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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MAXSERV, INC.
(NAME OF SUBJECT COMPANY)
ON BEHALF OF
MAXSERV, INC.
BY
SPECIAL COMMITTEE OF BOARD OF DIRECTORS
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
005779171
(CUSIP NUMBER OF CLASS OF SECURITIES)
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NEIL A. JOHNSON
SENIOR VICE PRESIDENT
MAXSERV, INC.
8317 CROSS PARK DRIVE
AUSTIN, TX 78754
(512) 834-8341
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZEDTO RECEIVE NOTICE AND
COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
NATHANIEL P. TURNER
CHAIRMAN, SPECIAL COMMITTEE
15303 DALLAS PKWY
SUITE 960 LB-63
DALLAS, TX 75248
(972)-702-7521
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This Amendment No. 1 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission
("Commission") on February 18, 1997 (the "Schedule 14D-9"), and relates to the
tender offer made by Max Acquisition Delaware Inc. (the "Offeror"), a wholly
owned subsidiary of Sears Roebuck and Co., a New York corporation ("Sears"),
pursuant to a Tender Offer Statement on Schedule 14D-1 dated February 4, 1997,
as amended, to purchase all the outstanding common stock, $.01 per value
("Common Stock") of MaxServ, Inc., a Delaware corporation ("Company" or
"MaxServ"), net to the seller in cash, for $7.75 per share, all upon the terms
and subject to the conditions set forth in the Offer to Purchase dated
February 4, 1997, as amended through March 3, 1997, and the related Letter of
Transmittal (which together in their revised form constitute the "Revised
Sears Offer"). The purpose of this Amendment No. 1 is to amend Items 2, 4, 6,
7 and 9 of the Schedule 14D-9, as set forth below. All capitalized terms not
defined herein are used as defined in the Schedule 14D-9, except that the term
"Statement" refers to the Schedule 14D-9, as amended by this Amendment No. 1.
ITEM 2. TENDER OFFER OF THE BIDDER.
Item 2 is hereby amended to add the following:
The Revised Sears Offer is being made pursuant to the Agreement and Plan of
Merger (the "Merger Agreement"), among the Company, Sears and the Offeror
dated as of March 2, 1997. A copy of the Merger Agreement is filed as Exhibit
21 to this Statement and is incorporated herein by reference in its entirety.
For a description of the material terms of the Merger Agreement, see Annex A
to this Statement. The Merger Agreement provides that following the completion
of the Revised Sears Offer, the Offeror will be merged into the Company, with
the Company continuing as a wholly owned subsidiary of Sears (the "Merger").
In the Merger, all remaining shares of Common Stock not tendered in the
Revised Sears Offer will be converted into the right to receive $7.75 in cash,
unless the holders thereof properly exercise their appraisal rights under
applicable Delaware law.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4 is hereby amended to add the following:
AS MORE FULLY DESCRIBED BELOW, THE SPECIAL COMMITTEE HAS UNANIMOUSLY
RECOMMENDED THAT MAXSERV SHAREHOLDERS ACCEPT THE REVISED SEARS OFFER AND
TENDER THEIR SHARES OF COMMON STOCK PURSUANT TO THE REVISED SEARS OFFER.
BACKGROUND.
The Revised Sears Offer
On February 18, 1997, Mr. Nathaniel P. Turner, Chairman of the Special
Committee, called Mr. John T. Pigott, an officer of Sears, and informed Mr.
Pigott that the Special Committee was interested in meeting with
representatives of Sears to discuss Sears' $7.00 tender offer ("Sears Offer").
Mr. Pigott called Mr. Turner on February 19, 1997 to schedule a meeting
between representatives of Sears and the Special Committee to be held on
February 26, 1997. Mr. Turner requested that he and Mr. Pigott confer
privately prior to the February 26 meeting.
On February 25, 1997, Mr. Pigott telephoned Mr. Turner and stated that Sears
believed there was value to a negotiated transaction and that, as a result,
Sears was prepared to increase the Sears Offer in the context of a negotiated
transaction. Mr. Pigott informed Mr. Turner, however, that Sears was not
prepared to increase the Sears Offer to the Special Committee's desired price
range.
Also on February 25, 1997, a representative of Merrill Lynch & Co. ("Merrill
Lynch"), financial advisor to Sears, spoke with a representative of Broadview
Associates LLC ("Broadview"), the Special Committee's financial advisor, in an
effort to discern whether a compromise as to the $7.00 offer price was
achievable. Merrill Lynch did not, however, make any offer to Broadview during
this conversation.
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On February 26, 1997, representatives of Sears and Sears' legal advisors met
with representatives of the Special Committee and the Special Committee's
legal advisor. At this meeting the Special Committee and representatives of
Sears discussed the issue of resolving the impasse on price. The parties
agreed that the discussions were productive and directed their advisors to
identify the issues to be resolved in a negotiated transaction.
On February 27, 1997, further discussions were held among Mr. Turner and Mr.
Pigott and counsel to Sears and the Special Committee in an effort to resolve
the issues associated with a negotiated transaction. On March 1, 1997,
negotiations continued among the Special Committee, through its counsel,
Sears, through its counsel, and counsel for the plaintiffs in the litigation
referred to in Item 8 of the Schedule 14D-9 that had arisen out of events
leading up to the Sears Offer, concerning the terms of the proposed Merger
Agreement. During that same time period, negotiations took place among
representatives of Sears and Sunwestern concerning the terms of the proposed
Stockholder Tender Agreement. Later on March 1, 1997, the parties agreed in
principle on an increased tender price of $7.75 for the Public Shares.
On March 2, 1997, the Special Committee met telephonically, discussed a
draft of this Amendment No. 1 and the Merger Agreement and received the oral
opinion of Broadview (which was subsequently confirmed in writing) that the
proposed consideration of $7.75 in cash pursuant to the Revised Sears Offer
was fair, from a financial point of view, to the MaxServ shareholders other
than Sears. Broadview's valuation methodology is summarized below, and the
full text of Broadview's opinion, dated March 2, 1997, which sets forth the
assumptions made, matters considered and limitations set forth by Broadview,
is included as Annex B hereto and should be read in its entirety. Based on the
Broadview opinion, a draft of this Amendment No. 1 and the other discussions
that the members of the Special Committee have had and the advice they have
received since the Special Committee's formation in December 1996, THE MEMBERS
OF THE SPECIAL COMMITTEE UNANIMOUSLY DETERMINED THAT THE REVISED SEARS OFFER
WAS FAIR AND IN THE BEST INTERESTS OF THE MINORITY SHAREHOLDERS OF MAXSERV AND
RECOMMENDED THAT SUCH STOCKHOLDERS ACCEPT THE REVISED SEARS OFFER AND TENDER
THEIR SHARES PURSUANT TO THE REVISED SEARS OFFER.
On March 2, 1997, the Board of Directors of MaxServ, based upon the
unanimous recommendation of the Special Committee and following approval by
all the Company's directors other than the designees of Sears, unanimously
approved the Merger Agreement. Following such approval by the Board of
Directors of MaxServ, Sears, Offeror and the Company executed and delivered
the Merger Agreement. Concurrently therewith, Sears, Offeror and two
Sunwestern investment funds that own an aggregate of 1,014,800 shares of
Common Stock executed and delivered a Stockholder Tender Agreement pursuant to
which such funds agreed to tender their shares in the Revised Sears Offer. A
copy of this agreement is filed as Exhibit 22 to this Statement and is
incorporated herein by reference in its entirety ("Stockholder Tender
Agreement").
On March 3, 1997, the Company and Sears jointly issued a press release
announcing the execution of the Merger Agreement, the increase of the offer
price to $7.75 per share and the extension of the Revised Sears Offer.
A copy of the letter to the Company's shareholders and the joint press
release relating to the Revised Sears Offer are filed as Exhibits 23 and 24
hereto, respectively, and are incorporated herein by reference.
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SUMMARY EXPLANATION OF BROADVIEW'S VALUATION METHODOLOGY.
The following is a summary explanation of the various sources of information
and valuation methodologies employed by Broadview in valuing MaxServ and the
Public Shares in conjunction with rendering its fairness opinion regarding the
Revised Sears Offer. Broadview employed analyses based on: (1) public company
comparables, (2) transaction comparables, (3) premiums paid for minority
interests, and (4) discounted cash flow to determine the fairness of the
Revised Sears Offer.
Public Company Comparables Analysis
Total Market Capitalization/Revenue/1/ ("TMC/R"), Price/Earnings ("P/E"),
and Total Market Capitalization/Earnings Before Interest and Taxes
("TMC/EBIT") multiples indicate the value public markets place on companies in
a particular market segment. Although there are a limited number of public
company "pure plays" in the markets in which MaxServ competes, several
companies are comparable to MaxServ based on revenue size range, products and
services offered, business model, management structure, and market position.
Broadview reviewed eleven public company comparables from a financial point of
view including each company's: Trailing Twelve Month ("TTM") Revenue; TTM
Revenue Growth; TTM EBIT Margin; TTM Net Margin; Equity Market Capitalization;
TTM P/E ratio; Price/Projected Calendar 1997 EPS ratio ("Forward P/E"); TTM
TMC/EBIT; and TTM TMC/R ratio. The public company comparables were selected
from the Broadview Barometer, a proprietary database of publicly-traded
information technology ("IT") companies maintained by Broadview and broken
down by industry segment. In order of descending TMC/R, the public company
comparables consist of:
(1) TeleTech Holdings, Inc.;
(2) Sykes Enterprises, Inc.;
(3) Precision Response Corp.;
(4) Access Health Marketing, Inc.;
(5) APAC Teleservices, Inc.;
(6) Metro One Telecommunications, Inc.;
(7) SITEL Corp.;
(8) West Teleservices Corp.;
(9) Telespectrum Worldwide, Inc.;
(10) RMH Teleservices, Inc.; and
(11) ATC Communications Group, Inc.
These comparables have a TTM P/E ratio range of 21.3x to 101.8x with a
median of 46.5x; Forward P/E ratio range of 16.7x to 53.1x with a median of
29.8x; TTM TMC/EBIT ratio range of 12.4x to 69.6x with a median of 36.4x; and
TTM TMC/R ratio range of 1.31x to 7.67x with a median of 4.44x.
The TMC/R valuation analysis places a per share value of $20.73 on MaxServ.
The TTM P/E valuation analysis places a per share value of $11.72 on MaxServ.
The TTM TMC/EBIT valuation analysis places a per share value of $13.70 on
MaxServ. For the Forward P/E analysis, Broadview applied the Forward P/E of
the
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/1/Broadview employed a TMC/R ratio in this analysis because it enables two
critical balance sheet items, cash and debt, to be factored directly into
the valuation. The formula for a TMC/R ratio is as follows:
((market value of equity) + (short term debt + long term debt) -
(cash and equivalents))/revenues.
To determine value using this approach, the first step is to
calculate the appropriate TMC/R ratio. Next, the revenues of the
company are multiplied by the appropriate TMC/R ratio determined
in step 1. This provides a total "entity" value which represents
the company's value based on its operating performance, i.e.,
excluding the effects of capitalization. The final step is to
subtract all short term and long term debt from the total entity
value and then add back cash and equivalents. The result is one
measure of the fair market value of a company's equity.
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comparables to two estimates of MaxServ's projected earnings. The first is
based on EPS estimates made by Southcoast Capital Corporation ("Southcoast")
in its equity research report dated July 29, 1996, and the second is based on
MaxServ management's forecasts. Management's forecasts reflect depressed
earnings expectations due to what MaxServ management perceives to be a
temporary delay in new business from Sears. The Forward P/E analysis based on
Southcoast's estimates and on management's forecasts place per share values of
$8.95 and $6.04 on MaxServ, respectively.
Transaction Comparables Analysis
Valuation statistics from transaction comparables indicate the Price/Revenue
("P/R") multiples acquirers have paid to purchase majority ownership of
comparable companies in a particular market segment. Broadview reviewed
acquisitions of teleservice companies with less than $150 million in revenue
occurring since 1995. Transactions were selected from Broadview's proprietary
database of published and confidential merger and acquisition transactions in
the IT industry. In order of descending P/R multiples, the public seller
transactions used are the acquisition of:
(1) Mitre Plc by SITEL Corporation;
(2) Market USA by HA-LO Industries Inc.;
(3) A confidential transaction where Broadview represented one of the
parties;
(4) Levita Group Pty Ltd. by SITEL Corporation;
(5) ITI Marketing Services by Golder, Thoma, Cressy, Rauner and Management;
(6) A confidential transaction where Broadview represented one of the
parties; and
(7) Teleaction SA by SITEL Corporation.
These transaction comparables have a P/R multiple range of 1.16x to 3.07x
with a median of 1.89x. The per share valuation implied by the median P/R
multiple is $8.99.
Premiums Paid for Minority Interests Analysis
Premiums paid in comparable public seller transactions indicate the amount
of consideration acquirers which already own control of a company are willing
to pay above the seller's stock price to acquire the remaining minority
interest. In this analysis, the value of consideration paid in transactions
involving stock is computed using the buyer's stock price immediately prior to
announcement, while the seller's stock price is measured at both one day
before announcement and thirty days before announcement. Broadview reviewed 26
merger and acquisition transaction comparables from January 1, 1992 to the
present in which the buyer had owned greater than 50% of the seller prior to
the transaction. In reverse chronological order, the transactions used were
the acquisition of:
(1) Central Tractor Farm & Country, Inc. by JW Childs Equity Partners LP;
(2) WCI Steel Inc. by Renco Group, Inc.;
(3) Roto-Rooter, Inc. by Chemed Corp.;
(4) SyStemix Inc. by Sandoz Ltd.;
(5) Great American Management & Investment, Inc. by Equity Holdings Ltd.;
(6) SCOR US Corp. by Societe Commerciale de Reassurance;
(7) Syms Corp. by an investor group;
(8) REN Corp-USA by COBE Laboratories, Inc.;
(9) Club Med, Inc. by Club Mediterranee SA;
(10) Ropak Corp. by LinPac Mouldings Ltd.;
(11) IG Laboratories, Inc. by Genzyme Corp.;
(12) Rust International, Inc. by WMX Technologies, Inc.;
(13) Fleet Mortgage Group, Inc. by Fleet Financial Group, Inc.;
(14) Pacific Telecom, Inc. by PacifiCorp;
(15) Castle & Cooke Homes, Inc. by Dole Food Co. Inc.;
(16) Ogden Projects, Inc. by Ogden Corp.;
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(17) General Cable Corp. by Wassall PLC;
(18) Diamond Shamrock Offshore Partners LP by Burlington Resources, Inc.;
(19) Scripps Howard Broadcasting Co. by EW Scripps Co.;
(20) Holnam, Inc. by Holderbank Financiere Glarus AG;
(21) Medical Marketing Group, Inc. by Medco Containment Services, Inc.;
(22) West Point-Pepperell, Inc. by Valley Fashions Corp.;
(23) Forum Group, Inc. by an investor group;
(24) Brand Cos. Inc. by Rust International, Inc.;
(25) Katy Industries, Inc. by Katy Holdings; and
(26) Unocal Exploration Corp. by Unocal Corp.
Based upon analysis of the premiums paid in comparable transactions,
Broadview found that the ratios of prices paid to sellers' stock prices one
day before announcement ranged from a discount of 25.9% to a premium of 33.3%
with a median premium of 13.2%. The ratios of prices paid to sellers' stock
prices thirty days before announcement ranged from a discount of 16.7% to a
premium of 90.5% with a median premium of 20.0%. Broadview also examined the
ratios of prices paid in transactions which were announced since January 1,
1996 as a separate group. For this group, the ratios of prices paid to
sellers' stock prices thirty days before announcement ranged from premiums of
10.8% to 90.5% with a median premium of 22.6%.
The premiums paid analysis based on the median premiums paid on sellers'
prices one day and thirty days before announcement for all 26 transactions
place per share values of $5.52 and $6.15 on MaxServ, respectively. The
premiums paid analysis based on the median premium paid on sellers' prices
thirty days before announcement for the group of transactions announced since
January 1, 1996 places a per share value of $6.28 on MaxServ.
Discounted Cash Flow Analysis
Broadview valued MaxServ based upon free cash flow estimates over a period
from January 1, 1997 through May 31, 2002. The forecasts of MaxServ's
financial performance were constructed by Broadview based on its discussions
with MaxServ management concerning their expectations about the Company's
future financial performance and using their assumptions and projections. The
Company's terminal value was calculated as a perpetuity of free cash flow in
the terminal year grown at rates of 6.0%, 7.0% and 8.0%. A discount rate of
20.0% was applied based on Broadview's careful weighting of all factors having
a positive and negative effect on the risk of MaxServ's future cash flows.
Using the aforementioned terminal growth rates and discount rate, and
adjusting for cash and debt as of November 30, 1996, the discounted cash flow
analysis places per share values of $8.91, $9.45, and $10.08 on MaxServ.
Summary of Valuation Analyses
Taken together, the information and analyses employed by Broadview lead to
Broadview's overall opinion that the Revised Sears Offer of $7.75 is fair to
MaxServ shareholders other than Sears from a financial point of view. See
Annex B for the full text of Broadview's opinion dated March 2, 1997.
REASONS FOR THE RECOMMENDATION.
In addition to the factors set forth elsewhere in this Statement and
considered by the Special Committee in reaching the conclusions with respect
to the Revised Sears Offer described above, the Special Committee considered a
number of factors, including, but not limited to, the following:
(1) the recognition that a sale of control of MaxServ to Sears occurred
in late 1994 when the Board of Directors of MaxServ approved Sears'
acquisition of more than 50% of the Company's voting stock and that as a
consequence Sears has no obligation to offer its majority stock position in
MaxServ for sale in order to maximize value for the holders of the Public
Shares;
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(2) Sears' publicly announced position that it has no intention of
offering its majority stock interest in MaxServ for sale to a third party;
(3) Sears' publicly announced unwillingness to develop new proprietary
customer communications programs, such as MaxServNet, within an entity that
it does not wholly own;
(4) the belief that the Special Committee has negotiated the highest
price that Sears is willing to pay for the Public Shares;
(5) the Special Committee's belief that the Revised Sears Offer, under
all the relevant circumstances, reflects the fair value of the Public
Shares based on the Special Committee's familiarity with the business,
financial condition, results of operations, current business strategy,
projects under development and future prospects of the Company;
(6) confirmation by the Company's management that the proposed
consideration of $7.75 in cash per share of Common Stock payable in the
Revised Sears Offer is, in management's opinion, fair to the holders of the
Public Shares; and
(7) the presentation by Broadview, financial advisor to the Special
Committee, concerning the financial aspects of the Revised Sears Offer, the
Company and the home service industry, and its oral opinion (which was
subsequently confirmed in writing and is attached hereto as Annex B) that,
from a financial point of view and as of the date of such opinion, the
proposed consideration of $7.75 in cash pursuant to the Revised Sears Offer
is fair to the MaxServ shareholders other than Sears.
The foregoing discussion of the information and factors considered and given
weight by the Special Committee is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation of the
Revised Sears Offer, the Special Committee did not find it practicable to and
did not quantify or otherwise assign relative weights to the specific factors
considered in reaching its determinations and recommendations. In addition,
individual members of the Special Committee may have given different weight to
different factors. Throughout its deliberations, the Special Committee
received the advice of its legal and financial advisors.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
Item 6 is hereby amended to add the following:
(b) Intent to Tender.
The Sunwestern investment funds over which Mr. Patrick A. Rivelli, a member
of the Special Committee, exercises dispositive power have agreed to tender
into the Revised Sears Offer the 1,014,800 shares of Common Stock owned by
them pursuant to the terms of the Stockholder Tender Agreement.
