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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. __ )/1/
Ocular Sciences, Inc.
---------------------
(Name of Issuer)
Common Stock, par value $0.001 per share
----------------------------------------
(Title of Class of Securities)
675744106
---------
(CUSIP Number)
Wesley Jessen VisionCare, Inc.
333 East Howard Avenue
Des Plaines, IL 60018-5903
(847) 294-3000
Attn: President
------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 19, 2000
--------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
/1/ The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
Page 1 of 11 Pages
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CUSIP NO. 675744106 13 D Page 2 of 11 Pages
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NAMES OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Wesley Jessen VisionCare, Inc. 36-4023739
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
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SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
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SOLE VOTING POWER
7
NUMBER OF
9,594,495 (See Item 5)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
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EACH SOLE DISPOSITIVE POWER
9
REPORTING
4,577,830 (See Item 5)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
9,594,495 (See Item 5)
- ------------------------------------------------------------------------------
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximately 41.7%
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TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
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Item 1. Security and Issuer.
The class of equity security to which this Statement relates is the common
stock, par value $0.001 per share (the "Common Stock") of Ocular Sciences, Inc.,
a Delaware corporation ("OSI"). The name and address of the principal executive
offices of OSI are Ocular Sciences, Inc., 475 Eccles Avenue, South San
Francisco, California 94080.
Item 2. Identity and Background.
This Statement is being filed by Wesley Jessen VisionCare, Inc. ("WJ"), a
Delaware corporation, by virtue of: (i) its deemed beneficial ownership of
shares of Common Stock as a result of WJ holding an option (the "Option") that
is exercisable under certain circumstances for an aggregate of 4,577,830 shares
of Common Stock ("Option Shares") and (ii) its deemed beneficial ownership of
5,016,665 shares of Common Stock as a result of its having been granted a proxy
to vote such shares under certain circumstances as more fully described herein.
WJ is the leading worldwide developer, manufacturer and marketer of
specially soft contact lenses. WJ's products include cosmetic lenses, which
change or enhance the wearer's eye color appearance; toric lenses, which correct
vision for people with astigmatism; and premium lenses, which offer value-added
features, such as improved comfort for dry eyes and protection from ultraviolet
light. The address of the principal business and office of WJ is 333 East Howard
Avenue, Des Plaines, Illinois 60018-5903. WJ is sometimes referred to herein as
the "Reporting Person."
Attached as Schedule A to this Statement is information concerning the
Reporting Person to which such information is required to be disclosed in
response to Item 2 and General Instruction C to Schedule 13D.
During the last five years, neither the Reporting Person or the persons
identified on Schedule A attached hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). During the
last five years, neither of the Reporting Person or the persons identified on
Schedule A attached hereto was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which any person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On March 19, 2000, WJ entered into a Stock Option Agreement with OSI (the
"OSI Stock Option Agreement"). Pursuant to the OSI Stock Option Agreement, OSI
granted to WJ an irrevocable option to purchase 4,577,830 shares of its Common
Stock (subject to adjustment) at a purchase price of $16.94 per share (subject
to adjustment). The Option may only be exercised upon the happening of certain
events, which are outlined in Item 4. The Option is not currently exercisable.
If the Option were to become exercisable, the exercise price to purchase all of
the shares subject to the Option would be $77,548,440. WJ anticipates that all
funds to be paid by it upon exercise of the Option would be provided by working
capital, cash on hand and through debt and/or equity offerings.
No consideration was paid for the Option. OSI entered into the OSI Stock
Option Agreement to induce WJ to enter into the Merger Agreement (as defined in
Item 4) and the WJ Stock Option Agreement (as defined in the Merger Agreement).
WJ entered into the WJ Stock Option Agreement to induce OSI to enter into the
Merger Agreement and the OSI Stock Option Agreement.
Page 3 of 11 Pages
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On March 19, 2000, OSI, John D. Fruth (the "Stockholder") and WJ entered
into a Stockholders Agreement (the "Stockholders Agreement"). The transactions
contemplated by the Stockholders Agreement are not expected to require the
expenditure of any funds. OSI, the Stockholder and WJ entered into the
Stockholders Agreement to induce WJ and OSI Acquisition Corp. ("Merger Sub") to
enter into the Merger Agreement.
Item 4. Purpose of Transaction.
On March 19, 2000, OSI, WJ and Merger Sub entered into an Agreement and
Plan of Merger (the "Merger Agreement") providing for (i) the merger of Merger
Sub with and into OSI (the "Merger"), whereupon the existence of Merger Sub will
cease and OSI will continue as the surviving corporation (the "Surviving
Corporation"), and will be a wholly-owned subsidiary of WJ. WJ entered into the
OSI Stock Option Agreement and the Stockholders Agreement to facilitate the
transactions contemplated by the Merger Agreement.
