SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 24, 1994
(Date of earliest event reported)
ADVANCED TECHNOLOGY LABORATORIES, INC.
(Exact name or registrant as specified in its charter)
Delaware 0-15160 91-1353386
(State or other (Commission (I.R.S. Employer
jurisdiction or File Identification
organization) Number) Number)
22100 Bothell-Everett Highway
Post Office Box 3003
Bothell, Washington 98041-3003
(Address of principal executive offices) (Zip Code)
(206) 487-7000
(Registrant's telephone number, including area code)
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Item 5. OTHER EVENTS
On February 24, 1994, Advanced Technology
Laboratories, Inc. (the "Company" or "ATL") announced that
it had amended and restated its Merger Agreement with
Interspec, Inc., whereby Interspec would become a wholly
owned subsidiary of ATL, to reflect the changes contemplated
as a result of the determination that the pooling of
interests methof of accounting is appropriate for the merger
transaction. As previously disclosed, the exchange ratio
applicable to the merger has now been adjusted to be 0.413
of a share of ATL stock for each share of Interspec stock.
As previously disclosed, the merger is subject to
customary conditions, including approval by the shareholders
of ATL and Interspec. ATL and Interspec currently
anticipate that the transaction will close in the latter
part of the second quarter.
Item 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
c. Exhibits
2. Amended and Restated Agreement and Plan
of Merger dated as of February 10, 1994.
2O Press Release dated February 24, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
ADVANCED TECHNOLOGY LABORATORIES,
INC.,
by
/s/ Harvey N. Gillis
Name: Harvey N. Gillis
Title: Senior Vice President
and Chief Financial
Officer
Date: March 2, 1994
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EXHIBIT INDEX
Exhibit Sequentially
Number Exhibit Numbered Page
2 Amended and Restated Agreement
and Plan of Merger dated as of
February 10, 1994 5
20 Press Release dated February 24,
1994 80
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EXHIBIT 2
CONFORMED COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Dated as of February 10, 1994,
Among
ADVANCED TECHNOLOGY LABORATORIES, INC.
ATL SUB ACQUISITION CORP.
And
INTERSPEC, INC.
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TABLE OF CONTENTS
Page
Parties and Recitals ............................. 1
ARTICLE I
The Merger
SECTION 1.01. The Merger ........................... 2
SECTION 1.02. Closing .............................. 2
SECTION 1.03. Effective Time ....................... 2
SECTION 1.04. Effects of the Merger ................ 3
SECTION 1.05. Articles of Incorporation and
By-Laws ............................ 3
SECTION 1.06. Directors ............................ 3
SECTION 1.07. Officers ............................. 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock .............. 4
SECTION 2.02. Exchange of Certificates ............. 5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company ........................ 10
SECTION 3.02. Representations and Warranties of
Parent and Sub ..................... 28
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business .................. 39
SECTION 4.02. No Solicitation ...................... 43
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ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Joint Proxy Statement;
Stockholders Meetings .............. 45
SECTION 5.02. Letter of the Company's Accountants .. 47
SECTION 5.03. Letter of Parent's Accountants ....... 47
SECTION 5.04. Access to Information;
Confidentiality .................... 47
SECTION 5.05. Best Efforts; Notification ........... 48
SECTION 5.06. Stock Options ........................ 49
SECTION 5.07. Benefit Plans ........................ 51
SECTION 5.08. Indemnification and Insurance ........ 52
SECTION 5.09. Fees and Expenses .................... 53
SECTION 5.10. Public Announcements ................. 53
SECTION 5.11. Affiliates and Certain Stockholders .. 54
SECTION 5.12. National Market System Trading ....... 55
SECTION 5.13. Stockholder Litigation ............... 55
SECTION 5.14. Tax Represenation Letters of the
Company and Parent ................. 55
SECTION 5.15. Directorship ......................... 56
SECTION 5.16. Employment Agreements ................. 56
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
To Effect the Merger ............... 56
SECTION 6.02. Conditions to Obligations of Parent
and Sub ............................ 58
SECTION 6.03. Conditions to Obligation of the
Company ............................ 60
SECTION 6.04. Frustration of Closing Conditions .... 62
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination .......................... 62
SECTION 7.02. Effect of Termination ................ 64
SECTION 7.03. Amendment ............................ 64
SECTION 7.04. Extension; Waiver .................... 64
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SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver ................ 65
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties ......................... 65
SECTION 8.02. Notices .............................. 65
SECTION 8.03. Definitions .......................... 67
SECTION 8.04. Interpretation ....................... 67
SECTION 8.05. Counterparts ......................... 68
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries ...................... 68
SECTION 8.07. Governing Law ........................ 68
SECTION 8.08. Assignment ........................... 69
SECTION 8.09. Enforcement .......................... 69
EXHIBIT A - Form of Initial Press Release
EXHIBIT B - Form of Company Affiliate Letter
EXHIBIT C - Form of Company Significant Stockholder
Letter
EXHIBIT D - Form of Company Tax Representation Letter
EXHIBIT E - Form of Parent Tax Representation Letter
EXHIBIT F-1 - Form of Employment Agreement with Edward Ray
EXHIBIT F-2 - Form of Employment Agreement with Michael J.
Wassil
EXHIBIT F-3 - Form of Employment Agreement with Patrick J.
Faivre
EXHIBIT G - Form of Representation Agreement
EXHIBIT H - Form of Amendment to the Company's
Convertible Note Documents
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CONFORMED COPY
AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER dated as of February 10, 1994,
among ADVANCED TECHNOLOGY LABORATORIES, INC.,
a Delaware corporation ("Parent"), ATL SUB
ACQUISITION CORP., a Delaware corporation
("Sub"), and a wholly owned subsidiary of
Parent, and INTERSPEC, INC., a Pennsylvania
corporation (the "Company").
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of Sub
into the Company (the "Merger"), upon the terms and subject
to the conditions set forth in this Agreement, whereby each
issued and outstanding share of common stock, par value
$.001 per share, of the Company ("Company Common Stock"),
other than shares owned directly or indirectly by Parent or
the Company and Dissenting Shares (as defined in
Section 2.01(d)), will be converted into the right to
receive common stock, par value $.01 per share, of Parent
("Parent Common Stock");
WHEREAS the Merger requires the approval of a
majority of votes cast by the holders of shares of the
Company Common Stock entitled to vote thereon at the meeting
of holders of Company Common Stock to be called therefor
(the "Company Stockholder Approval");
WHEREAS each of (x) the issuance of shares of
Parent Common Stock in the Merger and (y) the Stock Plan
Amendment (as defined in Section 5.01(b)) requires the
approval by an affirmative vote of the holders of a majority
of the shares of the Parent Common Stock present, or
represented, and entitled to vote thereon at the meeting of
holders of Parent Common Stock to be called therefor (the
"Parent Stockholder Approval");
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization
under the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
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WHEREAS, for accounting purposes, it is intended
that the Merger shall be accounted for as a "pooling of
interests"; and
WHEREAS, the parties desire to amend and restate
the Agreement pursuant to Agreement dated as of February 10,
1994, among Parent, Sub and the Company.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the Pennsylvania Business Corporation Law
of 1988 (the "PBCL") and the Delaware General Corporation
Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger (as defined in
Section 1.03). Following the Effective Time of the Merger,
the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the
PBCL and the DGCL.
SECTION 1.02. Closing. The closing of the Merger
(the "Closing") will take place at 10:00 a.m. on a date to
be specified by the parties (the "Closing Date"), which
(subject to satisfaction or waiver of the conditions set
forth in Sections 6.02 and 6.03) shall be no earlier than
May 3, 1994, and no later than the second business day after
satisfaction of the conditions set forth in Section 6.01, at
the offices of Cravath, Swaine & Moore, Worldwide Plaza,
825 Eighth Avenue, New York, New York 10019, unless another
date or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the
provisions of this Agreement, as soon as practicable
following the satisfaction or waiver of the conditions set
forth in Article VI, the parties shall file a certificate of
merger, articles of merger or other appropriate documents
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(in any such case, the "Certificate of Merger") executed in
accordance with the relevant provisions of the PBCL and the
DGCL and shall make all other filings or recordings required
under the PBCL and the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the Commonwealth of
Pennsylvania and the State of Delaware, or at such other
time as Sub and the Company shall agree should be specified
in the Certificate of Merger (the time the Merger becomes
effective being hereinafter referred to as the "Effective
Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger
shall have the effects set forth in Section 1929 of the PBCL
and Section 259 of the DGCL.
SECTION 1.05. Articles of Incorporation and
By-laws. (a) The articles of incorporation of the Company,
as in effect immediately prior to the Effective Time of the
Merger, shall be amended as of the Effective Time of the
Merger so that Article 5 of such articles of incorporation
reads in its entirety as follows: "The total number of
shares of all classes of stock which the corporation shall
have authority to issue is 100 shares of Common Stock, par
value $1.00 per share." and, as so amended, such articles of
incorporation shall be the articles of incorporation of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The by-laws of the Company as in effect at
the Effective Time of the Merger shall be the by-laws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub at
the Effective Time of the Merger shall be the directors of
the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the
Company at the Effective Time of the Merger shall be the
officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
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ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holder of any shares
of Company Common Stock or any shares of capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and
outstanding share of capital stock of Sub shall be
converted into and become one fully paid and
nonassessable share of Common Stock, par value $1.00
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-
Owned Stock. Each share of Company Common Stock that
is owned by the Company or by any subsidiary (as
defined in Section 8.03) of the Company and each share
of Company Common Stock that is owned by Parent, Sub or
any other subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no
Parent Common Stock or other consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject
to Section 2.02(e), each issued and outstanding share
of Company Common Stock (other than shares to be
cancelled in accordance with Section 2.01(b)) shall be
converted into the right to receive 0.413 of a fully
paid and nonassessable share of Parent Common Stock
(the "Exchange Ratio"). Pursuant to the Rights
Agreement (as defined in Section 3.02(b)), one Right
(as defined in the Rights Agreement) will be attached
to each share of Parent Common Stock issued in
connection with the Merger upon conversion of Company
Common Stock. As of the Effective Time of the Merger,
all such shares of Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company
Common Stock shall cease to have any rights with
respect thereto, except the right to receive the shares
of Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock to be issued
or paid in consideration therefor upon surrender of
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such certificate in accordance with Section 2.02,
without interest.
(d) Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, shares of Company
Common Stock outstanding immediately prior to the
Effective Time of the Merger held by a holder (if any)
who is entitled to demand, and who properly demands,
appraisal for such shares in accordance with
Section 1571 of the PBCL ("Dissenting Shares") shall
not be converted into a right to receive Parent Common
Stock and any cash in lieu of fractional shares of
Parent Common Stock unless such holder fails to perfect
or otherwise loses such holder's right to appraisal, if
any. If, after the Effective Time of the Merger, such
holder fails to perfect or loses any such right to
appraisal, such shares shall be treated as if they had
been converted as of the Effective Time of the Merger
into the right to receive Parent Common Stock pursuant
to Section 2.01(c) and the cash in lieu of fractional
shares of Parent Common Stock specified in
Section 2.02(e). The Company shall give prompt notice
to Parent of any demands received by the Company for
appraisal of shares of Company Common Stock, and Parent
shall have the right to participate in and direct all
negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior
written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such
demands.
SECTION 2.02. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time of the
Merger, Parent shall deposit with First Chicago Trust
Company of New York or such other bank or trust company as
may be designated by Parent (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock,
for exchange in accordance with this Article II, through the
Exchange Agent, certificates representing the shares of
Parent Common Stock (such shares of Parent Common Stock,
together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time of the Merger, the
Exchange Agent shall mail to each holder of record of a
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certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding shares
of Company Common Stock (the "Certificates") whose shares
were converted into the right to receive shares of Parent
Common Stock pursuant to Section 2.01, (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common
Stock which such holder has the right to receive pursuant to
the provisions of this Article II and cash in lieu of
fractional shares of Parent Common Stock as contemplated by
this Section 2.02, and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of
ownership of Company Common Stock which is not registered in
the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common
Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be
in proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by
reason of the issuance of shares of Parent Common Stock to a
person other than the registered holder of such Certificate
or establish to the satisfaction of Parent that such tax has
been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time of the Merger to
represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock and
cash in lieu of any fractional shares of Parent Common Stock
as contemplated by this Section 2.02. No interest will be
paid or will accrue on any cash payable in lieu of any
fractional shares of Parent Common Stock.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions with respect to
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Parent Common Stock with a record date after the Effective
Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of
Parent Common Stock represented thereby, and no cash payment
in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.02(e), in each case until the
surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole
shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective
Time of the Merger theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time of
the Merger but prior to such surrender and with a payment
date subsequent to such surrender payable with respect to
such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon the
surrender for exchange of Certificates in accordance with
the terms of this Article II (including any cash paid
pursuant to Section 2.02(c) or 2.02(e)) shall be deemed to
have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject,
however, to the Surviving Corporation's obligation to pay
any dividends or make any other distributions with a record
date prior to the Effective Time of the Merger which may
have been declared or made by the Company on such shares of
Company Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time of the Merger, and there
shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately
prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any
reason, they shall be cancelled and exchanged as provided in
this Article II, except as otherwise provided by law.