To the best of the Special Committee's knowledge and subject to applicable
tax or securities laws and other personal considerations, all of the Company's
executive officers and its other directors currently intend to tender to the
Offeror pursuant to the Revised Sears Offer any outstanding shares of Common
Stock that are held of record or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
Item 7 is hereby amended to add the following:
Except as otherwise disclosed in this Statement with respect to the Revised
Sears Offer and the Merger Agreement, no negotiations are presently being
undertaken or are underway by the Company, and no transactions, agreements or
negotiations have been entered into or effected, in response to the Revised
Sears Offer which relate to or would result in (i) an extraordinary
transaction, such as a merger or reorganization,
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involving the Company, (ii) a purchase, sale or transfer of a material amount
of assets by the Company, (iii) a tender offer for or other acquisition of
securities by or of the Company, or (iv) any material change in the present
capitalization or dividend policy of the Company.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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<C> <S> <C>
21 --Agreement and Plan of Merger by and among MaxServ,
Offeror, and Sears dated as of March 2, 1997.
22 --Stockholder Tender Agreement by and among Offeror, Sears,
and certain Sunwestern investment funds dated as of March
2, 1997.
23 --Press Release dated March 3, 1997.
*24 --Letter to Shareholders dated March 3, 1997 regarding
Special Committee's recommendation.
*25 --Opinion dated March 2, 1997 of Broadview Associates LLC
(included as Annex B to Amendment No. 1 to Schedule 14D-9).
</TABLE>
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*Included in copy mailed to shareholders.
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SIGNATURE
After due inquiry and to the best of each of the undersigned's knowledge and
belief, each of the undersigned certifies that the information set forth in
this Amendment No. 1 is true, complete and correct.
MaxServ, Inc.
By The Special Committee of the
Board of Directors
/s/ Nathaniel P. Turner
By: _________________________________
Name:Nathaniel P. Turner
Title:Director and Chairman of
the Special Committee
/s/ Patrick A. Rivelli
By: _________________________________
Name:Patrick A. Rivelli
Title:Director and Member of
the Special Committee
/s/ Stephen J. Keane
By: _________________________________
Name:Stephen J. Keane
Title:Director and Member of
the Special Committee
Dated: March 3, 1997
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ANNEX A
DESCRIPTION OF MERGER AGREEMENT
THE OFFER
The Merger Agreement provides that, as promptly as practicable following
the execution thereof, Sears and Offeror will amend the Sears Offer to provide
(a) for a purchase price per Public Share of $7.75, (b) for the period the
Sears Offer is to remain open to be extended to provide for an initial
expiration of the Revised Sears Offer no later than 12:00 Midnight on Friday,
March 14, 1997 and (c) for the consummation of the Revised Sears Offer to be
subject only to the conditions set forth in Annex A to the Merger Agreement
("Offer Conditions"). The Merger Agreement further provides that without the
prior written consent of the Company, neither Sears nor Offeror shall (i)
reduce the number of Public Shares subject to the Revised Sears Offer, (ii)
reduce the price per Public Share to be paid pursuant to the Revised Sears
Offer, (iii) extend the Revised Sears Offer if all of the Offer Conditions (as
defined in the Merger Agreement) have been satisfied or waived, (iv) change
the form of consideration payable in the Revised Sears Offer, (v) amend,
modify, or add to the Offer Conditions (provided that Sears or Offeror in its
sole discretion may waive any such conditions) or (vi) amend any other term of
the Revised Sears Offer in a manner adverse to the holders of the Public
Shares. Notwithstanding the foregoing, Sears and Offeror may, without the
consent of the Company, (A) extend the Revised Sears Offer, if at the
scheduled expiration date of the Revised Sears Offer any of the Offer
Conditions shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived, (B) extend the Revised Sears Offer for any
period required by any statute, rule, regulation, interpretation or position
of the Commission or any other governmental authority or agency (domestic,
foreign or supranational) applicable to the Revised Sears Offer, and (C)
extend the Revised Sears Offer for any reason on one or more occasions for an
aggregate of not more than fifteen business days beyond the latest expiration
date that would otherwise be permitted under clauses (A) and (B) of this
sentence in order to obtain at least 90% of the outstanding Public Shares.
Sears will make available to the Purchaser sufficient funds sufficiently in
advance to consummate the Revised Sears Offer in accordance with the
provisions of the Merger Agreement.
THE MERGER
The Merger Agreement provides that, following the consummation of the Sears
Revised Offer, Offeror shall be merged with and into the Company and the
separate corporate existence of Offeror shall thereupon cease. The Company
shall be the surviving corporation in the Merger ("Surviving Corporation") and
shall, following the Merger, continue as a wholly owned subsidiary of Sears,
governed by the laws of the State of Delaware, with all its rights,
privileges, immunities, powers and franchises, of a public as well as of a
private nature, continuing unaffected by the Merger. At the time the Merger is
effective (the "Effective Time"), each Public Share issued and outstanding
immediately prior to the Effective Time (other than shares held in the
Company's treasury or owned by Sears or Offeror or Public Shares which are
held by stockholders exercising appraisal rights pursuant to Section 262 of
the General Corporation Law of the State of Delaware ("DGCL")) shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive, without interest, an amount in cash
equal to the greater of $7.75 net or the amount which may be paid pursuant to
the Revised Sears Offer as it may be amended ("Merger Consideration").
The Merger Agreement provides that the Certificate of Incorporation of the
Company will be amended at the Effective Time to read as set forth in Annex B
to the Merger Agreement, and the By-Laws of Offeror at the Effective Time will
be the By-Laws of the Surviving Corporation, subject to the obligation of
Offeror and Sears to continue in force and effect certain obligations of the
Company to indemnify its officers and directors. The Merger Agreement also
provides that the directors of Offeror immediately prior to the Effective Time
will be the directors of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time will be the officers of the
Surviving Corporation.
COMPANY STOCK OPTIONS AND WARRANTS
The Merger Agreement provides that prior to consummation of the Revised
Sears Offer, the Company may, and it is a condition to Offeror's obligation to
purchase shares pursuant to the Revised Sears Offer that the
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Company shall, enter into agreements in respect of outstanding options to
purchase Common Stock ("Options") issued under the Company's 1988 Stock Option
Plan and the Company's 1994 Stock Option Plan (collectively, the "Stock Option
Plans") and any other options issued by the Company, providing for either (i)
the payment upon surrender of the Option upon consummation of the Revised Sears
Offer or at the Effective Time of an amount of cash per share subject to each
such Option equal to the difference between the Merger Consideration and the
exercise price of such Option, less an amount equal to all taxes required to be
withheld from such payment or (ii) with the consent of Sears, exchange of such
Options into certain options to acquire shares of Sears's common stock. The
Company may, if (and only if) an Option holder enters into an agreement
described in the preceding sentence, accelerate the vesting of any outstanding
Options. The Merger Agreement further provides that the Company shall
immediately provide the notice required by Section 4.1(d) of the Warrant No. 1
to purchase 50,000 shares issued to Needham & Co., Inc. dated August 30, 1994
("Warrants").
RECOMMENDATION
The Company represents and warrants in the Merger Agreement that the Special
Committee has, among other things, determined that the terms of the Revised
Sears Offer and the Merger are fair to, and in the best interests of, the
minority stockholders of the Company and has recommended without qualification
that the minority stockholders of the Company accept the Revised Sears Offer
and tender their Public Shares thereunder to Offeror. In addition, the Company
has represented and warranted that the Company's Board of Directors has
approved (i) the Merger Agreement and the transactions contemplated thereby,
including the Revised Sears Offer and the Merger and (ii) the taking of all
other action necessary to render any state takeover statutes inapplicable to
the Revised Sears Offer, the Merger and the Stockholder Tender Agreement.
INTERIM AGREEMENTS OF SEARS, OFFEROR AND THE COMPANY
Pursuant to the Merger Agreement, the Company has covenanted and agreed that,
during the period from the date of the Merger Agreement to the Effective Time,
the Company will conduct its business and operations only in the ordinary and
usual course of business consistent with past practice. The Merger Agreement
provides that the Company will use its reasonable best efforts to preserve
intact the business organization of the Company, to keep available the services
of its operating personnel and to preserve the goodwill of suppliers and others
having business relationships with it. Pursuant to the Merger Agreement,
without limiting the generality of the foregoing, and except as otherwise
expressly provided in the Merger Agreement, prior to the Effective Time, the
Company will not, without the prior written consent of Sears: (i) amend its
Certificate of Incorporation or By-Laws; (ii)(a) create, incur or assume any
indebtedness for money borrowed, including obligations in respect of capital
leases, except in the ordinary course of business consistent with past practice
or (b) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person; provided, however, that the Company may endorse negotiable instruments
in the ordinary course of business consistent with past practice; (iii)
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of the Common Stock of
the Company; (iv) issue, sell, grant, purchase or redeem, or issue, whether by
dividend or otherwise, or sell any securities convertible into or exercisable
for, or options with respect to, or warrants to purchase or rights to subscribe
to or otherwise purchase, or subdivide or in any way reclassify, any shares of
capital stock or other securities of the Company, except for the exercise of
the Options and Warrants outstanding on the date of the Merger Agreement;
(v)(a) increase the aggregate amount of compensation payable or to become
payable by the Company to its directors, officers or employees whether by
salary or bonus or (b) increase the rate or term of, or otherwise alter, any
bonus, insurance, pension, severance or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers or employees;
(vi) enter into any agreement, commitment or transaction, except agreements,
commitments or transactions in the ordinary course of business consistent with
past practice or settlements with the Internal Revenue Service or other similar
authority as permitted by Section 7.02(b) of the Merger Agreement; (vii) sell,
transfer, mortgage, pledge or grant any security
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<PAGE>
interest, lien or other encumbrance on any asset other than in the ordinary
course of business consistent with past practice; (viii) waive any right under
any contract or other agreement identified in the Company's Disclosure
Schedule (as defined in the Merger Agreement); (ix) other than as and when
required by any change in generally accepted accounting principles, make any
material change in its accounting or tax methods or practices or make any
material change in depreciation or amortization policies or rates adopted by
it for accounting or tax purposes or, other than normal writedowns or
writeoffs consistent with past practices, make any writedowns of inventory or
writeoffs of notes or accounts receivable; (x) make any loan or advance to any
of its stockholders, officers, directors, employees (other than advances to
field sales personnel, vacation advances, relocation advances and travel
advances in each case made in the ordinary course of business in a manner
consistent with past practice), or make any other loan or advance to any other
person or group otherwise than in the ordinary course of business consistent
with past practice; (xi) terminate or fail to renew, where such renewal is at
the Company's option, any contract or other agreement other than in the
ordinary course of business, the termination or failure of which to renew
would have a Material Adverse Effect (as defined below); (xii) enter into any
collective bargaining agreement or employment agreement; (xiii) make any
addition to or modification of the Company's existing employee benefits plans
or adopt any new employee benefit plan; (xiv) take, agree to take or do, or
with respect to anything within the Company's control, knowingly permit to be
done or to be taken any action in the conduct of its business which (a) would
cause any of the representations of the Company to be or become untrue in any
material respect, and (b) would reasonably be expected to have a Material
Adverse Effect; (xv) fail to comply with all applicable filing, payment,
withholding, collection and record retention obligations under all applicable
federal, state, local and foreign tax laws; or (xvi) agree to do any of the
foregoing.
When used in the Merger Agreement, the term "Material Adverse Effect" means
a material adverse effect on the business, assets, financial condition or
results of operations of the Company or on the ability of the Company, Sears
or Offeror to consummate the transactions contemplated by the Merger
Agreement, or any event or events which, individually or in the aggregate,
constitute or, with the passage of time, would constitute a "Material Adverse
Effect."
OTHER AGREEMENTS OF SEARS, OFFEROR AND THE COMPANY
Under the Merger Agreement, the Company, its affiliates and their respective
officers, directors, employees, investment bankers, attorneys and other
representatives and agents must immediately cease any existing discussions or
negotiations, if any, with any parties (other than Offeror and Sears)
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any
business combination with the Company. The Company, on behalf of itself and
its present affiliates and their respective officers, directors, employees,
representatives or agents, has also agreed that none of them shall, directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than Sears and Offeror,
any affiliate or associate of Sears and Offeror or any designees of Sears and
Offeror) concerning any Acquisition Proposal (as defined in the Merger
Agreement) or take any other action to facilitate the making of a proposal
that constitutes or could reasonably be expected to lead to an Acquisition
Proposal. The Company has agreed to use its best efforts to ensure that the
officers, directors, and employees of the Company and any other advisor or
representative retained by the Company are aware of the restrictions set forth
in the preceding sentence.
Pursuant to the Merger Agreement, between the date of the Merger Agreement
and the Effective Time, the Company will, during ordinary business hours and
upon reasonable advance notice, (i) give Sears and Sears' authorized
representatives all access that Sears shall reasonably request to all books,
records (including, without limitation, the workpapers of the Company's
outside accountants), contracts, commitments, offices, and other facilities
and properties of the Company and its personnel, representatives, accountants
and agents, provided, however, that all such access shall take place after
appropriate prior consultation with the officers of the Company, (ii) will
permit Sears to make such inspections as Sears may reasonably request and
(iii) will cause the Company's officers and advisors to furnish Sears with
such financial and operating data and other information with respect to the
business, properties, assets, liabilities, and personnel of the Company as
Sears may from time
A-3
<PAGE>
to time reasonably request, provided, however, that any such investigation
shall be conducted in such a manner as not to interfere unnecessarily with the
business of the Company.
The Merger Agreement provides that promptly upon the purchase by Offeror of
the Public Shares pursuant to the Revised Sears Offer, and from time to time
thereafter, Offeror shall be entitled to designate such 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 directors pursuant to this
paragraph) and (ii) the percentage, expressed as a decimal, that the aggregate
number of shares of Common Stock beneficially owned by Offeror or any
affiliate of Offeror following such purchase bears to the total number of
shares of Common Stock then outstanding, and the Company shall, at such time,
promptly take all actions necessary to cause Offeror's designees to be elected
as directors of the Company, including increasing the size of the Company's
Board of Directors or securing the resignations of incumbent directors, or
both. The Company shall cause persons designated by Offeror to constitute the
same percentage as persons designated by Offeror shall constitute of the
Company's Board of Directors to be appointed to each committee of the
Company's Board of Directors, to the extent permitted by applicable law.
Nothwithstanding the foregoing, until the Effective Time, the Company shall
use its best efforts to ensure that all members of its board of directors and
each committee thereof as of the date of the Merger Agreement who are not
employees of the Company shall remain members of its board of directors and of
such committees.
Pursuant to the Merger Agreement, in the event that the Offeror owns less
than 90% of the outstanding shares of Common Stock following expiration of the
Revised Sears Offer, the Company shall take all action to the extent necessary
to consummate the Merger in accordance with applicable law, including causing
a meeting of its stockholders to be duly called and held as soon as
practicable for the purposes of voting on the approval and adoption of the
Merger Agreement, the Merger and the transactions contemplated thereby.
The Merger Agreement provides that, at Sears's request, the Company will
promptly prepare and file with the Commission under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
a proxy statement relating to the Company Stockholder Meeting (the "Proxy
Statement") and cause the Proxy Statement to be mailed to its stockholders at
the earliest practicable time and obtain the necessary approvals by its
stockholders of the Merger Agreement. Notwithstanding the foregoing, in the
event that Offeror acquires at least 90% of the outstanding shares of Common
Stock and Offeror so requests, Sears, Offeror and the Company will take all
actions necessary and appropriate to cause the Merger to become effective
without a meeting of the stockholders of the Company in accordance with
Section 253 of the DGCL.
Sears has agreed that all rights to indemnification now existing in favor of
present and former directors or officers of the Company ("Indemnified
Parties") as provided in the Company's Certificate of Incorporation and By-
Laws, or rights of indemnification equivalent thereto, and limitations of
liability in the Company's Certificate of Incorporation, or rights and
limitations equivalent thereto, shall survive the Merger and shall continue in
full force and effect for a period of at least six years. Sears has agreed to
cause to remain in full force and effect and cause the Surviving Corporation
to fully perform all indemnity agreements with Indemnified Parties in effect
on the date of the Merger Agreement. For a period of at least six years after
the Effective Time, Sears and the Surviving Corporation will, jointly and
severally, indemnify and hold harmless, to the fullest extent permitted by
applicable law, each Indemnified Party and advance expenses in connection with
such indemnification. In addition, Sears has agreed that for six years after
the Effective Time, Sears will cause the Surviving Corporation to use
reasonable efforts to maintain the officers' and directors' liability
insurance covering the Indemnified Parties who are presently covered by the
Company's officers' and directors' liability insurance, with respect to acts
or omissions occurring prior to the Effective Time, on terms no less favorable
than those in effect on the date of the Merger Agreement or at the Effective
Time, or at Sears' option, such less favorable terms as Sears may provide for
its own directors and officers.
The Merger Agreement provides that the Company, Offeror and Sears will each
use their reasonable efforts to consummate the transactions contemplated by
the Merger Agreement.
A-4
<PAGE>
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of the parties thereto, including without limitation,
representations by the Company as to corporate existence and good standing,
subsidiaries, capital structure, corporate authorization, consents and
approvals, taxes, brokers and finders, known undisclosed liabilities, certain
changes or events concerning its businesses, compliance with applicable law,
employee benefit plans, litigation and environmental liabilities.
CONDITIONS TO THE MERGER
The obligations of each of Sears, Offeror and the Company to effect the
Merger are subject to the satisfaction of certain conditions, which have not
been waived at or prior to the Closing of the Merger, including (i) the Merger
Agreement and the Merger shall have been approved and adopted by the requisite
vote or consent, if any is required, of the stockholders of the Company
required by the Company's Certificate of Incorporation and By-Laws and the
DGCL; (ii) no preliminary or permanent injunction or other order shall have
been issued by any court or by any governmental or regulatory agency, body or
authority which prohibits the consummation of the Offer or the Merger and the
transactions contemplated by the Merger Agreement and which is in effect at the
Effective Time, provided, however, that, in the case of a decree, injunction or
other order, 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 as
possible any decree, injunction or other order that may be entered and (iii) no
statute, rule or regulation shall have been enacted, entered, promulgated or
enforced by any governmental authority that prohibits the consummation of the
Revised Sears Offer or the Merger or has the effect of making the purchase of
the Public Shares illegal. The obligation of Offeror and Sears to effect the
Merger is further subject to satisfaction of the conditions, unless waived by
Sears, that (i) Offeror shall have accepted for payment Public Shares tendered
pursuant to the Revised Sears Offer, provided that this condition will be
deemed satisfied with respect to Offeror and Sears if Offeror shall have failed
to purchase Public Shares pursuant to the Revised Sears Offer in violation of
the terms of the Revised Sears Offer or otherwise, (ii) the Company shall have
performed and complied in all material respects with the agreements and
obligations contained in the Merger Agreement required to be performed and
complied with by it at or prior to the Effective Time, provided that this
clause (ii) shall not apply after Offeror has designated a majority of
directors to serve on the Company's Board of Directors as provided in the
Merger Agreement or Offeror's and Sears' designees otherwise constitute a
majority of such board and (iii) there shall have been no change in the Special
Committee's recommendation that the stockholders of the Company accept the
Revised Sears Offer. The obligation of the Company to effect the Merger is
further subject, unless waived by the Company, to Sears and Offeror having
performed and complied in all material respects with the agreements and
obligations contained in the Merger Agreement required to be performed and
complied with by each of them at or prior to the Effective Time.