At the effective time of the Merger (the "Effective Time") and subject to
certain limitations set forth in the Merger Agreement, each share of Common
Stock issued and outstanding immediately prior to the Effective Time (other than
shares held by stockholders exercising appraisal rights in accordance with
applicable law) will, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into 0.7211 validly issued, fully paid and
nonassessable shares (the "Exchange Ratio") of common stock, par value $.01 per
share, of WJ ("WJ Common Stock") and the associated WJ Rights (as defined in the
Merger Agreement), together with any cash in lieu of fractional shares of WJ
Common Stock to be paid pursuant to the Merger Agreement. At the Effective Time,
the holders of the outstanding shares of Common Stock so converted will become
holders of record of the shares of WJ Common Stock issued in consideration
therefor upon such conversion without any further action on the part of such
holders.
At the Effective Time, each share of Common Stock issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
be canceled and be retired without payment of any consideration therefor and
cease to exist.
At the Effective Time, each share of Common Stock issued and outstanding at
the Effective Time and owned by WJ or Merger Sub or held by the Company at the
Effective Time, shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and be retired
without payment of any consideration therefor and cease to exist.
At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each share of common stock, par value $0.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one share of common stock, par value
$.01 per share, of the Surviving Corporation.
At the Effective Time, all then outstanding stock options granted under
OSI's existing stock option plans will be converted into options to acquire that
number of shares of WJ Common Stock as determined by multiplying the number of
shares subject to such options by the Exchange Ratio. At the Effective Time,
each outstanding purchase right under OSI's 1997 Employee Stock Purchase Plan
will be assumed by WJ.
Because the approval of OSI's stockholders is required by applicable law in
order to consummate the Merger, OSI will submit the Merger Agreement, the Merger
to its stockholders for approval.
Page 4 of 11 Pages
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The obligations of the parties to the Merger Agreement to effect the Merger
is subject to certain conditions, and prior to the Effective Time, OSI or WJ may
terminate the Merger Agreement under certain circumstances, in each case as set
forth in the Merger Agreement.
The certificate of incorporation and the bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the Surviving Corporation. The officers and
directors of Merger Sub immediately prior to the Effective Time will be the
officers and directors of the Surviving Corporation upon the completion of the
Merger.
In connection with the Merger, it is expected that OSI's Common Stock will
cease to be quoted on the Nasdaq National Market and will become eligible for
termination of registration under the Securities Exchange Act of 1934, as
amended.
Concurrently with the execution and delivery of the Merger Agreement, WJ,
OSI and the Stockholder entered into the Stockholders Agreement. Pursuant to the
Stockholders Agreement, the Stockholder has agreed to vote, and has granted the
individual or individuals to be named by WJ an irrevocable proxy to vote, his
shares of Common Stock owned as of March 19, 2000 and any shares of Common Stock
acquired after March 19, 2000 and prior to the Effective Time (the "Securities")
in favor of the Merger, the Merger Agreement and all other transactions
contemplated in the Merger Agreement and the calling of a special meeting of the
shareholders of the Company to consider any of the foregoing, in each case
during the term of the Stockholders Agreement.
The Stockholders Agreement also provides that the Stockholder shall not,
except as contemplated by the terms of the Stockholders Agreement: (i) sell,
transfer, pledge, assign or otherwise dispose of, or enter into any agreement,
option or other arrangement (including any profit sharing arrangement) or
understanding with respect to the sale, transfer, pledge, assignment or other
disposition of, the Securities to any person; (ii) enter into any voting
arrangement, whether by proxy voting agreement, voting trust, power-of-attorney
or otherwise, with respect to the Securities; or (iii) take any other action
that would in any way restrict, limit, or interfere with the performance of its
obligations thereunder or the transactions contemplated thereby; provided,
however, that the Stockholder may transfer all or any part of his Securities to
any person, if the recipient of the Securities agrees in advance in writing
delivered to WJ to be bound by the Stockholders Agreement.
The Stockholders Agreement and all rights and obligations of the parties
thereunder terminates immediately upon the earlier of: (a) the date upon which
the Merger Agreement is terminated in accordance with its terms, (b) the
Effective Time or (c) a Change in the OSI Recommendation as a result of a
Superior Proposal (as defined in the Merger Agreement).