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(e) No Fractional Shares. (i) No certificates
or scrip representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
stockholder of Parent.
(ii) As promptly as practicable following the
Effective Time of the Merger, the Exchange Agent shall
determine the excess of (x) the number of shares of Parent
Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.02(a) over (y) the aggregate number of
whole shares of Parent Common Stock to be distributed to
holders of the Certificates pursuant to Section 2.02(b)
(such excess being hereinafter referred to as the "Excess
Shares"). As soon after the Effective Time of the Merger as
practicable, the Exchange Agent, as agent for the holders of
the Certificates, shall sell the Excess Shares at then
prevailing prices on the National Association of Securities
Dealers, Inc. Automated Quotations National Market System
("NASDAQ/NMS"), all in the manner provided in
paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the
Exchange Agent shall be executed on the NASDAQ/NMS through
one or more member firms of the National Association of
Securities Dealers, Inc. and shall be executed in round lots
to the extent practicable. Until the net proceeds of such
sale or sales have been distributed to the holders of the
Certificates, the Exchange Agent will hold such proceeds in
trust for the holders of the Certificates (the "Common
Shares Trust"). Parent shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent,
incurred in connection with such sale of the Excess Shares.
The Exchange Agent shall determine the portion of the Common
Shares Trust to which each holder of a Certificate shall be
entitled, if any, by multiplying the amount of the aggregate
net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the
fractional share interest to which such holder of a
Certificate is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all
holders of the Certificates are entitled.
(iv) As soon as practicable after the
determination of the amount of cash, if any, to be paid to
holders of the Certificates in lieu of any fractional share
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interests, the Exchange Agent shall make available such
amounts, without interest, to such holders of the
Certificates.
(f) Termination of Exchange Fund and Common
Shares Trust. Any portion of the Exchange Fund and Common
Shares Trust which remains undistributed to the holders of
the Certificates for six months after the Effective Time of
the Merger shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to
Parent for payment of their claim for Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock
and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any person
in respect of any shares of Parent Common Stock (or
dividends or distributions with respect thereto) or cash
from the Exchange Fund or the Common Shares Trust delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the
Effective Time of the Merger (or immediately prior to such
earlier date on which any shares of Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock or
any dividends or distributions with respect to Parent Common
Stock in respect of such Certificate would otherwise escheat
to or become the property of any Governmental Entity (as
defined in Section 3.01(d)), any such shares, cash,
dividends or distributions in respect of such Certificate
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.
(h) Investment of Exchange Fund and Common Shares
Trust. The Exchange Agent shall invest any cash included in
the Exchange Fund and the Common Shares Trust, as directed
by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
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ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company. Except as set forth on the Disclosure Schedule
delivered by the Company to Parent prior to the execution of
this Agreement (the "Company Disclosure Schedule"), the
Company represents and warrants to Parent and Sub as
follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite
corporate power and authority to carry on its business
as now being conducted. Each of the Company and each
of its subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction
in which the nature of its business or the ownership or
leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed
individually or in the aggregate would not have a
material adverse effect on the Company. The Company
has delivered to Parent complete and correct copies of
its articles of incorporation and by-laws and the
certificates of incorporation and by-laws of its
subsidiaries, in each case as amended to the date
hereof.
(b) Subsidiaries. Exhibit 22 to the Company's
Form 10-K for the fiscal year ended November 30, 1992,
lists each subsidiary of the Company. All the
outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid
and nonassessable and are owned by the Company, free
and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for
the capital stock of its subsidiaries, the Company does
not own, directly or indirectly, any capital stock or
other ownership interest in any corporation,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital
stock of the Company consists of 10,000,000 shares of
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Company Common Stock and 400,000 shares of preferred
stock, par value $.01 per share. At the close of
business on February 8, 1994, (i) 6,274,877 shares of
Company Common Stock and no shares of preferred stock
were issued and outstanding, (ii) 10,390 shares of
Company Common Stock were held by the Company in its
treasury, (iii) 580,168 shares of Company Common Stock
were reserved for issuance pursuant to the Stock Plans
(as defined in Section 5.06) and (iv) 928,571 shares of
Company Common Stock were reserved for issuance upon
conversion of the Company's 11% Convertible
Subordinated Notes (the "Convertible Notes"). At the
close of business on February 8, 1994, there was
$6,500,000 aggregate principal amount outstanding of
the Convertible Notes, which are convertible into
shares of Company Common Stock at the option of the
holder thereof at an exchange price of $7 per share of
Company Common Stock. Except as set forth above, at
the close of business on February 8, 1994, no shares of
capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of the Company are,
and all shares which may be issued pursuant to the
Stock Plans will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company
having the right to vote (or, except for the
Convertible Notes, convertible into, or exchangeable
for, securities having the right to vote) on any
matters on which stockholders of the Company may vote.
Except as set forth above, as of the date hereof, there
are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of
its subsidiaries is a party or by which any of them is
bound obligating the Company or any of its subsidiaries
to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock
or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As
of the date of this Agreement, there are not any
outstanding contractual obligations of the Company or
any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the
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<PAGE>20
12
Company or any of its subsidiaries. There are not any
outstanding contractual obligations of the Company to
vote or to dispose of any shares of the capital stock
of any of its subsidiaries.
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to enter
into this Agreement and, subject to the Company
Stockholder Approval with respect to the Merger, to
consummate the transactions contemplated by this
Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the
Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject,
in the case of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against
the Company in accordance with its terms. The
execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or
result in the creation of any Lien upon any of the
properties or assets of the Company or any of its
subsidiaries under, (i) the articles of incorporation
or by-laws of the Company or the comparable charter or
organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to the Company or any of its subsidiaries or
their respective properties or assets or (iii) subject
to the governmental filings and other matters referred
to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in
the case of clause (ii), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a material
adverse effect on the Company, (y) impair the ability
of the Company to perform its obligations under this
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<PAGE>21
13
Agreement or (z) prevent the consummation of any of the
transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal,
state, local or foreign government or any court,
administrative agency or commission or other
governmental authority or agency, domestic or foreign
(a "Governmental Entity"), is required by or with
respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated by this
Agreement, except for (1) the filing of a premerger
notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), (2) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a proxy
statement relating to the Company Stockholder Approval
(such proxy statement, together with the proxy
statement relating to the Parent Stockholder Approval,
in each case as amended or supplemented from time to
time, the "Joint Proxy Statement"), and (B) such
reports under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (3) the
filing of the Certificate of Merger with the Secretary
of State of the Commonwealth of Pennsylvania and the
State of Delaware and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (4) such consents,
approvals, orders, authorizations, registrations,
declarations and filings as may be required under the
laws of any foreign country in which the Company,
Parent or any of their respective subsidiaries conducts
any business or owns any property or assets or (5) such
other consents, approvals, orders, authorizations,
registrations, declarations and filings as would not
individually or in the aggregate (A) have a material
adverse effect on the Company, (B) impair the ability
of the Company to perform its obligations under this
Agreement or (C) prevent the consummation of any of the
transactions contemplated by this Agreement.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules,
forms, statements and other documents with the SEC
since December 1, 1992 (the "SEC Documents"). As of
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<PAGE>22
14
their respective dates, the SEC Documents complied in
all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any SEC Document
has been revised or superseded by a later Filed SEC
Document (as defined in Section 3.01(g)), none of the
SEC Documents contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not
misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all
material respects with applicable accounting
requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting
principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods
involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial
position of the Company and its consolidated
subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows
(or changes in financial position prior to the approval
of Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 95) for the periods
then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
Other than with respect to ERISA (as defined in
Section 3.01(j) below) and tax matters, which are
addressed by Sections 3.01(j) and 3.01(k),
respectively, except as set forth in the Filed SEC
Documents, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise and whether or not required by generally
accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of the
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<PAGE>23
15
Company and its consolidated subsidiaries or in the
notes thereto) which individually or in the aggregate
could reasonably be expected to have a material adverse
effect on the Company.
(f) Information Supplied. None of the
information supplied or to be supplied by the Company
specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4
to be filed with the SEC by Parent in connection with
the issuance of Parent Common Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented
or at the time it becomes effective under the
Securities Act, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Joint
Proxy Statement will, at the date it is first mailed to
the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 5.01(b)),
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. The Joint Proxy Statement
will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation
or warranty is made by the Company with respect to
statements made or incorporated by reference therein
based on information supplied by Parent or Sub
specifically for inclusion or incorporation by
reference in the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except
as disclosed on the Company Disclosure Schedule or in
the SEC Documents filed and publicly available prior to
the date of this Agreement (the "Filed SEC Documents"),
since the date of the most recent audited financial
statements included in the Filed SEC Documents, the
Company has conducted its business only in the ordinary
course, and there has not been (i) any material adverse
change in the Company, (ii) any declaration, setting
aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to
any of the Company's capital stock, (iii) any split,
combination or reclassification of any of its capital
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<PAGE>24
16
stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock,
(iv) (x) any granting by the Company or any of its
subsidiaries to any executive officer or other employee
of the Company or any of its subsidiaries of any
increase in compensation, except in the ordinary course
of business consistent with prior practice or as was
required under employment agreements in effect as of
the date of the most recent audited financial
statements included in the Filed SEC Documents, (y) any
granting by the Company or any of its subsidiaries to
any such executive officer of any increase in severance
or termination pay, except as was required under any
employment, severance or termination agreements in
effect as of the date of the most recent audited
financial statements included in the Filed SEC
Documents or (z) any entry by the Company or any of its
subsidiaries into any employment, severance or
termination agreement with any such executive officer,
(v) any damage, destruction or loss, whether or not
covered by insurance, that has or could reasonably be
expected to have a material adverse effect on the
Company or (vi) any change in accounting methods,
principles or practices by the Company materially
affecting its assets, liabilities or business, except
insofar as may have been required by a change in
generally accepted accounting principles.
(h) Litigation. Except as disclosed in the Filed
SEC Documents, there is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its
subsidiaries (and the Company is not aware of any basis
for any such suit, action or proceeding) that
individually or in the aggregate could reasonably be
expected to (i) have a material adverse effect on the
Company, (ii) impair the ability of the Company to
perform its obligations under this Agreement or
(iii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having,
or which is reasonably likely to have, any effect
referred to in clause (i), (ii) or (iii) above.
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17
(i) Absence of Changes in Benefit Plans. Except
as disclosed in the Filed SEC Documents, since the date
of the most recent audited financial statements
included in the Filed SEC Documents, there has not been
any adoption or amendment in any material respect by
the Company or any of its subsidiaries of any
collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current
or former employee, officer or director of the Company
or any of its subsidiaries. Except as disclosed in the
Filed SEC Documents, there exist no employment,
consulting, severance, termination or indemnification
agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or
former employee, officer or director of the Company or
any of its subsidiaries.
(j) ERISA Compliance. (i) The Company
Disclosure Schedule contains a list and brief
description of each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")),
each "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) (sometimes referred to herein as
a "Welfare Plan"), each stock option, stock purchase,
deferred compensation plan or arrangement and each
other employee fringe benefit plan or arrangement
maintained, contributed to or required to be maintained
or contributed to by the Company, any of its
subsidiaries or any other person or entity that,
together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the
Code (each, a "Commonly Controlled Entity") for the
benefit of any current or former employees, officers,
directors or independent contractors of the Company or
any of its subsidiaries (collectively, "Benefit
Plans"). The Company has delivered to Parent true,
complete and correct copies of (w) each Benefit Plan
(or, in the case of any unwritten Benefit Plans,
descriptions thereof), (x) the most recent annual
report on Form 5500 filed with the Internal Revenue
Service with respect to each Benefit Plan (if any such
report was required), (y) the most recent summary plan
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<PAGE>26
18
description for each Benefit Plan for which such
summary plan description is required and (z) each
currently effective trust agreement and insurance or
group annuity contract relating to any Benefit Plan.