TERMINATION
The Merger Agreement may be terminated and the Revised Sears Offer (if
Offeror has not accepted Public Shares for payment) and the Merger may be
abandoned at any time prior to the Effective Time: (i) by mutual written
consent of Sears, Offeror and the Company; (ii) by Sears and Offeror or by the
Company if the Closing of the Merger shall not have occurred on or prior to
December 31, 1997; (iii) by Sears and Offeror or the Company if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger or the
acceptance for payment of and payment for the Public Shares and such order,
decree, ruling or other action shall have become nonappealable; (iv) by Sears
and Offeror if, due to an occurrence or circumstance which would result in a
failure to satisfy any of the Offer Conditions, Offeror shall have terminated
the Revised Sears Offer or allowed the Revised Sears Offer to expire without
the purchase of any Public Shares thereunder; (v) by the Company if there shall
not have been a material breach of any representation, warranty, covenant or
agreement on the part of the Company which would entitle Sears or Offeror
A-5
<PAGE>
to terminate the Merger Agreement pursuant to clause (vi) of this paragraph
and, due to an occurrence or circumstance which would result in a failure to
satisfy any of the Offer Conditions, Offeror shall have terminated the Revised
Sears Offer or allowed the Revised Sears Offer to expire without the purchase
of any shares thereunder; (vi) by Sears and Offeror prior to the purchase of
Public Shares pursuant to the Revised Sears Offer if (a) there shall have been
a breach of any representation or warranty on the part of the Company having a
Material Adverse Effect, (b) there shall have been a breach of any covenant or
agreement on the part of the Company resulting in a Material Adverse Effect or
(c) the Special Committee shall have withdrawn or modified (including by
amendment of this Statement) in a manner adverse to Offeror its approval or
recommendation of the Revised Sears Offer, the Merger Agreement or the Merger
or shall have recommended another offer, or shall have adopted any resolution
to effect any of the foregoing, or (vii) by the Company if (a) there shall
have been a breach of any representation or warranty on the part of Sears or
Offeror which materially adversely affects the consummation of the Offer or
the Merger and which representation or warranty remains incorrect at the date
of termination under clause (a) or (b) there shall have been a material breach
of any covenant or agreement on the part of Sears or Offeror and which
materially adversely affects the consummation of the Offer or the Merger. In
the event that a third party makes a fully financed all cash tender offer for
the Public Shares at a price in excess of the Revised Sears Offer, the
obligation of the Special Committee and the Company's Board of Directors to
continue to recommend the Revised Sears Offer shall be relieved to the extent
necessary, in the opinion of legal counsel, to permit the Special Committee
and the Company's Board of Directors to satisfy their obligations under Rule
14e-2 promulgated by the Commission under the Securities Exchange Act of 1934,
as amended.
TERMINATION FEE AND EXPENSES
In the event that (i) Sears and Offeror terminate the Merger Agreement
pursuant to clause (vi)(a) or (vi)(b) of the preceding paragraph, or (ii) the
Merger Agreement is terminated in the manner described in clause (vi)(c) of
the preceding paragraph, the Company shall reimburse Sears, Offeror and their
affiliates (not later than five business days after submission of statements
therefor) for all actual documented out-of-pocket fees and expenses actually
and reasonably incurred by any of them or on their behalf in connection with
the Revised Sears Offer and the Merger and the consummation of all
transactions contemplated by the Merger Agreement (including, without
limitation, reasonable attorneys' fees, reasonable fees payable to financing
sources, investment bankers, counsel to any of the foregoing, and accountants
and filing fees and printing costs).
Pursuant to the Merger Agreement, in the event of the termination of the
Merger Agreement and abandonment of the Revised Sears Offer and the Merger,
the Merger Agreement will become void and have no effect, without any
liability on the part of any party to the Merger Agreement or its affiliates,
directors, officers or stockholders, provided that a party will not be
relieved from liability for any damages arising out of any willful or
intentional breach of the Merger Agreement or from their obligations with
respect to brokers and finders, and expenses of the parties.
COSTS AND EXPENSES
Except as discussed above, the Merger Agreement provides that all costs and
expenses incurred in connection with the transactions contemplated by the
Merger Agreement shall be paid by the party incurring such costs and expenses.
AMENDMENTS AND MODIFICATIONS
Subject to applicable law, at any time prior to the Effective Time, the
Merger Agreement may be amended, modified or supplemented by a written
agreement of Sears, Offeror and the Company executed by duly authorized
officers of the respective parties except that after the meeting of the
stockholders of the Company to approve the Merger, the price per Public Share
to be paid pursuant to the Merger Agreement to the holders of the Public
Shares may not be decreased and the form of consideration to be received by
the holders of the Public Shares in the Merger may not be altered, and no
other amendment which would adversely affect the holders of Public Shares may
be made, without the approval of the applicable holders.
A-6
<PAGE>
ANNEX B
LOGO
March 2, 1997
CONFIDENTIAL
Special Committee of the Board of Directors
MaxServ, Inc.
8317 Cross Park Dr.
Austin, TX 78754
Dear Members of the Special Committee:
We understand that Sears, Roebuck and Co. ("Parent"), Max Acquisition
Delaware Inc. ("Purchaser"), a wholly owned subsidiary of Parent, and MaxServ,
Inc. ("MaxServ" or the "Company") have entered into an agreement pursuant to
which Purchaser will acquire all of the outstanding shares of common stock of
MaxServ not owned by Parent (the "Minority Shares") for $7.75 per share (the
"Increased Offer Price") payable in cash (the "Transaction"). The Minority
Shares will be acquired through a tender offer commenced by Purchaser on
February 4, 1997 and to be amended pursuant to the Agreement (as defined
below) (the "Offer") and the subsequent merger of Purchaser with and into the
Company. The terms and conditions of the Transaction are more fully described
in the Agreement and Offer to Purchase (as defined below).
You have requested our opinion as to whether the Increased Offer Price is
fair, from a financial point of view, to MaxServ shareholders other than
Parent.
Broadview Associates LLC focuses on providing merger and acquisition
advisory services to information technology ("IT") companies. In this
capacity, we are continually engaged in valuing such businesses, and we
maintain an extensive database of IT mergers and acquisitions for comparative
purposes. We are currently acting as financial advisor to the Special
Committee of the Board of Directors of MaxServ (the "Special Committee") and
will receive a fee from MaxServ for our services. Such fee is in large part
dependent upon consummation of a transaction such as the Transaction.
In rendering our opinion, we have, among other things:
(1.) reviewed the terms and conditions of (i) the Offer to Purchase relating
to the Offer and a draft Supplement thereto dated March 2, 1997 (which,
for the purposes of this opinion, we have assumed, with your permission,
to be identical in all material respects to the supplement to be
distributed to security holders) (giving effect to such Supplement, the
"Offer to Purchase") and (ii) the Agreement and Plan of Merger dated
March 2, 1997 and associated annexes thereto (the "Agreement");
(2.) reviewed the financial statements of MaxServ for its fiscal years ended
December 31, 1994, 1995, and 1996 audited and reported on by Price
Waterhouse LLP and the unaudited financial statements of MaxServ for the
three month periods ended August 31, 1996 and November 30, 1996 included
within MaxServ's Forms 10-Q for such periods;
(3.) reviewed internal historical financial and operating data concerning
MaxServ prepared and provided to us by MaxServ management;
<PAGE>
LOGO
(4.) discussed with MaxServ management their expectations about the Company's
future financial performance and, using their assumptions and
projections, constructed forecasts of financial performance based on such
assumptions;
(5.) considered the fact that Parent owns 64.2% of the outstanding MaxServ
common stock, and accounts for approximately 90% of MaxServ's total
current revenue;
(6.) participated in discussions with MaxServ management concerning the
operations, business strategy, financial performance and prospects for
MaxServ including specific discussions regarding the Company's ongoing
development of MaxServNet, a comprehensive service-cycle management
technology;
(7.) reviewed the reported closing prices and trading activity for MaxServ
common stock;
(8.) compared certain aspects of the financial performance of MaxServ with
public companies we deemed comparable;
(9.) considered current public market valuations of companies we deemed
comparable to MaxServ;
(10.) analyzed available information, both public and private, concerning other
transactions we believe to be comparable in whole or in part to the
Transaction;
(11.) discussed potential acquisition of all or part of the Company by third
parties with the Special Committee, the full MaxServ Board of Directors,
Parent and interested third parties;
(12.) discussed with Parent management its view of the strategic rationale for
the acquisition of the Minority Shares;
(13.) participated in negotiations and discussions prior to commencement of the
Offer among MaxServ, the Special Committee and Parent and their financial
and legal advisors for a possible negotiated transaction regarding the
acquisition by Parent of the Minority Shares;
(14.) participated in negotiations and discussions since commencement of the
Offer among MaxServ, the Special Committee and Parent and their financial
and legal advisors regarding several possible alternatives to the Offer,
all of which were rejected by Parent; and
(15.) conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
that was publicly available or furnished to us by MaxServ, Purchaser or Parent.
With respect to the assumptions of future financial performance which we
discussed with MaxServ management, we have assumed that they reflected the best
available estimates and good faith judgments of the management of MaxServ as to
the future performance of MaxServ. We have neither made nor obtained an
independent appraisal or valuation of any of MaxServ's assets.
Based upon and subject to the foregoing, we are of the opinion that the
Increased Offer Price is fair, from a financial point of view, to MaxServ
shareholders other than Parent.
This opinion speaks only as of the date hereof and may be relied upon only by
the Special Committee and no other person. This opinion is not intended to be
and shall not constitute a recommendation to any shareholder of the Company as
to whether to tender shares of common stock pursuant to the Offer. This opinion
may not be published or referred to, in whole or part, without our prior
written permission, which shall not be unreasonably withheld.
Sincerely,
LOGO
Broadview Associates LLC
2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
21 Agreement and Plan of Merger by and among MaxServ, Offeror,
and Sears dated as of March 2, 1997
22 Stockholder Tender Agreement by and among Offeror, Sears and
certain Sunwestern investment funds dated as of March 2, 1997
23 Press Release dated March 3, 1997
*24 Letter to Shareholders dated March 3, 1997 regarding Special
Committee's recommendation
*25 Opinion dated March 2, 1997 of Broadview Associates LLC
(included as Annex B to Amendment No. 1 to Schedule 14D-9)
</TABLE>
- --------
*Included in copy mailed to shareholders.
<PAGE>
EXHIBIT 21
AGREEMENT AND PLAN OF MERGER
By and among
MAXSERV, INC.,
MAX ACQUISITION DELAWARE INC.,
and
SEARS, ROEBUCK AND CO.
Dated as of March 2, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I - DEFINITIONS..................................................... 2
1.01 Definitions.................................................... 2
ARTICLE II - THE TENDER OFFER............................................... 8
2.01 The Offer...................................................... 8
2.02 Company Action................................................. 9
ARTICLE III - THE MERGER.................................................... 10
3.01 The Merger..................................................... 10
3.02 Effective Time................................................. 11
3.03 Certificate of Incorporation................................... 11
3.04 By-Laws........................................................ 11
3.05 Directors and Officers......................................... 11
3.06 Further Assurances............................................. 11
3.07 Stockholders' Meeting or Written Consent in Lieu of a Meeting.. 11
3.08 Company Board Representation; Section 14(f).................... 13
ARTICLE IV - CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS............. 14
4.01 Conversion or Cancellation of Shares........................... 14
4.02 Exchange of Certificates; Paying Agent......................... 15
4.03 Dissenters' Rights............................................. 16
4.04 Transfer of Shares After the Effective Time.................... 16
4.05 Company Stock Options and Warrant.............................. 17
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 17
5.01 Organization, Qualification.................................... 17
5.02 Company Subsidiaries........................................... 17
5.03 The Company's Capitalization................................... 17
5.04 Company Investments............................................ 18
5.05 Authority...................................................... 18
5.06 Consents and Approvals; No Violation........................... 18
5.07 SEC Reports; Financial Statements.............................. 19
5.08 Proxy Statement; Offer Documents............................... 19
5.09 Undisclosed Liabilities........................................ 20
5.10 Absence of Certain Changes or Events........................... 20
5.11 Patents, Trademarks, Etc....................................... 20
5.12 Employee Benefit Plans......................................... 21
5.13 Legal Proceedings, Etc......................................... 21
5.14 Taxes.......................................................... 22
5.15 Compliance with Law............................................ 22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
5.16 Insider Interests.............................................. 22
5.17 Environmental Protection....................................... 22
5.18 Labor Matters.................................................. 23
5.19 Brokers and Finders............................................ 23
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND THE PURCHASER................................................ 24
6.01 Corporation Organization....................................... 24
6.02 Authorized Capital............................................. 24
6.03 Authority...................................................... 24
6.04 No Prior Activities............................................ 24
6.05 No Financing Contingency....................................... 25
6.06 Governmental Filings; No Violations............................ 25
6.07 Brokers and Finders............................................ 25
6.08 Offer Documents; Proxy Statement; Other Information............ 26
ARTICLE VII - COVENANTS OF THE PARTIES...................................... 26
7.01 Conduct of Business of the Company............................. 26
7.02 Notification of Certain Matters................................ 28
7.03 Access to Information.......................................... 28
7.04 Further Information............................................ 29
7.05 Reasonable Efforts............................................. 29
7.06 Public Announcements........................................... 29
7.07 Indemnity; D&O Insurance....................................... 30
7.08 Other Transactions............................................. 32
7.09 Contribution to Capital........................................ 32
ARTICLE VIII - CONDITIONS TO THE MERGER..................................... 32
8.01 Conditions to Each Party's Obligation to Effect the Merger..... 32
8.02 Conditions to the Obligations of the Parent and the Purchaser
to Effect the Merger........................................... 33
8.03 Conditions to the Obligations of the Company to Effect the
Merger......................................................... 33
ARTICLE IX - CLOSING........................................................ 34
9.01 Time and Place................................................. 34
9.02 Filings at the Closing......................................... 34
ARTICLE X - TERMINATION; AMENDMENT; WAIVER.................................. 34
10.01 Termination.................................................... 34
10.02 Effect of Termination.......................................... 35
10.03 Fees and Expenses.............................................. 35
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE XI - MISCELLANEOUS 36
11.01 Survival of Representations, Warranties, Covenants and
Agreements.................................................... 36
11.02 Amendment and Modification.................................... 36
11.03 Waiver of Compliance; Consents................................ 36
11.04 Counterparts.................................................. 36
11.05 Governing Law; Submission to Jurisdiction..................... 37
11.06 Notices....................................................... 37
11.07 Entire Agreement, Assignment Etc.............................. 38
11.08 Validity...................................................... 38
11.09 Headings; Certain Definitions................................. 39
11.10 Specific Performance.......................................... 39
ANNEX A ................................................................... A-1
ANNEX B ................................................................... B-1
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of March 2, 1997, among MaxServ, Inc., a Delaware corporation (the
"Company"), Max Acquisition Delaware Inc., a Delaware corporation (the
"Purchaser"), and Sears, Roebuck and Co., a New York corporation (the "Parent").
WHEREAS, on February 4, 1997, Parent and Purchaser commenced a tender
offer to purchase all outstanding shares of common stock, par value $0.01 per
share (the "Shares") of the Company for a purchase price of $7.00 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated February 4, 1997 (the
"Offer to Purchase") of Purchaser and the related Letter of Transmittal
(collectively, the "Initial Offer"), which are filed as exhibits to each of (a)
the Tender Offer Statement on Schedule 14D-1 filed by Parent and Purchaser
(together with all supplements or amendments thereto, the "Schedule 14D-1") and
(b) the Transaction Statement on Schedule 13E-3 filed by Parent and Purchaser
(together with all supplements or amendments thereto, the "Schedule 13E-3") in
respect of the Initial Offer with the Securities and Exchange Commission (the
"SEC") on February 4, 1997;
WHEREAS, on February 18, 1997, the Special Committee (the "Special
Committee") of the Board of Directors of the Company (the "Company Board") filed
a Solicitation/Recommendation Statement on Schedule 14D-9 on behalf of the
Company (together with all supplements or amendments thereto, the "Schedule 14D-
9") in which it recommended the Company's stockholders reject the Initial Offer;
WHEREAS, the Boards of Directors of Purchaser and, on the
recommendation of the Special Committee and, following approval of the
disinterested directors of the Company Board, the Company, each have determined
that it is in the best interests of their respective companies and stockholders
for Parent to acquire the Company upon the terms and conditions set forth
herein;
WHEREAS, promptly following the execution hereof, Parent and Purchaser
will file with the SEC an amendment to the Schedule 14D-1 which reflects the
Amendments, and the Special Committee will file an amendment to the Schedule
14D-9 in which it recommends to the Company's stockholders that they accept the
Offer;
WHEREAS, the Company, the Parent and the Purchaser desire to make
certain representations, warranties and agreements in connection with this
Agreement;
WHEREAS, to complete the acquisition described herein, the respective
Boards of Directors of the Purchaser and the Company, and the Parent acting as
the sole stockholder of the Purchaser, have approved the Offer and the
subsequent merger of the Purchaser with and into the Company upon the terms and
subject to the conditions of this Agreement;
WHEREAS, in order to induce the Purchaser and the Parent to enter into
this Agreement, the Stockholders have entered into the Tender Agreement,
pursuant to which such
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stockholders have agreed to tender their shares of Common Stock pursuant to and
in accordance with the terms of the Offer;
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. For purposes of this Agreement and in addition to
any and all definitions and interpretations otherwise provided throughout this
Agreement, the following terms shall have the meanings set forth below. Any of
such terms, unless the context otherwise requires, may be used in the singular
or plural, depending on reference.
"Acquisition Proposal" shall mean any proposed merger, sale of assets,
sale of shares of capital stock, acquisition of Shares other than pursuant to
the Offer or the Merger or similar transaction involving the Company or any
division of the Company.
"Amendments" shall have the meaning set forth in Section 2.01.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company.
"Certificate" or "Certificates" shall mean the certificates that,
immediately prior to the Effective Time, represent issued and outstanding
Shares.
"Closing" shall have the meaning set forth in Section 9.01.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock of the Company, par value
$.01 per share.
"Company Balance Sheet" shall mean the audited consolidated balance
sheet of the Company dated as of May 31, 1996.
"Company Benefit Plans" shall mean (i) all employee pension and
welfare benefit plans, agreements and arrangements described in section 3(3) of
ERISA, including without limitation, all qualified retirement plans and medical,
dental, life insurance and other similar plans, maintained by the Company, to
which the Company has contributed or been
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required to contribute, or with respect to which the Company has a liability,
whether direct or indirect, actual or contingent, (ii) all stock option, change
of control and similar plans, agreements and arrangements maintained by the
Company, and (iii) all material employment, bonus, incentive, and similar plans,
agreements and arrangements maintained by the Company.
"Company Board" shall have the meaning set forth in the second Whereas
clause of this Agreement.
"Constituent Corporations" shall mean the Purchaser and the Company.
"Delaware Certificate of Merger" shall have the meaning set forth in
Section 3.02.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Director" shall mean a member of the Company Board as of the date
hereof.
"Disclosure Schedule" shall mean a schedule, attached hereto and
incorporated herein by reference, executed and delivered by the Company to the
Purchaser and the Parent as of the date hereof that sets forth the exceptions to
the representations and warranties contained in Article V hereof and certain
other information called for by this Agreement.
"Dissenting Shares" shall mean Shares that are not voted in favor of
the approval and adoption of the Merger and with respect to which appraisal
rights are demanded and perfected in accordance with Section 262 of the DGCL and
not withdrawn.
"Dissenting Stockholders" shall mean the stockholders of the Company
who hold Dissenting Shares.
"Effective Time" shall have the meaning set forth in Section 3.02.
"Environmental Claims" shall mean all written allegations, notices of
violation, liens, claims, demands, suits, or causes of action for any damage,
including, without limitation, personal injury, property damage, lost use of
property or consequential damages, arising directly or indirectly out of
Environmental Conditions or Environmental Laws. By way of example only,
Environmental Claims include (i) violations of or obligations under any contract
related to Environmental Laws or Environmental Conditions, (ii) actual or
threatened damages to natural resources, (iii) claims for nuisance or its
statutory equivalent, (iv) claims for the recovery of response costs, or
administrative or judicial orders directing the performance of investigations,
responses or remedial actions under any Environmental Laws, (v) requirements to
implement "corrective action" pursuant to any order or permit issued pursuant to
Environmental Laws, (vi) fines, penalties or liens of any kind against property
related to Environmental Laws or Environmental Conditions, and (vii) with regard
to any
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present or former employees, claims relating to exposure to or injury from
Environmental Conditions.