Concurrently with the execution and delivery of the Merger Agreement, WJ
and OSI entered into the OSI Stock Option Agreement. Pursuant to the OSI Stock
Option Agreement, OSI granted WJ an irrevocable option to purchase 4,577,830
shares of Common Stock (subject to adjustment). The number of shares subject to
the Option is subject to adjustment in order to prevent WJ's Total Profit (as
defined in the OSI Stock Option Agreement) from exceeding $25.0 million.
WJ may exercise the Option, in whole or in part, at any time or from time
to time following the occurrence of an event the result of which is that the
total fee or fees required to be paid by OSI to WJ pursuant to the Merger
Agreement equals $20 million (each, a "Purchase Event"); provided, that, except
as otherwise provided in the OSI Stock Option Agreement, the Option shall
terminate upon the earliest to occur of (i) the Effective Time; (ii) 6 months
after the first occurrence of a Purchase Event (or if, at the expiration of such
6-months after the first occurrence of a Purchase Event, the Option cannot be
exercised by reason of any applicable judgment, decree, order, law or
Page 5 of 11 Pages
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regulation, 10 business days after such impediment to exercise shall have been
removed, but in no event under this clause (ii) later than the first anniversary
of the Purchase Event); (iii) termination of the Merger Agreement under
circumstances which do not and cannot result in WJ's becoming entitled to
receive termination fees from OSI pursuant to the Merger Agreement; and (iv) 12
months after the termination of the Merger Agreement under circumstances which
could result in WJ's becoming entitled to receive termination fees from OSI
pursuant to the Merger Agreement, unless during such 12-month period, a Purchase
Event shall occur.
The preceding summaries of certain provisions of the Stockholders
Agreement, the OSI Stock Option Agreement and the Merger Agreement are not
intended to be complete and are qualified in their entirety by reference to the
full text of such agreements, copies of which are attached hereto as Exhibits A,
B and C, respectively, and are incorporated herein by reference.
Other than as described in this Statement, none of the Reporting Persons or
the persons identified on Schedule A attached hereto presently has any plans or
proposals that relate to or would result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
Prior to March 19, 2000, the Reporting Person did not own and was not the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act)
of any shares of Common Stock. Upon execution of the Stockholders Agreement, the
Reporting Person may be deemed to have acquired "beneficial ownership" (as
defined in Rule 13d-3 promulgated under the Exchange Act), of the Securities,
with the sole power to vote the Securities with respect to the matters set forth
in the Stockholders Agreement. As of March 19, 2000, the 5,016,665 shares of
Common Stock (including 16,665 shares that are deemed beneficially owned as a
result of the Stockholder holding currently exercisable stock options),
constituted approximately 21.8% of the issued and outstanding shares of Common
Stock (based on the number of shares of Common Stock represented to be issued
and outstanding as of March 19, 2000, by the Company in the Merger Agreement).
Upon execution of the OSI Stock Option Agreement, the Reporting Person may
be deemed to be have acquired the "beneficial ownership" of the Option Shares,
with the sole power to vote and dispose of such Option Shares. As of March 19,
2000, the Option Shares totaled 4,577,830 shares and constituted approximately
19.9% of the issued and outstanding shares of Common Stock (based on the number
of shares of Common Stock represented to be issued and outstanding as of March
19, 2000, by the Company in the Merger Agreement and assuming the exercise of
the Option).
Neither the filing of this Statement nor any of its contents shall be
deemed to constitute an admission that the Reporting Person is the beneficial
owner of any Common Stock referred to in this Statement for the purposes of
Section 13(d) of the Act or for any other purpose, and such beneficial ownership
is expressly disclaimed.
Page 6 of 11 Pages
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Item 6. Contracts, Arrangements, Understandings of Relationships With
Respect to Securities of the Issuer.
Except as otherwise set forth in this Statement (and the agreements
referenced herein), to the best knowledge of the Reporting Person, no contracts,
arrangements, understandings or relationships (legal or otherwise) exist among
the persons named in Item 2 or between such persons and any other person with
respect to any securities of OSI, including but not limited to transfer or
voting of any of the securities of OSI, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees or profits, divisions of profits
or loss, or the giving or withholding of proxies, or a pledge or contingency,
the occurrence of which would give another person voting power over the
securities of OSI.
Item 7. Material to be filed as Exhibits.
Exhibit A -- Stockholders Agreement, dated as of March 19, 2000, by and
among Wesley Jessen VisionCare, Inc., Ocular Sciences, Inc.
and John D. Fruth.
Exhibit B -- OSI Stock Option Agreement, dated as of March 19, 2000, by
and among Ocular Sciences, Inc. and Wesley Jessen
VisionCare, Inc.