(ii) Each Benefit Plan has been administered in
all material respects in accordance with its terms.
The Company, its subsidiaries and all the Benefit Plans
are in compliance in all material respects with the
applicable provisions of ERISA and the Code. All
reports, returns and similar documents with respect to
the Benefit Plans required to be filed with any
governmental agency or distributed to any Benefit Plan
participant have been duly and timely filed or
distributed. To the knowledge of the Company, there
are no investigations by any governmental agency,
termination proceedings or other claims (except claims
for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that could
give rise to any material liability, and, to the
knowledge of the Company, there are not any facts that
could give rise to any material liability in the event
of any such investigation, claim, suit or proceeding.
(iii) (1) All contributions to, and payments from,
the Benefit Plans that may have been required to be
made in accordance with the terms of the Benefit Plans,
any applicable collective bargaining agreement and,
when applicable, Section 302 of ERISA or Section 412 of
the Code, have been timely made, (2) there has been no
application for or waiver of the minimum funding
standards imposed by Section 412 of the Code with
respect to any Benefit Plan that is an "employee
pension benefit plan" (as defined in Section 3(2) of
ERISA) (sometimes referred to herein as a "Pension
Plan") and (3) no Pension Plan had an "accumulated
funding deficiency" within the meaning of Section
412(a) of the Code as of the end of the most recently
completed plan year.
(iv) Each Pension Plan has been the subject of a
determination letter from the Internal Revenue Service
to the effect that such Pension Plan is qualified and
exempt from Federal income taxes under Sections 401(a)
and 501(a), respectively, of the Code; no such
determination letter has been revoked, and, to the
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<PAGE>27
19
knowledge of the Company, revocation has not been
threatened; and such Pension Plan has not been amended
since the effective date of its most recent
determination letter in any respect that would
adversely affect its qualification, materially increase
its costs or require security under Section 307 of
ERISA. The Company has delivered to Parent a copy of
the most recent determination letter received with
respect to each Pension Plan for which such a letter
has been issued, as well as a copy of any pending
application for a determination letter. The Company
has also provided to Parent a list of all Pension Plan
amendments as to which a favorable determination letter
has not yet been received. To the knowledge of the
Company, no event has occurred that could subject any
Pension Plan to tax under Section 511 of the Code.
(v) To the knowledge of the Company, (1) no
"prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) has occurred that
involves the assets of any Benefit Plan; (2) no
prohibited transaction has occurred that could subject
the Company, any of its subsidiaries, any employee of
the Company or its subsidiaries or, to the knowledge of
the Company, a trustee, administrator or other
fiduciary of any trust created under any Benefit Plan
to the tax or penalty on prohibited transactions
imposed by Section 4975 of the Code or the sanctions
imposed under Title I of ERISA; (3) no Pension Plan has
been terminated or has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA
and the regulations thereunder); and (4) none of the
Company or any trustee, administrator or other
fiduciary of any Benefit Plan or any agent of any of
the foregoing has engaged in any transaction or acted
in a manner that could, or failed to act so as to,
subject the Company or any trustee, administrator or
other fiduciary to any liability for breach of
fiduciary duty under ERISA or any other applicable law.
(vi) As of the most recent valuation date for each
Pension Plan that is a "defined benefit pension plan"
(as defined in Section 3(35) of ERISA) (a "Defined
Benefit Plan"), there was not any amount of "unfunded
benefit liabilities" (as defined in Section 4001(a)(18)
of ERISA) under such Defined Benefit Plan, and the
Company is not aware of any facts or circumstances that
would materially change the funded status of any such
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<PAGE>28
20
Defined Benefit Plan. The Company has furnished to
Parent the most recent actuarial report or valuation
with respect to each Defined Benefit Plan. The
information supplied to the actuary by the Company and
any of its subsidiaries for use in preparing those
reports or valuations was complete and accurate in all
material respects and the Company has no reason to
believe that the conclusions expressed in those reports
or valuations are incorrect.
(vii) No Commonly Controlled Entity has incurred
any liability to an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) (other than for
contributions not yet due) or to the Pension Benefit
Guaranty Corporation (other than for the payment of
premiums not yet due), which liability has not been
fully paid as of the date hereof.
(viii) No Commonly Controlled Entity has (a) engaged
in a transaction described in Section 4069 of ERISA
that could subject the Company to liability at any time
after the date hereof or (b) acted in a manner that
could, or failed to act so as to, result in fines,
penalties, taxes or related charges under
(x) Section 502(c)(i) or (l) of ERISA, (y) Section 4071
of ERISA or (z) Chapter 43 of the Code.
(ix) No Commonly Controlled Entity is required to
contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted
or would result in any "withdrawal liability" (as
defined in Section 4201 of ERISA) that has not been
fully paid.
(x) The list of Welfare Plans on the Company
Disclosure Schedule discloses whether each Welfare Plan
is (i) unfunded, (ii) funded through a "welfare benefit
fund", as such term is defined in Section 419(e) of the
Code, or other funding mechanism or (iii) insured.
Each such Welfare Plan may be amended or terminated
without material liability to the Company at any time
after the Effective Time of the Merger. The Company
and its subsidiaries comply in all material respects
with the applicable requirements of Section 4980B(f) of
the Code with respect to each Benefit Plan that is a
group health plan, as such term is defined in Section
5000(b)(1) of the Code.
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21
(xi) Except as disclosed on the Company Disclosure
Schedule, no employee of the Company will be entitled
to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any
Benefit Plan as a result of the transactions
contemplated by this Agreement.
(k) Taxes. (i) Each of the Company and its
subsidiaries has filed all tax returns and reports
required to be filed by it or requests for extensions
to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that
such failures to file or to have extensions granted
that remain in effect individually and in the aggregate
would not have a material adverse effect on the
Company. All returns filed by the Company and each of
its subsidiaries are complete and accurate in all
material respects to the knowledge of the Company. The
Company and each of its subsidiaries has paid (or the
Company has paid on its behalf) all taxes shown as due
on such returns, and the most recent financial
statements contained in the Filed SEC Documents reflect
an adequate reserve for all taxes payable by the
Company and its subsidiaries for all taxable periods
and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or
any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually
or in the aggregate would not have a material adverse
effect on the Company, and no requests for waivers of
the time to assess any such taxes have been granted or
are pending. None of the Federal income tax returns of
the Company and each of its subsidiaries consolidated
in such returns have been examined by and settled with
the United States Internal Revenue Service. The
statute of limitations on assessment or collection of
any taxes due from the Company or any of its
subsidiaries has expired for all taxable years of the
Company or any of its subsidiaries through November 30,
1989.
(iii) Neither the Company nor any of its
subsidiaries has taken any action or has any knowledge
of any fact or circumstance that is reasonably likely
to prevent the transactions contemplated hereby,
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<PAGE>30
22
including the Merger, from qualifying as a
reorganization within the meaning of Section 368(a) of
the Code.
(iv) No real estate transfer tax or real estate
gains tax will be imposed by the Commonwealth of
Pennsylvania or any political subdivision thereof as a
consequence of the Merger or any other transaction
contemplated by this Agreement.
(v) As used in this Agreement, "taxes" shall
include all Federal, state, local and foreign income,
property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever.
(l) No Excess Parachute Payments; Section 162(m)
of the Code. (i) Any amount that could be received
(whether in cash or property or the vesting of
property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement,
other compensation arrangement or Benefit Plan
currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(ii) The disallowance of a deduction under
Section 162(m) of the Code for employee renumeration
will not apply to any amount paid or payable by the
Company or any subsidiary of the Company under any
contract, plan, program, arrangement or understanding.
(m) Voting Requirements. The affirmative vote of
a majority of the votes cast by the holders of the
shares of Company Common Stock entitled to vote thereon
at the Stockholders Meeting with respect to the
approval of the Merger is the only vote of the holders
of any class or series of the Company's capital stock
necessary to approve this Agreement and the
transactions contemplated by this Agreement.
(n) State Takeover Statutes. The Board of
Directors of the Company has approved the execution and
delivery of this Agreement and the consummation of the
Merger and the other transactions contemplated by this
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<PAGE>31
23
Agreement, and such approval is sufficient to render
inapplicable to this Agreement, the Merger and the
other transactions contemplated by this Agreement the
provisions of Subchapter 25F of the PBCL. To the best
of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement or any
of the transactions contemplated by this Agreement and
no provision of the articles of incorporation, by-laws
or other governing instruments of the Company or any of
its subsidiaries would, directly or indirectly,
restrict or impair the ability of Parent to vote, or
otherwise to exercise the rights of a stockholder with
respect to, shares of the Company and its subsidiaries
that may be acquired or controlled by Parent.
(o) Labor Matters. There are no collective
bargaining or other labor union agreements to which the
Company or any of its subsidiaries is a party or by
which any of them is bound. To the best knowledge of
the Company, since December 1, 1992, neither the
Company nor any of its subsidiaries has encountered any
labor union organizing activity, or had any actual or
threatened employee strikes, work stoppages, slowdowns
or lockouts.
(p) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other
person, other than Merrill Lynch & Co. ("Merrill
Lynch"), the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission
in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of the Company. The estimated fees and expenses
incurred and to be incurred by the Company in
connection with this Agreement and the transactions
contemplated by this Agreement (including the fees of
the Company's legal counsel) are set forth on the
Company Disclosure Schedule.
(q) Opinion of Financial Advisor. The Company
has received the oral opinion of Merrill Lynch to the
effect that, based upon and subject to assumptions made
by Merrill Lynch in rendering such opinion and based
upon such other matters as they consider relevant, as
of the date of this Agreement, the Exchange Ratio is
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<PAGE>32
24
fair to the Company's stockholders from a financial
point of view.
(r) Accounting Matters. Neither the Company nor,
to its best knowledge, any of its affiliates, has taken
or agreed to take any action that (without giving
effect to any action taken or agreed to be taken by
Parent or any of its affiliates) would prevent Parent
from accounting for the business combination to be
effected by the Merger as a pooling of interests.
(s) Compliance with Applicable Laws. (i) Each
of the Company and its subsidiaries has in effect all
Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights
("Permits") necessary for it to own, lease or operate
its properties and assets and to carry on its business
as now conducted, and there has occurred no default
under any such Permit, except for the lack of Permits
and for defaults under Permits which lack or default
individually or in the aggregate would not have a
material adverse effect on the Company. Except as
disclosed in the Filed SEC Documents, the Company and
its subsidiaries are in compliance with all applicable
statutes, laws, ordinances, rules, orders and
regulations of any Governmental Entity, except for
possible noncompliance which individually or in the
aggregate would not have a material adverse effect on
the Company.
(ii) To the best of the Company's knowledge, each
of the Company and its subsidiaries is, and has been,
and each of the Company's former subsidiaries, while
subsidiaries of the Company, was in compliance with all
applicable Environmental Laws, except for possible
noncompliance which individually or in the aggregate
would not have a material adverse effect on the
Company. The term "Environmental Laws" means any
Federal, state, local or foreign statute, code,
ordinance, rule, regulation, policy, guideline, permit,
consent, approval, license, judgment, order, writ,
decree, directive, injunction or other authorization,
including the requirement to register underground
storage tanks, relating to: (A) emissions, discharges,
Releases (as defined below) or threatened Releases of
Hazardous Material (as defined below) into the
environment, including into ambient air, soil,
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25
sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; (B) the
generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of
Hazardous Material; or (C) pollution of the environment
or the protection of human health or safety.