"Environmental Conditions" shall mean the state of the environment,
including natural resources, soil, surface water, ground water, or ambient air,
relating to or arising out of the use, storage, treatment, transportation,
release, disposal, dumping or threatened release of Hazardous Substances.
"Environmental Laws" shall mean all applicable federal, state,
district, local and foreign laws, all rules or regulations promulgated
thereunder, and all orders, consent orders, judgments, notices, permits or
demand letters issued or entered pursuant thereto, relating to pollution or
protection of the environment (e.g., ambient air, surface water, ground water,
or soil). Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupational Safety and Health Act, as amended, and all analogous
laws promulgated or issued by any state or other governmental authority.
"Environmental Reports" shall mean any and all written analyses,
summaries or explanations, in the possession or control of the Company, of (a)
any Environmental Conditions in, on or about the Properties (defined below) of
the Company or (b) the Company's compliance with Environmental Laws.
"Equity Rights" shall have the meaning set forth in Section 5.03.
"ERISA" shall mean the Employee Retirement Income Securities Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean the scheduled expiration date and the
time the Offer is, from time to time, set to expire.
"Funds" shall have the meaning set forth in Section 4.02(a).
"Hazardous Substances" shall mean all pollutants, contaminants,
chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials subject to regulation,
control or remediation under Environmental Laws, including but not limited to
petroleum, urea formaldehyde, flammable, explosive and
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radioactive materials, PCBs, pesticides, herbicides, asbestos,
sludge, slag, acids, metals, and solvents.
"Indemnified Parties" shall mean each present and former director or
officer of the Company.
"Indemnity Agreements" shall have the meaning set forth in Section
7.07.
"Initial Offer" shall have the meaning set forth in the first Whereas
clause of this Agreement.
"Intellectual Property" shall mean trademarks (registered or
unregistered), service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patented, patentable or not in any
jurisdiction; nonpublic information, trade secrets and confidential information
(including, without limitation, (i) all databases owned, maintained, supported
and updated by Parent, located at Parent's computer facilities and (ii) Sears
TIPS Database, Sears MAX Database, Sears STAC Database (as such terms are
defined in that certain Service Agreement by and between the Company and the
Parent dated as of May 20, 1993), and any other databases created by the Company
specifically for providing services to Parent) and rights in any jurisdiction to
limit the use or disclosure thereof by any person; writings and other works,
whether copyrighted, copyrightable or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights and computer programs and software (including source code, object code
and data); licenses, immunities, covenants not to sue and the like relating to
the foregoing; and any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
"Loan Agreement" shall mean the Loan Agreement between the Company and
Texas Commerce Bank, National Association, dated as of April 29, 1994, as
amended.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, financial condition or results of operation of the Company or
on the ability of the Company, the Parent or the Purchaser to consummate the
transactions contemplated by this Agreement, or any event or events which,
individually or in the aggregate, constitute or, with the passage of time, would
constitute a Material Adverse Effect.
"Merger" shall have the meaning set forth in Section 3.01.
"Merger Consideration" shall have the meaning set forth in Section
4.01(a).
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"Offer" shall have the meaning set forth in Section 2.01(a).
"Offer Conditions" shall have the meaning set forth in Section
2.01(a).
"Offer Documents" shall mean the documents pursuant to which the Offer
will be made, including all materials required to be transmitted to stockholders
pursuant to Regulations 13E-3 and 14D-1 of the Exchange Act, together with any
supplements or amendments thereto.
"Offer to Purchase" shall have the meaning set forth in the first
whereas clause of this Agreement.
"Options" shall mean outstanding options to purchase Shares issued
pursuant to the Stock Option Plans, or otherwise.
"Other Filings" shall have the meaning set forth in Section 3.07(b).
"Parent Companies" shall mean the Parent together with any wholly-
owned subsidiaries of the Parent.
"Paying Agent" shall have the meaning set forth in Section 4.02(a).
"Properties" shall mean the real or personal properties owned or
leased by the Company.
"Proxy Statement" shall mean any proxy or information statement or
similar materials distributed to the Company's stockholders in connection with
the Merger, including any amendments or supplements thereto.
"Real Property" shall mean all of the real property owned in fee by
the Company.
"Real Property Leases" shall mean all of the material leases and
subleases under which, as of the date hereof, the Company has the right to
occupy space.
"Schedule 13E-3" shall have the meaning set forth in the first Whereas
clause of this Agreement.
"Schedule 14D-1" shall have the meaning set forth in the first Whereas
clause of this Agreement.
"Schedule 14D-9" shall have the meaning set forth in the second
Whereas clause of this Agreement.
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"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in Section 5.07.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the first Whereas clause
of this Agreement.
"Special Committee" shall have the meaning set forth in the second
Whereas clause of this Agreement.
"Staff" shall mean the employees, representatives and other staff of
the SEC.
"Stockholders" shall mean Sunwestern Investment Fund II, a Texas
limited partnership, and Sunwestern Cayman 1984 Partners.
"Stockholders' Meeting" shall mean the annual or special meeting of
the stockholders of the Company held for the purpose of approving and adopting
this Agreement, the Merger and the transactions contemplated hereby and thereby.
"Stock Option Plans" shall mean the Company's 1988 Stock Option Plan
and the Company's 1994 Stock Option Plan.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement by and between the Parent and the Company dated as of December 29,
1994.
"Surviving Corporation" shall mean the Company after the Merger.
"Taxes" shall mean all federal, state, local, foreign and other taxes,
assessments or other governmental charges, including, without limitation,
income, estimated income, gross receipts, profits, occupation, franchise,
capital stock, real or personal property, sales, use, value added, transfer,
license, commercial rent, payroll, employment or unemployment, social security,
disability, withholding, alternative or add-on minimum, customs, excise, stamp
or environmental taxes, and further including all interest, penalties and
additions in connection therewith for which the Company may be liable.
"Tender Agreement" shall mean that certain Stockholder Tender
Agreement, dated as of the date hereof by and among, the Purchaser, the Parent
and the Stockholders.
"Transfer Agent" shall mean the transfer agent selected by the
Company.
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"Warrants" shall mean the Warrant No. 1 to purchase 50,000 Shares
issued to Needham & Co., Inc., dated August 30, 1994.
ARTICLE II
THE TENDER OFFER
2.01 The Offer. (a) As promptly as practicable following the
execution hereof, Parent and Purchaser will amend the Initial Offer (the Initial
Offer as now or hereafter amended, is referred to herein as the "Offer") to
provide (i) for a purchase price per Share of $7.75 (the "Per Share Price"),
(ii) for the period the Offer is to remain open to be extended to provide for an
initial expiration of the Offer no later than at 12:00 midnight on Friday, March
14, 1997 and (iii) for the consummation of the Offer to be subject only to the
conditions (the "Offer Conditions") set forth on Annex A hereto (collectively,
the "Amendments"). Without the prior written consent of the Company, neither
Parent nor Purchaser shall (i) reduce the number of Shares subject to the Offer,
(ii) reduce the price per Share to be paid pursuant to the Offer, (iii) extend
the Offer if all of the Offer Conditions have been satisfied or waived, (iv)
change the form of consideration payable in the Offer, (v) amend, modify or add
to the Offer Conditions (provided that Parent or Purchaser in its sole
discretion may waive any such conditions) or (vi) amend any other term of the
Offer in a manner adverse to the holders of the Shares. Notwithstanding the
foregoing, Parent and Purchaser may, without the consent of the Company, (A)
extend the Offer, if at the scheduled expiration date of the Offer any of the
Offer Conditions shall not have been satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Offer for any period
required by any statute, rule, regulation, interpretation or position of the SEC
or any other governmental authority or agency (domestic, foreign or
supranational) applicable to the Offer, and (C) extend the Offer on one or more
occasions for an aggregate of not more than 15 business days beyond the latest
expiration date that would otherwise be permitted under clauses (A) and (B) of
this sentence in order to obtain at least 90% of the outstanding Shares.
Purchaser will promptly pay for all Shares tendered and not withdrawn pursuant
to the Offer as soon as practicable after the expiration of the Offer. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver of the
Offer Conditions.
(b) As promptly as reasonably practicable following execution of this
Agreement, the Parent and the Purchaser shall file with the SEC each of the
Schedule 13E-3 and Schedule 14D-1, which shall reflect the Amendments. The
Offer Documents 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 holders of Shares, 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 are made, not misleading, except that no
representation will be made by the Parent or the Purchaser with
respect to information supplied by the Company or any Stockholder in writing
specifically for inclusion in the Offer Documents, and the Offer Documents may
contain a disclaimer to such effect. Each of the Parent, the Purchaser and the
Company agrees promptly to correct any information supplied by it specifically
for
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inclusion in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of the
Parent and the Purchaser further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Parent and the Purchaser agree to provide the
Company and its counsel in writing with any comments the 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 and shall provide the
Company and its counsel an opportunity to participate, including by way of
discussions with the Commission or its Staff, in the response of the Parent and
Purchaser to such comments. The Company and its counsel shall be given all
practicable opportunity to review and comment upon the Offer Documents and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to the stockholders of the Company.
(c) The Parent will make available to the Purchaser sufficient funds
sufficiently in advance of the Effective Time to consummate the Offer and the
Merger in accordance with the provisions of this Agreement.
2.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and the Merger and represents and warrants that (X) the
Special Committee has unanimously adopted resolutions determining that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to, and in the best interests of, the stockholders of the
Company other than Parent and recommending without qualification that the
stockholders of the Company accept the Offer, tender their Shares thereunder to
the Purchaser and approve and adopt this Agreement and the Merger and (Y) the
disinterested directors of the Company Board and the Company Board have each (i)
unanimously adopted resolutions that approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger and the
transactions contemplated thereby, in all respects and (ii) taken all other
action necessary to render any state takeover statutes inapplicable to the Offer
and the Merger and the Tender Agreement and (Z) as required by Section 7.04 (e)
of the Stock Purchase Agreement, a majority of the directors on the Company
Board who are not affiliated with the Parent have approved the acquisition of
additional Shares by the Parent or its affiliates pursuant to the terms of the
Offer and the Merger.
(b) The Company has been advised by each of its executive officers
and each of its directors, that each such person intends to tender pursuant to
the Offer all outstanding Shares owned or controlled by such person. The
Company represents that the Special Committee has received the oral opinion of
Broadview Associates LLC that the consideration to be received by holders of
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view, and the Company will provide a copy of the written
form of such opinion to the Parent prior to the filing of the amendments to the
Schedule 14D-1 and the Schedule 14D-9 contemplated hereby.
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(c) The Special Committee shall use its best efforts to file with the
SEC, on the date the Offer Documents are filed with the SEC, an amendment to the
Schedule 14D-9 which contains the recommendations described in Sections
2.02(a)(X) (other than any recommendation with respect to the Merger), and shall
mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9
shall comply in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, and 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 in writing by the Parent or the
Purchaser specifically for inclusion or incorporation by reference in the
Schedule 14D-9, and may contain a disclaimer to such effect. Each of the
Company, the Parent and the Purchaser agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal securities laws. The
Company agrees to provide the Parent and its counsel in writing 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. The
Parent and its counsel shall be given all practicable opportunity to review and
comment upon the Schedule 14D-9 and all amendments and supplements thereto prior
to their filing with the SEC or dissemination to stockholders of the Company.
ARTICLE III
THE MERGER
3.01 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Parent shall cause the Purchaser to merge
(the "Merger") with and into the Company and the separate corporate existence of
the Purchaser shall thereupon cease. The Company shall be the surviving
corporation in the Merger and shall, following the Merger, continue as a wholly-
owned subsidiary of Parent, governed by the laws of the State of Delaware, and
the separate corporate existence of the Company, with all its rights,
privileges, immunities, powers and franchises, of a public as well as of a
private nature, shall continue unaffected by the Merger. From and after the
Effective Time, the Merger shall have the effects specified in the DGCL.
3.02 Effective Time. At the Closing contemplated in Section 9.01,
the Company and the Parent will cause a Certificate of Merger or, if applicable,
a Certificate of Ownership and Merger (in either case, the "Delaware Certificate
of Merger") to be filed with
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the Secretary of State of the State of Delaware as provided in the DGCL. The
Merger shall become effective as of the date and at the time the Delaware
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware (or such later time as may be specified therein), and such time is
hereinafter referred to as the "Effective Time."
3.03 Certificate of Incorporation. The Certificate of Incorporation
of the Company shall be amended at the Effective Time to read as set forth in
Annex B hereto, until duly amended in accordance with the terms thereof and the
DGCL.
3.04 By-Laws. The By-Laws of the Purchaser as in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation,
until duly amended in accordance with the terms thereof and the DGCL.
3.05 Directors and Officers. At the Effective Time, the directors of
the Purchaser immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, each of such directors to hold office, subject to the
applicable provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, until their respective successors shall be duly elected
or appointed and qualified. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified.
3.06 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper: (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the proper officers and directors of the Surviving Corporation are
hereby authorized on behalf of the respective Constituent Corporations to
execute and deliver, in the name and on behalf of the respective Constituent
Corporations, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of the Constituent Corporations, all such other acts
and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of the Constituent Corporations and otherwise
to carry out the purposes of this Agreement.
3.07 Stockholders' Meeting or Written Consent in Lieu of a Meeting.
In the event that the Purchaser owns less than ninety percent (90%) of the
outstanding Shares following expiration of the Offer, the Company shall take all
action to the extent necessary to consummate the Merger in accordance with
applicable law, including:
(a) (i) if requested by Parent, duly call, give notice of, convene
and hold the Stockholders' Meeting, as soon as practicable;
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(ii) include in any Proxy Statement the recommendation of the
Special Committee and the Company Board that stockholders of the Company vote in
favor of the approval and adoption of this Agreement and the Merger and the
other transactions contemplated hereby and thereby and the determination of the
Special Committee that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to, and in the best interests of,
the stockholders of the Company; and
(iii) as soon as practicable after the Parent's request, (A)
prepare and file a preliminary Proxy Statement with the SEC, (B) after
consultation with the Parent and the Purchaser, respond promptly to any comments
made by the SEC with respect to the Proxy Statement and any preliminary version
thereof, provided, however, that the Company shall provide the Parent and its
counsel with copies of any written comments from the SEC or its Staff and an
opportunity to participate, including by way of discussions with the SEC or its
Staff, in the response of the Company to such comments, and (C) cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time
after responding to all such comments to the satisfaction of the Staff of the
SEC and to obtain the necessary approvals by its stockholders of this Agreement.
(b) The Company, the Parent and the Purchaser, as the case may be,
shall promptly prepare and file any other filings required under the Exchange
Act or any other Federal or state securities or corporate laws relating to the
Merger and the transactions contemplated herein (the "Other Filings"). Each of
the parties hereto shall notify the other parties hereto promptly of the receipt
by it of any comments from the SEC or its Staff and of any request of the SEC
for amendments or supplements to the Proxy Statement or by the SEC or any other
governmental officials with respect to any Other Filings or for additional
information and will supply the other parties hereto with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
or the members of its Staff or any other governmental officials, on the other
hand, and will provide the other parties and their counsel with the opportunity
to participate, including by way of discussions with the SEC or its Staff, in
the response of such party to such comments, with respect to the Proxy
Statement, any Other Filings or the Merger. The Company, the Parent and the
Purchaser each shall use its best efforts to obtain and furnish the information
required to be included in the Proxy Statement, any Other Filings or the Merger.
If at any time prior to the time of approval and adoption of this Agreement by
the Company's stockholders there shall occur any event that should be set forth
in an amendment or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such amendment or supplement. The Company
shall not mail the Proxy Statement or, except as required by the Exchange Act or
the rules and regulations promulgated thereunder, any amendment or supplement
thereto, to the Company's stockholders unless the Company has first obtained the
consent of the Parent to such mailing.
(c) At the Stockholders' Meeting or in any written consent in lieu of
a meeting, the Parent, the Purchaser and their affiliates will vote all Shares
owned by them and will exercise all voting rights or proxies held by them in
favor of approval and adoption of this Agreement, the Merger, and the
transactions contemplated hereby and thereby.
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(d) Notwithstanding the foregoing, in the event that the Purchaser
shall acquire at least ninety percent (90%) of the outstanding Shares, the
parties hereto agree, at the request of the Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective, in accordance with
Section 253 of the DGCL, as soon as reasonably practicable after such
acquisition and satisfaction or waiver of the conditions of Article VIII,
without a meeting of the stockholders of the Company.
(e) Without limiting the generality of the foregoing, other than as
specifically set forth in clause (a) (ii) above, the Company agrees that its
obligations pursuant to this Section 3.07 shall not be affected by either the
commencement, public proposal, public disclosure or other communication to the
Company by any third party of any offer to acquire some or all of the Shares or
all or any substantial portion of the assets of the Company or any change in the
recommendation of the Company Board.
3.08 Company Board Representation; Section 14(f).
(a) Promptly upon the purchase by the Purchaser of the Shares pursuant
to the Offer, and from time to time thereafter, the Purchaser shall be entitled
to designate up to such number of directors, rounded up to the next whole
number, on the Company Board as shall give the Purchaser representation on the
Company Board equal to the product of the total number of directors on the
Company Board (giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage, expressed as a decimal, that the aggregate number
of Shares beneficially owned by the Purchaser or any affiliate of the Purchaser
following such purchase bears to the total number of Shares, and the Company
shall, at such time, promptly take all actions necessary to cause the
Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Company Board or securing the resignations of
incumbent directors, or both. The Company shall cause persons designated by the
Purchaser to constitute the same percentage as persons designated by the
Purchaser shall constitute of the Company Board to be appointed to each
committee of the Company Board (except the Special Committee), to the extent
permitted by applicable law. Notwithstanding the foregoing, until the Effective
Time, the Company shall use its best efforts to ensure that all the members of
the Company Board and each committee of the Company Board as of the date hereof
who are not employees of the Company shall remain members of the Company Board
and of such committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 3.08, 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 such
obligations. The Parent and the Purchaser shall supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
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(c) Following the election or appointment of designees of the
Purchaser pursuant to this Section 3.08, prior to the Effective Time, the Parent
and the Purchaser each specifically acknowledge and agree that any amendment of
this Agreement or, the Certificate of Incorporation or Bylaws of the Company,
any termination 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 the
Company or the Purchaser or waiver of any of the Company's rights hereunder,
shall require the concurrence of a majority of the directors of the Company then
in office who neither were designated by the Purchaser nor are employees of the
Company.
ARTICLE IV
CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS
4.01 Conversion or Cancellation of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Parent Companies, Shares held by
the Dissenting Stockholders, and any Shares held in the treasury of the Company)
shall be converted into and represent the right to receive, without interest, an
amount in cash equal to the greater of $7.75 net or the amount per share which
may be paid pursuant to the Offer as it may be amended (the "Merger
Consideration") upon surrender of the Certificates. As of the Effective Time,
all such Shares shall no longer be outstanding, shall be automatically cancelled
and shall cease to exist, and each holder of a Certificate which formerly
represented any such Shares shall thereafter cease to have any rights with
respect to such Shares, except the right to receive the Merger Consideration
without interest for such Shares upon the surrender of such Certificate or
Certificates in accordance with Section 4.02.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by any of the Parent Companies, and each Share issued
and held in the Company's treasury immediately prior to the Effective Time,
shall no longer be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist, and each holder of a
Certificate representing any such Shares shall thereafter cease to have any
rights with respect to such Shares.
