a
majority of the stockholders of the Company other than Purchaser, and that
Purchaser, if it were to purchase a sufficient number of Shares to satisfy the
Minimum Condition, would have sufficient voting power to approve the Merger
without the affirmative vote of any other stockholder of the Company. While
consummation of the Offer would result in the stockholders of the Company
receiving a premium for their Shares over the trading prices of the Shares prior
to the announcement of the Offer and the Merger, it would eliminate any
opportunity for stockholders of the Company other than Parent and Purchaser to
participate in the potential future growth prospects of the Company. The Board,
however, believed that this was reflected in the Offer price to be paid and also
recognized that there can be no assurance as to the level of growth, if any, to
be attained by the Company in the future.
The Board determined that it was necessary to appoint a committee of
independent directors for the purpose of negotiating the terms of the Merger
Agreement. In making such determination, the Board considered that one of the
directors is employed by the Company and will have a financial interest in the
Company following consummation of the Merger. As noted above, the Board has
determined that each of the Offer and the Merger is fair to, and in the best
interests of, the stockholders of the Company. In
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addition, the Board recognized that certain officers of the Company may have
interests in the Offer and the Merger that could be deemed to present them with
certain conflicts of interest. The Board was aware of these potential conflicts
of interest and considered them along with the other matters described above.
The Company has been advised by each of its directors and executive officers
that they either tendered all Shares beneficially owned by them to Purchaser
pursuant to the Offer or intend to vote such Shares in favor of the approval and
adoption by the stockholders of the Company of the Merger Agreement and the
transactions contemplated thereby.
In connection with advising the Special Committee regarding potential
acquisitions, DLJ prepared a presentation to the Board disseminated to the Board
on or about September 22, 1995, which included a comparable publicly traded
companies analysis, an analysis of comparable merger and acquisition
transactions and an internal rate of return analysis. Based on the analyses
conducted by DLJ, DLJ's preliminary valuation range for the Company as of
September 22, 1995 was $18.00-$22.00 per share.
As a result of the Company's continued failure to meet management's
financial projections, on February 5, 1996, DLJ provided to the Board a revised
and updated comparable publicly traded companies analysis, analysis of
comparable merger and acquisition transactions and internal rate of return
analysis, as well as a control premium analysis. Based on DLJ's revised
analyses, DLJ's preliminary valuation range for the Company as of February 5,
1996 was $16.00-$19.50 per share.
In connection with the foregoing, DLJ advised the Board regarding certain
matters relating to the preparation of these analyses, which are described
below. The preparation of such analyses is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the process
underlying DLJ's opinion. In arriving at its fairness determination, DLJ
considered the results of all such analyses. No company or transaction used in
the above analyses as a comparison is identical to the Company or GCLLC or the
contemplated transaction. The analyses were prepared solely for purposes of
DLJ's providing its opinion to the Board as to the fairness of the contemplated
transaction and do not purport to be appraisals or necessarily reflect the
prices at which businesses or securities actually may be sold. Analyses based
upon forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of the Company, GCLLC, DLJ or any other person
assumes responsibility if future results are materially different from those
forecasted.
Pursuant to the Engagement Letter, the Company retained DLJ to act as the
exclusive financial advisor to the Company and the Special Committee of the
Board with respect to the sale, merger, consolidation or any other business
combination, in one or a series of transactions, involving all or a substantial
amount of the business, securities or assets of the Company. The Company agreed
to compensate the DLJ for its services in an amount of (i) $100,000, payable
upon the execution of the Engagement Letter, (ii) $300,000 as compensation for
the delivery of the Fairness Opinion, payable at the time DLJ notifies the
Special Committee that it is prepared to deliver the Fairness Opinion, and
(iii) an amount equal to one percent of the aggregate amount of consideration
received by the Company and/or its stockholders in connection with any of the
above-mentioned transactions less any amounts paid by the Company pursuant to
clause (i) or (ii) above. The Company also agreed to reimburse DLJ for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred by DLJ in connection with its engagement, whether or not a
transaction is consummated. The Company further
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agreed to indemnify DLJ against certain liabilities and expenses in connection
with its engagement, including liabilities arising under federal securities
laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain existing and former members of the Company's management and Board
(as well as other employees of the Company) have certain interests that are
described below that may present them with actual or potential conflicts of
interest in connection with the Merger. Also see "Security Ownership of Certain
Beneficial Owners and Management".
Four designees of Purchaser--Richard D. Paterson, Mark E. Bandeen, Daniel
J. Boverman and Jean-Pierre L. Conte--were appointed to the Board following
consummation of the Offer. None of such designees own any Shares as individuals
as of the Record Date.
STOCK OPTIONS AND RESTRICTED STOCK. The Merger Agreement provides that,
prior to the Effective Time, the Board (or, if appropriate, any committee of the
Board administering the Stock Option Plans (as defined below)) shall adopt such
resolutions or take such other actions as are required to provide that each
option or other right to acquire Shares (the "Options") theretofore granted
under any stock option, stock appreciation rights or stock purchase plan,
program or arrangement of the Company (collectively, the "Stock Option Plans")
outstanding immediately prior to consummation of the Merger, whether or not then
exercisable, shall, unless otherwise consented to by Parent in its sole
discretion, be exchanged, in whole and not in part, for a cash payment from the
Company in an amount (subject to any applicable withholding tax) equal to the
product of (i) the excess of $18.00 over the per share exercise price of the
Option multiplied by (ii) the number of Shares covered by the Option immediately
prior to the Effective Time.
The Merger Agreement provides that except as provided therein or as
otherwise agreed to by the parties and to the extent permitted by the Stock
Option Plans, (i) the Stock Option Plans shall terminate as of the Effective
Time and (ii) the Company shall use reasonable efforts to ensure that following
the Effective Time no holder of Options or any participant in the Stock Option
Plans shall have any right thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
MANAGEMENT ROLL-OVER AGREEMENTS. Pursuant to the agreements, each dated as
of March 25, 1996, between Parent and each of Susan M. Fixmer, Donald Madsen,
Dane Nelson and William W. Weiss (each a "Manager" and collectively the
"Managers"), Parent has granted to each such Manager, in exchange for
cancellation of certain Options held thereby, option equivalents which entitle
such Manager to receive payment from Parent of the value thereof in cash or, at
the election of Parent, class A common stock, par value $.01 per share, of
Parent, upon the happening of certain events.
STRUCTURE OF THE MERGER
In the Merger, each issued and outstanding Share (other than Shares owned
by Purchaser, Parent or the Company, or any direct or indirect subsidiary of any
of them, and the Dissenting Share), will be
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<PAGE>
converted into the right to receive $18.00 in cash, without interest. Each
share of common stock of Purchaser issued and outstanding immediately prior to
the Effective Time will be converted into and become one issued and outstanding
share of common stock of the Surviving Corporation. The Company will thereupon
become a direct subsidiary of Parent and Parent will own directly the entire
common equity interest in the Company.
The acquisition of the Shares is structured as a cash merger, with the
Company as the Surviving Corporation, to ensure that Parent will acquire all
outstanding Shares from all public holders thereof without materially disrupting
the Company's operations.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the "purchase" method of accounting,
whereby the purchase price for the Company will be allocated to the identifiable
assets and liabilities of the Company and its subsidiaries based on their
respective fair values.
FINANCING THE ACQUISITION
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay fees and expenses related thereto is estimated by
Purchaser to be approximately $94.8 million.
On March 25, 1996, Purchaser entered into the Credit Agreement and the Loan
Agreement. Copies of substantially final forms of the Credit Agreement and the
Loan Agreement are attached as EXHIBITS (B)(3) and (B)(4), respectively, to
Amendment No. 3 (Final Amendment), dated March 26, 1996 (the "Final Amendment"),
to the Schedule 14D-1
Purchaser obtained the funds required to purchase the 2,765,192 Shares
purchased pursuant to the Offer (approximately $49.8 million), to pay certain
fees related to the Offer (approximately $6.4 million) and to pre-fund interest
on the loans made under the Credit Agreement (approximately $0.6 million) from
(i) the proceeds of the sale of shares of common stock, par value $.01 per
share, of Parent to GCP II for an aggregate of approximately $17.0 million,
(ii) the proceeds of loans from the Banks to Purchaser pursuant to a senior term
loan facility (the "Tender Offer Facility") under the Credit Agreement in an
aggregate amount of approximately $24.8 million and (iii) the proceeds of loans
from BG Services to Purchaser under the Loan Agreement in an aggregate amount of
approximately $15.0 million.
Purchaser expects to obtain the funds required to pay the Merger
Consideration for the outstanding Shares converted into the right to receive
such payment pursuant to the Merger (approximately $34.9 million), to cash-out
Options pursuant to the Merger (approximately $3.7 million), to repay
indebtedness of the Surviving Corporation under the Tender Offer Facility
(approximately $24.8 million), and to pay certain other fees and expenses
related to the Offer and the Merger (approximately $1.0 million) from (i) the
proceeds of loans from the Banks to the Surviving Corporation pursuant to a
senior term loan facility and a revolving credit facility under the Credit
Agreement in an aggregate amount of approximately $34.8 million and
(ii) approximately $29.6 million of Company cash on hand.
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<PAGE>
CERTAIN EFFECTS OF THE MERGER
If the Merger is consummated, holders of Shares will not have an
opportunity to continue their common equity interest in the Company as an
ongoing operation and therefore will not have the opportunity to share in its
future earnings and potential growth, if any. Following the Merger, the Company
plans to take all necessary actions (i) to de-register the Shares under the
Exchange Act and (ii) to terminate inclusion of the Shares in Nasdaq and
designation of the Shares as NNM securities.
CERTAIN FEDERAL TAX CONSEQUENCES OF THE MERGER
The following is a summary of the principal federal income tax consequences
of the Merger to stockholders of the Company who hold their Shares as capital
assets. The discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations ("Regulations") and public administrative and judicial
interpretations of the Code and Regulations, all of which are subject to change,
which changes could be applied retroactively. This discussion is for general
information purposes only and may not apply to stockholders of the Company who
are subject to special treatment under the Code, such as (but not limited to)
foreign persons, retirement plans, regulated investment companies and dealers in
securities. It does not cover the special tax consequences that may apply to
holders who acquired their Shares pursuant to the exercise of employee stock
options or otherwise as compensation. This summary is not intended to address
any aspects of state, local, foreign or other tax laws.
ACCORDINGLY, STOCKHOLDERS ARE URGED AND EXPECTED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM UNDER
FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND THE EFFECT OF ANY CHANGE IN
THE APPLICABLE TAX LAWS SINCE THE DATE HEREOF.
The receipt of cash from Purchaser for Shares pursuant to the Merger will
be a taxable sale for federal income tax purposes (and also may be a taxable
sale under applicable state, local or foreign tax laws). In general, a
stockholder will recognize gain or loss for federal income tax purposes equal to
the difference between the amount of cash received for the Shares and the
holder's adjusted tax basis in such Shares. Gain or loss must be determined
separately for each identifiable block of Shares (I.E., shares acquired at the
same time and at the same price in one transaction) converted into cash in the
Merger. Provided the Shares constitute capital assets in the hands of the holder
thereof such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if, on the date of the sale pursuant to the Merger, the
Shares were held for more than one year. The deduction of any capital loss may
be limited under the Code.
Unless a Stockholder complies with certain reporting and certification
procedures or is an exempt recipient under applicable withholding provisions of
the Code and Regulations, such holder may be subject to backup withholding tax
of 31% with respect to any cash payments received pursuant to the Merger. This
tax is not an additional tax, but IS treated as a payment of the taxpayer's
federal income tax and may be refunded if the taxpayer has otherwise satisfied
its federal income tax liability and the taxpayer complies with the applicable
requirements for obtaining a refund. Stockholders should consult their brokers
or the Paying Agent to ensure compliance with such procedures. Foreign
stockholders should consult their own tax advisors regarding withholding taxes
in general.
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<PAGE>
THE MERGER AGREEMENT
Set forth below is a description of the principal terms of the Merger
Agreement which are of continuing applicability. This description is qualified
in its entirety by reference to the Merger Agreement, which is attached as
EXHIBIT A hereto and is incorporated herein by reference.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with the General Corporation Law,
at the Effective Time, Purchaser will be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Purchaser will cease
and the Company will continue as the Surviving Corporation and will become a
direct wholly owned subsidiary of Parent. Upon consummation of the Merger, each
issued and then outstanding Share (other than Shares held by Purchaser, Parent
or the Company or any direct or indirect wholly owned subsidiary of any of them
and any Dissenting Shares which are held by Dissenting Stockholders who have not
voted in favor of the Merger and who shall have demanded properly in writing
appraisal for such Dissenting Shares in accordance with the General Corporation
Law) shall be converted into the right to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value
$.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
The Merger Agreement provides that the directors and officers of Purchaser
immediately prior to the Effective Time shall become the directors and officers
of the Surviving Corporation. The Merger Agreement further provides that, at the
Effective Time the certificate of incorporation of Purchaser, as in effect
immediately prior to the Effective Time, will become the certificate of
incorporation of the Surviving Corporation; provided, however, that, at the
Effective Time, Article I of the certificate of incorporation of the Surviving
Corporation will be amended to read as follows: "The name of the corporation is
Andros Incorporated." The Merger Agreement also provides that the by-laws of
Purchaser, as in effect immediately prior to the Effective Time, will become the
by-laws of the Surviving Corporation.
AGREEMENTS OF PARENT, PURCHASER AND THE COMPANY. Pursuant to the Merger
Agreement, the Company agreed to cause the Special Meeting to be duly called and
held as soon as reasonably practicable following consummation of the Offer for
the purpose of voting on the approval and adoption of the Merger Agreement and
the transactions contemplated thereby.
The Merger Agreement provides that in connection with the Special Meeting
the Company shall promptly prepare and file with the Commission, use all
reasonable efforts to have cleared by the Commission and thereafter mail to its
stockholders as promptly as practicable this Proxy Statement with respect to
the Special Meeting. The Company has agreed, subject to the fiduciary duties of
the Board as advised by counsel, to include in the Proxy Statement the
recommendation of the Board that the stockholders of the Company approve and
adopt the Merger Agreement and the transactions contemplated thereby and to use
all reasonable efforts to obtain such approval and adoption. Parent has agreed
to cause Purchaser to vote all Shares beneficially owned by it in favor of
adoption of the Merger Agreement and the transactions contemplated thereby at
the Special Meeting.
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<PAGE>
The Merger Agreement provides that following the first date on which
designees of Purchaser shall constitute a majority of the Board and prior to the
Effective Time, any amendment of the Merger Agreement or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries, any
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or Purchaser or any exercise or waiver of any of the Company's rights
thereunder, will require the concurrence of a majority of the directors of the
Company then in office who were neither designated by Purchaser, employees of
the Company or any of its subsidiaries nor otherwise affiliated with Purchaser.