(iii) During the period of ownership or operation
by the Company and its subsidiaries of any of their
respective current or previously-owned properties,
there have been no Releases of Hazardous Material in,
on, under or affecting such properties or, to the
knowledge of the Company, any surrounding site, except
in each case for those which individually or in the
aggregate would not have a material adverse effect on
the Company. Prior to the period of ownership or
operation by the Company and its subsidiaries of any of
their respective current or previously-owned
properties, to the knowledge of the Company, no
Hazardous Material was generated, treated, stored,
disposed of, used, handled or manufactured at, or
transported, shipped or disposed of from, such current
or previously-owned properties, and there were no
Releases of Hazardous Material in, on, under or
affecting any such property or any surrounding site,
except in each case for those which individually or in
the aggregate would not have a material adverse effect
on the Company. The term "Release" has the meaning set
forth in 42 U.S.C. Section 9601(22). The term
"Hazardous Material" means (1) hazardous materials,
pollutants, contaminants, constituents, medical wastes,
hazardous or infectious wastes and hazardous substances
as those terms are defined in the following statutes
and their implementing regulations: the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et
seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act,
as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq. and the Clean Air Act,
42 U.S.C. Section 7401 et seq., (2) petroleum,
including crude oil and any fractions thereof,
(3) natural gas, synthetic gas and any mixtures
thereof, (4) asbestos
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26
and/or asbestos-containing material and (5) PCBs, or
materials or fluids containing PCBs.
(t) Contracts; Debt Instruments. (i) Except as
disclosed in the Filed SEC Documents or on the Company
Disclosure Schedule, there are no contracts or
agreements that are material to the business,
properties, assets, condition (financial or otherwise),
results of operations or prospects of the Company and
its subsidiaries taken as a whole. Neither the Company
nor any of its subsidiaries is in violation of or in
default under (nor does there exist any condition which
upon the passage of time or the giving of notice would
cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any
other contract, agreement, arrangement or understanding
to which it is a party or by which it or any of its
properties or assets is bound, except for violations or
defaults that individually or in the aggregate would
not have a material adverse effect on the Company.
(ii) Set forth on the Company Disclosure Schedule
is (x) a list of all loan or credit agreements, notes,
bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the
Company or any of its subsidiaries in an aggregate
principal amount in excess of $25,000 is outstanding or
may be incurred and (y) the respective principal
amounts currently outstanding thereunder. For purposes
of this Agreement, "indebtedness" shall mean, with
respect to any person, without duplication, (A) all
obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such
person, (B) all obligations of such person evidenced by
bonds, debentures, notes or similar instruments,
(C) all obligations of such person upon which interest
charges are customarily paid, (D) all obligations of
such person under conditional sale or other title
retention agreements relating to property purchased by
such person, (E) all obligations of such person issued
or assumed as the deferred purchase price of property
or services (excluding obligations of such person to
creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such
person's business), (F) all capitalized lease
obligations of such person, (G) all obligations of
others secured by any lien on property or assets owned
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27
or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or
currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit
issued for the account of such person and (J) all
guarantees and arrangements having the economic effect
of a guarantee of such person of any indebtedness of
any other person.
(u) Title to Properties. (i) Each of the
Company and each of its subsidiaries has good and
marketable title to, or valid leasehold interests in,
all its material properties and assets except for such
as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary
course of business and except for defects in title,
easements, restrictive covenants and similar
encumbrances or impediments that individually or in the
aggregate would not materially interfere with its
ability to conduct its business as currently conducted.
All such material assets and properties, other than
assets and properties in which the Company or any of
its subsidiaries has leasehold interests, are free and
clear of all Liens, except for Liens that individually
or in the aggregate would not materially interfere with
the ability of the Company and its subsidiaries to
conduct business as currently conducted.
(ii) Each of the Company and each of its
subsidiaries has complied in all material respects with
the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases
are in full force and effect. Each of the Company and
each of its subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(v) Intellectual Property. To the best of the
Company's knowledge, the Company and its subsidiaries
own, or are validly licensed or otherwise have the
right to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights,
service marks, service mark rights, copyrights and
other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property
Rights") which are material to the conduct of the
business of the Company and its subsidiaries taken as a
whole. The Company Disclosure Schedule sets forth a
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28
description of all Intellectual Property Rights which
are material to the conduct of the business of the
Company and its subsidiaries taken as a whole. Except
as set forth on the Company Disclosure Schedule, no
claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its subsidiaries
is infringing or otherwise adversely affecting the
rights of any person with regard to any Intellectual
Property Right. To the knowledge of the Company,
except as set forth on the Company Disclosure Schedule,
no person is infringing the rights of the Company or
any of its subsidiaries with respect to any
Intellectual Property Right.
SECTION 3.02. Representations and Warranties of
Parent and Sub. Except as set forth on the Disclosure
Schedule delivered by Parent to the Company prior to the
execution of this Agreement (the "Parent Disclosure
Schedule"), Parent and Sub represent and warrant to the
Company as follows:
(a) Organization, Standing and Corporate Power.
Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent
and Sub is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing
of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the
failure to be so qualified or licensed individually or
in the aggregate would not have a material adverse
effect on Parent. Parent has delivered to the Company
complete and correct copies of its certificate of
incorporation and by-laws and the certificate of
incorporation and by-laws of Sub, in each case as
amended to the date hereof.
(b) Capital Structure. The authorized capital
stock of Parent consists of 50,000,000 shares of Parent
Common Stock and 6,000,000 shares of preferred stock,
par value $1 per share. At the close of business on
February 8, 1994, (i) 10,491,489 shares of Parent
Common Stock and no shares of preferred stock, par
value $1 per share, were issued and outstanding,
(ii) 760,457 shares of Parent Common Stock were held by
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29
Parent in its treasury, (iii) 1,601,983 shares of
Parent Common Stock were reserved for issuance pursuant
to the Company's 1986 Amended and Restated Option,
Restricted Stock, Stock Appreciation Right and
Performance Unit Plan, the Amended Westmark
International Incorporated Incentive Savings and Stock
Ownership Plan and Trust, the Amended and Restated
Retirement Plan, the Management Incentive Compensation
Plan, the 1992 Option, Stock Appreciation Right,
Restricted Stock, Stock Grant and Performance Unit Plan
(the "1992 Option Plan"), the Amended and Restated
Nonofficer Employee Option, Restricted Stock and Stock
Grant Plan, the 1992 Nonofficer Employee Stock Option
Plan and the Stock Option Plan for Nonemployee
Directors (the "Parent Stock Plans") and
(iv) 500,000 shares of Series A Participating
Cumulative Preferred Stock ("Parent Preferred Stock")
(subject to increase and adjustment as set forth in the
Rights Agreement and the Certificate of Designations
attached as an exhibit thereto) were reserved for
issuance in connection with the rights (the "Rights")
to purchase shares of Parent Preferred Stock pursuant
to the Amended and Restated Rights Agreement dated as
of June 26, 1992, between Parent and First Chicago
Trust Company of New York, as Rights Agent (the "Rights
Agreement"). Except as set forth above, at the close
of business on February 8, 1994, no shares of capital
stock or other voting securities of Parent were issued,
reserved for issuance or outstanding. All outstanding
shares of capital stock of Parent are, and all shares
which may be issued pursuant to this Agreement will be,
when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
stockholders of Parent may vote. Except as set forth
above or as otherwise contemplated by this Agreement,
as of the date of this Agreement, there are no
securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings
of any kind to which Parent or any of its subsidiaries
is a party or by which any of them is bound obligating
Parent or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting
securities of Parent or obligating Parent or any of its
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30
subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As
of the date of this Agreement, there are no outstanding
contractual obligations of Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of Parent or any of its
subsidiaries. As of the date of this Agreement, the
authorized capital stock of Sub consists of 100 shares
of common stock, par value $1.00 per share, all of
which have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of
any Lien.
(c) Authority; Noncontravention. Parent and Sub
have all requisite corporate power and authority to
enter into this Agreement and, subject to the Parent
Stockholder Approval with respect to the issuance of
Parent Common Stock in the Merger and the Stock Plan
Amendment, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this
Agreement by Parent and Sub and the consummation by
Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Sub,
subject, in the case of the issuance of Parent Common
Stock in the Merger and the Stock Plan Amendment, to
the Parent Stockholder Approval. This Agreement has
been duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of each such
party, enforceable against such party in accordance
with its terms. The execution and delivery of this
Agreement do not, and the consummation of the
transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will
not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss
of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, (i) the
certificate of incorporation or by-laws of Parent or
Sub or the comparable charter or organizational
documents of any other subsidiary of Parent, (ii) any
loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to
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31
Parent, Sub or any other subsidiary of Parent or their
respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to Parent, Sub or any other subsidiary of Parent or
their respective properties or assets, other than, in
the case of clause (ii), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a material
adverse effect on Parent, (y) impair the ability of
Parent and Sub to perform their respective obligations
under this Agreement or (z) prevent the consummation of
any of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or
registration, declaration or filing with, any
Governmental Entity is required by or with respect to
Parent, Sub or any other subsidiary of Parent in
connection with the execution and delivery of this
Agreement or the consummation by Parent or Sub, as the
case may be, of any of the transactions contemplated by
this Agreement, except for (1) the filing of a
premerger notification and report form under the HSR
Act, (2) the filing with the SEC of the Form S-4, the
Joint Proxy Statement relating to the Parent
Stockholder Approval and such reports under
Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions
contemplated by this Agreement, (3) the filing of the
Certificate of Merger with the Secretary of State of
the Commonwealth of Pennsylvania and the State of
Delaware and appropriate documents with the relevant
authorities of other states in which Parent is
qualified to do business, (4) such consents, approvals,
orders, authorizations, registrations, declarations and
filings as may be required under the "takeover" or
"blue sky" laws of various states or the laws of any
foreign country in which the Company, Parent or any of
their respective subsidiaries conducts any business or
owns any property or assets and (5) such other
consents, approvals, orders, authorizations,
registrations, declarations and filings as would not
individually or in the aggregate (A) have a material
adverse effect on Parent, (B) impair the ability of
Parent and Sub to perform their respective obligations
under this Agreement or (C) prevent the consummation of
any of the transactions contemplated by this Agreement.
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(d) SEC Documents; Undisclosed Liabilities.
Parent has filed all required reports, schedules,
forms, statements and other documents with the SEC
since January 1, 1993 (the "Parent SEC Documents"). As
of their respective dates, the Parent SEC Documents
complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which they
were made, not misleading. Except to the extent that
information contained in any Parent SEC Document has
been revised or superseded by a later Filed Parent SEC
Document (as defined in Section 3.02(f)), none of the
Parent SEC Documents contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not
misleading. The financial statements of Parent
included in the Parent SEC Documents comply as to form
in all material respects with applicable accounting
requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting
principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods
involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial
position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of
their operations and cash flows (or changes in
financial position prior to the approval of Financial
Accounting Standards Board Statement of Financial
Accounting Standards No. 95) for the periods then ended
(subject, in the case of unaudited statements, to
normal year-end audit adjustments). Other than with
respect to ERISA and tax matters, which are addressed
by Sections 3.02(n) and 3.02(o), respectively, except
as set forth in the Filed Parent SEC Documents, neither
Parent nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued,
absolute, contingent or otherwise and whether or not
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33
required by generally accepted accounting principles to
be recognized or disclosed on a consolidated balance
sheet of Parent and its consolidated subsidiaries or in
the notes thereto) which individually or in the
aggregate could reasonably be expected to have a
material adverse effect on Parent.
(e) Information Supplied. None of the
information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or (ii) the Joint Proxy Statement will, at
the date the Joint Proxy Statement is first mailed to
Parent's stockholders or at the time of the Parent
Stockholders Meeting (as defined in Section 5.01(b)),
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. The Form S-4 will comply as
to form in all material respects with the requirements
of the Securities Act and the rules and regulations
promulgated thereunder and the Joint Proxy Statement
will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no
representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by
reference in either the Form S-4 or the Joint Proxy
Statement based on information supplied by the Company
specifically for inclusion or incorporation by
reference therein.
(f) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed and
publicly available prior to the date of this Agreement
(the "Filed Parent SEC Documents"), since the date of
the most recent audited financial statements included
in the Filed Parent SEC Documents, Parent has conducted
its business only in the ordinary course, and there has
not been (i) any material adverse change in Parent,
(ii) any declaration, setting aside or payment of any
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34
dividend or distribution (whether in cash, stock or
property) with respect to any of Parent's capital
stock, (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the
authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares
of its capital stock, (iv) any damage, destruction or
loss, whether or not covered by insurance that has or
could reasonably be expected to have a material adverse
effect on Parent or (v) any change in accounting
methods, principles or practices by Parent materially
affecting its assets, liabilities or business, except
insofar as may have been disclosed in the Filed Parent
SEC Documents or required by a change in generally
accepted accounting principles.