(c) Each Share of the Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully-paid
and non-assessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
4.02 Exchange of Certificates; Paying Agent. (a) Prior to the
Closing, the Parent shall select a bank or trust company to act as paying agent
(the "Paying Agent") for the
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payment of the cash consideration specified in Section 4.01 pursuant to
irrevocable instructions from the Parent upon surrender of Certificates
converted into the right to receive cash pursuant to the Merger. Prior to the
Effective Time, the Parent shall make available, or cause the Purchaser to make
available, to the Paying Agent immediately available funds in the amount of the
Merger Consideration multiplied by the number of outstanding Shares (the
"Funds") upon surrender of Certificates pursuant to Section 4.01, it being
understood that any and all interest earned on the Funds shall be paid over by
the Paying Agent as the Parent shall direct. The Funds shall be held as a
separate fund and not used for any purpose except as provided herein.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each person who was, at the Effective Time, a holder of record of a Certificate
or Certificates, other than the Company or any of the Parent Companies, a letter
of transmittal and instructions for use in effecting the surrender, in exchange
for payment in cash therefor, of the Certificates. The letter of transmittal
shall specify that delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery to and receipt of such Certificates by the
Paying Agent and shall be in such form and have such provisions as the Parent
shall reasonably specify. Upon surrender to the Paying Agent of such
Certificates, together with the letter of transmittal, duly executed and
completed in accordance with the instructions thereto and such other documents
as may be reasonably required by the Paying Agent, the Paying Agent shall
promptly pay to the persons entitled thereto, out of the Funds, a check in the
amount to which such persons are entitled pursuant to Section 4.01(a), after
giving effect to any required tax withholdings, and such Certificate shall
forthwith be cancelled. No interest will be paid or will accrue on the amount
payable upon the surrender of any such Certificates. If payment is to be made
to a person other than the registered holder of the Certificates surrendered, it
shall be a condition of such payment that the Certificates so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificates surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 4.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 4.01. No interest shall accrue or
be paid on any portion of the Merger Consideration.
(c) One hundred eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any Funds (including any interest, dividends, earnings or distributions
received with respect thereto which shall be paid as directed by the Parent)
made available to the Paying Agent by the Parent which have not been disbursed,
and thereafter holders of Certificates who have not theretofore complied with
the instructions for exchanging their Certificates shall be entitled to look
only to the Surviving Corporation for payment as general creditors thereof with
respect to the cash payable upon due surrender of their Certificates.
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(d) Except as otherwise provided herein, the Parent shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the Merger Consideration for Certificates.
(e) Notwithstanding anything to the contrary in this Section 4.02,
none of the Paying Agent, the Parent, the Company, the Surviving Corporation or
the Purchaser shall be liable to a holder of a Certificate formerly representing
Shares for any amount properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If Certificates are not
surrendered prior to two years after the Effective Time (or immediately prior to
such earlier date on which any payment pursuant to this Article IV would
otherwise escheat or become the property of any Federal, state or local
government agency or authority, court or commission), unclaimed funds payable
with respect to such Certificates shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
4.03 Dissenters' Rights. Notwithstanding the provisions of Section
4.01 or any other provision of this Agreement to the contrary, Dissenting Shares
shall not be converted into the right to receive cash at or after the Effective
Time, but such Shares shall become the right to receive such consideration as
may be determined to be due to holders of Dissenting Shares pursuant to the laws
of the State of Delaware unless and until the holder of such Dissenting Shares
withdraws his or her demand for such appraisal in accordance with the DGCL or
becomes ineligible for such appraisal. If a holder of Dissenting Shares shall
withdraw his or her demand for such appraisal or shall become ineligible for
such appraisal (through failure to perfect or otherwise), then, as of the
Effective Time or the occurrence of such event, whichever last occurs, such
holder's Dissenting Shares shall automatically be converted into and represent
the right to receive the Merger Consideration, without interest, as provided in
Section 4.01(a) and in accordance with the DGCL. The Company shall give the
Parent (i) prompt notice of any demands for appraisal of Shares received by the
Company and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands. The Company shall not, without
the prior written consent of the Parent, make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
4.04 Transfer of Shares After the Effective Time. No transfers of
Shares shall be made in the stock transfer books of the Surviving Corporation at
or after the Effective Time. If, after the Effective Time, Certificates formerly
representing Shares are presented to the Surviving Corporation, they shall be
cancelled and exchanged for the Merger Consideration set forth in Section 4.01.
4.05 Company Stock Options and Warrant.
(a) Prior to consummation of the Offer, the Company may enter into
agreements in respect of outstanding Options, providing for either (i) the
payment upon surrender of the Option upon consummation of the Offer or at the
Effective Time of an amount
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of cash per share subject to each such Option equal to the difference between
the Merger Consideration and the exercise price of such Option, less an amount
equal to all taxes required to be withheld from such payment or (ii) with the
consent of Parent, the exchange of such Options into certain options to acquire
shares of Parent's common stock. The Company may, if (and only if) an Option
holder enters into an agreement described in the preceding sentence, accelerate
the vesting of any outstanding Options.
(b) The Company shall immediately provide the notice required by
Section 4.1(d) of the Warrant.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents, warrants, covenants and agrees to the
Parent and the Purchaser that:
5.01 Organization, Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the Company's business or the location of
its properties makes such qualification necessary, except for any such failure
to qualify or be in good standing as shall not have a Material Adverse Effect on
the Company. The Disclosure Schedule identifies, and the Company has heretofore
made available to the Parent, complete and correct copies of the Certificate of
Incorporation and By-Laws of the Company, as currently in effect.
5.02 Company Subsidiaries. The Company has no subsidiaries.
5.03 The Company's Capitalization. The authorized capital stock of
the Company consists of 25,000,000 Shares. As of the close of business on
February 28, 1997, there were 10,948,506 Shares issued and outstanding and no
Shares held in the Company's treasury. All outstanding Shares have been duly
authorized and validly issued, and are fully paid, nonassessable and free of
preemptive rights. Except for the Options described in Section 4.05 hereof and
except as set forth on the Disclosure Schedule, there are not now, and at the
Effective Time there will not be, any subscriptions, options, warrants, calls,
rights, agreements or commitments relating to the issuance, sale, delivery or
transfer by the Company (including any right of conversion or exchange under any
outstanding security or other instrument) of its Shares (collectively, "Equity
Rights"). There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Shares. The Disclosure Schedule
contains a complete and accurate list of all holders of Options and any other
options or rights
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of any kind to purchase or acquire Shares, together with the number of such
options and the terms of such options held by each such holder.
5.04 Company Investments. Except as set forth in the Disclosure
Schedule, the Company neither owns nor has the right to acquire, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity, other than
non-controlling investments made in the ordinary course of business and
corporate partnering, development, cooperative marketing and similar
undertakings and arrangements entered into in the ordinary course of business.
5.05 Authority. The Company has full corporate power and authority
to execute, deliver and perform (subject to approval by the Company's
stockholders) this Agreement and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly and validly approved by the
Company Board, and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Company Board and, except for the approval of the
Merger by the holders of at least a majority of the Shares in accordance with
the DGCL, no other corporate actions on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
including the acquisition of Shares pursuant to the Offer and the Merger. No
"fair price," "merger moratorium," "control share acquisition" or other anti-
takeover statute or similar statute or regulation applies or purports to apply
to the Merger, this Agreement or any of the transactions contemplated hereby or
thereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by the Parent
and the Purchaser, constitute valid and binding agreements of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the enforcement
of creditors' rights generally and by general principles of equity, regardless
of whether such enforceability is considered in a proceeding in equity or at
law.
5.06 Consents and Approvals; No Violation. Except as set forth on
the Disclosure Schedule, and except for any required approval of the Merger by
the stockholders of the Company and the filing of the Delaware Certificate of
Merger in accordance with the DGCL, neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by it of the
transactions contemplated hereby and thereby will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation or By-Laws of
the Company; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(A) in connection with the Exchange Act and (B) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not have a Material Adverse Effect; (iii) constitute a
breach or result in a default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract, agreement
(including,
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without limitation, the Stock Purchase Agreement) or other instrument or
obligation of any kind to which the Company is a party or by which the Company
or any of its assets may be bound, except for any such breach, default or right
as to which requisite waivers or consents have been obtained or which, in the
aggregate, would not have a Material Adverse Effect; or (iv) assuming compliance
with the DGCL, violate any order, writ, injunction, judgment, decree, law,
statute, rule, regulation or governmental permit or license applicable to the
Company or any of its assets, which violation would have a Material Adverse
Effect.
5.07 SEC Reports; Financial Statements. The Company has filed all
required forms, reports and documents with the SEC since May 31, 1996
(collectively, the "SEC Reports"), each of which has complied in all material
respects with all applicable requirements of the Securities Act, and the
Exchange Act, each as in effect on the dates so filed. None of such forms,
reports or documents, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Company has heretofore made available or
promptly will make available to the Parent, a complete and correct copy of any
amendment to the SEC Reports. Each of the financial statements included in the
SEC Reports (including the related notes thereto) presents fairly the financial
position of the Company as of their respective dates and present fairly the
results of operations, the cash flows or changes in financial position, and
changes in stockholders' equity for the periods then ended, all in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein.
5.08 Proxy Statement; Offer Documents. The Proxy Statement will
comply in all material respects with applicable federal securities laws and will
not contain any untrue statements of a material fact required to be stated
therein 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 the Parent or the
Purchaser in writing for inclusion in the Proxy Statement. None of the
information supplied by the Company in writing for inclusion in the Offer
Documents or provided by the Company in the Schedule 14D-9 will, at the
respective times that the Offer Documents and the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC and are first published
or sent or given to holders of Shares, 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.
5.09 Undisclosed Liabilities. Except as set forth on the Disclosure
Schedule or reflected in the SEC Reports or with respect to liabilities incurred
in the ordinary course of business (and which in the aggregate are not material
to the Company) since the date of the Company Balance Sheets the Company does
not have any known material liability or obligation, secured or unsecured
(whether absolute, accrued, contingent or otherwise, and
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whether due or to become due) which would be required to be disclosed in
financial statements prepared in accordance with generally accepted accounting
principles. Except as set forth in the Disclosure Schedule, the Company has not
engaged, and prior to the Effective Time will not engage in any hedging
transactions or transactions in derivative securities.
5.10 Absence of Certain Changes or Events. Except as set forth on
the Disclosure Schedule and capital expenditures contained in the Company
budgets approved by the Company Board, since the date of the Company Balance
Sheet (i) the business of the Company has been conducted in the ordinary course
(except as otherwise contemplated by this Agreement) and (ii) there has not been
any change which has had a Material Adverse Effect.
5.11 Patents, Trademarks, Etc. Except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), individually and in the aggregate, would not have a Material
Adverse Effect:
(a) the Company owns, or is licensed or otherwise has the right to use
(in each case, clear of any liens or encumbrances of any kind), all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted;
(b) no claims are pending or, to the knowledge of the Company,
threatened that the Company is infringing on or otherwise violating the rights
of any person with regard to any Intellectual Property owned by and/or licensed
to the Company;
(c) to the knowledge of the Company, no person is infringing on or
otherwise violating any right of the Company with respect to any Intellectual
Property owned by and/or licensed to the Company;
(d) none of the former or current members of management or key
personnel of the Company, including all former and current employees, agents,
consultants and contractors who have contributed to or participated in the
conception and development of computer software or other Intellectual Property
of the Company, has asserted in writing any claim against the Company in
connection with the involvement of such persons in the conception and
development of any computer software or other Intellectual Property of the
Company, and no such claim has been asserted or threatened in writing;
(e) the execution and delivery of this Agreement, compliance with its
terms and the consummation of the transactions contemplated hereby do not and
will not conflict with or result in any violation or default (with or without
notice or lapse of time or both) or give rise to any right, license or
encumbrance relating to Intellectual Property, or right of termination,
cancellation or acceleration of any material Intellectual Property right or
obligation, or the loss or encumbrance of any Intellectual Property or material
benefit related thereto, or result in or require the creation, imposition or
extension of any lien or encumbrance upon any Intellectual Property or right;
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(f) the Company has taken reasonable and necessary steps to protect
its Intellectual Property and its rights thereunder, and to the knowledge of the
Company no such rights to Intellectual Property have been lost or are in
jeopardy of being lost through failure to act by the Company.
5.12 Employee Benefit Plans. All Company Benefit Plans are listed in
the SEC Reports filed with the SEC prior to the date hereof or are not material.
(a) Except as set forth in the Disclosure Schedule with respect to
each Company Benefit Plan: (i) such Plan has been administered and enforced in
all material respects in accordance with its terms and ERISA, the Code and other
applicable law; (ii) to the knowledge of the Company, no breach of fiduciary
duty or non-exempt prohibited transaction that could result in a material
liability has occurred; (iii) no actions, suits, claims or disputes with respect
to material liabilities, are pending or, to the knowledge of the Company,
threatened, other than routine claims for benefits; (iv) all contributions and
premiums due which are material in amount have been made on a timely basis; (v)
all contributions and all distributions which are material in amount made or
required to be made under such Company Benefit Plan meet the requirements for
deductibility under the Code; and (vi) such Company Benefit Plan is not a
multiemployer plan (as defined in ERISA section 3(37)), a multiple employer plan
within the meaning of the Code or ERISA, a defined benefit plan within the
meaning of ERISA section 3(35), a plan subject to section 302 of ERISA, section
412 of the Code or Title IV of ERISA, or funded through a "welfare benefit fund"
(as defined in Section 419(e) of the Code).
(b) Except as set forth on the Disclosure Schedule or as specifically
provided in Section 4.05, the consummation of the transactions contemplated by
this Agreement will not (i) entitle any individual to severance pay, or (ii)
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any individual.
(c) Each Company Benefit Plan intended to be qualified under section
401(a) of the Code is so qualified, and each trust or other funding vehicle
related thereto is exempt from federal income tax under section 501(a) of the
Code.
5.13 Legal Proceedings, Etc. Except as set forth on the Disclosure
Schedule or the SEC Reports filed with the SEC prior to the date hereof, (i)
there is no claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against or relating to the Company before
any court or governmental or regulatory authority or body which could have a
Material Adverse Effect, and (ii) the Company is not subject to any outstanding
order, writ, judgment, injunction or decree of any court or governmental or
regulatory authority or body which could have a Material Adverse Effect.
5.14 Taxes. The Company has timely filed with the proper taxing or
other governmental authorities all returns (including, without limitation,
information returns, estimated Tax filings and other Tax-related information) in
respect of Taxes required to be
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filed through the date hereof. Such returns, filings and information filed are
complete, correct and accurate in all material respects. The Company has
delivered to Parent complete and accurate copies of all of the Company's
federal, state and local Tax returns filed for its taxable years ended May 31,
1991, 1992, 1993, 1994, 1995 and 1996. The Company has not filed any federal,
state or local tax returns for its taxable years ended May 31, 1997. All Taxes
for which the Company shows as owing on any Tax return for any period or portion
thereof ending on or before the Closing Date, shall have been paid, or an
adequate reserve (in conformity with generally accepted accounting principles
applied on a consistent basis and the Company's past custom and practice) has
been established therefor, and the Company has no material liability for Taxes
in excess of the amounts so paid or reserves so established. All Taxes that the
Company has been required to collect or withhold have been duly collected or
withheld and, to the extent required when due, have been or will be duly paid to
the proper taxing or other governmental authority.
5.15 Compliance with Law. Except as set forth on the Disclosure
Schedule or the SEC Reports, the business of the Company is not being conducted,
and the properties and assets of the Company are not currently owned or
operated, in violation of any law, ordinance, regulation, order, judgment,
injunction, award or decree of any governmental or regulatory entity or court or
arbitrator, except for possible violations which either individually or in the
aggregate do not, and so far as can be reasonably foreseen will not, have a
Material Adverse Effect.
5.16 Insider Interests. The Disclosure Schedule or the SEC Reports
sets forth all material contracts, agreements with and other obligations to
officers, directors, employees or stockholders of the Company, other than those
with Parent. Except as set forth on the Disclosure Schedule or the SEC Reports,
no officer, director or stockholder of the Company, and no entity controlled by
any such officer, director or stockholder, and no relative or spouse who resides
with any such officer, director or stockholder (i) owns, directly or indirectly,
any material interest in any person that is or is engaged in business, other
than on an arm's-length basis, as a competitor, lessor, lessee, customer or
supplier of the Company or (ii) owns, in whole or in part, any tangible or
intangible property that the Company uses in the conduct of the business of the
Company.
5.17 Environmental Protection. Except as set forth on the Disclosure
Schedule or the SEC Reports, (i) the Company is currently in compliance with all
Environmental Laws, including without limitation all permits or licenses
required thereunder except where any failure to comply would not reasonably be
expected to have a Material Adverse Effect; (ii) the Company has not received
any outstanding written notice that the Company is not in compliance with, or
that it is in violation of, any such Environmental Laws which involves a matter
that would reasonably be expected to have a Material Adverse Effect; (iii) there
are no Environmental Claims against the Company except for any Environmental
Claims which would not reasonably be expected to have a Material Adverse Effect;
(iv) no underground storage tank for Hazardous Substances, no PCBs, and no
asbestos containing material is currently located at or on the Properties except
where the occurrence of any of the
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foregoing would not reasonably be expected to have a Material Adverse Effect;
and (v) there have been no releases of Hazardous Substances in quantities
exceeding the reportable quantities as defined under Environmental Laws on, upon
or into the Properties other than those authorized by Environmental Laws except
for any such releases which would not reasonably be expected to have a Material
Adverse Effect. In addition, true and correct copies of the Environmental
Reports at any Property or any facility formerly owned or operated by the
Company have been made available to Purchaser, and a list of all such
Environmental Reports is set forth on the Disclosure Schedule.
5.18 Labor Matters. None of the employees of the Company are covered
by a collective bargaining agreement. As of the date of this Agreement, the
Company does not know of any activity or proceeding of any labor union (or
representatives thereof) to organize any unorganized employees employed by the
Company, nor of any strikes, slowdowns, work stoppages, lockouts or threats
thereof, by or with respect to any of the employees of the Company. Except as
set forth in the Disclosure Schedule, as of the date of this Agreement, the
Company has not received any notice of any claim, nor does it have knowledge of
any facts which are likely to give rise to any claim, that they have not
complied in any respect with any laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination or employment safety, except
such claims which, in the aggregate, would not have a Material Adverse Effect.
5.19 Brokers and Finders. Neither the Company nor any of its
respective officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any brokerage fees, commissions,
finders' fees or investment banking fees in connection with the transactions
contemplated herein, except that the Special Committee has employed, and the
Company has agreed to pay the fees and expenses of, Broadview Associates LLC as
its financial advisor pursuant to a Letter Agreement dated December 18, 1996, a
copy of which has been delivered to the Parent.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND THE PURCHASER
The Parent and the Purchaser hereby represent and warrant to the
Company that:
6.01 Corporation Organization. The Parent is a corporation duly
organized and validly existing and in good standing under the laws of the State
of New York and the Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware. The
Parent and the Purchaser each has all requisite corporate
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power and authority to own its assets and carry on its business as now being
conducted or proposed to be conducted.
6.02 Authorized Capital. The authorized capital stock of the
Purchaser consists of 1,000 shares of common stock, par value $.01 per share, of
which 1,000 shares are outstanding as of the Effective Time and are owned,
beneficially or of record, by Parent. All of the issued and outstanding shares
of capital stock of the Purchaser are validly issued, fully paid, nonassessable
and free of preemptive rights and all liens.
6.03 Authority. Each of the Parent and the Purchaser has the
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by each of the Parent and the Purchaser, the performance by the Parent
and the Purchaser of their respective obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of their
respective Boards of Directors and approved by the Parent as sole stockholder of
the Purchaser, and no other corporate proceeding on the part of the Parent or
the Purchaser is necessary for the execution and delivery of this Agreement by
the Parent and the Purchaser and the performance by the Parent and the Purchaser
of their respective obligations hereunder and the consummation by the Parent and
the Purchaser of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of the Parent and the Purchaser and,
assuming the due authorization, execution and delivery hereof by the Company, is
a legal, valid and binding obligation of the Parent and the Purchaser,
enforceable against each of the Parent and the Purchaser in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
6.04 No Prior Activities. The Purchaser has not incurred nor will it
incur, directly or indirectly, any liabilities or obligations, except those
incurred in connection with its incorporation or with the negotiation of this
Agreement, the Tender Agreement, the Offer Documents and the consummation of the
transactions contemplated hereby and thereby. The Purchaser has not engaged,
directly or indirectly, in any business or activity of any type or kind, or
entered into any agreement or arrangement with any person or entity, and is not
subject to or bound by any obligation or undertaking, that is not contemplated
by or in connection with this Agreement, the Tender Agreement, the Offer
Documents and the transactions contemplated hereby and thereby.