Exhibit C -- Agreement and Plan of Merger, dated as of March 19, 2000, by
and among Wesley Jessen VisionCare, Inc., OSI Acquisition
Corp. and Ocular Sciences, Inc.
Page 7 of 11 Pages
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SIGNATURES
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After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Date: March 28, 2000 WESLEY JESSEN VISIONCARE, INC.
By: /s/ Edward J. Kelley
---------------------
Name: Edward J. Kelley
Its: Chief Financial Officer
Page 8 of 11 Pages
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SCHEDULE A
The names and titles of the executive officers and the names of the
directors of Wesley Jessen VisionCare, Inc. ("WJ") and their business address
and principal occupations are set forth below. If no address is given, the
director's or executive officer's business address is that of WJ. Unless
otherwise indicated, each occupation set forth opposite an individuals name
refers to WJ and each individual is a United States citizen.
Executive Officers Position; Present Principal Occupation
Kevin J. Ryan Chairman, President and Chief Executive
Officer
Edward J. Kelley Vice President-Finance and Chief
Financial Officer
Raleigh S. Althisar, Jr. Vice President-Worldwide Manufacturing
Ronald J. Artale Vice President and Controller
Lawrence L. Chapoy Vice President-Research & Development
William M. Flynn Vice President-Pan Asia
Joseph F. Foos Vice President-Scientific Affairs
George H. McCrary Vice President-Americas
Daniel M. Roussel (citizen of France) Vice President-Europe
Thomas F. Steiner Vice President-Marketing
Directors Position; Present Principal Occupation
Michael A. D'Amato Executive Vice President of The Advisory
The Advisory Board Company Board Company (an advisory firm with
The Watergate practices in financial services and health
600 New Hampshire Avenue, NW care and a for-profit membership association)
Washington, D.C. 20037
Edward J. Kelley Listed above
Adam W. Kirsch Chief Executive Officer of Net Ventures,
Net Ventures, LLC LLC (private investment fund focusing on
2 Canal Park Internet-related companies)
Cambridge, Massachusetts 02141
Sol Levine Retired. Former President of Revlon, Inc.
4 East 72/nd/ Street
New York, New York 10021
Page 9 of 11 Pages
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Directors Position; Present Principal Occupation
John W. Maki Managing Director of Audax Management
Audax Management Company, LLC Company, LLC (money management
101 Huntington Avenue investment business)
Boston, Massachusetts 02199
John J. O'Malley Managing Director of Audax Management
Audax Management Company, LLC Company, LLC (money management
101 Huntington Avenue investment business)
Boston, Massachusetts 02199
Stephen G. Pagliuca Managing Director of Bain Capital, Inc.
Bain Capital, Inc. (private equity investment firm)
2 Copley Place
Boston, Massachusetts 02116
Kevin J. Ryan Listed above
Page 10 of 11 Pages
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EXHIBIT INDEX
Exhibit No. Exhibit Name
- ----------- ------------
A Stockholders Agreement, dated as of March 19, 2000, by and
among Wesley Jessen VisionCare, Inc., Ocular Sciences, Inc.
and John D. Fruth.
B OSI Stock Option Agreement, dated as of March 19, 2000, by
and among Ocular Sciences, Inc. and Wesley Jessen VisionCare,
Inc.
C Agreement and Plan of Merger, dated as of March 19, 2000, by
and among Wesley Jessen VisionCare, Inc., OSI Acquisition
Corp. and Ocular Sciences, Inc.
Page 11 of 11 Pages
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Exhibit A
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of March 19, 2000, between Wesley Jessen
VisionCare, Inc., a Delaware corporation ("Parent"), Ocular Sciences, Inc., a
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Delaware corporation (the "Company") and John D. Fruth ("Stockholder").
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Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to such terms in the Merger Agreement (as defined
below).