(g) Litigation. Except as disclosed in the Filed
Parent SEC Documents, there is no suit, action or
proceeding pending or, to the knowledge of Parent,
threatened against or affecting Parent or any of its
subsidiaries (and Parent is not aware of any basis for
any such suit, action or proceeding) that individually
or in the aggregate could reasonably be expected to
(i) have a material adverse effect on Parent,
(ii) impair the ability of Parent and Sub to perform
their obligations under this Agreement or (iii) prevent
the consummation of any of the transactions
contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against
Parent or any of its subsidiaries having, or which is
reasonably likely to have, any effect referred to in
clause (i), (ii) or (iii) above.
(h) Voting Requirements. The affirmative vote of
the holders of a majority of the shares of Parent
Common Stock present, or represented, and entitled to
vote thereon at the Parent Stockholders Meeting with
respect to each of (i) the issuance of shares of Parent
Common Stock in the Merger and (ii) the Stock Plan
Amendment are the only votes of the holders of any
class or series of Parent's capital stock necessary to
approve this Agreement and the transactions
contemplated by this Agreement.
(i) Labor Matters. There are no collective
bargaining or other labor union agreements to which
Parent or any of its subsidiaries is a party or by
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35
which any of them is bound. To the best knowledge of
Parent, since January 1, 1993, neither Parent nor any
of its subsidiaries has encountered any labor union
organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or
lockouts.
(j) Brokers. No broker, investment banker,
financial advisor or other person, other than Goldman,
Sachs & Co., the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission
in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
(k) Opinion of Financial Advisor. Parent has
received the oral opinion of Goldman, Sachs & Co. to
the effect that, based upon and subject to assumptions
made by Goldman, Sachs & Co. in rendering such opinion
and based upon such other matters as they consider
relevant, as of the date of this Agreement, the
Exchange Ratio is fair to Parent.
(l) Accounting Matters. Neither Parent nor, to
its best knowledge, any of its affiliates has taken or
agreed to take any action that (without giving effect
to any action taken or agreed to be taken by the
Company or any of its affiliates) would prevent Parent
from accounting for the business combination to be
effected by the Merger as a pooling of interests.
(m) Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business
activities and has conducted its operations only as
contemplated hereby.
(n) Benefit Plans. Parent and its subsidiaries
are in compliance in all material respects with the
applicable provisions of ERISA and the Code with
respect to each material "employee benefit plan" (as
defined in Section 3(3) of ERISA) maintained,
contributed to or required to be maintained or
contributed to by Parent or its subsidiaries for the
benefit of any present officers, employees or directors
of Parent or any of its subsidiaries in the United
States.
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(o) Taxes. (i) Each of Parent and its
subsidiaries has filed all tax returns and reports
required to be filed by it or requests for extensions
to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that
such failures to file or to have extensions granted
that remain in effect individually or in the aggregate
would not have a material adverse effect on Parent.
All returns filed by Parent and each of its
subsidiaries are complete and accurate in all material
respects to the knowledge of Parent. Parent and each
of its subsidiaries has paid (or Parent has paid on its
behalf) all taxes shown as due on such returns, and the
most recent financial statements contained in the Filed
Parent SEC Documents reflect an adequate reserve for
all taxes payable by Parent and its subsidiaries for
all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been
proposed, asserted or assessed against Parent or any of
its subsidiaries that are not adequately reserved for,
except for deficiencies that individually or in the
aggregate would not have a material adverse effect on
Parent, and no requests for waivers of the time to
assess any such taxes have been granted or are pending.
The Federal income tax returns of Parent and each of
its subsidiaries consolidated in such returns have been
examined by and settled with the United States Internal
Revenue Service for all years through 1990. The
statute of limitations on assessment or collection of
any taxes due from Parent or any of its subsidiaries
has expired for all taxable years of Parent or such
subsidiaries through 1990.
(iii) Neither Parent nor any of its subsidiaries
has taken any action or has any knowledge of any fact
or circumstance that is reasonably likely to prevent
the transactions contemplated hereby, including the
Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(p) Rights Agreement. The execution and delivery
of this Agreement by Parent and Sub and consummation of
the Merger and other transactions contemplated hereby
will not result in the grant or distribution of any
Rights to any person under the Rights Agreement (except
for the Rights attached to the Parent Common Stock
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37
issuable in the Merger or pursuant to this Agreement)
or enable or require any Rights to be exercised or
triggered.
(q) Compliance with Applicable Laws. (i) Each
of Parent and its subsidiaries has in effect all
Permits necessary for it to own, lease or operate its
properties and assets and to carry on its business as
now conducted, and there has occurred no default under
any such Permit, except for the lack of Permits and for
defaults under Permits which lack or default
individually or in the aggregate would not have a
material adverse effect on Parent. Except as disclosed
in the Filed Parent SEC Documents, Parent and its
subsidiaries are in compliance with all applicable
statutes, laws, ordinances, rules, orders and
regulations of any Governmental Entity, except for
possible noncompliance which individually or in the
aggregate would not have a material adverse effect on
Parent.
(ii) Each of Parent and its subsidiaries is, and
has been, in compliance with all applicable
Environmental Laws, except for possible noncompliance
which individually or in the aggregate would not have a
material adverse effect on Parent.
(r) Contracts; Debt Instruments. Except as
disclosed in the Filed Parent SEC Documents or on the
Parent Disclosure Schedule, there are no contracts or
agreements that are material to the business,
properties, assets, condition (financial or otherwise),
results of operations or prospects of Parent and its
subsidiaries taken as a whole. Neither Parent nor any
of its subsidiaries is in violation of or in default
under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause
such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any
other contract, agreement, arrangement or understanding
to which it is a party or by which it or any of its
properties or assets is bound, except for violations or
defaults that individually or in the aggregate would
not have a material adverse effect on Parent.
(s) Title to Properties. (i) Each of Parent and
each of its subsidiaries has good and marketable title
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38
to, or valid leasehold interests in, all its material
properties and assets except for such as are no longer
used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of
business and except for defects in title, easements,
restrictive covenants and similar encumbrances or
impediments that individually or in the aggregate would
not materially interfere with its ability to conduct
its business as currently conducted. All such material
properties and assets, other than properties and assets
in which Parent or any of its subsidiaries has
leasehold interests, are free and clear of all Liens,
except for Liens that individually or in the aggregate
would not materially interfere with the ability of
Parent and its subsidiaries to conduct business as
current conducted.
(ii) Each of Parent and each of its subsidiaries
has complied in all material respects with the terms of
all material leases to which it is a party and under
which it is in occupancy, and all such leases are in
full force and effect. Each of Parent and each of its
subsidiaries enjoys peaceful and undisturbed possession
under all such material leases.
(t) Intellectual Property. Parent and its
subsidiaries own, or are validly licensed or otherwise
have the right to use, all Intellectual Property Rights
which are material to the conduct of the business of
Parent and its subsidiaries taken as a whole. The
Parent Disclosure Schedule sets forth a description of
all Intellectual Property Rights which are material to
the conduct of the business of Parent and its
subsidiaries taken as a whole. Except as set forth on
the Parent Disclosure Schedule, no claims are pending
or, to the knowledge of Parent, threatened that Parent
or any of its subsidiaries is infringing or otherwise
adversely affecting the rights of any person with
regard to any Intellectual Property Right. To the
knowledge of Parent, except as set forth on the Parent
Disclosure Schedule, no person is infringing the rights
of Parent or any of its subsidiaries with respect to
any Intellectual Property Right.
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ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct
of Business by the Company. During the period from the date
of this Agreement to the Effective Time of the Merger, the
Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and
ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent
therewith, use all reasonable efforts to preserve intact
their current business organizations, keep available the
services of their current officers and employees and
preserve their relationships with customers, suppliers,
licensors, licensees, distributors and others having
business dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the Effective
Time of the Merger. Without limiting the generality of the
foregoing, during the period from the date of this Agreement
to the Effective Time of the Merger, the Company shall not,
and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any
of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (y) split,
combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of
its capital stock or (z) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or
any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities
(other than (x) the issuance of Company Common Stock
upon the exercise of Employee Stock Options (as defined
in Section 5.06) outstanding on the date of this
Agreement and in accordance with their present terms
and (y) the issuance of Company Common Stock upon
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conversion of the Convertible Notes by the holders
thereof in accordance with their present terms);
(iii) amend its articles of incorporation, by-laws
or other comparable charter or organizational
documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint
venture, association or other business organization or
division thereof or (y) any assets that individually or
in the aggregate are material to the Company and its
subsidiaries taken as a whole, except purchases of
inventory in the ordinary course of business consistent
with past practice;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, except sales in the
ordinary course of business consistent with past
practice of inventory or of furniture, fixtures and
equipment that are no longer used by or useful to the
Company or its subsidiaries;
(vi) (x) incur any indebtedness, except for short-
term borrowings incurred in the ordinary course of
business consistent with past practice and except for
intercompany indebtedness between the Company and any
of its subsidiaries or between such subsidiaries, or
(y) make any loans, advances or capital contributions
to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned
subsidiary of the Company;
(vii) make or agree to make any new capital
expenditure or capital expenditures which individually
is in excess of $50,000 or in the aggregate are in
excess of $300,000;
(viii) make any tax election that could reasonably be
expected to have a material adverse effect on the
Company or settle or compromise any income tax
liability;
(ix) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted
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or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in
accordance with their terms, of liabilities reflected
or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes
thereto) of the Company included in the Filed SEC
Documents or incurred since the date of such financial
statements in the ordinary course of business
consistent with past practice;
(x) except in the ordinary course of business,
modify, amend or terminate any material contract or
agreement to which the Company or any subsidiary is a
party or waive, release or assign any material rights
or claims thereunder;
(xi) take any action that (without giving effect to
any action taken or agreed to be taken by Parent or any
of its affiliates) would prevent Parent from accounting
for the business combination to be effected by the
Merger as a pooling of interests or from treating the
Merger as a "reorganization" under Section 368(a) of
the Code; or
(xii) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) Conduct of Business by Parent. During the
period from the date of this Agreement to the Effective Time
of the Merger, Parent shall, and shall cause its
subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent
therewith, use all reasonable efforts to preserve intact
their current business organizations, keep available the
services of their current officers and employees and
preserve their relationships with customers, suppliers,
licensors, licensees, distributors and others having
business dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the Effective
Time of the Merger; provided that the foregoing shall not
prevent Parent or any of its subsidiaries from discontinuing
or disposing of any part of its assets or business if such
action is, in the judgment of Parent, desirable in the
conduct of the business of Parent and its subsidiaries or if
such action would not result in either of the effects
referred to in clause (ii) below. Without limiting the
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42
generality of the foregoing, during the period from the date
of this Agreement to the Effective Time of the Merger,
Parent shall not, and shall not permit any of its
subsidiaries to:
(i) (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any
capital stock of Parent or (y) split, combine or
reclassify any of its capital stock or issue or
authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of
Parent's capital stock (other than exchanges in the
ordinary course under Parent's employee stock plans);
(ii) take any action that (without giving effect to
any action taken or agreed to be taken by the Company
or any of its affiliates) would prevent Parent from
accounting for the business combination to be effected
by the Merger as a pooling of interests or from
treating the Merger as a "reorganization" under
Section 368(a) of the Code;
(iii) amend the Rights Agreement in any manner
adverse to the holders of Company Common Stock;
(iv) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, in
each case if any such action could reasonably be
expected to (A) delay materially the date of mailing of
the Joint Proxy Statement or, (B) if it were to occur
after such date of mailing, require an amendment of the
Joint Proxy Statement;
(v) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint
venture, association or other business organization or
division thereof or (y) any assets that individually or
in the aggregate are material to the Company and its
subsidiaries taken as a whole, except purchases of
inventory in the ordinary course of business consistent
with past practice, in each case if any such action
could reasonably be expected to (A) delay materially
the date of mailing of the Joint Proxy Statement or,
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(B) if it were to occur after such date of mailing,
require an amendment of the Joint Proxy Statement; or
(vi) authorize any of, or commit or agree to take
any of, the foregoing actions.
(c) Other Actions. The Company and Parent shall
not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in
this Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect
or (iii) except as otherwise permitted by Section 4.02, any
of the conditions to the Merger set forth in Article VI not
being satisfied.
(d) Advice of Changes. The Company and Parent
shall promptly advise the other party orally and in writing
of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a material adverse
effect on such party or on the truth of their respective
representations and warranties.