6.05 No Financing Contingency. The Parent has sufficient funds to
consummate all of the transactions contemplated by this Agreement and will make
available to the Purchaser sufficient funds in sufficient time to consummate the
Offer and the Merger in accordance with the terms of this Agreement.
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6.06 Governmental Filings; No Violations. (a) No notices, reports
or other filings are required to be made by the Parent or the Purchaser with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Parent or the Purchaser from, any governmental or
regulatory authorities of the United States, the several States or any foreign
jurisdictions in connection with the execution and delivery of this Agreement by
the Parent and the Purchaser and the consummation by the Parent and the
Purchaser of the transactions contemplated hereby, the failure to make or obtain
any or all of which could prevent, delay or burden the transactions contemplated
by this Agreement, except in connection with the Exchange Act.
(b) Neither the execution and delivery of this Agreement by the Parent
or the Purchaser nor the consummation by the Parent or the Purchaser of the
transactions contemplated hereby nor compliance by the Parent or the Purchaser
with any of the provisions hereof will: (i) conflict with or result in any
breach of any provision of its Certificate of Incorporation or By-Laws, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or require any consent under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the Parent or the
Purchaser is a party or by which it or any of its properties or assets may be
bound, (iii) require the creation or imposition of any lien upon or with respect
to the properties of the Parent or the Purchaser or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent
or the Purchaser or any of its properties or assets, excluding from the
foregoing clauses (iii) and (iv) violations, breaches or defaults which in the
aggregate, would neither have a material adverse effect on the business,
financial condition or operations of the Parent or the Purchaser nor prevent,
materially delay or materially burden the transactions contemplated by this
Agreement.
6.07 Brokers and Finders. Neither the Parent, the Purchaser nor any
of its officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any brokerage fees, commissions,
finders fees or investment banking fees in connection with the transactions
contemplated herein, except that the Parent has employed and will pay the fees
and expenses of Merrill Lynch & Co.
6.08 Offer Documents; Proxy Statement; Other Information. None of
the information included in the Offer Documents (including any amendments or
supplements thereto) or any schedules required to be filed with the SEC in
connection therewith and described therein as being supplied by the Parent or
the Purchaser will, at the respective times that the Offer Documents or any
amendments or supplements thereto or any such schedules are filed with the SEC,
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. None of the information supplied in writing by the Parent or the
Purchaser specifically for inclusion in the Proxy Statement, Schedule 14D-9 or
any statement required pursuant to Section 14(f) of the Exchange Act or any
other schedules or statements required to be filed with the SEC in
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connection therewith will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
ARTICLE VII
COVENANTS OF THE PARTIES
7.01 Conduct of Business of the Company. The Company shall use its
reasonable best efforts to preserve intact the business organization of the
Company, to keep available the services of its operating personnel and to
preserve the goodwill of those having business relationships with it, including,
without limitation, suppliers. Except as contemplated by this Agreement or as
set forth on the Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, the Company will conduct its business and
operations only in the ordinary and usual course of business consistent with
past practice. Without limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as set forth on the Disclosure Schedule, prior
to the Effective Time, without the advance written consent of the Parent or
approval of the Company Board, the Company will not:
(a) Amend its Certificate of Incorporation or By-Laws or similar
governing documents;
(b) (i) Create, incur or assume any indebtedness for money borrowed,
including obligations in respect of capital leases, except in the ordinary
course of business consistent with past practice, or (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; provided,
however, that the Company may endorse negotiable instruments in the ordinary
course of business consistent with past practice;
(c) Declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Shares;
(d) Issue, sell, grant, purchase or redeem, or issue, whether by
dividend or otherwise, or sell any securities convertible into or exercisable
for, or options with respect to, or warrants to purchase or rights to subscribe
to or otherwise purchase, or subdivide or in any way reclassify, any shares of
capital stock or other securities of the Company except for the exercise of
Options and Warrants outstanding on the date hereof;
(e) Increase the aggregate amount of compensation payable or to
become payable by the Company to its directors, officers or employees, whether
by salary or bonus, or (ii) increase the rate or term of, or otherwise alter,
any bonus, insurance, pension, severance
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or other employee benefit plan, payment or arrangement made to, for or with any
such directors, officers or employees;
(f) Enter into any agreement, commitment or transaction, except
agreements, commitments or transactions in the ordinary course of business
consistent with past practice or any proposed settlement with the IRS or any
other such authority permitted by Section 7.02(b);
(g) Sell, transfer, mortgage, pledge or grant any security interest,
lien or other encumbrance on any asset other than in the ordinary course of
business consistent with past practice;
(h) Waive any right under any contract or other agreement identified
on the Disclosure Schedule;
(i) Other than as and when required by any change in generally
accepted accounting principles, make any material change in its accounting or
tax methods or practices or make any material change in depreciation or
amortization policies or rates adopted by it for accounting or tax purposes or,
other than normal writedowns or writeoffs consistent with past practices, make
any writedowns of inventory or writeoffs of notes or accounts receivable;
(j) Make any loan or advance to any of its stockholders, officers,
directors, employees (other than advances to field sales personnel, vacation
advances, relocation advances and travel advances in each case made in the
ordinary course of business in a manner consistent with past practice) or make
any other loan or advance to any other person or group otherwise than in the
ordinary course of business consistent with past practice;
(k) Terminate or fail to renew, where such renewal is at the
Company's option, any contract or other agreement other than in the ordinary
course of business, the termination or failure of which to renew would have a
Material Adverse Effect;
(l) Enter into any collective bargaining agreement or employment
agreement;
(m) Make any addition to or modification of any existing Company
Benefit Plans or adopt any new Company Benefit Plan;
(n) Take, agree to take, or do, or with respect to anything within
the Company's control, knowingly permit to be done or to be taken any action in
the conduct of its business which (i) would cause any of the representations of
the Company to be or become untrue in any material respect, and (ii) would
reasonably be expected to have a Material Adverse Effect;
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(o) Fail to comply with all applicable filing, payment, withholding,
collection and record retention obligations under all applicable federal, state,
local and foreign Tax laws; or
(p) Agree to do any of the foregoing.
7.02 Notification of Certain Matters. (a) The Company shall give
prompt notice to the Parent of: (i) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; (ii) any
notice or other communication from any regulatory authority in connection with
the transactions contemplated by this Agreement; and (iii) the occurrence of any
event having, or which insofar as can be reasonably foreseen would have, a
Material Adverse Effect.
(b) Between the date of this Agreement and the Effective Time, the
Company shall give prompt notice to the Parent of: (i) the initiation of any
audit or other review by the IRS or any other state, local or foreign taxing or
other governmental authority with respect to any Tax return or that may result
in any additional liability for Taxes, (ii) any proposed adjustment or
assessment by the IRS or any such authority that may result in any material
additional liability for Taxes, (iii) any proposed settlement or similar
agreement with the IRS or any other such authority. Between the date of this
Agreement and the Effective Time, the Company shall not enter into any
settlement under part (iii) of this subsection with respect to Taxes without the
prior written consent of the Parent, which consent shall not be unreasonably
withheld.
7.03 Access to Information. Between the date of this Agreement and
the Effective Time, the Company will, during ordinary business hours and upon
reasonable advance notice, (i) give the Parent and the Parent's authorized
representatives all access the Parent shall reasonably request to all of its
books, records (including, without limitation, the workpapers of the Company's
outside accountants), contracts, commitments, offices and other facilities and
properties, and its personnel, representatives, accountants and agents;
provided, however, that all such access shall take place after appropriate prior
consultation with the officers of the Company, (ii) permit the Parent to make
such inspections thereof as it may reasonably request and (iii) cause its
officers and advisors to furnish to the Parent its financial and operating data
and such other existing information with respect to its business, properties,
assets, liabilities and personnel (including, without limitation, title
insurance reports, real property surveys and environmental reports, if any), as
the Parent may from time to time reasonably request; provided, however, that any
such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Company.
7.04 Further Information. The Company and the Parent shall give
prompt written notice to the other of (i) any representation or warranty made by
it contained in this Agreement becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be
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complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
7.05 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and shall use all reasonable efforts to satisfy the conditions to the
transactions contemplated hereby and to obtain all waivers, permits, consents
and approvals and to effect all registrations, filings and notices with or to
third parties or governmental or public bodies or authorities which are
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, but not limited to, filings to the extent required under
the Exchange Act. Without limiting the generality of the foregoing, the Parent
as the sole stockholder of the Purchaser, and the Purchaser as a stockholder of
the Company, will consent and/or vote in favor of the transactions contemplated
hereunder, and Company, the Parent, and the Purchaser will vigorously defend
against any lawsuit or proceeding, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated hereby. Subject to the terms and conditions of this Agreement, from
time to time after the date hereof, without further consideration, the Company
will, at its own expense, execute and deliver such documents to the Parent as
the Parent may reasonably request in order to consummate the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, from time to time after the date hereof, without further
consideration, each of the Parent and the Purchaser will, at its own expense,
execute and deliver such documents to the Company as the Company may reasonably
request in order to consummate the transactions contemplated by this Agreement.
7.06 Public Announcements. The initial press release with respect to
the transactions contemplated hereby shall be a joint press release, and
thereafter the Company and the Parent shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law, fiduciary duty upon advice of outside legal counsel or
any listing agreement with a national securities exchange. No director shall
make any press release or public announcement concerning the transactions
contemplated hereby except pursuant to the joint press release referenced above
or the Schedule 14D-9, and shall make no other statement inconsistent with the
Schedule 14D-9 and the Schedule 14D-1.
7.07 Indemnity; D&O Insurance. (a) The Parent shall cause (i) all
rights to indemnification by the Company now existing in favor of the
Indemnified Parties as provided in the Company's Certificate of Incorporation
and By-Laws, or rights of indemnification equivalent thereto, and (ii)
limitations of liability in the Company's Certificate of Incorporation, or
limitations equivalent thereto, to survive the Merger and to continue in full
force and effect as rights to indemnification and limitations on liability,
respectively, by the
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Surviving Corporation for a period of six years following the Effective Time,
and shall cause to remain in full force and effect and cause the Surviving
Corporation to fully perform all indemnity agreements with Indemnified Parties
in effect on the date hereof (the "Indemnity Agreements").
(b) Subject to the terms set forth herein, the Parent and the
Surviving Corporation shall, jointly and severally, indemnify and hold harmless,
to the fullest extent permitted under applicable law (and shall also advance
expenses as incurred by an Indemnified Party to the extent permitted under
applicable law, provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification), each Indemnified Party against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action,
alleged action, omission or alleged omission occurring on or prior to the
Effective Time in their capacity as director, officer or employee (including,
without limitation, any claims, actions, suits, proceedings and investigations
which arise out of or relate to the transactions contemplated by this Agreement)
for a period of six years after the Effective Time, provided that, in the event
any claim or claims are asserted or made within such six year period, all rights
to indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 7.07, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Parent and the Surviving Corporation
thereof, but the failure to so notify shall not relieve the Parent and the
Surviving Corporation of any obligation to indemnify such Indemnified Party or
of any other obligation imposed by this Section 7.07 unless and to the extent
that such failure prejudices the Parent or the Surviving Corporation; it being
understood that it shall be deemed to materially prejudice the Parent or the
Surviving Corporation, as the case may be, if, as a result of such failure to
notify, the Parent or the Surviving Corporation is not given an opportunity to
assume the defense of such claim, action, suit, proceeding or investigation
within a reasonably prompt time after such claim, action, suit, proceeding or
investigation is asserted or initiated. In the event of any such claim, action,
suit, proceeding or investigation, (i) the Surviving Corporation or the Parent
shall have the right to assume the defense thereof and shall not be liable to
such Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with the
defense hereof, except that if the Parent or Surviving Corporation elects not to
assume such defense or counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest between the Parent or Surviving
Corporation and the Indemnified Party, the Indemnified Party may retain counsel
satisfactory to it, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Party promptly
as statements therefore are received; provided, however, that in no event shall
the Parent or Surviving Corporation be required to pay fees and expenses,
including disbursements and other charges, for more than one firm of attorneys
in any one legal action or
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group of related legal actions unless (A) counsel for the Indemnified Party
advises that there is a conflict of interest that requires more than one firm of
attorneys, or (B) local counsel of record is needed in any jurisdiction in which
any such action is pending, (ii) the Parent and the Indemnified Party shall
cooperate in the defense of any such matter, and (iii) the Parent and the
Surviving Corporation shall not be liable for any settlement effected without
the prior written consent of one of them (which consent shall not be
unreasonably withheld); and provided, further, that the Parent and Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party if
and to the extent a court of competent jurisdiction ultimately determines, and
such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) For six years after the Effective Time, the Parent shall cause
the Surviving Corporation to use reasonable efforts to maintain the officers'
and directors' liability insurance covering the Indemnified Parties who are
presently covered by the Company's officers' and directors' liability insurance,
with respect to acts or omissions occurring at or prior to the Effective Time,
on terms no less favorable than those in effect on the date hereof or at the
Effective Time, or, at Parent's option, such less favorable terms as Parent may
provide for its own directors and officers.
(e) In the event that any of the provisions of Section 7.07(a), (b),
(c) or (d) above would conflict with any of the provisions of the Company's By-
Laws, Certificate of Incorporation or Indemnity Agreements in a manner that, if
held applicable, would limit or restrict, or impose conditions or obligations on
the exercise by any of the Indemnified Parties of, any of the indemnification
rights or limitations of liability granted to them under the Company's By-Laws,
Certificate of Incorporation or Indemnity Agreements, then, in any such event or
circumstance the applicable provisions of the Company's By-Laws, Certificate of
Incorporation or Indemnity Agreements shall control, as it is the intention of
the parties that the Indemnified Parties shall have indemnification rights or
limitations of liability no less favorable than those which they have under the
Company's By-Laws, Certificate of Incorporation or Indemnity Agreements, as in
effect on the date hereof.
(f) The covenants contained in this Section 7.07 shall survive the
Effective Time until fully discharged, are intended to benefit each of the
Indemnified Parties and shall be binding on all successors and assignees of the
Parent and the Surviving Corporation.
7.08 Other Transactions. (a) The Company on behalf of itself and
its affiliates and their respective officers, directors, employees, investment
bankers, attorneys and other representatives and agents, shall immediately cease
any existing discussions or negotiations, if any, with any parties (other than
the Purchaser and the Parent) conducted heretofore with respect to any
Acquisition Proposal.
(b) Neither the Company, on behalf of itself and each of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, shall not, directly or indirectly, encourage,
solicit, participate in or initiate discussions or
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negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Parent and the Purchaser, any
affiliate or associate of the Parent and the Purchaser or any designees of the
Parent and the Purchaser) concerning any Acquisition Proposal, or take any other
action to facilitate the making of a proposal that constitutes or could
reasonably be expected to lead to an Acquisition Proposal. The Company shall use
its best efforts to ensure that the officers, directors and employees of the
Company and any investment banker or other advisor or representatives retained
by the Company are aware of the restrictions set forth in the preceding
sentences.
(c) Purchaser and Parent acknowledge the obligations of the Special
Committee and the Company Board under Rule 14e-2 of the Exchange Act and agree
that in the event (and only in such event) a fully financed all cash tender
offer is made prior to the Expiration Date for all of the Shares not owned by
Parent, at a price per share in excess of the Merger Consideration, that the
obligations of the Special Committee and the Company Board under Sections
2.02(c) and 3.07(a)(ii) hereof shall be relieved to the extent necessary to
satisfy their obligations under such Rule 14e-2 as prescribed in a written
opinion of their counsel.
7.09 Contribution to Capital. If, after receiving the Parent's
Shares, the Purchaser would own at least 90% of the outstanding Shares, then,
prior to the Effective Time, the Parent shall contribute all of the Shares owned
by it to the capital of the Purchaser.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to this Agreement to consummate the Merger
shall be subject to the following conditions, which have not been waived at or
prior to the Closing:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent, if any is required, of the
stockholders of the Company required by the Company's Certificate of
Incorporation and By-Laws and the DGCL;
(b) No preliminary or permanent injunction or other order shall have
been issued by any court or by any governmental or regulatory agency, body or
authority which prohibits the consummation of the Offer or the Merger and the
transactions contemplated by this Agreement and which is in effect at the
Effective Time, provided, however, that, in the case of a decree, injunction or
other order, 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 as
possible any decree, injunction or other order that may be entered;
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(c) No statute, rule or regulation shall have been enacted, entered,
promulgated or enforced by any governmental authority that prohibits the
consummation of the Offer or the Merger or has the effect of making the purchase
of the Shares illegal.
8.02 Conditions to the Obligations of the Parent and the Purchaser to
Effect the Merger. The obligation of the Purchaser and the Parent to effect the
Merger shall be further subject to satisfaction of the conditions, unless waived
by the Parent, that (i) the Purchaser shall have accepted for payment Shares
tendered pursuant to the Offer, provided that this condition will be deemed
satisfied with respect to the Purchaser and the Parent if the Purchaser shall
have failed to purchase Shares pursuant to the Offer in violation of the terms
of the Offer, (ii) the Company shall have performed and complied in all material
respects with the agreements and obligations contained in this Agreement
required to be performed and complied with by it at or prior to the Effective
Time, provided that this clause (ii) shall not apply after Purchaser has
designated a majority of directors to serve on the Company Board pursuant to
Section 3.08 or Purchaser's and Parent's designees otherwise constitute a
majority of the Company Board and (iii) there shall have been no change in the
Special Committee's recommendation that the stockholders of the Company accept
the Offer pursuant to Section 2.02(a).
8.03 Conditions to the Obligations of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject, unless waived by the Company, to the Parent and the Purchaser having
performed and complied in all material respects with the agreements and
obligations contained in this Agreement required to be performed and complied
with by each of them at or prior to the Effective Time.
ARTICLE IX
CLOSING
9.01 Time and Place. The closing of the Merger (the "Closing") shall
take place at the offices of Latham & Watkins, Sears Tower, Suite 5800, Chicago,
Illinois at 9:00 a.m. local time on a date to be specified by the parties which
shall be no later than the third business day after the date on which the last
of the closing conditions set forth in Article VIII is satisfied or waived
unless another time, date or place is agreed upon in writing by the parties
hereto.
9.02 Filings at the Closing. At the Closing, the Purchaser shall
cause the Delaware Certificate of Merger to be filed and recorded with the
Secretary of State of the State of Delaware in accordance with the provisions of
Section 103 of the DGCL and/or Section 253 of the DGCL, if applicable, and shall
take any and all other lawful actions and do any and all other lawful things
necessary to cause the Merger to become effective.