Pursuant to the Merger Agreement, until the Effective Time, the Company
shall, and shall cause its subsidiaries and the officers, directors, employees,
auditors and agents of the Company and its subsidiaries to, afford the officers,
employees and agents of Parent and Purchaser and persons providing or committing
to provide Parent or Purchaser with financing for the transactions contemplated
by the Merger Agreement reasonable access at all reasonable times to the
officers, employees, agents, properties, offices, plants and other facilities,
books and records of the Company and each of its subsidiaries, and shall furnish
Parent and Purchaser and persons providing or committing to provide Parent or
Purchaser with financing for the transactions contemplated by the Merger
Agreement with all financial, operating and other data and information as Parent
or Purchaser, through its officers, employees or agents, may reasonably request
and Parent and Purchaser have agreed to keep such information confidential,
except in certain circumstances.
The Company has agreed that neither it nor any of its subsidiaries shall,
directly or indirectly, through any officer, director, agent or otherwise,
initiate, solicit or intentionally encourage (including by way of furnishing
nonpublic information or assistance), or take any other action to intentionally
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize or permit any of
the officers, directors or employees of the Company or any investment banker,
financial advisor, attorney, accountant or other agent or representative of the
Company to take any such action; provided, however, that the foregoing shall not
prohibit the Board from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, bona fide written proposal to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or other similar transaction, if, and only to the extent that, (A) the
Board determines in good faith (after consultation with its financial advisor)
that the proposal would, if consummated, result in a transaction more favorable
to the Company's stockholders from a financial point of view than the
transactions contemplated by the Merger Agreement, (B) the Board further
determines in good faith after consultation with counsel that the failure to do
so would cause the Board to breach its fiduciary duties to the Company or its
stockholders under applicable law (any such proposal being referred to herein
and in the Merger Agreement as a "Superior Proposal"), and (C) no information is
so furnished, and no such discussions or negotiations are held, prior to the
execution by the receiving party and the Company of a confidentiality and
standstill agreement on terms no less favorable to the Company than those
contained in the Confidentiality Agreement, or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer.
The Company has further agreed to notify Parent promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and shall, in any such notice to Parent, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
has also agreed not to release any third party from, or waive any provision of,
any
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<PAGE>
confidentiality or standstill agreement to which the Company is a party (except
to the extent necessary in connection with the delivery of a Superior Proposal).
For purposes of this Proxy Statement and the Merger Agreement, "Competing
Transaction" means any of the following involving the Company: (i) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of more than 25% of the assets of the Company in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for more than 25% of the Shares or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any person having acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) having been formed which
beneficially owns or has the right to acquire beneficial ownership of, more than
25% of the Shares.
The Merger Agreement provides that the Company shall promptly notify
Parent, and Parent shall promptly notify the Company of (i) receipt of any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions contemplated by
the Merger Agreement; (ii) receipt of any notice or other communication from any
Governmental Entity (as defined below) in connection with the transactions
contemplated by the Merger Agreement; (iii) receipt of notice that any actions,
suits, claims, investigations or proceedings have been commenced or, to the
knowledge threatened against, or involving the Company or any of its
subsidiaries, or Parent, as applicable, which, if pending on the date of the
Merger Agreement, would have been required to have been disclosed under the
terms of the Merger Agreement or which relate to the consummation of the
transactions contemplated by the Merger Agreement; (iv) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be likely to cause any representation or warranty of it (and, in the case of
Parent, of Purchaser) contained in the Merger Agreement to be untrue or
inaccurate; and (v) any failure of the Company, Parent or Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under the Merger Agreement.
The Merger Agreement further provides that the certificate of incorporation
and by-laws of the Surviving Corporation shall contain the respective provisions
that were set forth, as of the date of the Merger Agreement, in Article Twelfth
of the certificate of incorporation and Article 5 of the by-laws of the Company,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at or at any time prior to
the Effective Time were entitled to indemnification thereunder, unless such
modification shall be required by law.
The Merger Agreement provides that the Surviving Corporation shall use
commercially reasonable efforts to maintain in effect for six years from the
Effective Time directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy with respect to matters occurring prior to the
Effective Time on terms comparable to such existing insurance coverage
(including coverage amounts); provided, however, that in no event shall the
Surviving Corporation be required to expend more than an amount per year equal
to 150% of the current annual premiums paid by the Company for such insurance
(which premiums the Company has represented to Parent and Purchaser to be
$61,000 in the aggregate) and provided further that if the annual premiums
exceed such amount, Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
Parent, Purchaser and the Company have each agreed that it will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on such party with
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<PAGE>
respect to the Offer and the Merger (including furnishing all information
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) and will take all reasonable actions necessary to cooperate promptly
with and furnish information to the other parties in connection with any such
requirements imposed upon such other parties in connection with the Offer and
the Merger. Parent, Purchaser and the Company have also each agreed that it will
take or cause to be taken all reasonable actions necessary to obtain (and will
take all reasonable actions necessary to cooperate promptly with the other
parties in obtaining) any consent, authorization, order or approval of, or any
exemption by, any court, administrative agency, commission or other governmental
or regulatory authority or instrumentality, domestic or foreign (a "Governmental
Entity"), or other third party, required to be obtained or made by any such
party in connection with the Offer or the Merger or the taking of any action
contemplated thereby or by the Merger Agreement.
Parent has agreed that it will take all action necessary to cause Purchaser
to perform its obligations under the Merger Agreement and to consummate the
Merger on the terms and conditions set forth in the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company and Seller as to the conduct of the Company's
business and the absence of certain changes or events with respect thereto,
financial statements and other documents filed with the Commission, litigation,
labor relations and employees, employee benefit plans, taxes and intellectual
property.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (i) the Merger
Agreement and the Merger shall have been approved and adopted by the affirmative
vote of stockholders of the Company to the extent required by the General
Corporation Law and the certificate of incorporation of the Company; and (ii) no
temporary restraining order, preliminary or permanent injunction or other order
issued by any Governmental Entity of competent jurisdiction nor any statute,
rule, regulation or executive order promulgated or enacted by any Governmental
Entity, nor other legal restriction, restraint or prohibition, preventing the
consummation of the Merger shall be in effect; provided however, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly practicable any injunction
or other order that may be entered.
REGULATORY AND OTHER APPROVALS
Except for the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, there are no federal or state regulatory
requirements which remain to be complied with in order for the Merger to be
consummated in accordance with the terms of the Merger Agreement.
APPRAISAL RIGHTS
Under Section 262 of the Delaware Corporation Law, any person who was a
holder of record of Shares immediately prior to the Merger and who does not wish
to accept the $18.00 cash payment per Share pursuant to the Merger has the right
to seek an appraisal of the fair value of such stockholder's Shares in the
Chancery Court. To perfect this right of appraisal, a Dissenting Stockholder
must make
18
<PAGE>
written demand for such appraisal to the Company before the taking of the vote
on the Merger Agreement and the Merger. Such demand must be delivered to the
Company at 2323 Fourth Street, Berkeley, California 94710-2402, Attention:
Secretary. The demand must reasonably inform the Surviving Corporation of the
identity of the stockholder making the demand as well as the intention of such
stockholder to demand an appraisal of the Shares held thereby.
Only a holder of record of Shares, or a person duly authorized and
explicitly purporting to act on such holder's behalf, is entitled to assert an
appraisal right with respect to the Shares registered in such holder's name.
Beneficial owners who are not record owners, including, without limitation,
persons whose Shares are held of record by a broker or by a central depository
or a central depository's nominee, and who wish to exercise appraisal rights are
advised to consult promptly with the appropriate record owners as to the timely
exercise of appraisal rights. A record owner, such as a broker, who holds
Shares as a nominee for others may exercise appraisal rights with respect to the
Shares held for one or more beneficial owners, while not exercising such rights
for other beneficial owners. In such a case, the written demand should set
forth the number of Shares as to which the demand is made. Where no Shares are
expressly mentioned, the demand will be presumed to cover all Shares held in the
name of such record owner.
A demand for the appraisal of Shares owned of record by two or more
joint holders must identify and be signed by, or on behalf of, all of the
holders. A demand for appraisal signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity must so identify the persons signing the
demand.
An appraisal demand may be withdrawn by a Dissenting Stockholder
within 60 days after the Effective Time, or thereafter with the approval of the
Surviving Corporation. Upon withdrawal of an appraisal demand, such stockholder
will be entitled to receive the Merger Consideration.
Within 120 days after the Effective Time (the "120-Day Period"), any
Dissenting Stockholder who has properly demanded an appraisal, and who has not
withdrawn this demand as described above, and the Surviving Corporation each
have the right to file in the Chancery Court a petition (the "Petition")
demanding a determination of the value of the Shares held by all of the
Dissenting Stockholders. If, within the 120-Day Period, no Petition shall have
been filed as provided above, all rights to appraisal will cease and all of the
Dissenting Stockholders will become entitled to receive the payment of the
Merger Consideration. Any Dissenting Stockholder is entitled, within the
120-Day Period and upon written request to the Surviving Corporation, to receive
from the Surviving Corporation a statement setting forth the aggregate number of
Shares with respect to which demands for appraisal have been received and the
aggregate number of Dissenting Stockholders.
Upon the filing of the Petition, the Chancery Court may order that
notice of the time and place fixed for the hearing on the Petition be mailed to
the Surviving Corporation and all of the Dissenting Stockholders, and be
published at least one week before the day of the hearing in a newspaper of
general circulation published in the City of Wilmington, Delaware or in another
publication determined by the Chancery Court. The costs relating to these
notices are borne by the Surviving Corporation. If a hearing on the Petition is
held, the Chancery Court is empowered to determine which Dissenting Stockholders
are entitled to an appraisal of their Shares. The Chancery Court may require
that the Dissenting Stockholders submit their stock certificates which had
represented Shares for notation thereon of the pendency of the appraisal
proceedings, and the Chancery Court is empowered to dismiss the proceedings as
to any
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Dissenting Stockholder who does not comply with this direction. Accordingly,
Dissenting Stockholders are cautioned to retain their stock certificates pending
resolution of the appraisal proceedings.
The Shares held by Dissenting Stockholders will be appraised by the
Chancery Court at their fair value as of the Effective Time, exclusive of any
element of value arising from the accomplishment or expectation of the Merger.
In determining such fair value, the Chancery Court will take into account all
relevant factors. The determination of the fair value of the Shares could be
based upon considerations other than, or in addition to, the market value of the
Shares, including values attributable to assets and earnings capacity. The
Chancery Court may also, on application, (i) determine a fair rate of interest,
if any, to bc paid to Dissenting Stockholders in addition to the fair value of
the Shares determined by the Chancery Court, (ii) assess costs among the parties
as the Chancery Court deems equitable under the circumstances and (iii) order
all or a portion of the expenses incurred by any Dissenting Stockholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorney's fees and the fees and expenses of experts, to bc charged
PRO RATA against the value of all Shares entitled to appraisal. The fair value
of the Shares could be determined by the Chancery Court to be higher or lower
than the Merger Consideration. Determinations by the Chancery Court are subject
to appellate review by the Supreme Court of the State of Delaware.
Dissenting Stockholders are generally permitted to participate in the
appraisal proceedings. No appraisal proceeding in the Chancery Court shall be
dismissed as to any Dissenting Stockholder without the approval of the Chancery
Court, and this approval may be conditioned upon terms which the Chancery Court
deems just.
THE FOREGOING DESCRIPTION IS NOT, AND DOES NOT PURPORT TO BE, A
COMPLETE SUMMARY OF THE APPLICABLE PROVISIONS OF SECTIONS 262 OF THE GENERAL
CORPORATION LAW AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
PROVISIONS, WHICH ARE SET FORTH IN THEIR ENTIRETY IN ANNEX C HERETO. ANY
STOCKHOLDER CONSIDERING DEMANDING APPRAISAL IS ADVISED TO CONSULT LEGAL COUNSEL.
CERTAIN LITIGATION
On March 4, 1996, a putative class action was filed in the Chancery Court
on behalf of the stockholders of the Company alleging causes of action arising
out of the Offer and the Merger. IRA FBO DANIEL W. KRASNER, DLJSC AS CUSTODIAN
V. ANDROS INCORPORATED, ET AL., Civil Action No. 14872. The defendants in this
action include the Company and its directors. The action alleges that the Board
breached its fiduciary duties and specifically alleges that the Board breached
its fiduciary duties by failing to undertake an adequate evaluation of the
Company as a potential acquisition candidate and to take adequate steps to
enhance the Company's value as an acquisition candidate, and by failing to
provide all material information to stockholders in the Schedule 14D-9. The
action seeks, INTER ALIA, to enjoin the defendants from taking steps to
accomplish the Offer and the Merger under their present terms.
Pursuant to a preliminary settlement agreement reached among the parties,
the pending legal proceedings against the Company and the Board are to be
dismissed with prejudice. The preliminary settlement agreement provides, INTER
ALIA, that the defendants will (i) disseminate to the stockholders of the
Company the information contained in Amendment No. 2, dated March 14, 1996, to
the Schedule 14D-9; and (ii) not object to the application of plaintiff's
counsel for legal fees not exceeding $175,000
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and expenses actually and reasonably incurred not exceeding $15,000 to be paid
by the Company. The contemplated settlement is subject, among other conditions,
to execution by the parties of an appropriate Stipulation of Settlement and the
approval of the Chancery Court.
PRICE RANGE OF SHARES; DIVIDENDS
The Shares are included in Nasdaq, designated NNM securities and
principally traded on the NNM. The following table sets forth, for the calendar
quarters indicated, the high and low sales prices per Share on the NNM as
reported by the Dow Jones News Service.
<TABLE>
<CAPTION>
High Low
---- ---
1993
----
<S> <C> <C>
First Quarter . . . . . . . . . . . . . . . $19 1/4 $12
Second Quarter . . . . . . . . . . . . . . . 17 3/4 13 1/4
Third Quarter . . . . . . . . . . . . . . . 17 13 1/2
Fourth Quarter . . . . . . . . . . . . . . . 16 3/4 13
1994
----
First Quarter . . . . . . . . . . . . . . . $21 1/4 $15
Second Quarter . . . . . . . . . . . . . . . 19 3/4 13 1/2
Third Quarter . . . . . . . . . . . . . . . 18 1/4 15 1/4
Fourth Quarter . . . . . . . . . . . . . . . 18 1/4 14 3/4
1995
----
First Quarter . . . . . . . . . . . . . . . $18 $15
Second Quarter . . . . . . . . . . . . . . . 18 3/4 14 3/4
Third Quarter . . . . . . . . . . . . . . . 19 1/2 15 1/4
Fourth Quarter . . . . . . . . . . . . . . . 18 1/4 15 1/4
1996
----
First Quarter . . . . . . . . . . . . . . . $18 1/4 $12 1/4
Second Quarter (through April 12, 1996) . . . $17 3/4 $17 1/2
</TABLE>
Although prior to March 25, 1996, there were no legal restrictions on the
payment of dividends by the Company, historically the Company had never declared
or paid dividends. Upon execution of the Credit Agreement and the Loan
Agreement on March 25, 1996, the Company became subject to certain restrictions
on the declaration and payment of dividends.