SECTION 4.02. No Solicitation. (a) The Company
shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney or other
advisor or representative of, the Company or any of its
subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the submission of, any takeover
proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any
information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided, however, that prior to the
Stockholders Meeting, to the extent required by the
fiduciary obligations of the Board of Directors of the
Company, as determined in good faith by the Board of
Directors based on the advice of outside counsel, the
Company may, (A) in response to an unsolicited request
therefor, furnish information with respect to the Company to
any person pursuant to a customary confidentiality agreement
(as determined by the Company's outside counsel) and discuss
such information (but not the terms of any possible takeover
proposal) with such person and (B) upon receipt by the
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Company of a takeover proposal, following delivery to Parent
of the notice required pursuant to Section 4.02(c),
participate in negotiations regarding such takeover
proposal. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the
preceding sentence by any officer, director or employee of
the Company or any of its subsidiaries or any investment
banker, attorney or other advisor or representative of the
Company or any of its subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any
of its subsidiaries or otherwise, shall be deemed to be a
breach of this Section 4.02(a) by the Company. For purposes
of this Agreement, "takeover proposal" means any proposal
for a merger or other business combination involving the
Company or any of its subsidiaries or any proposal or offer
to acquire in any manner, directly or indirectly, an equity
interest in, any voting securities of, or a substantial
portion of the assets of the Company or any of its
subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Neither the Board of Directors of the Company
nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent
or Sub, the approval or recommendation by such Board of
Directors or any such committee of this Agreement or the
Merger, (ii) approve or recommend, or propose to approve or
recommend, any takeover proposal or (iii) enter into any
agreement with respect to any takeover proposal.
Notwithstanding the foregoing, in the event the Board of
Directors of the Company receives a takeover proposal that,
in the exercise of its fiduciary obligations (as determined
in good faith by the Board of Directors based on the advice
of outside counsel), it determines to be a superior
proposal, the Board of Directors may (subject to the
following sentences) withdraw or modify its approval or
recommendation of this Agreement and the Merger, approve or
recommend any such superior proposal, enter into an
agreement with respect to such superior proposal or
terminate this Agreement, in each case at any time after the
second business day following Parent's receipt of written
notice (a "Notice of Superior Proposal") advising Parent
that the Board of Directors has received a superior
proposal, specifying the material terms and conditions of
such superior proposal and identifying the person making
such superior proposal. In the event the Board of Directors
of the Company takes any of the foregoing actions with
respect to such superior proposal, the Company shall,
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concurrently with the taking of any such action, pay to
Parent the Termination Fee plus all Expenses pursuant to
Section 5.09(b). For purposes of this Agreement, "superior
proposal" means a bona fide takeover proposal to acquire,
directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the shares of Company
Common Stock then outstanding or all or substantially all
the assets of the Company, and otherwise on terms which the
Board of Directors of the Company determines in its good
faith reasonable judgment to be more favorable to the
Company's stockholders than the Merger (based on the written
opinion, with only customary qualifications, of the
Company's independent financial advisor that the value of
the consideration provided for in such proposal is superior
to the value of the consideration provided for in the
Merger) and for which financing, to the extent required, is
then committed or which, in the good faith reasonable
judgment of the Board of Directors, is reasonably capable of
being financed by such third party.
(c) In addition to the obligations of the Company
set forth in paragraph (b) above, the Company promptly shall
advise Parent orally and in writing of any request for
information or of any takeover proposal or any inquiry with
respect to or which could lead to any takeover proposal, the
identity of the person making any such takeover proposal or
inquiry and the material terms and conditions thereof. The
Company will keep Parent generally informed of the status
and details of any such request, takeover proposal or
inquiry.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the
Joint Proxy Statement; Stockholders Meetings. (a) As soon
as practicable following the date of this Agreement, the
Company and Parent shall prepare and file with the SEC the
Joint Proxy Statement and Parent shall prepare and file with
the SEC the Form S-4, in which the Joint Proxy Statement
will be included as a prospectus. Each of the Company and
Parent shall use its best efforts to have the Form S-4
declared effective under the Securities Act as promptly as
practicable after such filing. The Company will use its
best efforts to cause the Joint Proxy Statement to be mailed
to the Company's stockholders, and Parent will use its best
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efforts to cause the Joint Proxy Statement to be mailed to
Parent's stockholders, in each case as promptly as
practicable after the Form S-4 is declared effective under
the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in
which it is not now so qualified) required to be taken under
any applicable state securities laws in connection with the
issuance of Parent Common Stock in the Merger and under the
Stock Plans and the Company shall furnish all information
concerning the Company and the holders of the Company Common
Stock and rights to acquire Company Common Stock pursuant to
the Stock Plans as may be reasonably requested in connection
with any such action.
(b) The Company will, as soon as practicable
following the date of this Agreement, duly call, give notice
of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of approving the
Merger. Parent will, as promptly as practicable following
the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Parent
Stockholders Meeting") for the purpose of approving (i) the
issuance of Parent Common Stock in the Merger and (ii) the
amendment of the 1992 Option Plan to increase the number of
shares of Parent Common Stock that are authorized for
issuance thereunder by 450,000 shares (the "Stock Plan
Amendment"). The Company and Parent will, through their
respective Boards of Directors, recommend to their
respective stockholders approval of the foregoing matters,
except to the extent that the Board of Directors of the
Company shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger as permitted
by Section 4.02(b). Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 5.01(b) shall not be
affected by (i) the commencement, public proposal, public
disclosure or communication to the Company of any takeover
proposal or (ii) the withdrawal or modification by the Board
of Directors of the Company of its approval or
recommendation of this Agreement or the Merger. Parent and
the Company will use reasonable efforts to hold the
Stockholders Meeting and the Parent Stockholders Meeting on
the same day and use their best efforts to hold such
Meetings as soon as practicable after the date hereof.
(c) The Company shall use its best efforts to
obtain the opinion of Merrill Lynch, dated on or about the
date that is two business days prior to the mailing of the
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Joint Proxy Statement, to the effect that, as of such date,
the Exchange Ratio is fair to the Company's stockholders
from a financial point of view, and shall cause a signed
copy of such opinion to be delivered to Parent.
(d) Parent shall use its best efforts to obtain
the opinion of Goldman, Sachs & Co., dated on or about the
date that is two business days prior to the mailing of the
Joint Proxy Statement, to the effect that, as of such date,
the Exchange Ratio is fair to Parent, and shall cause a
signed copy of such opinion to be delivered to the Company.
SECTION 5.02. Letter of the Company's
Accountants. The Company shall use its best efforts to
cause to be delivered to Parent a letter of KPMG Peat
Marwick, the Company's independent public accountants, dated
a date within two business days before the date on which the
Form S-4 shall become effective and a letter of KPMG Peat
Marwick, dated a date within two business days before the
Closing Date, each addressed to Parent, in form and
substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent
public accountants in connection with registration
statements similar to the Form S-4.
SECTION 5.03. Letter of Parent's Accountants.
Parent shall use its best efforts to cause to be delivered
to the Company a letter of KPMG Peat Marwick, Parent's
independent public accountants, dated a date within two
business days before the date on which the Form S-4 shall
become effective and a letter of KPMG Peat Marwick, dated a
date within two business days before the Closing Date, each
addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and
substance for letters delivered by independent public
accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.04. Access to Information;
Confidentiality. (a) Each of the Company and Parent shall,
and shall cause each of its respective subsidiaries to,
afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other
representatives of such other party, reasonable access
during normal business hours during the period prior to the
Effective Time of the Merger to all their respective
properties, books, contracts, commitments, personnel and
records and, during such period, each of the Company and
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Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a
copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to
the requirements of Federal or state securities laws and
(b) all other information concerning its business,
properties and personnel as such other party may reasonably
request. Except as required by law, each of the Company and
Parent will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic
information in confidence until such time as such
information becomes publicly available (otherwise than
through the wrongful act of any such person) and shall use
its best efforts to ensure that such persons do not disclose
such information to others without the prior written consent
of the Company or Parent, as the case may be. In the event
of the termination of this Agreement for any reason, the
Company and Parent shall promptly return or destroy all
documents containing nonpublic information so obtained from
the other party or any of its subsidiaries and any copies
made of such documents. In addition, Parent and the Company
shall not, and shall cause their respective advisors and
agents not to, use any such nonpublic information for any
purpose except in furtherance of the transactions
contemplated by this Agreement.
(b) Neither Parent nor any of its subsidiaries
will solicit or employ any employees of the Company or any
of its subsidiaries as long as they are employed by the
Company or such subsidiary during the period prior to the
Effective Time of the Merger (except as contemplated by this
Agreement) and, in the event of termination of this
Agreement for any reason, for a period of two years after
the date of termination.
SECTION 5.05. Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, unless, to the extent permitted by
Section 4.02(b), the Board of Directors of the Company
approves or recommends a superior proposal, each of the
parties agrees to use its best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary
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actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with
Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties and
(iii) the execution and delivery of any additional
instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of,
this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall
(A) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any of
the other transactions contemplated by this Agreement and
(B) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement
or any other transaction contemplated by this Agreement,
take all action necessary to ensure that the Merger and the
other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
Notwithstanding the foregoing, the Board of Directors of the
Company shall not be prohibited from taking any action
permitted by Section 4.02(b).
(b) The Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the
Company, of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified
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
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.
SECTION 5.06. Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any
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50
committee administering the Stock Plans) shall adopt such
resolutions or take such other actions as may be required to
effect the following:
(i) adjust the terms of all outstanding employee
stock options to purchase shares of Company Common
Stock ("Employee Stock Options") granted under the
Company's 1982 Incentive Stock Option Plan, the 1985
Incentive Stock Option Plan, the 1986 Non-Qualified
Stock Option Plan, the 1988 Non-Qualified Stock Option
Plan and the 1991 Non-Qualified Stock Option Plan and
any other stock option plan, program or arrangement of
the Company (collectively, the "Stock Plans"), whether
vested or unvested, as necessary to provide that, at
the Effective Time of the Merger, each Employee Stock
Option outstanding immediately prior to the Effective
Time of the Merger shall be deemed to constitute an
option to acquire, on the same terms and conditions as
were applicable under such Employee Stock Option,
including vesting, the same number of shares of Parent
Common Stock as the holder of such Employee Stock
Option would have been entitled to receive pursuant to
the Merger had such holder exercised such Employee
Stock Option in full immediately prior to the Effective
Time of the Merger, at a price per share equal to
(A) the aggregate exercise price for the shares of
Company Common Stock otherwise purchasable pursuant to
such Employee Stock Option divided by (B) the aggregate
number of shares of Parent Common Stock deemed
purchasable pursuant to such Employee Stock Option
(each, as so adjusted, an "Adjusted Option"); provided,
however, that in the case of any option to which
Section 421 of the Code applies by reason of its
qualification under any of Sections 422 through 424 of
the Code ("qualified stock options"), the option price,
the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such
option shall be determined in order to comply with
Section 424 of the Code; and
(ii) make such other changes to the Stock Plans as
it deems appropriate to give effect to the Merger
(subject to the approval of Parent, which shall not be
unreasonably withheld).
(b) As soon as practicable after the Effective
Time of the Merger, Parent shall deliver to the holders of
Employee Stock Options appropriate notices setting forth
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51
such holders' rights pursuant to the respective Stock Plans
and the agreements evidencing the grants of such Employee
Stock Options shall continue in effect on the same terms and
conditions (subject to the adjustments required by this
Section 5.06 after giving effect to the Merger). Parent
shall comply with the terms of the Stock Plans and ensure,
to the extent required by, and subject to the provisions of,
such Stock Plans, that the Employee Stock Options which
qualified as qualified stock options prior to the Effective
Time of the Merger continue to qualify as qualified stock
options after the Effective Time of the Merger.
(c) Parent agrees to use reasonable efforts to
take such actions as are necessary for the conversion of the
Employee Stock Options of the Company pursuant to
Section 5.06(a), including the reservation, issuance and
listing of Common Stock of Parent as is necessary to
effectuate the transactions contemplated by Section 5.06(a).
(d) A holder of an Adjusted Option may exercise
such Adjusted Option in whole or in part in accordance with
its terms by delivering a properly executed notice of
exercise to Parent, together with the consideration therefor
and the Federal withholding tax information, if any,
required in accordance with the related Stock Plan.