WHEREAS, Parent, OSI Acquisition Corp., a Delaware corporation and wholly
owned subsidiary of Parent ("Merger Sub") and the Company, propose to enter into
----------
an Agreement and Plan of Merger, dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement"), providing for the merger of
----------------
Merger Sub with and into the Company (the "Merger");
------
WHEREAS, Stockholder is the record and beneficial owner of the number of
shares of common stock, par value $0.001 per share, of the Company (the "Company
-------
Common Stock") set forth opposite Stockholder's name on Schedule A hereto; such
- ------------ ----------
securities, as they may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, together
with securities that may be acquired after the date hereof by Stockholder,
including Company Common Stock issuable upon the exercise of options to purchase
Company Common Stock (as the same may be adjusted as aforesaid), being
collectively referred to herein as the "Securities"; and
----------
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Merger Sub have requested that Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in
consideration of them entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein and intending to be legally bound hereby, the parties hereto hereby agree
as follows:
1. Covenants of Stockholder. Stockholder agrees as follows:
------------------------
a. Stockholder shall not, except as contemplated by the terms of this
Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of,
or enter into any agreement, option or other arrangement (including
any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the
Securities to any Person; (ii) enter into any voting arrangement,
whether by proxy, voting agreement, voting trust, power-of-attorney or
otherwise, with respect to the Securities; or (iii) take any other
action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions
contemplated hereby; provided, however, that Stockholder may transfer
-------- -------
all or any part of his Securities to any Person, if the recipient of
the Securities agrees in advance
<PAGE>
in writing delivered to Parent to be bound by this Agreement and the
transfer is otherwise permitted by the Stockholder's Affiliate
Agreement.
b. Subject to Section 9 hereof, except as specifically provided in the
Merger Agreement, until the Merger is consummated or the Merger
Agreement is terminated, Stockholder shall not, nor shall Stockholder
permit any investment banker, financial adviser, attorney, accountant
or other representative or agent acting on behalf of or at the
direction of Stockholder (a "Stockholder Representative") to, directly
--------------------------
or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed or
reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined in the Merger Agreement) or (ii)
participate in any discussions or negotiations regarding any
Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the
preceding sentence by a Stockholder Representative shall be deemed to
be a violation of this Section 1(b) by Stockholder.
c. At any meeting of the stockholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other
approval (including by written consent) with respect to the Merger and
the Merger Agreement is sought from the stockholders of the Company,
Stockholder shall vote (or cause to be voted) Stockholder's Securities
in favor of approving the Merger, the adoption of the Merger Agreement
and the approval of the other transactions contemplated by the Merger
Agreement and the calling of a special meeting of the stockholders of
the Company to consider any of the foregoing.
2. Grant of Irrevocable Proxy Coupled with an Interest; Appointment of Proxy.
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a. Stockholder hereby irrevocably grants to, and appoints, any individual
who shall be designated in writing by Parent, and each of them,
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such
Stockholder, to vote Stockholder's Securities, or grant a consent or
approval in respect of such Securities, at any meeting of the
stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which their vote, consent or other approval
is sought, in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and the calling of a special
meeting of the stockholders of the Company to consider any of the
foregoing.
b. Stockholder represents that any proxies heretofore given in respect of
Stockholder's Securities are not irrevocable, and that any such
proxies are hereby revoked.
2
<PAGE>
c. Stockholder hereby affirms that the proxy set forth in this Section 2
is coupled with an interest and is irrevocable until the time set
forth in the last sentence of this Section. Stockholder hereby
further affirms that such irrevocable proxy is given in connection
with the execution of the Merger Agreement, and that such irrevocable
proxy is given to secure the performance of the duties of Stockholder
under this Agreement. Stockholder hereby ratifies and confirms all
that the individual voting such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed
and intended to be irrevocable in accordance with the provisions of
Section 212(e) of the Delaware General Corporation Law. Such
irrevocable proxy shall be valid until the termination of this
Agreement in accordance with its terms.
3. Representations and Warranties of Stockholder. Stockholder hereby
---------------------------------------------
represents and warrants to Parent as follows:
a. Authorization. Stockholder has the legal capacity to execute, deliver
-------------
and perform this Agreement. This Agreement constitutes a valid and
binding obligation of Stockholder enforceable against Stockholder in
accordance with its terms, subject to customary bankruptcy-related
exceptions. If Stockholder is married and the Securities constitute
community property under applicable law, this Agreement has been duly
authorized, executed and delivered by, and constitutes the valid and
binding agreement of, Stockholder's spouse enforceable against such
spouse in accordance with its terms.
b. No Conflict. The execution, delivery and performance by Stockholder
-----------
of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) result in any breach or
violation of or be in conflict with or constitute a default under any
law or agreement or arrangement to which Stockholder is a party or by
which Stockholder is bound, (ii) require any filing by Stockholder
with or authorization by any governmental entity (other than any
filings required by Sections 13 and 16 of the Securities Exchange Act
of 1934) or (iii) require any consent or other action by any person
under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of a loss of any benefit to
which Stockholder is entitled under any provision of any agreement or
other instrument binding on Stockholder.
c. Ownership of Securities. Stockholder's Securities and the
-----------------------
certificates representing such Securities are now held by Stockholder,
or by a nominee or custodian for the benefit of Stockholder, and
Stockholder has good and marketable title to such Securities, free and
clear of any (i) liens, proxies, voting trusts or agreements,
understandings or arrangements and (ii) pledges, restrictions, charges
or other adverse claims of any kind or nature.