On February 14, 1996, the last full trading day prior to the announcement
of the execution of the Merger Agreement and of Purchaser's intention to
commence the Offer, the closing price per Share as reported on the NNM was
$15 1/2. On February 20, 1996, the last full trading day prior to the
commencement of the Offer, the closing price per Share as reported on the NNM
was $17 3/4. On April 12, 1996, the most recent full trading day practicable
prior to the mailing of this Proxy Statement, the closing price per Share as
reported on the NNM was $17 5/8.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
21
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Shares by each current director of the Company, each "named
executive officer" (as defined in Item 402(a)(3) of Regulation S-K under the
Exchange Act) of the Company, the current directors and "named executive
officers" as a group, and all persons known to the Company to be beneficial
owners of more than 5% of the Shares:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned the Shares
------------------------ ------------------ ----------
<S> <C> <C>
Purchaser, Parent, GCP II and GCLLC(1) 2,765,192 58.0%
Steven A. Cohen, S.A.C. Capital Management, L.P.
and S.A.C. Investments, L.P.(2) 723,994 15.6
Richard D. Paterson(1) 2,765,192 58.0
Mark E. Bandeen(1) 2,765,192 58.0
Daniel J. Boverman(1) 2,765,192 58.0
Jean-Pierre L. Conte(1) 2,765,192 58.0
Eugene Kleiner(3) 85,845 1.8
Robert C. Wilson(3) 55,000 1.2
Dane Nelson(3) 150,000 3.1
Edward A. McClatchie, Ph.D.(3) 100,109 2.1
Lee R. Carlson, Ph.D.(3) 55,800 1.2
Robert L. Turner(3) 61,000 1.3
William W. Weiss(3) 10,132 *
Directors and "named executive officers" as a group 3,283,078 63.1(4)
</TABLE>
- ---------------------
* Less than 1%.
(1) According to information available to the Company and as reported to the
Commission by Parent and Purchaser in the Final Amendment, as of March 26,
1996 such persons beneficially owned 2,765,192 Shares, representing
approximately 58% of the Shares outstanding on such date. Richard D.
Paterson, Mark E. Bandeen, Daniel J. Boverman and Jean-Pierre L. Conte,
each of whom is a director of the Company designated by Purchaser pursuant
to the terms of the Merger Agreement, may be deemed to beneficially own
such Shares. Each of GCLLC and Messrs. Paterson, Bandeen, Boverman and
Conte disclaims beneficial ownership of such Shares.
(2) According to information available to the Company and as reported to the
Commission by Mr. Cohen and his affiliates in Amendment No. 10, dated March
13, 1996, to the Schedule 13D filed thereby with the Commission, such
persons beneficially owned 723,994 Shares, representing approximately 15.6%
of the Shares outstanding on such date. Of such Shares, 334,800 are owned
by Mr. Cohen, 221,840 are owned by S.A.C. Capital Management, L.P., and
167,354 are owned by S.A.C. Investments, L.P.
(3) According to information available to the Company, as supplied by directors
and "named executive officers" of the Company and reported to the
Commission by the Company in the Schedule 14D-9. The figures supplied
indicate beneficial ownership at January 31, 1996 and percentage ownership
of Shares calculated
22
<PAGE>
based on 4,628,054 Shares outstanding on January 31, 1996, adjusted as
required by rules promulgated by the Commission.
(4) Calculated based on the number of fully diluted Shares on the date hereof--
5,200,675.
INDEPENDENT PUBLIC ACCOUNTANTS
It is not expected that representatives of Price Waterhouse LLP, the
Company's principal accountants for its most recently completed fiscal year,
will be present at the Special Meeting. It is expected that Coopers & Lybrand
LLP, the Company's principal accountants for its most recently completed fiscal
year, will be present at the Special Meeting, that such representatives will
have an opportunity to make a statement if they desire to do so, and that such
representatives will be available to respond to appropriate questions.
OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the Special Meeting by
the Company nor does the Company know of any matters that are expected to be
properly brought before the Special Meeting by others.
STOCKHOLDERS' PROPOSALS
If the Merger is not consummated, any proposals of holders of Shares
intended to be presented at the annual meeting of stockholders of the Company to
be held in 1996 must have been received by the Company, addressed to the Company
at 2323 Fourth Street, Berkeley, California 94710-2402, Attention: Secretary,
not later than February 15, 1996, to be considered for inclusion in the proxy
statement and form of proxy relating to such annual meeting.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information, as well as the Schedule 14D-1 and the Schedule 14D-9, should
be available for inspection at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and also should be available for inspection at the Commission's
regional offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and the Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained by mail,
upon payment of the Commission's customary fees, by writing to its principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
information should also be available for inspection at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington D.C. 20006.
23
<PAGE>
The Shares are currently registered under the Exchange Act. Upon
consummation of the Merger, the Company will become a direct wholly owned
subsidiary of Parent, and there will be no public trading of the Shares.
Accordingly, as soon as practicable following the Merger registration of the
Shares, and the Company's obligation to file periodic reports, proxy statements
and other information with the Commission, will be terminated upon application
of the Company to the Commission.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Proxy Statement the
following documents previously filed with the Commission pursuant to the
Exchange Act:
- The Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1995;
- The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended October 29, 1995 and January 28, 1996; and
- The Company's Current Report on Form 8-K dated April 5, 1996.
In addition, all reports and other documents filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the Special Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such reports
and documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein, or in any other subsequently filed document that also is incorporated or
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement. A copy of any document incorporated by reference herein (including
any exhibit incorporated by reference from any such document) may be obtained
without charge by any person receiving this Proxy Statement, upon written or
oral request, by contacting the Company at 2332 Fourth Street, Berkeley,
California 94710-2402, Attention: Secretary. Such copy will be sent by first
class mail or other equally prompt means within one business day after receipt
of such request. In order to ensure timely delivery of the documents prior to
the Special Meeting, any request should be made prior to May 7, 1996.
24
<PAGE>
EXHIBIT A
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
FEBRUARY 14, 1996
by and among
CHO HOLDINGS INC.,
CHO ACQUISITION INC.
and
ANDROS INCORPORATED<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE TENDER OFFER
SECTION 1.1 THE OFFER . . . . . . . . . . . . . . . . . . . . . . . A-1
ARTICLE II THE MERGER
SECTION 2.1 MERGER . . . . . . . . . . . . . . . . . . . . . . . . A-5
SECTION 2.2 CONVERSION OF SHARES. . . . . . . . . . . . . . . . . A-5
SECTION 2.3 EXCHANGE OF CERTIFICATES.. . . . . . . . . . . . . . . A-6
SECTION 2.4 DISSENTING SHARES. . . . . . . . . . . . . . . . . . . A-7
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. . . . . . . . . . . . . . . . . . . . . A-7
SECTION 2.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. . A-7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE
PURCHASER
SECTION 3.1 CORPORATE ORGANIZATION.. . . . . . . . . . . . . . . . A-8
SECTION 3.2 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . A-8
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATION.. . . . . . . . . A-8
SECTION 3.4 FINANCING. . . . . . . . . . . . . . . . . . . . . . . A-9
SECTION 3.5 SURVIVING CORPORATION AFTER THE MERGER.. . . . . . . . A-9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1 CORPORATE ORGANIZATION. . . . . . . . . . . . . . . . A-9
SECTION 4.2 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . A-10
SECTION 4.3 SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . A-10
SECTION 4.4 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . A-10
SECTION 4.5 CONSENTS AND APPROVALS; NO VIOLATION. . . . . . . . . A-11
SECTION 4.6 PROXY OR INFORMATION STATEMENT.. . . . . . . . . . . . A-11
SECTION 4.7 CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . A-12
SECTION 4.8 SEC DOCUMENTS. . . . . . . . . . . . . . . . . . . . . A-12
SECTION 4.9 LITIGATION. . . . . . . . . . . . . . . . . . . . . . A-13
SECTION 4.10 LABOR RELATIONS; EMPLOYEES . . . . . . . . . . . . . . A-13
SECTION 4.11 CERTAIN AGREEMENTS AND EMPLOYEE BENEFIT PLANS . . . . A-13
SECTION 4.12 TAXES . . . . . . . . . . . . . . . . . . . . . . . . A-15
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . A-16
SECTION 4.14 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . A-17
SECTION 4.15 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . A-17
SECTION 4.16 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . A-17
SECTION 4.17 FEES . . . . . . . . . . . . . . . . . . . . . . . . . A-17
SECTION 4.18 BUSINESS COMBINATION STATUTE INAPPLICABLE . . . . . . A-18
<PAGE>
ARTICLE V COVENANTS OF THE COMPANY AND PARENT
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY.. . . . . . . . . . A-18
SECTION 5.2 STOCKHOLDER MEETING; PROXY MATERIAL; INFORMATION
STATEMENT . . . . . . . . . . . . . . . . . . . . . . A-20
SECTION 5.3 NO SOLICITATION OF COMPETING TRANSACTIONS. . . . . . . A-20
ARTICLE VI ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . A-21
SECTION 6.2 LEGAL CONDITIONS TO OFFER AND MERGER. . . . . . . . . A-22
SECTION 6.3 CONFIDENTIALITY AGREEMENT. . . . . . . . . . . . . . . A-22
SECTION 6.4 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . A-22
SECTION 6.5 DIRECTORS' AND OFFICERS' INSURANCE AND
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . A-22
SECTION 6.6 EMPLOYEE ARRANGEMENTS. . . . . . . . . . . . . . . . . A-23
SECTION 6.7 COMPANY STOCK OPTION PLANS.. . . . . . . . . . . . . . A-24
SECTION 6.8 COMPANY EMPLOYEE STOCK PURCHASE PLAN . . . . . . . . . A-24
SECTION 6.9 NOTICE OF CERTAIN EVENTS. . . . . . . . . . . . . . . A-24
SECTION 6.10 OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . A-25
SECTION 6.11 VOTING OF SHARES . . . . . . . . . . . . . . . . . . . A-25
ARTICLE VII CONDITIONS PRECEDENT
SECTION 7.1 CONDITIONS OF EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER . . . . . . . . . . . . . . . . . . . . . . . A-25
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO
EFFECT THE MERGER. . . . . . . . . . . . . . . . . . A-25
ARTICLE VIII TERMINATION
SECTION 8.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . A-26
SECTION 8.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . A-27
SECTION 8.3 CERTAIN PAYMENTS.. . . . . . . . . . . . . . . . . . . A-27
ARTICLE IX GENERAL PROVISIONS
SECTION 9.1 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . A-27
SECTION 9.2 EXTENSION; WAIVER. . . . . . . . . . . . . . . . . . . A-28
SECTION 9.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . A-28
SECTION 9.4 ENTIRE AGREEMENT.. . . . . . . . . . . . . . . . . . . A-28
SECTION 9.5 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . A-28
SECTION 9.6 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . A-28
SECTION 9.7 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . A-29
SECTION 9.8 EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . A-29
SECTION 9.9 BENEFITS; ASSIGNMENT. . . . . . . . . . . . . . . . . A-29
SECTION 9.10 SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . A-30
SECTION 9.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . A-30
ANNEX I CONDITIONS OF THE OFFER
A-ii
<PAGE>
INDEX OF DEFINED TERMS
DEFINED TERM REFERENCE
- ------------ ---------
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.7(c)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(a)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.11(a)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Competing Transaction. . . . . . . . . . . . . . . . . . . . . . . . Section 5.3
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . Section 6.3
Constituent Corporations . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(a)
Current Offering . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.8
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . Section 2.4(a)
Dissenting Stockholder . . . . . . . . . . . . . . . . . . . . . Section 2.4(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.1(b)
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . Section 4.7(c)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.11(b)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.3(a)
Financing Commitments. . . . . . . . . . . . . . . . . . . . . . . . Section 3.4
Fully Diluted Shares . . . . . . . . . . . . . . . . . . . . . . . . Section 4.2
Governmental Entity. . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . Section 4.7(c)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.3
Information Statement. . . . . . . . . . . . . . . . . . . . . . . . Section 4.6
ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.11(c)
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.11(b)
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.14
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . Section 4.1
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . Section 4.16
Material Plans . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.11(b)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Price . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.2(a)
Minimum Shares . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Minimum Share Condition. . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(b)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.7(b)
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.6
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(b)
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(b)
A-iii
<PAGE>
SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.8
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Special Committee. . . . . . . . . . . . . . . . . . . . . . . . Section 1.2(a)
Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.2
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . Section 6.7(a)
Stock Purchase Plan. . . . . . . . . . . . . . . . . . . . . . . . . Section 4.2
Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . Section 5.2(a)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.3(a)
Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . Section 5.3
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . Section 2.1(a)
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.12(a)
Tendered Shares. . . . . . . . . . . . . . . . . . . . . . . . . Section 1.1(a)
A-iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 14, 1996, is entered into by and among CHO HOLDINGS INC., a Delaware
corporation ("Parent"), CHO ACQUISITION INC., a Delaware corporation and a
wholly owned subsidiary of Parent (the "Purchaser"), and ANDROS INCORPORATED, a
Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, the respective Boards of Directors of the Company, Parent and the
Purchaser have approved the acquisition of the Company by the Purchaser and, in
furtherance of such acquisition, Parent proposes to cause the Purchaser to make
a cash tender offer (the "Offer") for all of the outstanding shares of common
stock, par value $.01 per share ("Common Stock"), of the Company ("Shares") on
the terms specified herein and the Board of Directors of the Company has
approved the Offer and recommended that it be accepted by the stockholders of
the Company; and
WHEREAS, the Boards of Directors of the Company and the Purchaser deem it
advisable and in the best interests of the stockholders of such corporations to
effect the merger (the "Merger") of the Purchaser with and into the Company
following the consummation of the Offer, all pursuant to this Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL");
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, Parent, the Purchaser and
the Company hereby agree as follows:
ARTICLE I
THE TENDER OFFER
SECTION 1.1 THE OFFER.