SECTION 5.07. Benefit Plans. (a) Except as
provided in Section 5.06 and subject to the provisions of
ERISA and the Code, Parent agrees to cause the Surviving
Corporation to maintain for a period of at least two years
after the Effective Time of the Merger the Benefit Plans of
the Company and its subsidiaries in effect on the date of
this Agreement or to provide benefits to employees of the
Company and its subsidiaries that are comparable in the
aggregate to those in effect on the date of this Agreement,
and thereafter Parent will cause the employees of the
Surviving Corporation to have benefit plans that are at
least comparable to those provided to the employees of
Parent. Parent will cause each employee benefit plan of the
Surviving Corporation or Parent covering such employees of
the Company and its subsidiaries to recognize the service of
such employees with the Company and its subsidiaries prior
to the Closing Date, but only for purposes of eligibility to
participate and vesting under any such plan.
(b) After the Effective Time of the Merger,
Parent intends to grant to key employees of the Surviving
Corporation options to purchase Parent Common Stock and
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52
restricted stock awards commensurate with those granted to
key employees of Parent.
SECTION 5.08. Indemnification and Insurance.
(a) Parent and Sub agree that all rights to indemnification
for acts or omissions occurring at or prior to the Effective
Time of the Merger now existing in favor of the current or
former directors or officers of the Company and its
subsidiaries as provided in their respective certificates of
incorporation or by-laws shall survive the Merger and shall
continue in full force and effect in accordance with their
terms for a period of not less than six years from the
Effective Time of the Merger. Parent will cause to be
maintained for a period of not less than five years from the
Effective Time of the Merger the Company's current
directors' and officers' insurance and indemnification
policy to the extent that it provides coverage for events
occurring prior to the Effective Time of the Merger (the
"D&O Insurance") for all persons who are directors and
officers of the Company on the date of this Agreement, so
long as the annual premium therefor would not be in excess
of 150% of the last annual premium paid prior to the date of
this Agreement (the "Maximum Premium"); provided, however,
that Parent may, in lieu of maintaining such existing D&O
Insurance as provided above, cause comparable coverage to be
provided under any policy maintained for the benefit of
Parent or any of its subsidiaries, so long as the material
terms thereof are no less advantageous that the existing D&O
Insurance. If the existing D&O Insurance expires, is
terminated or cancelled during such five-year period, Parent
will use all reasonable efforts to cause to be obtained as
much D&O Insurance as can be obtained for the remainder of
such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less
advantageous than the existing D&O Insurance. The Company
represents to Parent that the Maximum Premium is $72,500.
(b) In the event Parent, the Surviving
Corporation or any of their successors or assigns
(i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all
or substantially all of its properties and assets to any
person, then and in each such case, proper provisions shall
be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 5.08.
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(c) This Section 5.08 shall survive the
consummation of the Merger at the Effective Time of the
Merger, is intended to benefit the Company, Parent, the
Surviving Corporation and the persons indemnified pursuant
to Section 5.08(a), and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 5.09. Fees and Expenses. (a) Except as
provided below in this Section 5.09, all fees and expenses
incurred in connection with the Merger, this Agreement and
the transactions contemplated by this Agreement shall be
paid by the party incurring such fees or expenses, whether
or not the Merger is consummated, except that expenses
incurred in connection with printing and mailing the Joint
Proxy Statement and the Form S-4 shall be shared equally by
Parent and the Company.
(b) The Company shall pay to Parent upon demand a
fee of $1,000,000 (the "Termination Fee"), payable in same
day funds, plus all Expenses not exceeding $500,000 (as
defined below), if a takeover proposal is commenced,
publicly proposed, publicly disclosed or communicated to the
Company (or the willingness of any person to make a takeover
proposal is publicly disclosed or communicated to the
Company) and (i) the Board of Directors of the Company
withdraws or modifies its approval or recommendation of this
Agreement or the Merger, approves or recommends such other
takeover proposal, enters into an agreement with respect to
such other takeover proposal or terminates this Agreement
(other than as a result of a willful and material breach of
this Agreement by Parent or Sub (which breach shall not have
been cured within five business days following Parent's
receipt of written notice of such breach from the Company)),
(ii) the requisite approval of the Company's stockholders
for the Merger is not obtained at the Stockholders Meeting
or (iii) the Stockholders Meeting does not occur prior to
the termination of this Agreement pursuant to
Section 7.01(b)(ii). For purposes of this paragraph,
"Expenses" shall mean all out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection
with the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all
fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to Parent.
SECTION 5.10. Public Announcements. Parent and
Sub, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and provide
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each other the opportunity to review, comment upon and
concur with, any press release or other public statements
with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior
to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to
any listing agreement with any national market system. The
parties agree that the initial press release to be issued
with respect to the transactions contemplated by this
Agreement is set forth in Exhibit A to this Agreement.
SECTION 5.11. Affiliates and Certain
Stockholders. (a) Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who
are, at the time the Merger is submitted for approval to the
stockholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act and for
purposes of applicable interpretations regarding the
pooling-of-interests method of accounting. The Company
shall use its best efforts to cause each such person to
deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit B
hereto. If the Merger would otherwise qualify for pooling-
of-interests accounting treatment, shares of Parent Common
Stock issued to such affiliates of the Company in exchange
for shares of Company Common Stock shall not be transferable
until such time as financial results covering at least
30 days of combined operations of Parent and the Company
have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies,
regardless of whether each such affiliate has provided the
written agreement referred to in this Section 5.11, except
to the extent permitted by, and in accordance with,
Accounting Series Release 135 and Staff Accounting
Bulletins 65 and 76. Any shares of Company Common Stock
held by such affiliates shall not be transferable,
regardless of whether each such affiliate has provided the
written agreement referred to in this Section 5.11, if such
transfer, either alone or in the aggregate with other
transfers by affiliates, would preclude Parent's ability to
account for the business combination to be effected by the
Merger as a pooling of interests. The Company shall not
register the transfer of any certificate representing
Company Common Stock, unless such transfer is made in
compliance with the foregoing. Parent shall not be required
to maintain the effectiveness of the Form S-4 or any other
registration statement under the Securities Act for the
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purposes of resale of Parent Common Stock by such affiliates
and the certificates representing Parent Common Stock
received by such affiliates in the Merger shall bear a
customary legend regarding applicable Securities Act
restrictions and the provisions of this Section 5.11.
(b) The Company shall deliver to Parent on the
date of the Joint Proxy Statement and on the Closing Date
letters, in each case dated as of such respective dates and
identifying all persons who are, as of such respective
dates, beneficial owners of five percent or more of the
Company Common Stock. The Company shall use its best
efforts to cause each such person to deliver to counsel to
Parent and to the Company on the date of the Joint Proxy
Statement and on the Closing Date written agreements, in
each case dated as of such respective dates and
substantially in the form attached as Exhibit C hereto.
SECTION 5.12. National Market System Trading.
Parent shall use its best efforts to cause the shares of
Parent Common Stock to be issued in the Merger and under the
Stock Plans to be approved for trading on the NASDAQ/NMS,
subject to official notice of issuance, prior to the Closing
Date.
SECTION 5.13. Stockholder Litigation. The
Company shall give Parent the opportunity to participate in
the defense or settlement of any stockholder litigation
against the Company and its directors relating to the
transactions contemplated by this Agreement; provided,
however, that no such settlement shall be agreed to without
Parent's consent, which consent shall not be unreasonably
withheld.
SECTION 5.14. Tax Representation Letters of the
Company and Parent. (i) The Company will sign and deliver
to Duane, Morris & Heckscher, counsel to the Company, and to
Cravath, Swaine & Moore, counsel to Parent, on the date of
the Joint Proxy Statement and on the Closing Date
representation letters, in each case dated as of such
respective dates and substantially in the form of Exhibit D
hereto, for the purpose of the reliance of such counsel in
delivering the opinions described in Section 6.01(g).
(ii) Parent will sign and deliver to Duane,
Morris & Heckscher, counsel to the Company, and to Cravath,
Swaine & Moore, counsel to Parent, on the date of the Joint
Proxy Statement and on the Closing Date representation
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letters, in each case dated as of such respective dates and
substantially in the form of Exhibit E hereto, for the
purpose of the reliance of such counsel delivering the
opinions described in Section 6.01(g).
SECTION 5.15. Directorship. Promptly following
the Effective Time of the Merger, Parent's Board of
Directors will elect Edward Ray to be a director of Parent.
SECTION 5.16. Employment Agreements. Promptly
following the Effective Time of the Merger, Parent shall, or
shall cause the Surviving Corporation to, enter into an
employment contract with Edward Ray, Michael J. Wassil and
Patrick J. Faivre on substantially the terms set forth in
Exhibits F-1, F-2 and F-3, respectively.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's
Obligation To Effect the Merger. The respective obligation
of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Stockholder Approval. Each of the Company
Stockholder Approval and the Parent Stockholder
Approval (with respect to both the issuance of Parent
Common Stock in the Merger and the Stock Plan
Amendment) shall have been obtained.
(b) National Market System Trading. The shares
of Parent Company Stock issuable to the Company's
stockholders pursuant to this Agreement and under the
Stock Plans shall have been approved for trading on the
NASDAQ/NMS, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any
extension thereof) applicable to the Merger under the
HSR Act shall have been terminated or shall have
expired.
(d) No Injunctions or Restraints. No statute,
rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction
or other order enacted, entered, promulgated, enforced
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or issued by any court of competent jurisdiction or
other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger
shall be in effect.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order.
(f) Pooling. Parent and the Company shall have
received from KPMG Peat Marwick, as independent
auditors of both Parent and the Company, on the date of
the Joint Proxy Statement and on the Closing Date
letters, in each case dated as of such respective
dates, addressed to Parent and the Company, in form and
substance reasonably acceptable to Parent and the
Company and stating that the business combination to be
effected by the Merger may be accounted for as a
pooling of interests by Parent for purposes of its
consolidated financial statements under generally
accepted accounting principles and applicable SEC rules
and regulations. No action shall have been taken by
any Governmental Entity or any statute, rule,
regulation or order enacted, promulgated or issued by
any Governmental Entity, or any proposal made for any
such action by any Governmental Entity which is
reasonably likely to be put into effect, that would
prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling
of interests.
(g) Tax Opinions. Parent shall have received
from Cravath, Swaine & Moore, counsel to Parent, and
the Company shall have received from Duane, Morris &
Heckscher, counsel to the Company, on the date of the
Joint Proxy Statement and on the Closing Date opinions,
in each case based on the representations of Parent and
the Company provided to such counsel pursuant to
Section 5.14, dated as of such respective dates and
stating that the Merger will be treated for Federal
income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that Parent,
Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of
the Code.
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(h) Dissenters. No more than 5% of the
outstanding shares of Company Common Stock immediately
prior to the Merger shall constitute Dissenting Shares
in accordance with Section 2.01(d).
SECTION 6.02. Conditions to Obligations of Parent
and Sub. The obligations of Parent and Sub to effect the
Merger are further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects, in each case as of the date of
this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the
extent such representations and warranties speak as of
an earlier date, and Parent shall have received a
certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer
of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such
effect.
(c) Certificates; Letters from Company
Affiliates. The Company shall have delivered to Parent
certified copies of resolutions duly adopted by the
Company's Board of Directors and stockholders
evidencing the taking of all corporate action necessary
to authorize the execution, delivery and performance of
this Agreement, and the consummation of the
transactions contemplated hereby, all in such
reasonable detail as Parent and its counsel shall
reasonably request prior to the date of the
Stockholders Meeting. In addition, Parent shall have
received from each affiliate named in the letter
referred to in Section 5.11(a) an executed copy of an
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agreement substantially in the form of Exhibit B
hereto.
(d) No Litigation. There shall not be pending or
threatened by any Governmental Entity any suit, action
or proceeding and there shall not be pending by any
other person any suit, action or proceeding which has a
reasonable likelihood of success, in each case
(i) challenging the acquisition by Parent or Sub of any
shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or
seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company
and its subsidiaries taken as a whole or Parent and its
subsidiaries taken as a whole, as applicable,
(ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the
business or assets of the Company, Parent or any of
their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries
to dispose of or hold separate any material portion of
the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the
Merger or any of the other transactions contemplated by
this Agreement, (iii) seeking to impose limitations on
the ability of Parent to acquire or hold, or exercise
full rights of ownership of, any shares of Company
Common Stock or common stock of the Surviving
Corporation, including the right to vote the Company
Common Stock, or Common Stock of the Surviving
Corporation, on all matters properly presented to the
stockholders of the Company or the Surviving
Corporation, respectively, (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively
controlling in any material respect the business or
operations of the Company or its subsidiaries or
(v) which otherwise could reasonably be expected to
have a material adverse effect on the Company or
Parent. In addition, there shall not be any statute,
rule, regulation, judgment or order enacted, entered,
enforced or promulgated that is reasonably likely to
result, directly or indirectly, in any of the
consequences referred to in clauses (ii) through (iv)
above.