3
<PAGE>
d. Merger Agreement. Stockholder understands and acknowledges that
----------------
Parent and Merger Sub are entering into the Merger Agreement in
reliance upon Stockholder's execution and delivery of this Agreement.
4. Further Assurances. Stockholder will, from time to time, execute and
------------------
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as
Parent may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to
vote Stockholder's Securities as contemplated by Section 2.
5. Assignment: Binding Effect. Except as set forth herein, neither this
--------------------------
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties; provided
that (i) Parent may assign any of its rights, interests and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent and
(ii) Merger Sub may assign any of its rights, interests and obligations
hereunder to any domestic subsidiary of Parent that may be substituted for
Merger Sub under the Merger Agreement. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective assigns.
Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
6. Termination. This Agreement, and all rights and obligations of the parties
-----------
hereunder, shall terminate upon the earliest to occur of (i) the Effective
Time, (ii) the termination of the Merger Agreement in accordance with its
terms or (iii) a Change in the OSI Recommendation as a result of a Superior
Proposal. Nothing in this Section 6 shall relieve any party from liability
for willful breach of this Agreement.
7. Stop Transfer. The Company agrees with, and covenants to, Parent that the
-------------
Company shall not register the transfer of any certificate representing
Stockholder's Securities unless such transfer is made in accordance with
the terms of this Agreement. In furtherance of this Agreement, the Company
shall (and Stockholder authorizes the Company to) notify the Company's
transfer agent that there is a stop transfer order with respect to the
Securities (and that this Agreement places limits on the transfer of the
Securities).
8. General Provisions.
------------------
a. Amendments. This Agreement may not be amended except by an instrument
----------
in writing signed by each of the parties hereto.
4
<PAGE>
b. Notice. All notices, demands or other communications to be given or
------
delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered
personally to the recipient, one day after being sent to the recipient
by reputable overnight courier service (charges prepaid), upon
machine-generated acknowledgment after transmittal by facsimile or
five days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications shall be sent to Stockholder
at the address set forth on Schedule A and to Parent and the Company
----------
at the address indicated below:
i. if to Parent, to:
-----------------
Wesley Jessen VisionCare, Inc.
333 East Howard Avenue
Des Plaines, Illinois 60018-5903
Fax: (847) 294-3434
Attn: President
with a copy to:
Kirkland & Ellis Sweeney, Lev & Blinkoff
200 E. Randolph Drive 400 Bloomfield Avenue, #200
Chicago, Illinois 60601 Montclair, New Jersey 07042
Fax: (312) 861-2200 Fax: (973) 509-1074
Attn: Dennis M. Myers, Esq. Attn: Gerald Sweeney, Esq.
ii. if to the Company, to:
----------------------
Ocular Sciences, Inc.
475 Eccles Avenue
South San Francisco, California 94080
Fax: (650) 583-1108
Attn: Chairman of the Board
With a copy to:
Pillsbury Madison & Sutro
50 Fremont Street
San Francisco, California 94105
Fax: (415) 983-1200
Attn: Nathaniel M. Cartmell III, Esq.
5
<PAGE>
or to such other address or to the attention of such other person as
the recipient party has specified by prior written notice to the
sending party.
c. Interpretation. When a reference is made in this Agreement to a
--------------
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
d. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
e. Counterparts. This Agreement may be executed in two or more
------------
counterparts (including by means of telecopied signature pages), all
of which shall be considered one and the same agreement.
f. Entire Agreement: No Third-party Beneficiaries. This Agreement
----------------------------------------------
(including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supercedes all prior agreements
and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
g. Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
9. Stockholder Capacity. Stockholder signs solely in his capacity as the
--------------------
record holder and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, Stockholder's Securities and
nothing herein shall limit or affect any actions taken by Stockholder in
his capacity as an officer or director, if applicable, of the Company to
the extent specifically permitted by the Merger Agreement.
10. 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 a court of the
United States. 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
waives any right to trial by jury with respect to any claim
6
<PAGE>
or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
* * * * *
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WESLEY JESSEN VISIONCARE, INC.
By: /s/ Edward J. Kelley
------------------------------------
Edward J. Kelley
Chief Financial Officer
OCULAR SCIENCES, INC.