(a) Subject to the provisions of this Agreement and provided that nothing
shall have occurred that would result in a failure to satisfy any of the
conditions set forth in Annex I hereto, Parent shall cause the Purchaser to, as
promptly as reasonably practicable after the date hereof, but in no event later
than five (5) business days following the initial public announcement of the
Purchaser's intention to commence the Offer, commence (within the meaning of
Rule 14d-2(a) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), the Offer for all of the outstanding Shares at a price of
$18.00 per Share, net to the seller in cash, subject only (i) to a minimum of
2,649,538 Shares (or such other number of Shares, when added to the number of
Shares already owned by Parent, the Purchaser or any direct or indirect wholly
owned Subsidiary (as defined in Section 1.3(a)) of Parent, as shall constitute a
majority of the Company's Fully Diluted Shares (as defined in Section 4.2) (the
"Minimum Shares") being validly tendered prior to the expiration or termination
of the Offer and not withdrawn (the "Minimum Share Condition") and (ii) to the
other conditions to the Offer set forth in Annex I. The Purchaser may at any
time transfer or assign to one or more corporations directly or indirectly
wholly owned by Parent the right to purchase all or any portion of the Shares
tendered pursuant to the Offer (the "Tendered Shares"), but no such assignment
shall relieve the Purchaser of its obligations hereunder. The Purchaser
expressly reserves the right to waive
<PAGE>
any of the conditions to the Offer set forth in Annex I and to modify the
terms and conditions of the Offer; provided, however, that, without the prior
written approval of the Company, the Purchaser shall not amend or modify the
terms of the Offer to (i) reduce the cash price to be paid pursuant to the
Offer, (ii) reduce the number of Shares as to which the Offer is made, (iii)
change the form of consideration to be paid in the Offer, (iv) modify or
waive the Minimum Share Condition, or (v) impose conditions to its obligation
to accept for payment or pay for the Tendered Shares other than those set
forth in Annex I. The Offer may not be extended without the Company's prior
written consent; provided, however, that the Purchaser may extend (and
re-extend) the Offer for up to a total of 20 business days if, as of the
initial expiration date, which shall be 20 business days following
commencement of the Offer, there shall not have been validly tendered and not
withdrawn that number of Shares necessary to permit the Merger to be effected
without a meeting of the Company's stockholders in accordance with the DGCL.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, the Purchaser shall file with the Securities and Exchange Commission
("SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer,
which shall contain or shall incorporate by reference an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
the documents included therein or incorporated therein by reference pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). Parent and the Purchaser agree that the Offer
Documents shall comply as to form in all material respects with the Exchange
Act, and the rules and regulations promulgated thereunder, and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or the Purchaser with respect to information supplied by the
Company or any of its representatives which is included in the Offer Documents.
Each of Parent, the Purchaser and the Company agrees to correct promptly any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading, and each of Parent
and the Purchaser further agrees to take all steps necessary to amend or
supplement the Offer Documents and to cause the Offer Documents as so amended or
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Offer Documents and all amendments and supplements
thereto prior to their filing with the SEC or dissemination to stockholders of
the Company. Parent and the Purchaser agree to provide the Company and its
counsel any comments Parent, the Purchaser or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments.
(c) Subject to the terms and conditions of the Offer, the Purchaser shall
pay for Shares which have been validly tendered and not withdrawn pursuant to
the Offer as promptly as practicable following expiration of the Offer.
SECTION 1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents that at a meeting duly called and held the Board of Directors of the
Company has, after receiving the recommendation in favor thereof of the special
committee of the Board of Directors of the Company (the "Special Committee")
formed to consider this Agreement and the transactions contemplated
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hereby, (i) approved and adopted this Agreement and the transactions
contemplated hereby and determined that the Offer and the Merger are in the
best interests of the Company and its stockholders and on terms that are fair
to such stockholders, and (ii) recommended that the Company's stockholders
accept the Offer and tender all of their Shares in connection therewith and,
if required under the DGCL, approve this Agreement and the transactions
contemplated hereby. The Company represents that its Board of Directors has
received the written opinion of Donaldson, Lufkin & Jenrette Securities
Corporation that the consideration to be received by the Company's
stockholders pursuant to each of the Offer and the Merger is fair to the
Company's stockholders from a financial point of view, and that a complete
and correct signed copy of such opinion will be delivered promptly following
the date hereof by the Company to Parent. The Company represents that the
Special Committee has duly adopted resolutions providing for the dissolution
of the Special Committee on the Cut-Off Date (as defined below).
(b) As soon as reasonably practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended and supplemented from time to time, the "Schedule 14D-9") and shall mail
the Schedule 14D-9 to the stockholders of the Company. Subject to the fiduciary
duties of the Board of Directors as advised by counsel, the Offer Documents and
the Schedule 14D-9 shall contain the recommendation of the Company's Board of
Directors described in Section 1.2(a). The Company agrees that the Schedule
14D-9 shall comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations promulgated thereunder and, on
the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or the
Purchaser or any of their respective representatives which is included in the
Schedule 14D-9. Each of the Company, Parent and the Purchaser agrees to correct
promptly any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading, and the
Company further agrees to take all steps necessary to amend or supplement the
Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to
be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given a reasonable opportunity to review the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide Parent and its counsel with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish the Purchaser promptly with mailing labels containing the names
and addresses of the record holders of Common Stock as of a recent date and of
those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Common Stock, and shall furnish to the Purchaser such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as the Purchaser may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer or the Merger, Parent and the Purchaser and their
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agents shall hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the
Offer and the other transactions contemplated hereby and, if this Agreement
shall be terminated, will deliver, and will use their reasonable best efforts
to cause their agents to deliver, to the Company all copies of such
information then in their possession or control.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase by the Purchaser of Shares in the Offer,
and from time to time thereafter, the Purchaser shall be entitled to designate
the number of directors, rounded up to the next whole number, on the Company's
Board of Directors that equals the product of (i) the total number of directors
on the Company's Board of Directors (giving effect to the election of any
additional directors pursuant to this Section 1.3) and (ii) the percentage that
the number of Shares owned by the Purchaser, Parent and any direct or indirect
wholly owned Subsidiary of Parent (including Shares purchased in the Offer)
bears to the total number of Shares outstanding, and to effect the foregoing the
Company shall upon request by the Purchaser, at the Company's election, either
increase the number of directors comprising the Company's Board of Directors or
seek and accept resignations of incumbent directors. The first date on which
designees of the Purchaser shall constitute a majority of the Company's Board of
Directors is referred to in this Agreement as the "Cut-Off Date." At such
times, the Company will use its reasonable best efforts to cause individuals
designated by the Purchaser to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each committee
of the Board, (y) each board of directors of each Subsidiary of the Company and
(z) each committee of each such board. As used in this Agreement, a
"Subsidiary" of any other corporation means a corporation an amount of whose
voting securities sufficient to elect at least a majority of its Board of
Directors is owned directly or indirectly by such other corporation.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 to fulfill its obligations under this Section 1.3. The Purchaser
will supply to the Company and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(c) Following the Cut-Off Date and prior to the Effective Time, any
amendment of this Agreement or the Certificate of Incorporation or Bylaws of the
Company or any of its Subsidiaries, any termination or amendment of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or the Purchaser
or any exercise or waiver of any of the Company's rights hereunder, will require
the concurrence of a majority of the directors of the Company then in office who
are neither designated by the Purchaser, employees of the Company or any of its
Subsidiaries nor otherwise affiliated with the Purchaser.
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ARTICLE II
THE MERGER
SECTION 2.1 MERGER.
(a) At the Effective Time (as defined in subsection (b) below) and subject
to the terms and conditions hereof and the provisions of the DGCL, the Purchaser
will be merged with and into the Company in accordance with the DGCL, the
separate existence of the Purchaser shall thereupon cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). The
Purchaser and the Company are sometimes hereinafter referred to collectively as
the "Constituent Corporations."
(b) Subject to the terms and conditions hereof, the Merger shall be
consummated as promptly as practicable after the expiration of the Offer and the
Stockholders' Meeting (as defined in Section 5.2), if any, by duly filing an
appropriate certificate of merger or certificate of ownership, as the case may
be, in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL. The Merger shall be effective at such time as
the certificate of merger or certificate of ownership is duly filed with the
Secretary of State of the State of Delaware in accordance with the DGCL or at
such later time as is specified in the certificate of merger or certificate of
ownership (the "Effective Time"). Prior to such filing, a closing shall take
place at the offices of Shearman & Sterling, 555 California Street, San
Francisco, California, or at such other place as the parties shall agree, for
the purpose of confirming the satisfaction or waiver of the conditions contained
in Article VII hereof.
(c) The separate corporate existence of the Company, as the Surviving
Corporation, with all its purposes, objects, rights, privileges, powers,
certificates and franchises, shall continue unimpaired by the Merger. The
Surviving Corporation shall succeed to all the properties and assets of the
Constituent Corporations and to all debts, choses in action and other interests
due or belonging to the Constituent Corporations and shall be subject to, and
responsible for, all the debts, liabilities and duties of the Constituent
Corporations with the effect set forth in Section 259 of the DGCL.
SECTION 2.2 CONVERSION OF SHARES.
At the Effective Time and by virtue of the Merger and without any action on
the part of the holders of the capital stock of the Constituent Corporations:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than (i) Shares to be cancelled pursuant to subsection (b) below and
(ii) Dissenting Shares (as defined in Section 2.4)) shall be converted into the
right to receive in cash an amount per Share equal to the highest price paid per
Share pursuant to the Offer (the "Merger Price");
(b) Each Share held in the treasury of the Company and each Share owned by
Parent, the Purchaser or the Company, or by any direct or indirect wholly owned
Subsidiary of any of them, shall be cancelled and retired without payment of any
consideration therefor; and
(c) Each share of Common Stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully
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paid and nonassessable share of Common Stock, par value $.01 per share, of
the Surviving Corporation.
SECTION 2.3 EXCHANGE OF CERTIFICATES.
(a) From and after the Effective Time, a bank or trust company to be
designated by Parent with the concurrence of the Company shall act as exchange
agent (the "Exchange Agent") in effecting the exchange of the Merger Price for
certificates which prior to the Effective Time represented Shares and which as
of the Effective Time represent the right to receive the Merger Price (the
"Certificates"). Promptly after the Effective Time, the Exchange Agent shall
mail to each record holder of Certificates a form of letter of transmittal and
instructions for use in surrendering such Certificates and receiving the Merger
Price therefor in a form approved by Parent and the Company. At or prior to the
Effective Time, the Purchaser shall deposit in trust with the Exchange Agent
immediately available funds in an amount sufficient to pay the Merger Price for
all such Shares to the Company's stockholders as contemplated by this
Section 2.3. Such funds shall be invested by the Exchange Agent as directed by
Parent or the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $250 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise). Upon the
surrender of each Certificate and the issuance and delivery by the Exchange
Agent of the Merger Price for the Shares represented thereby in exchange
therefor, the Certificate shall forthwith be cancelled. Until so surrendered
and exchanged, each Certificate shall represent solely the right to receive the
Merger Price for the Shares represented thereby, without any interest thereon.
Upon the surrender and exchange of such an outstanding Certificate, the holder
thereof shall receive the Merger Price multiplied by the number of Shares
represented by such Certificate, without any interest thereon. If any cash is
to be paid to a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition to such payment or
exchange that the person requesting such payment or exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the payment of
such cash to a name other than that of the registered holder of the Certificate
surrendered, or such person shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Certificates for any part of the Merger Price payments made to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(b) Promptly following the sixth month after the Effective Time, the
Exchange Agent shall return to the Surviving Corporation all cash relating to
the transactions described in this Agreement, and the Exchange Agent's duties
shall terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Price for such Shares, without any interest thereon, but shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation under applicable law. At and after the
Effective Time, holders of Certificates shall cease to have any rights as
stockholders of the Company except for the right to surrender such Certificates
in exchange for the Merger Price for such Shares or to perfect their right to
receive payment for their Shares pursuant to Section 262 of the DGCL and
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Section 2.4 below, and there shall be no transfers on the stock transfer books
of the Company or the Surviving Corporation of any Shares that were outstanding
immediately prior to the Merger.
SECTION 2.4 DISSENTING SHARES.
(a) Notwithstanding the provisions of Section 2.2 or any other provision
of this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and are held by stockholders who have
not voted such Shares in favor of the approval and adoption of this Agreement
and who shall have properly demanded appraisal of such Shares in accordance with
Section 262 of the DGCL ("Dissenting Shares") shall not be converted into the
right to receive the Merger Price at the Effective Time, unless and until the
holder of such Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost such right to appraisal and payment under the
DGCL. If a holder of Dissenting Shares (a "Dissenting Stockholder") shall have
so failed to perfect or shall have effectively withdrawn or lost such right to
appraisal and payment, then, as of the Effective Time or the occurrence of such
event, whichever last occurs, such Dissenting Shares shall be converted into and
represent solely the right to receive the Merger Price, without any interest
thereon, as provided in Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any written demands
for appraisal, withdrawals of demands for appraisal and any other instruments
served pursuant to Section 262 of the DGCL received by the Company, and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under Section 262 of the DGCL. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or settle or offer to settle any such demands.
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION.
(a) Subject to the terms of Section 6.5, at the Effective Time the
Certificate of Incorporation of the Purchaser, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation; provided, however, that Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is Andros Incorporated."
(b) Subject to the terms of Section 6.5, the Bylaws of the Purchaser, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation or such Bylaws.
SECTION 2.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At
the Effective Time, the directors of the Purchaser immediately prior to the
Effective Time shall become the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
Certificate of Incorporation and Bylaws of the Surviving Corporation, until the
next annual stockholders' meeting of the Surviving Corporation and until their
successors shall be duly elected or appointed and shall duly qualify. At the
Effective Time, the officers of the Purchaser immediately prior to the Effective
Time shall become the officers of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby jointly and severally represent and warrant
to the Company that, except as and to the extent set forth in a Disclosure
Schedule delivered to the Company on or prior to the date hereof setting forth
additional exceptions specified therein to the representations and warranties
contained in this Article III, which Disclosure Schedule shall identify
exceptions by specific Section references:
SECTION 3.1 CORPORATE ORGANIZATION.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Purchaser has not
engaged in any business since it was incorporated other than in connection with
the transactions contemplated by this Agreement. Parent owns all of the
outstanding capital stock of the Purchaser.
SECTION 3.2 AUTHORITY. Each of Parent and the Purchaser has the full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the respective
Boards of Directors of Parent and the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to consummate
the transactions so contemplated (other than, with respect to the Merger, the
filing and recordation or the appropriate merger documents as required by the
DGCL). This Agreement has been duly executed and delivered by each of Parent
and the Purchaser and, assuming the due authorization, execution and delivery
thereof by the Company, constitutes a valid and binding obligation of each of
Parent and the Purchaser, enforceable against such parties in accordance with
its terms.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by Parent and the Purchaser nor the
consummation by Parent and the Purchaser of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of their
respective Certificates of Incorporation or Bylaws, or (ii) assuming compliance
with the matters referred to in clause (iii) below, constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation contained in or to the loss of a benefit under, or result in the
creation of any lien or other encumbrance upon any of the properties or assets
of Parent or the Purchaser under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease agreement or
other agreement, instrument, obligation, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or the Purchaser, or to which either of them or any of their
respective properties or assets may be subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of liens
or other encumbrances, which, individually or in the aggregate, will not have a
material adverse effect on Parent and its Subsidiaries taken as a whole or
(iii) require any consent, approval, authorization or permit of, or filing with
or notification to, any court, administrative agency,
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commission or other governmental or regulatory authority or instrumentality,
domestic or foreign (a "Governmental Entity"), except (A) pursuant to the
Exchange Act, (B) filing a certificate of merger or certificate of ownership,
as the case may be, pursuant to the DGCL, (C) filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the termination of the waiting periods thereunder or (D) consents,
approvals, authorizations, permits, filings or notifications which if not
obtained or made will not, individually or in the aggregate, have a material
adverse effect on Parent and its Subsidiaries taken as a whole or prevent or
materially delay consummation of the Offer or the Merger.