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(e) Approval of Company Board of Directors. The
Board of Directors of the Company or any committee
thereof shall not have withdrawn or modified in a
manner adverse to Parent or Sub its approval or
recommendation of the Merger or this Agreement, or
approved or recommended any takeover proposal, (ii) the
Company shall not have entered into any agreement with
respect to any superior proposal in accordance with
Section 4.02(b) of this Agreement, (iii) Parent shall
not have received a Notice of Superior Proposal from
the Company or two business days shall not have elapsed
from the date of such receipt or (iv) the Board of
Directors of the Company or any committee thereof shall
not have resolved to take any of the foregoing actions
referred to in clause (i) or (ii) above.
(f) Fairness Opinion. The Company shall have
received the opinion of Merrill Lynch, dated on or
about the date that is two business days prior to the
mailing of the Joint Proxy Statement, to the effect
that, as of such date, the Exchange Ratio is fair to
the Company's stockholders from a financial point of
view, a signed copy of which opinion shall have been
delivered to Parent.
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger
is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set
forth in this Agreement that are qualified as to
materiality shall be true and correct, and the
representations and warranties of Parent and Sub set
forth in this Agreement that are not so qualified shall
be true and correct in all material respects, in each
case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing
Date, except to the extent such representations speak
as of an earlier date, and the Company shall have
received a certificate signed on behalf of Parent by
the chief executive officer and the chief financial
officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material
respects all obligations required to be performed by
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them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate
signed on behalf of Parent by the chief executive
officer and the chief financial officer of Parent to
such effect.
(c) Certificates. Parent shall have delivered to
the Company certified copies of resolutions duly
adopted by Parent's and Sub's respective Board of
Directors and stockholders of Parent evidencing the
taking of all corporate action necessary to authorize
the execution, delivery and performance of this
Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as
the Company and its counsel shall reasonably request
prior to the date of the Parent Stockholders Meeting.
(d) No Litigation. There shall not be pending or
threatened by any Governmental Entity any suit, action
or proceeding and there shall not be pending by any
other person any suit, action or proceeding which has a
reasonable likelihood of success, in each case
(i) challenging the acquisition by Parent or Sub of any
shares of Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or
seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company
and its subsidiaries taken as a whole or Parent and its
subsidiaries taken as a whole, as applicable,
(ii) seeking to prohibit or limit the ownership or
operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the
business or assets of the Company, Parent or any of
their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries
to dispose of or hold separate any material portion of
the business or assets of the Company, Parent or any of
their respective subsidiaries, as a result of the
Merger or any of the other transactions contemplated by
this Agreement, (iii) seeking to impose limitations on
the ability of Parent to acquire or hold, or exercise
full rights of ownership of, any shares of Company
Common Stock or common stock of the Surviving
Corporation, including the right to vote the Company
Common Stock, or Common Stock of the Surviving
Corporation, on all matters properly presented to the
stockholders of the Company or the Surviving
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Corporation, respectively, (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively
controlling in any material respect the business or
operations of the Company or its subsidiaries or
(v) which otherwise could reasonably be expected to
have a material adverse effect on the Company or
Parent. In addition, there shall not be any statute,
rule, regulation, judgment or order enacted, entered,
enforced or promulgated that is reasonably likely to
result, directly or indirectly, in any of the
consequences referred to in clauses (ii) through (iv)
above.
(e) Fairness Opinion. Parent shall have received
the opinion of Goldman, Sachs & Co., dated on or about
the date that is two business days prior to the mailing
of the Joint Proxy Statement, to the effect that, as of
such date, the Exchange Ratio is fair to Parent, a
signed copy of which opinion shall have been delivered
to the Company.
SECTION 6.04. Frustration of Closing Conditions.
None of the Company, Parent and Sub may rely on the failure
of any condition set forth in Section 6.01, 6.02 or 6.03, as
the case may be, to be satisfied if such failure was caused
by such party's failure to act in good faith or to use its
best efforts to consummate the Merger and the other
transactions contemplated by this Agreement, as required by
Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the
Merger, whether before or after approval of matters
presented in connection with the Merger by the stockholders
of the Company:
(a) by mutual written consent of Parent, Sub and
the Company;
(b) by either Parent or the Company:
(i) if, upon a vote at a duly held
Stockholders Meeting or Parent Stockholders
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Meeting or any adjournment thereof, any required
approval of the stockholders of the Company or
Parent, as the case may be, shall not have been
obtained;
(ii) if the Merger shall not have been
consummated on or before the date 180 calendar
days following the date of this Agreement, unless
the failure to consummate the Merger is the result
of a willful and material breach of this Agreement
by the party seeking to terminate this Agreement;
provided, however, that the passage of such period
shall be tolled for any part thereof (but not
exceeding 60 calendar days in the aggregate)
during which any party shall be subject to a
nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting
the consummation of the Merger or the calling or
holding of the Stockholders Meeting or the Parent
Stockholders Meeting;
(iii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become
final and nonappealable; or
(iv) in the event of a breach by the other
party of any representation, warranty, covenant or
other agreement contained in this Agreement which
(A) would give rise to the failure of a condition
set forth in Section 6.02(a) or (b) or
Section 6.03(a) or (b), as applicable, and
(B) cannot be or has not been cured within 30 days
after the giving of written notice to the
breaching party of such breach (a "Material
Breach") (provided that the terminating party is
not then in Material Breach of any representation,
warranty, covenant or other agreement contained in
this Agreement);
(c) by the Company in accordance with the
provisions of Section 4.02(b); or
(d) by Parent on March 7, 1994, if on or prior to
such date (i) the Company shall not have caused a
representation agreement in the form of Exhibit G
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hereto to be executed and delivered by the Company and
each of the persons named in Schedule I thereto or
(ii) the Company shall not have caused an amendment to
the Convertible Notes and the Note Purchase Agreement
dated as of May 31, 1989, among the Company and the
holders of the Convertible Notes, in generally the form
of Exhibit H hereto to be executed and delivered by the
Company and those holders of the Convertible Notes
necessary for such amendment to be effective against
all holders (other than as a result of the failure by
Parent to execute and deliver a guarantee in
substantially the form of an exhibit to the form of
amendment attached as Exhibit H hereto).
SECTION 7.02. Effect of Termination. In the
event of termination of this Agreement by either the Company
or Parent as provided in Section 7.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 3.01(p),
Section 3.02(j), the last two sentences of Section 5.04,
Section 5.09, this Section 7.02 and Article VIII and except
to the extent that such termination results from the willful
and material breach by a party of any of its
representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties at any time before or after any
required approval of matters presented in connection with
the Merger by the stockholders of the Company and at any
time before or after any required approval of matters
presented in connection with the issuance of shares of
Parent Common Stock in the Merger and the Stock Plan
Amendment by the stockholders of Parent; provided, however,
that after any such approval, there shall be made no
amendment that by law requires further approval by such
stockholders without the further approval of such
stockholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties.
SECTION 7.04. Extension; Waiver. At any time
prior to the Effective Time of the Merger, the parties may
(a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties of
the other parties contained in this Agreement or in any
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document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 7.03, waive compliance by the
other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
SECTION 7.05. Procedure for Termination,
Amendment, Extension or Waiver. A termination of this
Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver
pursuant to Section 7.04 shall, in order to be effective,
require in the case of Parent, Sub or the Company, action by
its Board of Directors or the duly authorized designee of
its Board of Directors.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time of the
Merger. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or
sent by overnight courier (providing proof of delivery) to
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the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Advanced Technology Laboratories, Inc.
22100 Bothell Everett Highway
P.O. Box 3003
Bothell, WA 98041-3003
Telecopy No. (206) 485-3680
Attention: Harvey N. Gillis, Senior Vice
President, Chief Financial
Officer and Treasurer
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No. (212) 474-3700
Attention: Allen Finkelson, Esq.; and
(b) if to the Company, to
Interspec, Inc.
110 West Butler Avenue
Ambler, PA 19002-5795
Telecopy No. (215) 540-9707
Attention: Edward Ray, Chairman,
President and
Chief Executive Officer
with a copy to:
Duane, Morris & Heckscher
One Liberty Place (37th Floor)
Philadelphia, PA 19103-7396
Telecopy No. (215) 979-1020
Attention: Kathleen Shay, Esq.
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SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "indebtedness" has the meaning assigned
thereto in Section 3.01(t)(ii);
(c) "material adverse change" or "material adverse
effect" means, when used in connection with the Company
or Parent, any change or effect that is materially
adverse to the business, properties, assets, condition
(financial or otherwise), results of operations or
prospects of such party and its subsidiaries taken as a
whole;
(d) "person" means an individual, corporation,
partnership, joint venture, association, trust,
unincorporated organization or other entity;
(e) a "subsidiary" of any person means another
person, an amount of the voting securities, other
voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or
indirectly by such first person;
(f) "superior proposal" has the meaning assigned
thereto in Section 4.02;
(g) "takeover proposal" has the meaning assigned
thereto in Section 4.02; and
(h) "taxes" has the meaning assigned thereto in
Section 3.01(k).
SECTION 8.04. Interpretation. When a reference
is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference shall be to an Article or Section
of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or
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interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. All terms
defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined herein.
The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified
or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments
incorporated therein. References to a person are also to
its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire
agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and
(b) except for the provisions of Article II, Section 5.06,
Section 5.07 and Section 5.08, are not intended to confer
upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of
conflicts of laws thereof.
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SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this
Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that
Sub may assign, in its sole discretion, any of or all its
rights, interests and obligations under this Agreement to
Parent or to any direct or indirect wholly owned subsidiary
of Parent, but no such assignment shall relieve Sub of any
of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties 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 of this Agreement in any court of the
United States located in the Commonwealth of Pennsylvania or
the State of Delaware or in Delaware state court, this being
in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the
Commonwealth of Pennsylvania or the State of Delaware or any
Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any
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70
court other than a Federal court sitting in the Commonwealth
of Pennsylvania or the State of Delaware or a Delaware state
court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
ADVANCED TECHNOLOGY LABORATORIES,
INC.,
by
/s/ Dennis C. Fill
Name: Dennis C. Fill
Title: Chairman of the Board
and Chief Executive
Officer
Attest:
/s/ W. Brinton Yorks, Jr.
Name: W. Brinton Yorks, Jr.
Title: Secretary
ATL SUB ACQUISITION CORP.,
by
/s/ Dennis C. Fill
Name: Dennis C. Fill
Title: Chairman of the Board
Attest:
/s/ W. Brinton Yorks, Jr.
Name: W. Brinton Yorks, Jr.
Title: Secretary
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71
INTERSPEC, INC.,
by
/s/ Edward Ray
Name: Edward Ray
Title: President and Chief
Executive Officer
Attest:
/s/ Michael J. Wassil
Name: Michael J. Wassil
Title: Vice President and
Chief Financial
Officer
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PRESS RELEASE EXHIBIT 20
For Immediate Release Contact: Anne Marie Bugge
(206) 487-7081
ATL/INTERSPEC MERGER TO BE POOLING OF INTERESTS
BOTHELL, Washington, February 24, 1994--ATL (Advanced Technology
Laboratories, Inc.) reported today that it has determined its
recently announced plans to acquire Interspec, Inc. would
qualify for pooling of interests accounting treatment. If
approved by both companies' shareholders, Interspec would become
a wholly owned subsidiary of ATL through an exchange ratio of
0.4130 shares of ATL stock for each share of Interspec stock.
Interspec has approximately 6.3 million shares outstanding.
The proposed acquisition would create the world's leading
ultrasound company with combined revenues of approximately $365
million, an installed base of over 20,000 systems and a product
line spanning all major clinical applications.
Interspec of Ambler, Pennsylvania is a leading manufacturer of
high quality medical diagnostic ultrasound systems, probes and
transducers. Interspec stock is traded on the NASDAQ National
Market System under the symbol ISPC.
ATL, with headquarters in Bothell, Washington, is a worldwide
leader in the development, manufacture, distribution and service
of diagnostic medical ultrasound systems. ATL stock is traded
on the NASDAQ National Market System under the symbol ATLI.
###
22494/106
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