By: /s/ John D. Fruth
-----------------------------------
John D. Fruth
Chairman
/s/ John D. Fruth
-----------------------------------
John D. Fruth
8
<PAGE>
SCHEDULE A
Name and Address No. of Shares
---------------- -------------
John D. Fruth 5,016,665
c/o Ocular Sciences, Inc.
475 Eccles Avenue
South San Francisco, CA 94080
Fax: (650) 583-1108
<PAGE>
Exhibit B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 19, 2000 (the
"Agreement"), by and between Ocular Sciences, Inc., a Delaware corporation
---------
("Issuer"), and Wesley Jessen VisionCare, Inc., a Delaware corporation
------
("Grantee").
-------
WHEREAS, Issuer, Grantee and OSI Acquisition Corp., a Delaware
corporation ("Sub"), which is a direct wholly owned subsidiary of Grantee,
---
propose to enter into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"; capitalized terms used but not defined herein
----------------
shall have the meanings set forth in the Merger Agreement), providing for, among
other things, a merger (the "Merger") of Sub with and into Issuer;
------
WHEREAS, as a condition and inducement to Grantee's
willingness to enter into the Merger Agreement and the WJ Stock Option
Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to
issue to Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness
to enter into the Merger Agreement and this Agreement, Issuer has requested that
Grantee agree, and Grantee has agreed, to issue to Issuer an option to purchase
shares of Grantee's common stock under the WJ Stock Option Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, Issuer and Grantee agree as follows:
1. Grant of Options. Subject to the terms and conditions set
----------------
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 4,577,830 shares (the "Option Shares") of common
------
stock, par value $0.001 per share, of Issuer (the "Shares") (being 19.9% of the
number of Shares outstanding on March 19, 2000 before such issuance), at a
purchase price of $16.94 per Option Share (such price, as adjusted if
applicable, the "Purchase Price"). The number of Option Shares that may be
received upon the exercise of the Option and the Purchase Price are subject to
adjustment as set forth herein.
2. Exercise of Option. (a) Grantee may exercise the Option, in
------------------
whole or in part, at any time or from time to time following the occurrence of a
Purchase Event (as defined below); provided that, except as otherwise provided
herein, the Option shall terminate and be of no further force and effect upon
the earliest to occur of (i) the Effective Time, (ii) 6 months after the first
occurrence of a Purchase Event (or if, at the expiration of such 6-months after
the first occurrence of a Purchase Event, the Option cannot be exercised by
reason of any applicable judgment, decree, order, law or regulation, 10 business
days after such impediment to exercise shall have been removed, but in no event
under this clause (ii) later than the first anniversary of the Purchase Event),
<PAGE>
(iii) termination of the Merger Agreement under circumstances which do not and
cannot result in Grantee's becoming entitled to receive termination fees from
Issuer pursuant to Section 7.2(c) of the Merger Agreement; and (iv) 12 months
after the termination of the Merger Agreement under circumstances which could
result in Grantee's becoming entitled to receive termination fees from Issuer
pursuant to Section 7.2(c)(A) of the Merger Agreement, unless during such
12-month period, a Purchase Event shall occur. The termination of the Option
shall not affect any rights hereunder which by their terms extend beyond the
date of such termination.
(b) As used herein, a "Purchase Event" means an event the
--------------
result of which is that the total fee or fees required to be paid by Issuer to
Grantee pursuant to Section 7.2(c) of the Merger Agreement equals $20 million.
(c) In the event Grantee wishes to exercise the Option, it
shall send to Issuer a written notice (the "Exercise Notice"; the date of which
---------------
being herein referred to as the "Notice Date") specifying (i) the total number
-----------
of Option Shares it intends to purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 10 business
days from such Notice Date for the closing of such purchase (a "Closing"; and
-------
the date of such Closing, a "Closing Date"); provided that such closing shall be
------------
held only if (A) such purchase would not otherwise violate or cause the
violation of applicable law (including the HSR Act), (B) no law, rule or
regulation shall have been adopted or promulgated, and no temporary restraining
order, preliminary or permanent injunction or other order, decree or ruling
issued by a court or other governmental authority of competent jurisdiction
shall be in effect, which prohibits delivery of such Option Shares (and the
parties hereto shall use their reasonable best efforts to have any such order,
injunction, decree or ruling vacated or reversed) and (C) any prior notification
to or approval of any other regulatory authority in the United States or
elsewhere required in connection with such purchase shall have been made or
obtained, other than those which if not made or obtained would not reasonably be
expected to result in a significant detriment to the Grantee and its
Subsidiaries taken as a whole or the Issuer and its Subsidiaries taken as a
whole. If the Closing cannot be consummated by reason of a restriction set forth
in clause (A), (B) or (C) above, notwithstanding the provisions of Section 2(a),
the Closing shall be held within 5 business days following the elimination of
such restriction.