SECTION 3.4 FINANCING. The Purchaser has received loan commitment
letters from one or more commercial banks and purchase commitment letters from
subordinated debt investors (together, the "Financing Commitments"), copies of
which have been provided to the Company. The Purchaser has or will have, prior
to the expiration of the Offer and the Effective Time of the Merger, sufficient
cash or cash-equivalent funds available to purchase all of the Shares
outstanding in the Offer and the Merger, to provide adequate working capital for
the Company following the Effective Time and to pay all related fees and
expenses incurred in connection with the Offer and the Merger.
SECTION 3.5 SURVIVING CORPORATION AFTER THE MERGER. At the Effective
Time and after and giving effect to any changes in the Surviving Corporation's
assets and liabilities as a result of the Merger and after and giving effect to
the financing contemplated by the Financing Commitments, the Surviving
Corporation will not (i) be insolvent (either because its financial condition is
such that the sum of its debts is greater than the fair value of its assets or
because the present fair saleable value of its assets will be less than the
amount required to pay its probable liability on its debts as they become
absolute and matured), (ii) have unreasonably small capital with which to engage
in its business or (iii) have incurred or plan to incur debts beyond its ability
to pay as they become absolute and matured.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
that, except as and to the extent set forth in a Disclosure Schedule delivered
to Parent on or prior to the date hereof setting forth additional exceptions
specified therein to the representations and warranties contained in this
Article IV, which Disclosure Schedule shall identify exceptions by specific
Section references:
SECTION 4.1 CORPORATE ORGANIZATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. All Subsidiaries of the Company are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and the Company and its Subsidiaries
have the requisite corporate power and authority and all necessary governmental
approvals to own or lease and operate their properties and assets and to carry
on their businesses as they are now being conducted, and are duly qualified or
licensed as foreign corporations to do business and in good standing in each
jurisdiction in which the nature of the businesses conducted by them or the
character or location of the properties owned or leased by them makes such
qualification or licensing necessary, except where the failure to be so
organized, existing, in good standing, qualified or licensed would not have a
Material Adverse Effect. As used herein, the term "Material Adverse Effect"
means any
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change or effect that, individually or in the aggregate, is or is reasonably
likely to be materially adverse to the business, operations, properties,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of the Company and the Subsidiaries taken as a whole.
SECTION 4.2 CAPITALIZATION. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock. As of the close of
business on January 31, 1996, 4,628,054 shares of Common Stock were issued and
outstanding, 671,021 shares of Common Stock were reserved for issuance upon the
exercise of outstanding options to acquire shares of Common Stock ("Stock
Options"), no shares of Common Stock were held by the Company in its treasury
and 16,430 shares of Common Stock were reserved for issuance under the Company's
employee stock purchase plan (the "Stock Purchase Plan") and no shares of
Preferred Stock were issued and outstanding. The number of issued and
outstanding shares of Common Stock at any time taken together with the number of
shares of Common Stock reserved for issuance upon the exercise of outstanding
Stock Options at such time is referred to herein as the "Fully Diluted Shares."
All of the issued and outstanding shares of Common Stock are validly issued,
fully paid and nonassessable and are not subject to preemptive rights created by
statute, the Certificates of Incorporation or Bylaws of the Company or any
agreement to which the Company is a party or by which the Company or its assets
is bound. Except as disclosed in this Section 4.2, there are no shares of
capital stock of the Company issued or outstanding, and except for the Stock
Options and rights to purchase shares of Common Stock under the Stock Purchase
Plan, there are no outstanding subscriptions, options, warrants, rights,
convertible securities or other agreements or commitments of any character
(including, without limitation, rights which will or could become exercisable as
a result of this Agreement or any transaction contemplated hereby) relating to
the issued or unissued capital stock or other securities of the Company
obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or
obligating the Company to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment.
There are no voting trusts or other agreements or understandings to which the
Company or any Subsidiary of the Company is a party with respect to the voting
of the capital stock of the Company or such Subsidiary.
SECTION 4.3 SUBSIDIARIES. The Subsidiaries of the Company are listed
on Schedule 4.3. All of the outstanding shares of capital stock of each
Subsidiary of the Company are validly issued, fully paid and nonassessable and
are owned by the Company or a wholly owned Subsidiary of the Company, free and
clear of all liens, claims or encumbrances. There are no existing
subscriptions, options, warrants, rights, convertible securities or other
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of any Subsidiary of the Company obligating
any such Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of any Subsidiary of the Company or
obligating any Subsidiary of the Company to grant, extend or enter into any
subscription, option, warrant, right, convertible security or other similar
agreement or commitment. Except as disclosed in Schedule 4.3, the Company does
not own, directly or indirectly, any equity or similar interest in, or any
interest convertible into or exchangeable for, any equity or similar interest
in, any corporation, partnership, joint venture or other business association or
entity.
SECTION 4.4 AUTHORITY. The Company has the full corporate power and
authority to enter into this Agreement, to perform its obligations hereunder 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 approved by the Board of Directors of the Company
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and no other corporate proceedings on the part of the Company are necessary
to authorize this Agreement or to consummate the transactions so contemplated
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the stockholders of the Company if and to the extent required by
applicable law, and the filing and recordation of the appropriate merger
documents as required by DGCL). This Agreement has been duly executed and
delivered by, and, assuming the due authorization, execution and delivery
thereof by Parent and the Purchaser, constitutes a valid and binding
obligation of, the Company, enforceable against the Company in accordance
with its terms.
SECTION 4.5 CONSENTS AND APPROVALS; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will (i) conflict with or
result in any breach or violation of any provision of the Certificate of
Incorporation or Bylaws (or other comparable organizational documents) of the
Company or any Subsidiary of the Company, or (ii) constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation contained in or to the loss of a benefit under, or result in the
creation of any lien or other encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any such Subsidiary or to which they or
any of their respective properties or assets may be subject, except for such
violations, conflicts, breaches, terminations, accelerations or creations of
liens or other encumbrances, which will not have a Material Adverse Effect, or
(iii) require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except (A) pursuant to the Exchange
Act, (B) filing a certificate of merger pursuant to the DGCL, (C) filings under
the HSR Act and the termination of the waiting periods thereunder or
(D) consents, approvals, authorizations, permits, filings or notifications which
if not obtained or made will not have a Material Adverse Effect or prevent or
materially delay consummation of the Offer or the Merger.
SECTION 4.6 PROXY OR INFORMATION STATEMENT. If the DGCL shall
require a Stockholders' Meeting to be convened in connection with the Merger,
the proxy statement to be provided to stockholders of the Company in connection
with the Stockholders' Meeting (together with the amendments thereof and
supplements thereto, the "Proxy Statement") and all amendments thereof and
supplements thereto shall, and if the DGCL shall not require a Stockholders'
Meeting to be convened in connection with the Merger, the information statement
to be provided to stockholders of the Company in connection with the Merger
(together with the amendments thereof and supplements thereto, the "Information
Statement") shall, comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and shall not, at the time of (i) first mailing thereof
or (ii) in the case of the Proxy Statement, the Stockholders' Meeting to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that (x) no representation is made by the
Company with respect to information supplied in writing by Parent or any
affiliates or representatives of Parent or Purchaser for inclusion in the Proxy
Statement or Information Statement, as the case may be, and (y) no
representation is made with respect to a Proxy Statement or Information
Statement, as the case may be, prepared by the Company and provided to the
Company's stockholders at any time following the Cut-Off Date.
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SECTION 4.7 CONDUCT OF BUSINESS.
(a) The businesses of the Company and its Subsidiaries are not being
conducted in default or violation of any term, condition or provision of (i) its
respective charter or bylaws, or (ii) any note, bond, mortgage, indenture, deed
of trust, lease, agreement, or other instrument or obligation of any kind to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective properties or assets may
be bound, or (iii) any federal, state, local or foreign statue, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to the
Company or any of its Subsidiaries, excluding from the foregoing clauses
(ii) and (iii) defaults or violations that would not have a Material Adverse
Effect.
(b) The Company and each of its Subsidiaries have all licenses, permits,
orders or approvals of, and have made all required registrations with, all
Governmental Entities that are material to the conduct of the business of the
Company and its Subsidiaries taken as a whole (collectively, "Permits"). To the
knowledge of the Company, (i) all Permits are in full force and effect; (ii) no
material violations are or have been recorded in respect of any Permit; and
(iii) no proceeding is pending or threatened to revoke or limit any Permit.
(c) Neither the Company nor any of its Subsidiaries has received any
written communication from a Governmental Entity that alleges that the Company
or any Subsidiary of the Company is not in compliance with any Environmental Law
(as defined below) if such non-compliance could reasonably be expected to have a
Material Adverse Effect. The Company has no knowledge of any environmental
materials or information, including on-site or off-site disposal or releases of
Hazardous Materials (as defined below), that could reasonably be expected to
have a Material Adverse Effect. As used in this Agreement, the term
"Environmental Laws" means any applicable treaties, laws, regulations,
enforceable requirements, orders, decrees or judgments issued, promulgated or
entered into by any Governmental Entity, which relate to (A) pollution or
protection of the environment or (B) the generation, storage, use, handling,
disposal or transportation of or exposure to Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Sections 9601, et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. Sections 6901 et seq., the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Sections 1251 et seq., the Clean
Air Act of 1970, as amended, 42 U.S.C. Sections 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., and any similar
or implementing state or local law, and all amendments or regulations
promulgated thereunder. As used in this Agreement, the term "Hazardous
Materials" means all explosive or regulated radioactive materials or substances,
biological hazards, genotoxic or mutagenic hazards, hazardous or toxic
substances, medical wastes or other wastes or chemicals, petroleum or petroleum
distillates, asbestos or asbestos-containing materials, and all other materials
or chemicals regulated pursuant to any Environmental Law, including materials
listed in 49 C.F.R. Sections 172.101 and materials defined as hazardous pursuant
to Section 101(14) of CERCLA.
SECTION 4.8 SEC DOCUMENTS. The Company has filed all required
reports, schedules, forms, statements and other documents with the SEC since
July 31, 1992 (the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable
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to such SEC Documents, and, at the time of filing, none of the SEC Documents
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 SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and their consolidated statements of
operations, stockholders' equity and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments which were and are not expected to have a Material
Adverse Effect). Except as and to the extent set forth on the consolidated
balance sheet of the Company and the Subsidiaries as at July 30, 1995,
including the notes thereto, neither the Company nor any Subsidiary has any
liability or obligation of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with generally accepted
accounting principles, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since July 30, 1995
which could not reasonably be expected to have a Material Adverse Effect.
The Company has heretofore made available to Parent complete and correct
copies of all of the SEC Documents and all amendments and modifications
thereto, as well as, to the extent any shall exist, all amendments and
modifications that have not been filed by the Company with the SEC to all
agreements, documents and other instruments that previously had been filed by
the Company with the SEC and are currently in effect.
SECTION 4.9 LITIGATION. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries that, individually or in the aggregate, could reasonably
be expected to (i) have a Material Adverse Effect, (ii) materially impair the
ability of the Company to perform its obligations under this Agreement or
(iii) prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity outstanding against the Company or any of its subsidiaries
having, or that could reasonably be expected to have, any such effect.
SECTION 4.10 LABOR RELATIONS; EMPLOYEES. (i) Neither the Company nor
any of its Subsidiaries is, directly or indirectly, a party to or bound by any
collective bargaining agreement; (ii) no collective bargaining agreement is
currently being negotiated by the Company or its Subsidiaries; and (iii) to the
knowledge of the Company, no representation question exists respecting the
employees of the Company or its Subsidiaries.
SECTION 4.11 CERTAIN AGREEMENTS AND EMPLOYEE BENEFIT PLANS.
(a) Neither the Company nor any of its Subsidiaries is a party to any
written (i) employment, severance, collective bargaining or consulting agreement
not terminable on 60 days' or less notice, (ii) agreement with any executive
officer or other key employee of the Company or any Subsidiary of the Company
(A) the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company or any
Subsidiary of the Company of the nature of any of the transactions contemplated
by this Agreement, (B) providing
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any term of employment or compensation guarantee extending for a period
longer than one year, or (C) providing severance benefits or other benefits
after the termination of employment of such executive officer or key employee
regardless of the reason for such termination of employment, (iii) agreement,
plan or arrangement under which any person may receive payments subject to
the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or (iv) agreement or plan, including, without
limitation, any stock option plan (other than the Stock Option Plans), stock
appreciation right plan, restricted stock plan or stock purchase plan, the
benefits of which would be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement.
(b) Schedule 4.11(b) contains a true and complete summary or list
of, or otherwise describes (i) all employee benefit plans (within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts
or agreements to which the Company or any Subsidiary is a party, with respect
to which the Company or any Subsidiary has any obligations which while are
material in amount and which are maintained, contributed to or sponsored by
the Company or any Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Subsidiary and (ii) each
employee benefit plan for which the Company or any Subsidiary could incur
liability under Section 4069 of ERISA, in the event such plan were
terminated, or under Section 4212(c) of ERISA, or in respect of which the
Company or any Subsidiary remains secondarily liable under Section 4204 of
ERISA (collectively, the "Material Plans"). Each Material Plan is in writing
and the Company has previously made available to Parent a true and complete
copy of each Material Plan and a true and complete copy of each material
document prepared in connection with each such Material Plan including,
without limitation: (i) a copy of each trust or other funding arrangement,
(ii) the most current summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Material Plan, and (v) the most recently prepared actuarial report and
financial statement in connection with each such Material Plan. Neither the
Company nor any Subsidiary has any express or implied commitment (i) to
create, incur liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into any contract or
agreement to provide compensation or benefits to any individual or (iii) to
modify, change or terminate any Material Plan, other than with respect to a
modification, change or termination required by ERISA or the Code. To the
extent applicable, the Material Plans comply with the requirements of ERISA
and the Code, and any Material Plan intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service to be
so qualified and has been so qualified during the period from its adoption to
date. No Material Plan is covered by Title IV of ERISA or Section 412 of the
Code. Neither the Company, its Subsidiaries nor any officer or director of
the Company or any of its Subsidiaries has incurred any liability or penalty
under Sections 4975 through 4980 of the Code or Title I of ERISA. To the
knowledge of the Company, each Material Plan has been maintained and
administered in all material respects in compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Material Plans. There are no pending or anticipated
claims against or otherwise involving any of the Material Plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Material Plan activities) has been brought, or to the
knowledge of the Company is threatened, against or with
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respect to any such Material Plan. All material contributions, reserves or
premium payments required to be made or accrued as of the date hereof to the
Material Plans have been made or accrued.