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ARTICLE X
TERMINATION; AMENDMENT; WAIVER
10.01 Termination. This Agreement may be terminated and the Offer (if
Purchaser has not accepted Shares for payment) and the Merger may be abandoned
at any time prior to the Effective Time:
(a) by mutual written consent of the Parent, the Purchaser and the
Company;
(b) by the Parent and the Purchaser or by the Company if the Closing
shall not have occurred on or prior to December 31, 1997;
(c) by the Parent and the Purchaser or the Company if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger or the
acceptance for payment and payment for the Shares in the Offer and such order,
decree, ruling or other action is or shall have become nonappealable;
(d) by the Parent and the Purchaser if, due to an occurrence or
circumstance which would result in a failure to satisfy any of the conditions
set forth in Annex A hereto, the Purchaser shall have terminated the Offer or
allowed the Offer to expire without acceptance for payment of any Shares
thereunder;
(e) by the Company if there shall not have been a material breach of
any representation, warranty, covenant or agreement on the part of the Company
which would entitle the Parent or the Purchaser to terminate this Agreement
pursuant to Section 10.01(f) and, due to an occurrence or circumstance which
would result in a failure to satisfy any of the conditions set forth in Annex A
hereto or otherwise, the Purchaser shall have terminated the Offer or allowed
the Offer to expire without acceptance for payment of any Shares thereunder;
(f) by the Parent and the Purchaser prior to the acceptance for
payment of Shares pursuant to the Offer, if (i) there shall have been a breach
of any representation or warranty on the part of the Company having a Material
Adverse Effect, or (ii) there shall have been a breach of any covenant or
agreement on the part of the Company resulting in a Material Adverse Effect or
(iii) the Special Committee shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to the Purchaser, its
approval or recommendation of the Offer, this Agreement or the Merger or shall
have recommended another offer, or shall have adopted any resolution to effect
any of the foregoing;
(g) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of the Parent or the Purchaser which
materially adversely affects the consummation of the Offer or the Merger and
which representation or warranty remains
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incorrect at the date of termination under this clause (g) or (ii) there shall
have been a material breach of any covenant or agreement on the part of the
Parent or the Purchaser and which materially adversely affects the consummation
of the Offer or the Merger.
10.02 Effect of Termination. In the event of the termination of this
Agreement and the abandonment of the Offer and the Merger pursuant to Section
10.01, this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto or its affiliates, directors,
officers or stockholders, provided that no such termination shall relieve any of
the Company, the Parent or the Purchaser from (a) liability for damages arising
from any willful or intentional breach of this Agreement or (b) their
obligations under Section 5.19, this Section 10.02, Section 10.03 and Article
XI.
10.03 Fees and Expenses. (a) In the event that the Parent and the
Purchaser terminate this Agreement pursuant to Section 10.01(f), the Company
shall reimburse the Parent, the Purchaser and their affiliates (not later than
five business days after submission of statements therefor) for all actual
documented out-of-pocket fees and expenses actually and reasonably incurred by
any of them or on their behalf in connection with the Offer and the Merger and
the consummation of all transactions contemplated by this Agreement (including,
without limitation, reasonable attorneys' fees, reasonable fees payable to
financing sources, investment bankers, counsel to any of the foregoing, and
accountants and filing fees and printing costs).
(b) Except as specifically provided in this Section 10.03, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE XI
MISCELLANEOUS
11.01 Survival of Representations, Warranties, Covenants and
Agreements. The covenants and agreements of the parties contained in Sections
3.06, 4.01, 4.02 (but only to the extent that such Section expressly relates to
actions to be taken after the Effective Time), 4.03, 4.04, 4.05, 7.06, 7.07 and
Article XI hereof, shall survive the consummation of the Offer and the Merger.
The agreements of the parties contained in Sections 10.02, 10.03 and Article XI
hereof and the representations and warranties in Sections 5.19 and 6.07 shall
survive the termination of this Agreement without termination. All other
representations, warranties, agreements and covenants in this Agreement shall
not survive the consummation of the Offer and the Merger or the termination of
this Agreement.
11.02 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Parent, the Purchaser and the Company at any time prior to the Effective
Time with respect to
35
<PAGE>
any of the terms contained herein executed by duly authorized officers of the
respective parties, except that (i) prior to consummation of the Offer, consent
by the Company shall require the approval of the Special Committee and (ii)
after the consummation of the Offer, the price per Share to be paid pursuant to
this Agreement to the holders of Shares shall in no event be decreased and the
form of consideration to be received by the holders of the Shares in the Merger
shall in no event be altered, and no other amendment which would adversely
affect the holders of Shares shall be made, without the approval of the
applicable holders.
11.03 Waiver of Compliance; Consents. At any time prior to the
Effective Time, the parties hereto may extend the time for performance of any of
the obligations or other acts or waive any inaccuracies in the representations
and warranties contained herein or in the documents delivered pursuant hereto.
Any failure of the Parent (for itself and the Purchaser), on the one hand, or
the Company, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by the Parent (for itself
and the Purchaser) or the Company, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of or estoppel with respect to any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto or any extensions, such consent or extension
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 11.03.
11.04 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
11.05 Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware without regard to its conflicts of laws rules. Each party hereto hereby
(i) irrevocably and unconditionally submits in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the exclusive general jurisdiction of the state and
federal courts in the state of Delaware, and appellate courts from any thereof
and (ii) consents that any action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same.
11.06 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or by overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
36
<PAGE>
(a) If to the Company, to:
Prior to the Effective Time,
MaxServ, Inc.
8317 Cross Park Drive
Austin, Texas 78754
Attention: President
Telecopier: (512) 970-5555
with a copy to:
Nathaniel P. Turner
MaxServ, Inc.
15303 Dallas Parkway
Suite 960, LB-63
Dallas, Texas 75248
After the Effective Time,
MaxServ, Inc.
8317 Cross Park Drive
Austin, Texas 78754
Attention: President
Telecopier: (512) 834-8473
with copies to:
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Attention: General Counsel
Telecopier: (847) 286-2471
(b) if to the Parent or the Purchaser, to:
Sears, Roebuck and Co.
Max Acquisition Delaware Inc.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Attention: General Counsel
Telecopier: (847) 286-2471
37
<PAGE>
with copies to:
Latham & Watkins
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Carl E. Witschy, Esq.
Telecopier: (312) 993-9767
11.07 Entire Agreement, Assignment Etc. This Agreement, which hereby
incorporates the Disclosure Schedule and the Tender Agreement, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and is not intended to confer upon any other person any
rights or remedies hereunder. This Agreement supersedes all prior agreements and
understanding of the parties with respect to the subject matter hereof. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, and (except for Indemnified Parties) no other person shall have any
right, benefit or obligation under this Agreement as a third party beneficiary
or otherwise. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties hereto, except that the Parent shall have
the right to assign the rights of the Purchaser to any other (directly or
indirectly) wholly-owned subsidiary of the Parent without the prior written
consent of the Company, provided that the Parent shall remain fully responsible
for and shall cause such subsidiary to duly and timely perform, all obligations
of the Purchaser hereunder.
11.08 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11.09 Headings; Certain Definitions. The Articles and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect in any way the meaning
or interpretation of this Agreement. Every reference herein to the word "days,"
if not preceded by the word "business," shall mean calendar days, and every
reference herein to the words "business days" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday that is not a day on which banking institutions
in the city of New York are authorized or obligated by law to close.
11.10 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any state or federal court in
the state of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity.
38
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first above written.
MAXSERV, INC.
By: /s/ Charles F. Bayless
------------------------
Name: CHARLES F. BAYLESS
------------------------
Title: President/CEO
------------------------
MAX ACQUISITION DELAWARE INC.
By: /s/ John T. Pigott
------------------------
Name: JOHN T. PIGOTT
------------------------
Title: Vice President and Treasurer
------------------------
SEARS, ROEBUCK AND CO.
By: /s/ John T. Pigott
------------------------
Name: JOHN T. PIGOTT
------------------------
Title: Vice President
------------------------
39
<PAGE>
ANNEX A
-------
The capitalized terms used herein and not otherwise defined herein
have the meanings set forth in the Agreement and Plan of Merger to which this
Annex A is attached.
Notwithstanding any other provision of the Agreement and Plan of
Merger to which this ANNEX A is attached (the "Merger Agreement") or the Offer,
but subject to Section 2.01(a) of the Merger Agreement, the Purchaser shall not
be required to accept for payment, purchase or pay for any Shares of the Company
tendered, and may terminate or, subject to the terms of the Merger Agreement,
amend the Offer and may postpone the acceptance for payment of and payment for
any Shares, if prior to the time of acceptance for payment of Shares tendered
pursuant to the Offer (whether or not any Shares have theretofore been accepted
for payment or paid for pursuant to the Offer), the Company shall not have
entered into agreements with the holders of Options which have not been
exercised prior to the Expiration Date, providing for the surrender of such
Options in exchange for (i) an amount of cash equal to the difference between
the exercise price of all such Options and the Merger Consideration less all
taxes required to be withheld from payment, or (ii) with the consent of Parent,
certain options to acquire shares of Parent's common stock, or any of the
following shall occur or exist:
(a) there shall have been threatened, instituted or be pending any
action, proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, or by any other
person, domestic or foreign, before any court or governmental regulatory or
administrative agency, authority or tribunal, domestic or foreign, other
than the matter styled Gordon v. Bayless, et al., as pending on the date
hereof, (i) challenging the acquisition by Parent or Purchaser of the
Shares, seeking to restrain or prohibit the making or consummation of the
Offer, including, but not limited to any such challenge to the Offer based
upon the provisions of the Stock Purchase Agreement; (ii) seeking to obtain
from Parent or Purchaser any damages, fines or legal sanctions; (iii)
seeking to prohibit or limit the ownership or operation by Parent or
Purchaser or any of their affiliates of any portion of the business or
assets of the Company or to compel Parent or Purchaser or any of their
affiliates to dispose of or hold separate all or any portion of the
business or assets of the Company or of Purchaser or seeking to impose any
limitation on the ability of Parent or Purchaser or any of their affiliates
to conduct such business or own such assets; (iv) seeking to impose or
confirm limitations on the ability of Parent or Purchaser or any of their
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or
owned by Parent or Purchaser or any of their affiliates on all matters
properly presented to the Company's stockholders; (v) seeking to require
divestiture by Parent or Purchaser or any of their affiliates of any
Shares; or (vi) seeking any material diminution in the benefits expected to
be
A-1
<PAGE>
derived by Parent or Purchaser or any of their affiliates as a result of
the transactions contemplated by the Offer, which, in Parent's sole
discretion, could be expected to have a material adverse effect on the
business, properties, assets, liabilities, shareholder's equity,
capitalization, prospects, condition (financial or otherwise) or results of
operations of the Company considered on a consolidated basis or on the
ability of the Company, Parent or Purchaser to consummate the transactions
contemplated by the Offer, the Merger or any similar business combination
by Purchaser or any affiliate of Parent with the Company, or otherwise
directly or indirectly relating to the transactions contemplated by the
Offer, the Merger or any such business combination by Purchaser or any
affiliate of Parent with the Company; or
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction proposed, enacted,
promulgated, entered, enforced, issued or deemed applicable to the Offer,
the Merger, or other similar business combination by Purchaser or any
affiliate of Parent with the Company, or any other action shall have been
taken by any government, governmental authority or agency or court with
respect to a proceeding described in paragraph (a) above, domestic or
foreign, that has, or, in Parent's sole discretion, could be expected to
result in, any of the consequences referred to in paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change) in the business, properties, assets,
liabilities, capitalization, stockholder's equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of the Company that, in the sole judgment of Parent, is or may be
materially adverse to the Company or to the value of the Shares to
Purchaser, Parent or any other affiliate of Parent or Purchaser, or Parent
shall have become aware of any facts that, in the sole judgment of Parent,
have or may have material adverse significance with respect to either the
value of the Company or the value of the Shares to Purchaser, Parent or any
other affiliate of Parent, other than as reflected in the Disclosure
Schedule; or
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange, Inc., any other national securities exchange or in
the over-the-counter market in the United States; (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory); (iii) any extraordinary or
material adverse change in the financial markets or major stock exchange
indices in the United States or abroad or in the market price of Shares,
including, without limitation, a decline of at least 10% in either the Dow
Jones Average of Industrial Stocks
A-2
<PAGE>
or the Standard & Poor's 500 Index from that existing at the close of
business on February 28, 1997; (iv) any material change in United States
currency exchange rates or any other currency exchange rates or a
suspension of, or limitation on, the markets therefor; (v) the commencement
of a war or armed hostilities or other international calamity directly or
indirectly involving the United States; or (vi) in the case of any of the
foregoing existing at February 28, 1997, a material acceleration or
worsening thereof; or
(e) unless Parent shall have consented in writing, the Company shall
have (i) split, combined or otherwise changed, or authorized or proposed a
split, combination or other change of, the Shares or its capitalization;
(ii) issued, distributed, pledged or sold, or authorized, proposed or
announced the issuance, distribution, pledge or sale of (A) any shares of
capital stock (including, without limitation, the Shares), or securities
convertible into any such shares, or any rights, warrants, or options to
acquire any such shares or convertible securities, or (B) any other
securities in respect of, in lieu of, or in substitution for Shares; (iii)
purchased or otherwise acquired or caused a reduction in the number of, or
proposed or offered to purchase or otherwise acquire or cause a reduction
in the number of, any outstanding Shares or other securities of the
Company, except as permitted by Section 4.05(a) of the Merger Agreement;
(iv) declared or paid any dividend or distribution on any shares of capital
stock or issued, or authorized, recommended or proposed the issuance of,
any other distribution in respect of the Shares, whether payable in cash,
securities or other property, or altered or proposed to alter any material
term of any outstanding security; (v) issued, or announce its intention to
issue, any debt securities or any rights, warrants or options entitling the
holder thereof to purchase or otherwise acquire any debt securities, or
incurred, or announced its intention to incur, any debt other than in the
ordinary course of business and consistent with its past practice; (vi)
authorized, recommended, proposed or publicly announced its intention to
enter into a (A) any merger, consolidation, liquidation, dissolution,
business combination, acquisition or assets or securities or disposition of
assets or securities other than in the ordinary course of business, (B) any
material change in its capitalization, (C) any release or relinquishment of
any material contract rights, or (D) any comparable event not in the
ordinary course of business; (vii) authorized, recommended or proposed or
announced its intention to authorize, recommend or propose any transaction
which could adversely affect the value of the Shares; (viii) proposed,
adopted or authorized any amendment to its Certificate of Incorporation or
Bylaws or similar organizational documents or Purchaser or Parent shall
have learned about any such proposal or amendment which shall not have been
previously disclosed; (ix) entered into any new material contracts or
cancelled or substantially changed the terms of any existing material
contracts; or (x) agreed in writing or otherwise to take any of the
foregoing actions; or
A-3
<PAGE>
(f) the Company shall have (i) entered into any employment, severance
or similar agreement, arrangement or plan with any of its employees other
than in the ordinary course of business; (ii) entered into or amended any
agreements, arrangements or plans so as to provide for increased or
accelerated benefits to any employee as a result of or in connection with
the transactions contemplated by the Offer, the Merger or other business
combination; or (iii) except as may be required by law, taken any action to
terminate or amend any employee benefit plan (as defined in Section 3(2) of
the Employee Retirement and Income Security Act of 1974, as amended) of the
Company, or Purchaser shall have become aware of any such action that was
not disclosed in publicly available filings prior to the date of this Offer
to Purchase; or
(g) Purchaser, Parent or another affiliate of Parent and the Company
shall have entered into an agreement that the Offer be terminated or
amended or Purchaser, Parent or another affiliate of Parent shall have
entered into an agreement with the Company providing for a merger or other
business combination with the Company, which, in the sole judgment of
Parent or Purchaser in any such case, and regardless of the circumstances
(including any action or inaction by Purchaser, Parent or any affiliate of
Parent) giving rise to any such condition makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in its sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right, and the
waiver of such right with respect to any particular facts or circumstances shall
not be deemed a waiver with respect to any other facts or circumstances, and
each such right will be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by Parent or Purchaser concerning
the events described above will be final and binding upon all parties.
A-4
<PAGE>
ANNEX B
-------
FIRST. The name of the corporation is MaxServ, Inc.
SECOND. The address of the corporation's registered office in the State
of Delaware is One Rodney Square, 10th Floor, Tenth and King Streets, in the
City of Wilmington, County of New Castle, 19801. The name of its registered
agent at such address is RL&F Service Corp.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is 1,000. All such shares are to be Common Stock, par
value of $.01 per share, and are to be of one class.
FIFTH. The incorporator of the corporation is Siobhan Cameron, P.O. Box
551, Wilmington, DE 19899.
SIXTH. Unless and except to the extent that the by-laws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
SEVENTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors of the corporation
is expressly authorized to make, alter and repeal the by-laws of the
corporation, subject to the power of the stockholders of the corporation to
alter or repeal any by-law whether adopted by them or otherwise.
EIGHTH. A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence shall not adversely affect any
right or protection of a director of the corporation hereunder in respect of any
act or omission occurring prior to the time of such amendment, modification or
repeal.
NINTH. The corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any
B-1
<PAGE>
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the rights
reserved in this article.
B-2
<PAGE>
EXHIBIT 22
STOCKHOLDER TENDER AGREEMENT
by and among
MAX ACQUISITION DELAWARE INC.,
SEARS, ROEBUCK AND CO.,
SUNWESTERN INVESTMENT FUND II,
and
SUNWESTERN CAYMAN 1984 PARTNERS,
Dated as of March 2, 1997
<PAGE>
STOCKHOLDER TENDER AGREEMENT
This STOCKHOLDER TENDER AGREEMENT, dated as of March 2, 1997 (this
"Agreement"), is by and among Max Acquisition Delaware Inc., a Delaware
corporation ("Purchaser"), Sears, Roebuck and Co., a New York corporation
("Parent"), Sunwestern Investment Fund II, a Texas limited partnership
("Sunwestern Fund"), and Sunwestern Cayman 1984 Partners ("Sunwestern Cayman").
Sunwestern Fund and Sunwestern Cayman are referred to herein collectively as
"Stockholders" and individually as a "Stockholder." Capitalized terms used in
this Agreement are defined in Section 11 hereof unless otherwise indicated.
WHEREAS, on February 4, 1997, Parent and Purchaser commenced a tender
offer to purchase all outstanding shares of common stock, par value $.01 per
share (the "Shares") of MaxServ, Inc., a Delaware corporation (the "Company")
for a purchase price of $7.00 per Share, net to the Seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated February 4, 1997 (the "Offer to Purchase") of Purchaser
and the related Letter of Transmittal (collectively, the "Initial Offer") which
are filed as exhibits to (a) the Tender Offer Statement on Schedule 14D-1 filed
by Parent and Purchaser (together with all supplements or amendments thereto,
the "Schedule 14D-1") and (b) the Transaction Statement on Schedule 13E-3 filed
by Parent and Purchaser (together with all supplements or amendments thereto,
the "Schedule 13E-3"), each in respect of the Initial Offer, with the Securities
and Exchange Commission (the "SEC") on February 4, 1997;
WHEREAS, on February 18, 1997, the Special Committee (the "Special
Committee") of the Board of Directors of the Company (the "Company Board") filed
a Solicitation/Recommendation Statement on Schedule 14D-9 on behalf of the
Company (together with all supplements or amendments thereto, the "Schedule 14D-
9") in which it recommended the Company's stockholders reject the Initial Offer;
WHEREAS, the Boards of Directors of Parent, Purchaser and, on the
recommendation of the Special Committee and following approval of the
disinterested directors of the Company Board, the Company Board each have
determined that it is in the best interests of their respective companies and
stockholders for Parent to acquire the Company upon the terms and conditions set
forth in an Agreement and Plan of Merger, dated as of the date hereof (as
amended from time to time, the "Merger Agreement"), which provides in part,
that, upon the terms and subject to the conditions therein, Purchaser will merge
with and into the Company (the "Merger");
WHEREAS, promptly following the execution hereof Parent and Purchaser
will file with the SEC amendments to the Schedule 14D-1 and the Schedule 13E-3
which reflect the Amendments (as defined in the Merger Agreement), and the
Company Board will file an amendment to the Schedule 14D-9 in which it
recommends to the Company's stockholders that they accept the Offer (as defined
in the Merger Agreement);
<PAGE>
WHEREAS, the Stockholders own an aggregate of 1,014,800 Shares; and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Purchaser has requested that the Stockholders
agree, and in order to induce Parent and Purchaser to enter into the Merger
Agreement, the Stockholders have agreed, to enter into this Agreement so that
Purchaser is assured it will acquire Shares pursuant to and in accordance with
the terms of the Offer;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants to the Purchaser and the Parent as follows:
(a) Such Stockholder is the sole record and Beneficial Owner of, and
has good title to, its Shares and there exist no restrictions on transfer,
options, proxies, voting agreements, voting trusts or Liens affecting the
Shares.