(c) Schedule 4. 11(c) contains a true and correct list of each
person who holds any Stock Option as of the date hereof, together with (i)
the number of shares of Common Stock subject to such Stock Option, (ii) the
date of grant of such Stock Option, (iii) the extent to which such Stock
Option is currently vested or scheduled to vest by June 30, 1996, (iv) the
exercise price of such Stock Option, (v) whether such Stock Option is
intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code (an "ISO") and (vi) the expiration date of such
Stock Option. Schedule 4.11(c) also sets forth the aggregate number of ISO's
and nonqualified Stock Options outstanding as of the date hereof.
SECTION 4.12 TAXES.
(a) The Company and its Subsidiaries (i) have filed when due (taking
into account extensions) with the appropriate federal, state, local, foreign
and other governmental agencies, all tax returns, estimates and reports
required to be filed by it, (ii) either paid when due and payable or
established adequate reserves or otherwise accrued all requisite federal,
state, local or foreign taxes, levies, imposts, duties, licenses and
registration fees and charges of any nature whatsoever, and unemployment and
social security taxes and income tax withholding, including interest and
penalties thereon ("Taxes") and there are and will be no tax deficiencies
claimed in writing and received by the Company or its Subsidiaries in respect
of any period preceding the Effective Time that, in the aggregate, would
result in any tax liability in excess of the amount of the reserves or
accruals, and (iii) have established or will establish in accordance with its
normal accounting practices and procedures accruals and reserves that, in the
aggregate, are adequate for the payment of all Taxes not yet due and payable
and attributable to any period preceding the Effective Time.
(b) No taxes, interest, penalties, assessments or deficiencies have
been threatened or claimed in a writing and received by the Company or any of
its Subsidiaries by any taxing authority in respect of any tax returns filed
by the Company and its Subsidiaries (or any predecessor corporations).
Neither the Company nor any of its Subsidiaries (nor any predecessor
corporation) have executed or filed with the IRS or any other taxing
authority any agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any Taxes. Neither the
Company nor any of its Subsidiaries is currently being audited by any taxing
authority or have received notice of a proposed audit pertaining to Taxes.
There are no tax liens on any assets of the Company or any affiliate, except
for Taxes not yet due and payable. The accruals and reserves for taxes
reflected in the consolidated balance sheet of the Company and the
Subsidiaries as at July 30, 1995 are in all material respects adequate to
cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with
generally accepted accounting principles.
(c) The Company neither is a party to, is bound by, nor has any
obligation under any tax sharing or similar agreement.
(d) Neither the Company nor any of its Subsidiaries is required to
include in income (i) any amount in respect of any adjustment under Section
481 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) any
deferred intercompany transaction or (iii) any installment sale gain, where
the inclusion in income would result in a tax liability materially in excess
of the reserves
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therefor. Neither the Company nor any of its Subsidiaries has given a
consent under Section 341(f) of the Code. Neither the Company nor any of its
Subsidiaries is, or has been at any time, a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code.
(e) Neither the Company nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that may result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the
meaning of Section 280G of the Code by reason of the consummation of the
Offer or the Merger, determined without regard to Section 280G(b)(4) of the
Code. No acceleration of the vesting schedule for any property that is
substantially unvested within the meaning of the regulations under Section 83
of the Code will occur in connection with the transactions contemplated by
this Agreement. Neither the Company nor any of its Subsidiaries is or has
been subject to any accumulated earnings tax or personal holding company tax.
Neither the Company nor any of its Subsidiaries owns stock in (i) a passive
foreign investment company within the meaning of Section 1296 of the Code or
(ii) a controlled foreign corporation within the meaning of Section 957 of
the Code. Neither the Company nor any of its Subsidiaries is obligated under
any agreement with respect to industrial development bonds or other
obligations with respect to which the excludibility from gross income of the
holder for federal income tax purposes could be affected by the transactions
contemplated hereunder. Neither the Company nor any of its Subsidiaries has
an unrecaptured overall foreign loss within the meaning of Section 904(f) of
the Code or has participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code. Neither the Company nor any of
its Subsidiaries owns any property of a character the transfer of which would
give rise to (x) a revaluation of such property for purposes of any ad
valorem or similar tax, or (y) any documentary, stamp or other transfer tax.
Neither the Company nor any of its Subsidiaries has an "excess loss account"
for purposes of the Treasury Regulations promulgated under Section 1502 of
the Code.
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since July 30,
1995, except as contemplated by this Agreement or disclosed in any SEC
Document filed since July 30, 1995 and prior to the date of this Agreement,
the Company and its Subsidiaries have conducted their respective businesses
only in the ordinary course consistent with past practice, and there has not
been (i) any damage, destruction or loss, whether covered by insurance or
not, having or which, insofar as reasonably can be foreseen, in the future
would have a Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend (whether in cash, stock or property) with respect to
Common Stock, or any redemption, purchase or other acquisition of any of its
securities, (iii) any change in the business, operations, properties,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of the Company or any Subsidiary having a Material
Adverse Effect, (iv) any labor dispute, other than routine matters, none of
which is material to the Company and its Subsidiaries taken as a whole, (v)
any entry into any material commitment or transaction (including, without
limitation, any borrowing or capital expenditure) other than in the ordinary
course of business consistent with past practice, (vi) any material change by
the Company in its accounting methods, principles or practices, (vii) any
revaluation by the Company of any asset (including, without limitation, any
writing down of the value of inventory or writing off of notes or accounts
receivable), other than in the ordinary course of business consistent with
past practice, or (viii) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase
in the compensation payable or to become payable to any officers or key
employees of the Company or any Subsidiary, except in the ordinary course of
business consistent with past practice.
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SECTION 4.14 PROPERTIES. All of the properties and assets owned
by the Company and each of its Subsidiaries are owned by each of them,
respectively, free and clear of any lien, claim, encumbrance or restriction
of any nature whatsoever (a "Lien"), except for Liens which could not
reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, the Company and its Subsidiaries have good and marketable
title subject to no Liens, other than those permitted under this Section
4.14, to all of the properties and assets necessary for the conduct of their
business other than to the extent that the failure to have such title could
not reasonably be expected to have a Material Adverse Effect.
SECTION 4.15 INTELLECTUAL PROPERTY. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held or intended as of the date hereof by management of
the Company to be used by the Company or any Subsidiary in, and all such
intellectual property necessary in the conduct of, the business of the
Company and the Subsidiaries as currently conducted or as contemplated to be
conducted as of the date hereof by management of the Company, and there are
no other items of intellectual property that are material to the Company or
any Subsidiary or the business of the Company and the Subsidiaries. The
Company is unaware of any assertion or claim challenging the validity of any
of the foregoing which could reasonably be expected to have a Material
Adverse Effect. The conduct of the business of the Company and the
Subsidiaries as currently conducted and as contemplated to be conducted as of
the date hereof by management of the Company does not and will not conflict
in any way with any patent, patent right, license, trademark, trademark
right, trade name, trade name right, service mark or copyright of any third
party that could reasonably be expected to have a Material Adverse Effect,
and neither the Company nor any Subsidiary has received any claim or written
notice from any person to such effect. To the knowledge of the Company,
there are no infringements of any proprietary rights owned by or licensed by
or to the Company or any Subsidiary which could reasonably be expected to
have a Material Adverse Effect. To the knowledge of the Company, neither it
nor any Subsidiary has licensed or otherwise permitted the use by any third
party of any proprietary information on terms or in a manner which could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.16 MATERIAL CONTRACTS. All contracts, leases and other
agreements to which the Company or any of its Subsidiaries is a party that
would be required to be filed as Exhibits to the SEC Documents (the "Material
Contracts") have been filed as Exhibits to the SEC Documents. To the
knowledge of the Company: (i) each Material Contract is in full force and
effect except as the same may have expired in accordance with its terms; (ii)
neither the Company nor any of its Subsidiaries has received any written
assertion of default under any Material Contract; and (iii) neither the
Company nor any of its Subsidiaries reasonably expects or has received any
notice related to any termination or material change to, or proposal with
respect to, any of the Material Contracts as a result of the transactions
contemplated by this Agreement; in each case except where the result of a
failure of a representation contained in clauses (i), (ii) or (iii) above
could not reasonably be expected to have a Material Adverse Effect.
SECTION 4.17 FEES. Except for the fees payable by the Company to
Donaldson, Lufkin and Jenrette Securities Corporation described in an
engagement letter dated October 22, 1994, a complete and correct copy of
which has been provided to Parent, neither the Company nor any of its
Subsidiaries has paid or will become obligated to pay any fee or commission
to any broker, finder or intermediary in connection with the transactions
contemplated hereby.
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SECTION 4.18 BUSINESS COMBINATION STATUTE INAPPLICABLE. As of the
date hereof and pursuant to Section 203(a)(1) of the DGCL, the restrictions
contained in Section 203 of the DGCL are, and at all times on or prior to the
Effective Time such restrictions shall be, inapplicable to the Offer, the
Merger and the transactions contemplated by this Agreement, including,
without limitation, the pledge of the shares of the Company Common Stock
acquired in the Offer to the lending institutions providing the financing for
the Offer, and the transfer of such shares upon the exercise or remedies
under the applicable agreements. The Company has heretofore delivered to
Parent a complete and correct copy of the resolutions of the Board of
Directors of the Company to the effect that pursuant to Section 203(a)(1) of
the DGCL the restrictions contained in Section 203 of the DGCL are and shall
be inapplicable to the Offer, the Merger and the transactions contemplated by
this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY AND PARENT
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period commencing on the date of
this Agreement and continuing until the Cut-Off Date or until the termination
of this Agreement in accordance with its terms, the Company and each of its
Subsidiaries shall conduct its operations in the ordinary and usual course
consistent with past practice, and the Company and its Subsidiaries will each
endeavor to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory relations
with suppliers, contractors, distributors, licensors, licensees, customers
and others having business relationships with it. Without limiting the
generality of the foregoing and except as provided in this Agreement, prior
to the Cut-Off Date, neither the Company nor any of its Subsidiaries shall
directly or indirectly do, or propose to do, any of the following, without
the prior written consent of Parent:
(a) Declare or pay any dividends on or make any other distribution in
respect of any of the capital stock of the Company;
(b) Split, combine or reclassify any of the capital stock of the
Company or issue or authorize any other securities in respect of, in lieu of
or in substitution for, shares of the capital stock of the Company or
repurchase, redeem or otherwise acquire any shares of the capital stock of
the Company;
(c) Issue, deliver, encumber, sell or purchase any shares of the
capital stock of the Company or any securities convertible into, or rights,
warrants, options or other rights of any kind to acquire, any such shares of
capital stock, other convertible securities or any other ownership interest
(including, without limitation, any phantom interest) (other than the
issuance of Common Stock upon the exercise of outstanding Stock Options);
(d) Amend or otherwise change its Certificate of Incorporation or
Bylaws (or other comparable organizational document);
(e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof;
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(f) Sell, lease or otherwise dispose of any of its assets, other than
in the ordinary course of business consistent with its past practices;
(g) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of the Company or any
Subsidiary of the Company or guarantee any debt securities of others, other
than in the ordinary course of business consistent with past practice;
(h) Enter into any contract or agreement other than in the ordinary
course of business consistent with past practice;
(i) Authorize any single capital expenditure which is in excess of
$50,000 or capital expenditures which are, in the aggregate, in excess of
$250,000 for the Company and the Subsidiaries taken as a whole;
(j) Increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past practices
in salaries or wages of employees of the Company or any Subsidiary who are
not officers of the Company, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
or other employee of the Company or any Subsidiary, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer
or employee;
(k) Take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures (including, without limitation,
procedures with respect to cash management, the payment of accounts payable
and the collection of accounts receivable);
(l) Make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability, or execute or file with the IRS
or any other taxing authority any agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes;
(m) Amend or modify the warranty policy of the Company or any
Subsidiary;
(n) Pay, discharge, satisfy, settle or compromise any suit, claim,
liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction,
in the ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Company's consolidated
balance sheet dated as of July 30, 1995, as filed by the Company with the SEC
in its Annual Report on Form 10--K for its fiscal year ended July 30, 1995,
or subsequently incurred in the ordinary course of business and consistent
with past practice; or
(o) Take any action that would result in any of the representations and
warranties of the Company set forth in this Agreement becoming untrue in any
material respect or in any of the conditions to the Offer or any of the
conditions to the Merger set forth in Article VII not being satisfied.
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SECTION 5.2 STOCKHOLDER MEETING; PROXY MATERIAL; INFORMATION
STATEMENT.
(a) If this Agreement is required by the DGCL to be approved by the
Company's stockholders, then the Company shall cause a meeting of its
stockholders (the "Stockholders' Meeting") to be duly called and held as soon
as reasonably practicable for the purpose of voting on the approval and
adoption of this Agreement and the transactions contemplated hereby. The
Board of Directors of the Company shall, subject to their fiduciary duties as
advised by counsel, recommend approval and adoption of this Agreement and the
Merger by the Company's stockholders. In connection with such meeting, the
Company (i) shall promptly prepare and file with the SEC, use all reasonable
efforts to have cleared by the SEC and thereafter mail to its stockholders as
promptly as practicable the Proxy Statement and all other proxy materials for
such meeting, (ii) shall notify Parent of the receipt of any comments of the
SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company
or any representative of the Company and the SEC, (iii) shall give Parent and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all
responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC, (iv) shall, subject to
the fiduciary duties of its Board of Directors as advised by counsel, use all
reasonable efforts to obtain the necessary approvals by its stockholders of
this Agreement and the transactions contemplated hereby and (v) shall
otherwise comply with all legal requirements applicable to such meeting.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action, including the preparation and mailing of
the Information Statement, to cause the Merger to become effective, in
accordance with Section 253 of the DGCL, as soon as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.
SECTION 5.3 NO SOLICITATION OF COMPETING TRANSACTIONS. Neither
the Company nor any Subsidiary shall, directly or indirectly, through any
officer, director, agent or otherwise, initiate, solicit or intentionally
encourage (including by way of furnishing non-public information or
assistance), or take any other action to intentionally facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as defined below), or
enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize
or permit any of the officers, directors or employees of the Company or any
investment banker, financial advisor, attorney, accountant or other agent or
representative of the Company to take any such action; provided, however,
that nothing contained in this Section 5.3 shall prohibit the Board of
Directors of the Company from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, bona fide written proposal to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination, tender or
exchange offer or other similar transaction, if, and only to the extent that,
(A) the Board of Directors of the Company determines in good faith (after
consultation with its financial advisor) that the proposal would, if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the transactions
contemplated by this Agreement, (B) the Board of Directors of the Company
further determines in
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good faith after consultation with counsel that the failure to do so would
cause the Board of Directors of the Company to breach its fiduciary duties to
the Company or its stockholders under applicable law (any such proposal, a
"Superior Proposal") and (C) no information is so furnished, and no such
discussions or negotiations are held, prior to the execution by the receiving
party and the Company of a confidentiality and standstill agreement on terms
no less favorable to the Company than those contained in the Confidentiality
Agreement, or (ii) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a tender or exchange offer. The Company shall notify
Parent promptly if any such proposal or offer, or any inquiry or contact with
any person with respect thereto, is made and shall, in any such notice to
Parent indicate in reasonable detail the identity of the person making such
proposal, offer, inquiry or contact and the terms and conditions of such
proposal, offer, inquiry or contact. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or
standstill agreement to which the Company is a party (except to the extent
necessary to permit such third party to deliver a Superior Proposal). For
purposes of this Agreement, "Competing Transaction" shall mean any of the
following involving the Company: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of more than
25% of the assets of the Company in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for more than 25% of
the Shares or the filing of a registration statement under the Securities Act
in connection therewith; or (iv) any person having acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder) having been formed which beneficially
owns or has the right to acquire beneficial ownership of, more than 25% of
the Shares.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION. Between the date of this
Agreement and the Cut-Off Date, the Company and its Subsidiaries will afford
to Parent and its authorized representatives for the transactions
contemplated hereby and the authorized representatives of such parties and
persons providing or committing to provide Parent or the Purchaser financing
for the transactions contemplated hereby, reasonable access at all reasonable
times to the officers, employees, agents, properties, offices and all other
facilities, books and records of the Company and its Subsidiaries as Parent
may reasonably request. Additionally, the Company will permit Parent and its
authorized representatives for the transactions contemplated hereby, and the
authorized representatives of such parties and persons providing or
committing to provide Parent or the Purchaser financing for the transactions
contemplated hereby to make such inspections of the Company and its
operations at all reasonable times as it may reasonably require and will
cause its officers, employees and agents, and those of its Subsidiaries to
furnish Parent with such financial and operating data and other information
with respect to the business and properties of the Company and its
Subsidiaries as Parent may from time to time reasonably request. No
investigation pursuant to this Section 6.1 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
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SECTION 6.2 LEGAL CONDITIONS TO OFFER AND MERGER.
(a) The Company will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on the Company with
respect to the Offer and the Merger (including furnishing all information
required under the HSR Act) and will take all reasonable actions necessary to
cooperate promptly with and furnish information to the Purchaser or Parent in
connection with any such requirements imposed upon the Purchaser or Parent in
connection with the Offer and the Merger. The Company will take, and will
cause its Subsidiaries to take, all reasonable actions necessary to obtain
(and will take all reasonable actions necessary to cooperate promptly with
the Purchaser and Parent in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity, or other third
party, required to be obtained or made by the Company or any of its
Subsidiaries (or by the Purchaser or Parent) in connection with the Offer or
the Merger or the taking of any action contemplated thereby or by this
Agreement. In addition to the foregoing, prior to the Effective Time, the
parties shall take, or cause to be taken, all such actions as may be
necessary or appropriate in order to effectuate, as expeditiously as
practicable, the Offer and the Merger and the other transactions contemplated
by this Agreement, including any necessary consents and waivers.
(b) The Purchaser and Parent will take all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on them
with respect to the Offer and the Merger (including furnishing all
information required under the HSR Act) and will take all reasonable actions
necessary to cooperate promptly with and furnish information to the Company
in connection with any such requirements imposed upon the Company or any
Subsidiary of the Company in connection with the Offer and the Merger. The
Purchaser and Parent will take all reasonable actions necessary to obtain
(and will take all reasonable actions necessary to cooperate promptly with
the Company and its Subsidiaries in obtaining) any consent, authorization,
order or approval of, or exemption by, any Governmental Entity, or other
third party, required to be obtained or made by the Purchaser or Parent (or
by the Company or any of its Subsidiaries) in connection with the Offer or
the Merger or the taking of any action contemplated thereby or by this
Agreement.
SECTION 6.3 CONFIDENTIALITY AGREEMENT. The Company and Parent
acknowledge that the existing confidentiality agreement between such parties
(the "Confidentiality Agreement") shall remain in full force and effect at
all times prior to the Effective Time and after any termination of this
Agreement, and such parties agree to comply with the terms of such Agreement.
SECTION 6.4 PUBLIC ANNOUNCEMENTS. The Purchaser, Parent and the
Company will consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer, the Merger
or any transaction contemplated hereby and shall not issue any such press
release or make any such public statement except as they may mutually agree
unless required so to do by law or by obligations pursuant to any listing
agreement with any national securities exchange or the National Association
of Securities Dealers, Inc. The Company and Parent have agreed as to the
form of joint press release announcing execution of this Agreement.
SECTION 6.5 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) The Certificate of Incorporation and the Bylaws of the Surviving
Corporation shall contain the respective provisions that are set forth, as of
the date of this Agreement, in Article Twelfth of the Certificate of
Incorporation of the Company and Article 5 of the Bylaws of the Company,
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which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at or at any time prior to
the Effective Time were entitled to indemnification thereunder unless such
modification shall be required by law.
(b) Parent hereby agrees (i) to assume, as of the Effective Time, all
obligations of the Company under Article Twelfth of the Certificate of
Incorporation of the Company and Article 5 of the Bylaws of the Company, and
(ii) to pay all amounts that become due and payable under such provisions.
(c) The Surviving Corporation and Parent shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification
agreements with the Company's directors and officers existing at or before
the Effective Time.
(d) The Surviving Corporation shall use commercially reasonable efforts
to maintain in effect for six years from the Effective Time directors' and
officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy
on terms comparable to such existing insurance coverage (including coverage
amounts); provided, however, that in no event shall the Surviving Corporation
be required to expend pursuant to this Section 6.5 more than an amount per
year equal to 150% of current annual premiums paid by the Company for such
insurance (which premiums the Company represents and warrants to be $61,000
in the aggregate) and provided further that if the annual premiums exceed
such amount, Parent shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(e) This Section shall survive the consummation of the Offer and the
Merger, is intended to benefit the Company, the Surviving Corporation and
each indemnified party, shall be binding, jointly and severally, on all
successors and assigns of the Surviving Corporation and Parent, and shall be
enforceable by the indemnified parties.
(f) After the date of consummation of the Offer, neither Parent nor the
Purchaser shall take any action that would cause the Company not to honor in
accordance with their terms, any employment, severance, consulting, change of
control and other compensation contracts between the Company or any of its
Subsidiaries and any current or former director, officer or employee thereof
listed on Schedule 4.11(b).
SECTION 6.6 EMPLOYEE ARRANGEMENTS. From and after the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, cause any
employee benefit plans, programs, policies or arrangements of the Surviving
Corporation covering any active, former or retired employee of the Surviving
Corporation or its Subsidiaries to give full credit for each participant's
period of service with the Company and its Subsidiaries prior to the
Effective Time for all purposes for which such service was recognized under
the Material Plans prior to the Effective Time, including, but not limited
to, recognition of service for vesting, amount of benefits, eligibility to
participate and eligibility for disability and early retirement benefits
(including subsidies relating to such benefits) and full credit for
deductibles satisfied under the Material Plans toward any applicable
deductibles for the same period following the Effective Time.
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SECTION 6.7 COMPANY STOCK OPTION PLANS.
(a) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, any committee administering the Stock Option Plans (as
defined below)) shall adopt such resolutions or take such other actions as
are required to provide that each outstanding Stock Option heretofore granted
under any stock option, stock appreciation rights or stock purchase plan,
program or arrangement of the company (collectively, the "Stock Option
Plans") outstanding immediately prior to the consummation of the Offer,
whether or not then exercisable, shall be, unless otherwise consented to by
Parent in its sole discretion, exchanged, in whole and not in part, for a
cash payment from the Company in an amount (subject to any applicable
withholding tax) equal to the product of (i) the excess of the Merger Price
over the per share exercise price of the Stock Option, multiplied by (ii) the
number of Shares covered by the Stock Option immediately prior to the
Effective Time.
(b) Except as provided in this Agreement or as otherwise agreed to by the
parties and to the extent permitted by the Stock Option Plans, (i) the Stock
Option Plans shall terminate as of the Effective Time and (ii) the Company shall
use reasonable efforts to ensure that following the Effective Time no holder of
options or any participant in the Stock Option Plans shall have any right
thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof.
SECTION 6.8 COMPANY EMPLOYEE STOCK PURCHASE PLAN. The Company shall
take all actions necessary pursuant to the terms of Stock Purchase Plan in order
to shorten the offering period under such plan which includes the Effective Time
(the "Current Offering"), such that the Current Offering shall terminate at or
prior to the Effective Time (the final day of the Current Offering period being
referred to as the "Final Purchase Date"). On the Final Purchase Date, the
Company shall apply the funds credited as of such date under the Stock Purchase
Plan within each participant's payroll withholdings account to the purchase of
whole shares of Common Stock in accordance with the terms of the Stock Purchase
Plan. The cost to each participant in the Stock Purchase Plan for shares of
Common Stock shall be the lower of 85% of the closing sale price of Common Stock
on the Nasdaq National Market on (i) the first day of the Current Offering
period and (ii) the last trading day on or prior to the Final Purchase Date.
SECTION 6.9 NOTICE OF CERTAIN EVENTS. The Company shall notify
Parent, and Parent shall promptly notify the Company, of:
(i) receipt of any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) receipt of any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this Agreement;
(iii) receipt of notice that any actions, suits, claims, investigations
or proceedings have been commenced or, to the knowledge threatened against, or
involving the Company or any of its Subsidiaries, or Parent, as applicable,
which, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 4.9 or which relate to the consummation
of the transactions contemplated by this Agreement;
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(iv) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
of it (and, in the case of Parent, of the Purchaser) contained in this Agreement
to be untrue or inaccurate; and
(v) any failure of the Company, Parent or the Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.9
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.10 OBLIGATIONS OF PURCHASER. Parent will take all action
necessary to cause the Purchaser to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.11 VOTING OF SHARES. Parent agrees to cause Purchaser
(i) to vote all Shares beneficially owned by it in favor of adoption of this
Agreement and the Merger at the Stockholders' Meeting, if any such meeting shall
be required by the DGCL, and (ii) if no Stockholders' Meeting shall be required
by the DGCL, file the certificate of ownership providing for the Merger of
Purchaser with and into the Company as soon as permitted under applicable
regulatory requirements and law.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 CONDITIONS OF EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. If required by the DGCL, this Agreement and the
Merger shall have been approved and adopted by the affirmative vote or consent
of the stockholders of the Company to the extent required by the DGCL and the
Certificate of Incorporation of the Company.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any Governmental
Entity of competent jurisdiction nor any statute, rule, regulation or executive
order promulgated or enacted by any Governmental Entity, nor other legal
restriction, restraint or prohibition, preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall have used
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly practicable any injunction or other order that may be
entered.
(c) The Offer. Shares shall have been purchased pursuant to the Offer.
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger is further
subject to the satisfaction or waiver at or prior to the Effective Time of the
conditions that Parent and the Purchaser shall have performed in all material
respects each of their obligations under this Agreement required to be performed
by them
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pursuant to the terms hereof and the representations and warranties of
Parent and the Purchaser contained herein shall be true and correct in all
material respects.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval of this Agreement and the transactions contemplated
hereby by the stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of the Company, Parent and the Purchaser;
(b) by either Parent or the Company if (i) the Cut-Off Date shall not have
occurred on or before May 31, 1996; provided, however, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available (A) to
any party whose failure to fulfill any obligation under this Agreement has been
the substantial cause of, or resulted in, the failure of the Cut-Off Date to
occur on or before such date, or (B) to Parent if it shall fail to designate
persons that will constitute a majority of the Board of Directors in accordance
with Section 1.3 by May 24, 1996; or (ii) any court of competent jurisdiction or
other governmental authority shall have issued an order, decree, ruling or taken
any other action permanently restraining, enjoining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable;
(c) by either Parent or the Company if (i) as a result of an occurrence or
circumstance that would result in the failure of any of the conditions set forth
in Annex I hereto the Offer shall have terminated or expired in accordance with
its terms without the Purchaser having accepted for payment any Shares pursuant
to the Offer; or (ii) the Purchaser shall not have accepted for payment any
Shares pursuant to the Offer within 100 days following the commencement of the
Offer; provided, however, that the right to terminate this Agreement pursuant to
this Section 8.1(c) shall not be available to any party the failure of which (or
the failure of the affiliates of which) to perform in any material respect any
of its obligations under this Agreement results in the failure of any such
condition or if the failure of such condition results from facts or
circumstances that constitute a material breach of a representation or warranty
under this Agreement by such party;
(d) by Parent if prior to the purchase of Shares pursuant to the Offer,
(A) the Board of Directors of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to the Purchaser or Parent its
approval or recommendation of the Offer, this Agreement, the Merger or any other
transaction contemplated by this Agreement; (B) the Board of Directors of the
Company or any committee thereof shall have recommended to the stockholders of
the Company acceptance of a Competing Transaction; (C) the Company shall have
entered into any definitive agreement with respect to a Competing Transaction;
or (D) the Board of Directors of the Company or any committee thereof shall have
resolved to do any of the foregoing; or
(e) by the Company if (i) the Board of Directors of the Company shall have
withdrawn or modified in a manner adverse to the Purchaser or Parent its
approval or recommendation of the Offer,
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this Agreement or the Merger in order to approve the execution by the Company
of a definitive agreement providing for the transactions contemplated by a
Superior Proposal; or (ii) Parent or the Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement which breach cannot
be or has not been cured 20 days after the giving of written notice to Parent
or the Purchaser, as applicable, except, in any case, for such breaches which
are not reasonably likely to affect adversely Parent's or the Purchaser's
ability to complete the Offer or the Merger.
SECTION 8.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except for fraud and for willful
breach of a material obligation contained herein and except that the agreements
contained in Sections 6.3, 8.3 and 9.3 shall survive the termination hereof.