(b) The Shares constitute all of the Securities of the Company
beneficially owned, directly or indirectly, by such Stockholder.
(c) Except for the Shares, such Stockholder does not, directly or
indirectly, beneficially own or has any option, warrant or other right to
acquire any Securities of the Company (presently, with the passage of time,
subject to conditions or otherwise) that are or may by their terms or law become
entitled to voting rights or any Securities that are convertible or exchangeable
into or exercisable for any Securities of the Company.
(d) The execution and delivery of this Agreement by such Stockholder
does not, and the performance by such Stockholder of its obligations hereunder
will not, constitute a violation of, conflict with, result in a default (or an
event which, with notice or lapse of time or both, would result in a default)
under, or result in the creation of any Lien on any Shares under, (i) any
contract, commitment, agreement, understanding, arrangement or restriction of
any kind to which such Stockholder is a party or by which such Stockholder or
its Shares are bound or (ii) any judgment, writ, decree, order or ruling
affecting such Stockholder or its Shares.
(e) Such Stockholder has full power and authority to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized by such
Stockholder, and the execution, delivery and performance of this Agreement and
the consummation of the
2
<PAGE>
transactions contemplated hereby have been duly and validly authorized and no
other actions on the part of such Stockholder are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by such Stockholder and,
assuming due authorization, execution and delivery by the Purchaser, constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) Neither the execution and delivery of this Agreement nor the
performance by such Stockholder of its obligations hereunder will violate any
law, decree, statute, rule or regulation applicable to such Stockholder or the
Shares or require any consent, authorization or approval of, filing with or
notice to, any court, administrative agency or other governmental body or
authority.
3
<PAGE>
2. Representations and Warranties of Purchaser. Purchaser represents
and warrants to the Stockholders as follows:
(a) Purchaser is duly organized and validly existing and in good
standing under the laws of the State of Delaware, has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Purchaser does
not, and the performance by Purchaser of its obligations hereunder will not,
constitute a violation of, conflict with, or result in a default (or an event
which, with notice or lapse of time or both, would result in a default) under,
its certificate of incorporation or bylaws or any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which
Purchaser is a party or by which Purchaser is bound or any judgment, writ,
decree, order or ruling applicable to Purchaser.
(c) Neither the execution and delivery of this Agreement nor the
performance by Purchaser of its obligations hereunder will violate any order,
writ, injunction, judgment, law, decree, statute, rule or regulation applicable
to Purchaser or require any consent, authorization or approval of, filing with,
or notice to, any court, administrative agency or other governmental body or
authority.
3. Tender of Shares.
(a) Each Stockholder will cause to be tendered (and not withdrawn) (x)
within five business days of the execution of this Agreement, its Shares and (y)
any other Shares as to which it may subsequently acquire beneficial ownership,
on the next succeeding business day after the acquisition, in each case pursuant
to and in accordance with the terms of the Offer (collectively "Tendered
Securities"). Each Stockholder will receive the same price per Share received by
other stockholders of the Company in the Offer, in the same manner and upon the
same terms as such other stockholders. Each Stockholder acknowledges that
Purchaser's obligation to accept for payment and pay for the Tendered Securities
in the Offer is subject to all of the terms and conditions of the Offer.
(b) Each Stockholder hereby agrees to permit Parent and Purchaser to
publish and disclose in the Offer Documents (as such term is defined in the
Merger Agreement) and, if approval of the stockholders of the Company is
required under applicable
4
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law, the Proxy Statement, its identity and ownership of Shares and the nature of
its commitments, arrangements and understandings with the Company.
4. Transfer of the Shares. During the term of this Agreement,
except as otherwise provided herein, no Stockholder will (a) offer to sell,
sell, pledge or otherwise dispose of or transfer (except by operation of law in
a merger or business combination of the Company with or into any other entity or
entities) any interest in or encumber with any Lien any of its Shares, (b)
acquire any Shares or other securities of the Company (otherwise than in
connection with a transaction of the type described in Section 9, and any such
additional shares or securities will be deemed Shares and included in the Shares
subject to this Agreement), (c) deposit its Shares into a voting trust, enter
into a voting agreement or arrangement with respect to its Shares or grant any
proxy or power of attorney with respect to its Shares, or (d) enter into any
contract, option or other arrangement or undertaking with respect to the direct
or indirect acquisition or sale, assignment or other disposition of or transfer
of any interest in or the voting of any Shares or any other Securities of the
Company.
5. No Solicitation. Beginning on the date hereof and ending on the
date of termination of this Agreement, no Stockholder shall, in its capacity as
such, directly or indirectly, initiate, solicit (including by way of furnishing
information), encourage or respond to or take any other action knowingly to
facilitate, any inquiries or the making of any proposal by any person or entity
(other than Parent or any affiliate of Parent) with respect to the Company that
constitutes or reasonably may be expected to lead to, an Acquisition Proposal
(as such term is defined in the Merger Agreement), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain any Acquisition Proposal, or agree to or endorse any
Acquisition Proposal, or authorize or permit any Person or entity acting on
behalf of such Stockholder to do any of the foregoing, provided that the
foregoing shall not be construed to limit or restrict a director of the Company
from performing his or her fiduciary duties as a director. If a Stockholder
receives any inquiry or proposal regarding any Acquisition Proposal, such
Stockholder shall promptly inform Parent of that inquiry or proposal and the
details thereof.
6. Waiver of Appraisal Rights. Each Stockholder hereby irrevocably
waives any rights of appraisal or rights to dissent from the Merger that such
Stockholder may have pursuant to applicable law or otherwise.
7. Voting of Shares. Beginning on the date hereof and ending on the
date of termination of this Agreement, each Stockholder hereby agrees to vote
each Share at any annual, special or adjourned meeting of the stockholders of
the Company or execute a written consent in lieu thereof (a) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval and adoption thereof; (b) against any action or agreement that
would result in a breach in any respect of any covenant, agreement,
representation or warranty of the Company under the Merger Agreement; and (c)
against the following actions (other than the Merger and the other transactions
contemplated by the Merger Agreement): (i) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company; (ii) a
5
<PAGE>
sale, lease or transfer of a material amount of assets of the Company, or a
reorganization, recapitalization, dissolution or liquidation of the Company;
(iii) (A) any change in a majority of the persons who constitute the Company
Board as of the date hereof, except as contemplated by the Merger Agreement; (B)
any change in the present capitalization of the Company or any amendment of the
Company's Certificate of Incorporation or By-Laws, as amended to date; (C) any
other material change in the Company's corporate structure or business; or (D)
any other action which, in the case of each of the matters referred to in
clauses (iii)(A), (B), (C) and (D), is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or adversely affect the
Merger and the other transactions contemplated by this Agreement and the Merger
Agreement.
8. Enforcement of the Agreement. Each Stockholder acknowledges that
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an adequate
remedy at law for money damages, and therefore each of the parties hereto agrees
that in the event of any such breach the aggrieved party shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
9. Adjustments. The number and type of securities subject to this
Agreement will be appropriately adjusted in the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like
or any other action that would have the effect of changing the Stockholders'
ownership of the Company's capital stock or other securities.
10. Termination. This Agreement will terminate on the earliest of
(a) the date the Merger Agreement is terminated in accordance with its terms,
(b) the purchase of all the Shares pursuant to the Offer, upon termination of
the Offer if, prior thereto, the Stockholders shall have complied with their
covenants under Section 3(a) and (c) April 4, 1997, provided, however, that
this Agreement will automatically extend for up to 60 days if the consummation
of the Offer has been enjoined or otherwise stayed by any court or other
governmental authority.
11. Definitions.
"Adverse Interest" shall have the meaning accorded such term in
Article 8 of the Uniform Commercial Code as adopted by the State of Delaware.
"Agreement" shall have the meaning set forth in the introductory
paragraph of this Agreement.
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<PAGE>
"Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 under the Exchange Act.
"Company" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Company Board" shall have the meaning set forth in the second
Whereas clause of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, and as
amended, the rules and regulations promulgated thereunder.
"Initial Offer" shall have the meaning set forth in the first
Whereas clause of this Agreement.
"Liens" means any liens, claims, security interests, pledges,
charges, Adverse Interests or other encumbrances of whatever nature.
"Merger" shall have the meaning set forth in the third Whereas
clause of this Agreement.
"Merger Agreement" shall have the meaning set forth in the third
Whereas clause of this Agreement.
"Offer" shall have the meaning set forth in the Merger Agreement.
"Offer to Purchase" shall have the meaning set forth in the first
Whereas clause of this Agreement.
"Parent" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Proxy Statement" shall have the meaning set forth in the Merger
Agreement.
"Purchaser" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Schedule 13E-3" shall have the meaning set forth in the first
Whereas clause of this Agreement.
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<PAGE>
"Schedule 14D-1" shall have the meaning set forth in the first
Whereas clause of this Agreement.
"Schedule 14D-9" shall have the meaning set forth in the second
Whereas clause of this Agreement.
"SEC" shall have the meaning set forth in the first Whereas
clause of this Agreement.
"Securities" shall have the meaning ascribed to such term in
Section 3(10) of the Exchange Act.
"Shares" shall have the meaning set forth in the fifth Whereas
clause of this Agreement.
"Special Committee" shall have the meaning set forth in the
second Whereas clause of this Agreement.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement by and between the Parent and the Company dated as of December 29,
1994.
"Stockholder" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Sunwestern Cayman" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Sunwestern Fund" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Tendered Securities" shall have the meaning set forth in Section
3(a) of this Agreement.
12. Brokerage. Purchaser and each Stockholder represent and warrant
to the other that the negotiations relevant to this Agreement have been carried
on by Purchaser, on the one hand, and such Stockholder, on the other hand,
directly with the other, and that there are no claims for finder's fees or
brokerage commissions or other like payments in connection with this Agreement
or the transactions contemplated hereby. Purchaser, on the one hand, and each
Stockholder, on the other hand, will indemnify and hold harmless the other from
and against any and all claims or liabilities for finder's fees or brokerage
commissions or other like payments incurred by reason of action taken by it or
any of them, as the case may be.
8
<PAGE>
13. Miscellaneous.
(a) Any provision of this Agreement may be waived at any time by the
party that is entitled to the benefits thereof. No such waiver, amendment or
supplement will be effective unless in a writing signed by the party or parties
sought to be bound thereby. Any waiver by any party of a breach of any provision
of this Agreement will not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement or one or more sections hereof will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(b) This Agreement contains the entire agreement among the parties
with respect to the subject matter hereof, and supersedes all prior agreements
among the parties with respect to such matters. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified, except upon the
delivery of a written agreement executed by the parties hereto.
(c) This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and
performed in that state. Each party hereto hereby (i) irrevocably and
unconditionally submits in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive general jurisdiction of the state and federal courts
in the state of Delaware, and appellate courts from any thereof and (ii)
consents that any action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same.
(d) The descriptive headings contained herein are for convenience and
reference only and will not affect in any way the meaning or interpretation of
this Agreement.
(e) All notices and other communications hereunder will be in writing
and will be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by telecopy, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to a Stockholder to the address set forth beneath such
Stockholder's name below:
Sunwestern Investment Fund II
Three Forest Plaza, Suite 1300
12221 Merit Drive
Dallas, Texas 75251
Attention: Patrick A. Rivelli
Telecopier: (972) 239-5650
Sunwestern Cayman 1984 Partners
Three Forest Plaza, Suite 1300
12221 Merit Drive
Dallas, Texas 75251
Attention: Patrick A. Rivelli
Telecopier: (972) 239-5650
9
<PAGE>
If to the Purchaser or Parent to:
Max Acquisition Delaware Inc.
Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Attention: General Counsel
Telecopier: (847) 286-6544
with a copy to:
Latham & Watkins
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Carl E. Witschy, Esq.
Telecopier: (312) 993-9767
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(f) This Agreement may be executed in any number of counterparts, each
of which will be deemed to be an original, but all of which together will
constitute one agreement.
(g) This Agreement is binding upon and is solely for the benefit of
the parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that (i) Purchaser will have
the right to assign to Parent or any other direct or indirect
10
<PAGE>
wholly owned subsidiary of Parent any and all rights and obligations of
Purchaser under this Agreement, including the right to purchase Shares tendered
by the Stockholders pursuant to the terms hereof and the Offer, provided that
any such assignment will not relieve Purchaser from any of its obligations
hereunder and (ii) Parent will have the right to assign to Purchaser or any
other direct or indirect wholly owned subsidiary of Parent any and all rights
and obligations of Parent under this Agreement, including the right to purchase
Shares held by the Stockholders pursuant to the terms hereof, provided that any
such assignment will not relieve Parent from any of its obligations hereunder.
(h) If any term or other provision of this Agreement is determined to
be invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party hereto. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
extent possible.
(i) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity will be cumulative and
not alternative, and the exercise of any thereof by either party will not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
(j) While Patrick A. Rivelli has no dispositive power over any Shares
held by Sunwestern Capital Ltd., he believes, based upon conversations that he
has had with James F. Leary (who has such dispositive power) since the inception
of the Offer, that all Shares held by Sunwestern Capital Ltd. will be tendered
pursuant to the Offer.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
MAX ACQUISITION DELAWARE INC.
By: /s/ John T. Pigott
-----------------------------------
Name: John T. Pigott
---------------------------------
Title: Vice President and Treasurer
--------------------------------
SEARS, ROEBUCK AND CO.
By: /s/ John T. Pigott
-----------------------------------
Name: John T. Pigott
---------------------------------
Title: Vice President
--------------------------------
STOCKHOLDERS:
SUNWESTERN INVESTMENT FUND II,
by a duly authorized signatory of
its General Partner
By: /s/ Patrick A. Rivelli
---------------------------------
Name: Patrick A. Rivelli
-------------------------------
SUNWESTERN CAYMAN 1984
PARTNERS, by a duly authorized
signatory of its General Partner
By: /s/ Patrick A. Rivelli
---------------------------------
Name: Patrick A. Rivelli
-------------------------------
<PAGE>
EXHIBIT 23
FOR IMMEDIATE RELEASE
---------------------
March 3, 1997
Media Contacts
--------------
<TABLE>
<S> <C> <C>
Tom Nicholson Neil A. Johnson Andy Stern
Sears, Roebuck and Co. Senior Vice President, Finance Stern, Nathan & Perryman
(847) 286-5231 and Chief Financial Officer (214) 373-1601
MaxServ, Inc.
(512) 834-8341
</TABLE>
SEARS ROEBUCK AND CO. AND SPECIAL COMMITTEE OF MAXSERV, INC.
REACH MERGER AGREEMENT
CHICAGO, Illinois - Sears, Roebuck and Co. [NYSE: S] and MaxServ, Inc.
[Nasdaq SmallCap Market/SM/: MXSV] today announced the execution of a definitive
merger agreement in which Sears agreed to increase the price of its offer,
through its wholly-owned subsidiary, for any and all outstanding shares of
MaxServ from $7.00 to $7.75. Sears pending tender offer will be amended to
reflect the cash price of $7.75 per share. The expiration date of the offer
will also be extended until Friday, March 14, 1997. Sears intends to
disseminate today to MaxServ shareholders a supplement to its prior Offer to
Purchase, dated February 4, 1997.
At a meeting held yesterday, the Special Committee of the Board of
Directors of MaxServ unanimously recommended approval of the merger agreement
and determined that the $7.75 per share offer is fair to and in the best
interests of the stockholders of MaxServ. The Special Committee has recommended
that MaxServ shareholders tender their shares in the offer. Nathaniel P.
Turner, Chairman of the Special Committee, said "Sears increased offer
represents a significant premium over the historic market value of the shares."
The members of the Special Committee have agreed to tender all of the shares
over which they have dispositive power, including 1,014,800 shares owned by two
investment funds.
Jane J. Thompson, President of Sears Home Services, said "Sears is pleased
to have reached an agreement with MaxServ. It has been Sears desire from the
outset to negotiate a friendly transaction with the Special Committee."
Ms. Thompson and Mr. Turner each stated that they "wished to thank the
officers and almost 3,000 employees of MaxServ, who the Special Committee and
Sears know are the true value of MaxServ and are the principal reason that the
Company has achieved the value represented by this transaction."
Sears and the Special Committee also credited the efforts of counsel to the
parties and in the shareholder litigation arising out of the offer in helping to
effectuate an agreement between the parties.
Sears, Roebuck and Co. is a leading U.S. retailer of apparel, home and
automotive products, and home services, with annual revenues of more than $38
billion. Sears has been a customer of MaxServ since 1983 and accounts for more
than 90 percent of MaxServ's revenues. MaxServ provides information services for
Sears customers and for the repair and servicing of appliances and electronics
by Sears Home Services technicians.
The Dealer Manager for the offer is Merrill Lynch & Co. The Information
Agent is D.F. King & Co. (1-800-755-3107).
<PAGE>
EXHIBIT 24
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
OF
MAXSERV, INC.
15303 DALLAS PARKWAY
SUITE 960, LB-63
DALLAS, TEXAS 75248
March 3, 1997
Dear MaxServ, Inc. Shareholder:
On March 2, 1997, MaxServ, Inc. entered into a merger agreement with Sears,
Roebuck and Co. and one of its subsidiaries that provides for the acquisition
of MaxServ by Sears. Under the terms of the merger agreement, the Sears
subsidiary has amended its pending tender offer for all outstanding shares of
MaxServ common stock not owned by Sears to increase the tender price from
$7.00 to $7.75 per share. The amended tender offer also has been extended and
now expires on March 14, 1997.
THE SPECIAL COMMITTEE OF MAXSERV'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE AMENDED SEARS OFFER AND DETERMINED THAT THE TERMS OF THE AMENDED
OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF MAXSERV'S
MINORITY SHAREHOLDERS. ACCORDINGLY, THE SPECIAL COMMITTEE UNANIMOUSLY
RECOMMENDS THAT ALL MAXSERV'S SHAREHOLDERS ACCEPT THE AMENDED SEARS OFFER AND
TENDER THEIR COMMON STOCK TO SEARS. THE MEMBERS OF THE SPECIAL COMMITTEE HAVE
AGREED TO TENDER ALL OUTSTANDING SHARES OF COMMON STOCK OVER WHICH THEY HAVE
DISPOSITIVE POWER, INCLUDING AN AGGREGATE OF 1,014,800 SHARES OWNED BY TWO
INVESTMENT FUNDS.
In arriving at its recommendation, the Special Committee gave careful
consideration to a number of factors. These factors included, among other
things, the oral opinion (which was later confirmed in writing) of Broadview
Associates LLC, financial advisor to the Special Committee, that the cash
consideration to be received by the minority shareholders of MaxServ pursuant
to the amended Sears offer and the merger is fair to such shareholders from a
financial point of view.
Following the successful completion of the amended tender offer, the Sears
subsidiary will be merged into MaxServ, and all shares not purchased in the
tender offer will be converted into the right to receive $7.75 per share in
cash without interest, unless the holders thereof properly exercise their
appraisal rights under applicable Delaware law.
Attached to this letter is a copy of the Amendment No. 1 to the
Solicitation/Recommendation Statement on Schedule 14D-9 that was filed today
on behalf of MaxServ by the Special Committee. Also enclosed is the amended
offer to purchase on behalf of the Sears subsidiary, together with the related
tender materials. These documents set forth the terms and conditions of the
amended Sears offer and other important information. I encourage you to read
the enclosed materials carefully.
The members of the Special Committee want to thank you for the support you
have given MaxServ over the years. We also wish to thank the officers and the
almost 3,000 employees of MaxServ, who we and Sears know are the true value of
MaxServ and who are the principal reason that MaxServ has achieved the value
represented by this transaction.
LOGO
Nathaniel P. Turner
Chairman of the Special Committee of
the Board of Directors of MaxServ, Inc.