SECTION 8.3 CERTAIN PAYMENTS. In the event that:
(i) any person (including, without limitation, the Company or any
affiliate thereof), other than Parent or any affiliate of Parent, shall have
become the beneficial owner of a majority of the then outstanding Shares and
this Agreement shall have been terminated pursuant to Section 8.1;
(ii) any person shall have commenced, publicly proposed or communicated to
the Company a Competing Transaction and (A) the Offer shall have remained open
for at least 20 business days, (B) the Minimum Condition shall not have been
satisfied, (C) this Agreement shall have been terminated pursuant to Section 8.1
and (D) the Company shall have consummated a Competing Transaction with any
person other than Parent or any of its affiliates before or within 12 months
after the date of such termination; or
(iii) this Agreement is terminated (A) pursuant to Section 8.1(d) or
Section 8.1(e)(i); or (B) pursuant to Section 8.1(c) to the extent that the
termination or the failure to accept any Shares for payment, as set forth in
Section 8.1(c), shall relate to the intentional failure of the Company to
perform in any material respect any material covenant or agreement of it
contained in this Agreement or the intentional material breach by the Company of
any material representation or warranty of it contained in this Agreement;
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $3,100,000, which amount shall be payable in immediately available
funds.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 AMENDMENT. This Agreement may be amended by the parties,
by action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company but, after any such approval, no amendment shall be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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SECTION 9.2 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties, by action taken by their respective Boards of Directors, may,
to the extent legally allowed (i) extend the time for the performance of any of
the obligations or other acts of the other parties, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
SECTION 9.3 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Merger or termination of this Agreement, as the case may be, except for the
agreements contained in Sections 6.5, 6.6 and 6.7 of this Agreement, each of
which shall survive the Merger, and the agreements contained in Sections 6.3 and
8.3, each of which shall survive termination of this Agreement.
SECTION 9.4 ENTIRE AGREEMENT. This Agreement (including the Annexes,
Schedules and Exhibits), together with the Confidentiality Agreement, contains
the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior arrangements and understandings with respect
thereto.
SECTION 9.5 SEVERABILITY. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any term or other
provision of this Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, all other conditions and provisions
of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
SECTION 9.6 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally or
telecopied 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 Parent or the Purchaser:
CHO Holdings Inc. or CHO Acquisition Inc.
Metro Tower, Suite 1170
950 Tower Lane
Foster City, California 94404-2121
Attention: Daniel J. Boverman
Facsimile: (415) 286-2383
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with copies in each case to:
Shearman & Sterling
555 California Street
San Francisco, California 94104-1522
Attention: Michael J. Kennedy, Esq.
Facsimile: (415) 616-1199
(b) if to the Company:
Andros Incorporated
2332 Fourth Street
Berkeley, CA 94710-2402
Attention: Chairman of the Board
Facsimile: (510) 849-5849
with copies to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza
San Francisco, California 94111-3580
Attn: Susan Cooper Philpot, Esq.
Facsimile: (415) 951-3698
and
Brobeck, Phleger & Harrison LLP
One Market
Spear Street Tower
San Francisco, California 94105
Attn: Steven J. Tonsfeldt, Esq.
Facsimile: (415) 422-1010
All such notices and other communications shall be deemed to have been received
(i) in the case of personal delivery, on the date of such delivery and (ii) in
the case of a telecopy, when the party who receives such telecopy shall have
confirmed receipt of the communication. Notices and other communications which
are delivered by telecopier shall be followed promptly with a copy of the notice
or other communication by registered or certified mail.
SECTION 9.7 HEADINGS. 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.
SECTION 9.8 EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be borne by the
party incurring such cost or expense.
SECTION 9.9 BENEFITS; ASSIGNMENT. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder and, except as provided in Section 1.1(a), shall not be assigned other
than by operation of law; provided, however, that the
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officers and directors of the Company and its Subsidiaries as provided in
Section 6.5 are intended beneficiaries of the covenants and agreements
contained in such Section.
SECTION 9.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
SECTION 9.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its principles of conflicts of laws other than principles directing the
application of Delaware law.
SECTION 9.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreements
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
CHO HOLDINGS INC.
By: /s/ Richard D. Paterson
Title: Chairman and President
CHO ACQUISITION INC.
By: /s/ Jean-Pierre L. Conte
Title: Vice President and Treasurer
ANDROS INCORPORATED
By: /s/ Robert Turner
Title: Vice President
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ANNEX I
CONDITIONS OF THE OFFER
DEFINED TERMS. Capitalized terms used in this Annex I and not
otherwise defined shall have the meanings attributed thereto in the Agreement
and Plan of Merger, dated as of February 14, 1996 (the "Merger Agreement"), by
and among CHO Holdings Inc., CHO Acquisition Inc. and Andros Incorporated.
CONDITIONS OF THE OFFER. Notwithstanding any other term of the Offer,
the Purchaser shall not be required to accept for payment or pay for any Shares
tendered pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for Shares tendered, if
(i) the Minimum Share Condition shall not have been satisfied, or (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer, (iii) the Purchaser shall not
have obtained financing pursuant to, or on terms and conditions no less
favorable than those contained in, the Financing Commitments (the "Financing
Condition"), or (iv) at any time on or after the date of the Merger Agreement
and before the acceptance of such Shares for payment or the payment therefor,
any of the following conditions exists:
(a) a preliminary or permanent injunction or other order by any federal,
state or foreign court which prevents the acceptance for payment of, or payment
for, some of or all the Shares shall have been issued and shall remain in
effect;
(b) there shall have been instituted or be pending any action or
proceeding by any Governmental Entity (i) challenging the acquisition by the
Purchaser of Shares or otherwise seeking to restrain, materially delay or
prohibit the consummation of the Offer or the Merger or seeking damages that
would make the Offer, the Merger or any other transaction contemplated hereby
materially more costly to Parent or the Purchaser, (ii) seeking to prohibit or
limit materially the ownership or operation by the Purchaser or Parent of all or
a material portion of the business or assets of the Company and its
Subsidiaries, or to compel the Purchaser or Parent to dispose of or hold
separate all or a material portion of the business or assets of the Company and
its Subsidiaries or the Purchaser or Parent, as a result of the Offer or the
Merger, (iii) seeking to impose or confirm limitations on the ability of Parent
or the Purchaser effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of the Merger Agreement and the
transactions contemplated hereby, or (iv) seeking to require divestiture by
Parent, the Purchaser or any other affiliate of Parent of any Shares;
(c) there shall have been any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Offer, the Merger or any other transaction contemplated hereby, Parent, the
Company or any affiliate of Parent or the Company by any Governmental Entity,
except for the waiting period provisions of the HSR Act, which is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (iv) of paragraph (b) above;
(d) any change or effect that, individually or in the aggregate, is or is
reasonably likely to constitute a Material Adverse Effect shall have occurred
following the date of the Merger Agreement;
<PAGE>
(e) the Company shall have breached or failed to perform in any material
respect any of its obligations, covenants or agreements under the Merger
Agreement;
(f) any representation or warranty of the Company in the Merger Agreement
that is qualified as to materiality shall not be true and correct or any such
representation or warranty that is not so qualified shall not be true and
correct in any material respect, in each case when made and at and as of such
time as if made at and as of such time;
(g) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the Nasdaq National Market; (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or Canada; (iii) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States or Canada which has or is reasonably likely to have
a Material Adverse Effect; (iv) any extraordinary material adverse change in the
financial markets in the United States which has or is reasonably likely to have
a Material Adverse Effect; or (v) in the case of any of the foregoing existing
on the date hereof, a material acceleration or worsening thereof;
(h) (i) it shall have been publicly disclosed or the Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of this
paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of a
majority of the then outstanding Shares have been acquired by any person other
than Parent or any of its affiliates or (ii)(A) the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified in a manner
adverse to Parent or the Purchaser the approval or recommendation of the Offer,
the Merger or the Merger Agreement, or approved or recommended any Competing
Transaction or any other acquisition of Shares other than the Offer and the
Merger or (B) the Board of Directors of the Company or any committee thereof
shall have resolved to do any of the foregoing; or
(i) the Merger Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent. The foregoing rights of the Purchaser shall be available regardless of
the circumstances giving rise to any such conditions (including any action or
omission to act of the Purchaser) and, subject to Section 1.1(a) of the Merger
Agreement, may be waived by Purchaser or Parent in whole or in part at any time
and from time to time in their sole discretion. Any determination by the
Purchaser will be final and binding upon all parties including tendering
stockholders.
The failure by the Purchaser or Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
2
<PAGE>
EXHIBIT B
DONALDSON, LUFKIN & JENRETTE
Donaldson, Lufkin & Jenrette Securities Corporation
600 California Street, San Francisco, CA 94108-2704 - (415) 249-2100
February 14, 1996
Board of Directors
Andros Incorporated
2332 Fourth Street
Berkeley, CA 94710-2402
Dear Sirs:
You have requested our opinion as to the fairness from a financial point
of view to the shareholders of Andros Incorporated (the "Company") of the
consideration to be received by such shareholders pursuant to the terms of
the Agreement and Plan of Merger dated as of February 14, 1996, among CHO
Holdings Inc. ("Holdings"), the Company and CHO Acquisition Inc.
("Acquisition"), a wholly owned subsidiary of Holdings (the "Agreement").
Pursuant to the Agreement, Acquisition will commence a tender offer for
all outstanding shares of the Company's common stock at a price of $18.00 per
share. The tender offer is to be followed by a merger in which the shares of
all shareholders who did not tender would be converted into the right to
receive $18.00 per share in cash.
In arriving at our opinion, we reviewed financial and other information
that was publicly available or furnished to us by the Company including
information provided during discussions with management. Included in the
information provided during discussions with management were certain
financial projections of the Company for the period beginning July 31, 1995
and ending July 31, 1999 prepared by the management of the Company. In
addition, we have compared certain financial and securities data of the
Company with various other companies whose securities are traded in public
markets, reviewed the historical stock prices and trading volumes of the
common stock of the Company, reviewed prices and premiums paid in other
business combinations and conducted such other financial studies, analyses
and investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that
was available to us from public sources, that was provided to us by the
Company or its representatives, or that was otherwise reviewed by us. With
respect to the financial projections supplied to us, we have assumed that
they have been reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of the Company as to the
future operating and financial performance of the Company. We have not
assumed any responsibility for making an independent evaluation of the
Company's assets or liabilities or for making any independent verification of
any of the information reviewed by us. We have relied as to all legal
matters relating to the Agreement and transactions contemplated thereby on
advice of counsel to the Company.
<PAGE>
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on the information made available to
us as of, the date of this letter. It should be understood that, although
subsequent developments may affect this opinion, we do not have any
obligation to update, revise or reaffirm this opinion. Our opinion does not
constitute a recommendation to any shareholder as to how such shareholder
should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of
its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
DLJ has been engaged by Holdings in connection with placing $15 million of
senior subordinated notes and warrants which will be used to help finance the
acquisition. DLJ's Private Placement Group will receive usual and customary
fees in conjunction with raising the subordinated notes.
Based upon the foregoing and such other factors as we deem relevant, we
are of the opinion that the consideration to be received by the shareholders
of the Company pursuant to the Agreement is fair to the shareholders of the
Company from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Thomas M. Benninger
-------------------------
Thomas M. Benninger
Managing Director
B-2
<PAGE>
EXHIBIT C
GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Section 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of
this section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in
a stock corporation and also a member of record of a nonstock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by
those words and also membership or membership interest of a member of a
nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to Section 251, Section 252, Section 254, Section 257,
Section 258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsections (f) or (g) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant
to Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
<PAGE>
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository receipts
at the effective date of the merger or consolidation will be either listed
on a national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a
<PAGE>
demand. A stockholder electing to take such action must do so by a
separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
Section 228 or 253 of this title, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or within
10 days thereafter, shall notify each of the stockholders entitled to
appraisal rights of the effective date of the merger or consolidation and
that appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or
<PAGE>
resulting corporation, the petition shall be accompanied by such a duly
verified list. The Register in Chancery, if so ordered by the Court,
shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more
publications at least one week before the day of the hearing, in a
newspaper of general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable. The forms of
the notices by mail and by publication shall be approved by the Court,
and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder entitled to
participate in the appraisal proceeding, the Court may, in its discretion,
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this section
and who has submitted his certificates of stock to the Register in Chancery, if
such is required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder,
<PAGE>
the Court may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses
of experts, to be charged PRO RATA against the value of all the shares
entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
<PAGE>
ANDROS INCORPORATED
Proxy for Special Meeting of Stockholders--May 14, 1996
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF ANDROS INCORPORATED
The undersigned hereby appoints Daniel J. Boverman and Jean-Pierre L.
Conte, and each of them, as proxy or proxies of the undersigned (the "Proxies"),
each with full power of substitution, to represent the undersigned and to vote
all the shares of common stock, par value $.01 per share, of Andros
Incorporated, a corporation organized under the laws of the State of Delaware
(the "Company"), which the undersigned is entitled in any capacity to vote if
personally present at the special meeting (the "Special Meeting") of
stockholders of the Company to be held at the offices of the Company, 2332
Fourth Street, Berkeley, California 94710-2402, at 10:00 a.m., local time, on
May 14, 1996, and at any and all adjournments or postponements thereof, with
respect to all matters set forth in the Proxy Statement dated April 16, 1996,
and all supplements and amendments thereto and, in their discretion, upon all
matters incident to the conduct of such Special Meeting and all matters
presented at the Special Meeting but which are not known to the board of
directors of the Company (the "Board") at the time of the solicitation of this
proxy. The undersigned hereby revokes any proxy or proxies heretofore given by
the undersigned to vote at the Special Meeting or any adjournment or
postponement thereof.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Proposal to approve and adopt the agreement and plan of merger, dated
as of February 14, 1996, among the Company, Andros Acquisition Inc., a
corporation organized under the laws of the State of Delaware and a
direct wholly owned subsidiary of Andros Holdings Inc., a corporation
organized under the laws of the State of Delaware ("Parent"), and
Parent.
/ / FOR / / ABSTAIN / / AGAINST
[CONTINUED, AND TO BE SIGNED AND DATED, ON THE OTHER SIDE]
<PAGE>
[CONTINUED FROM OTHER SIDE]
If properly executed, this proxy will be voted in accordance with
instructions appearing hereon and, at the discretion of the Proxies, as to any
other matter that may properly come before the Special Meeting. IN THE ABSENCE
OF SPECIFIC INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 (THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT) AND, AT THE DISCRETION OF THE PROXIES, AS
TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Stockholders and Proxy Statement (with all enclosures and
attachments) dated April 16, 1996, relating to the Special Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING.
Dated: Name(s) of Holder(s):
-------------- ---------------------------------
---------------------------------
(Please Print)
---------------------------------
---------------------------------
(Signature(s))*
(By:)
--------------------------------
(Please Print)
(Name:)
-------------------------
(Title:)
-------------------------
- --------------------
* Please sign this proxy exactly as your name(s) appears hereon. Joint
owners should each sign personally. An attorney, administrator, trustee,
executor, guardian or other person siging in a representitve capacity
should indicate such capacity. An authorized officer signing on behalf of
a corporation should indicate the name of the corporation and such
officer's capacity.