3. Payment and Delivery of Certificates. On each Closing Date,
------------------------------------
Grantee shall pay to Issuer in immediately available funds by wire transfer to a
bank account designated by Issuer an amount equal to the Purchase Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such closing, which Option Shares shall be free and clear of all
liens, charges or encumbrances ("Liens"), and Grantee shall deliver to Issuer a
-----
letter agreeing that Grantee shall not offer to sell or otherwise dispose of
such Option Shares in violation of applicable law or the provisions of this
Agreement.
-2-
<PAGE>
(c) Certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF MARCH 19, 2000. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Authorized Stock. Issuer hereby represents and warrants to
----------------
Grantee that Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, at all times from the date
hereof until the obligation to deliver Shares upon the exercise of the Option
terminates, will have reserved for issuance, upon exercise of the Option, Shares
necessary for Grantee to exercise the Option, and Issuer will take all necessary
corporate action to authorize and reserve for issuance all additional Shares or
other securities which may be issued pursuant to Section 6 upon exercise of the
Option. The Shares to be issued upon due exercise of the Option, including all
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all Liens, including any preemptive rights of any stockholder of
Issuer.
5. Purchase Not for Distribution. Grantee hereby represents
-----------------------------
and warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the
----------------------------------------------
event of any change in Shares by reason of reclassification, recapitalization,
stock split, split-up, combination, exchange of shares, stock dividend,
dividend, dividend payable in any other securities, or any similar event, the
type and number of Shares or securities subject to the Option, and the Purchase
Price
-3-
<PAGE>
therefor (including for purposes of repurchase thereof pursuant to Section 7),
shall be adjusted appropriately, and proper provisions shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Shares if the Option had
been exercised immediately prior to such event or the record date therefor, as
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding
sentence), the number of Shares subject to the Option shall be adjusted so that
immediately prior to such issuance, it equals 19.9% of the number of Shares then
issued and outstanding. In no event shall the number of Shares subject to the
Option exceed 19.9% of the number of Shares issued and outstanding at the time
of exercise (without giving effect to any shares subject or issued pursuant to
the Option).
(b) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Option is adjusted as provided in
this Section 6, the Purchase Price per Option Share shall be adjusted by
multiplying the Purchase Price by a fraction, the numerator of which is equal to
the number of Option Shares purchasable prior to the adjustment and the
denominator of which is equal to the number of Option Shares purchasable after
the adjustment.
(c) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that Issuer enters into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its Subsidiaries, and Issuer will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any Person, other
than Grantee or one of its Subsidiaries, to merge into Issuer and Issuer will be
the continuing or surviving corporation, but in connection with such merger, the
shares of Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of Issuer
or any other Person or cash or any other property, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any Person, other than
Grantee or one of its Subsidiaries, then, and in each such case, the agreement
governing such transaction will make proper provision so that the Option will,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Option
Shares had the Option been exercised immediately prior to such consolidation,
merger, sale or transfer or the record date therefor, as applicable. Issuer
shall take such steps in connection with such consolidation, merger, liquidation
or other such transaction as may be reasonably necessary to assure that the
provisions hereof shall thereafter apply as nearly as possible to any securities
or property thereafter deliverable upon exercise of the Option.
7. Repurchase of Option. (a) Notwithstanding the provisions of
--------------------
Section 2(a), at any time commencing upon the first occurrence of a Purchase
Event and ending upon termination of this Option in accordance with Section 2,
Issuer (or any successor entity thereof) shall at the request of Grantee (any
such request, a "Cash Exercise Notice"), repurchase from Grantee the Option or a
--------------------
portion thereof (if and to the extent not previously exercised or terminated) at
a price which, subject to Section 10 below, is equal to the excess, if any, of
(x) the Applicable Price (as defined
-4-
<PAGE>
below) as of the Section 7 Request Date (as defined below) for a Share over (y)
the Purchase Price (subject to adjustment pursuant to Section 6), multiplied by
all or such portion of the Option Shares subject to the Option as the Grantee
shall specify in the Cash Exercise Notice (the "Option Repurchase Price").
-----------------------
(b) Notwithstanding the provisions of Section 2(a), at any
time following the occurrence of a Purchase Event, Issuer (or any successor
entity thereof) may, at its election, repurchase the Option (if and to the
extent not previously exercised or terminated) at the Option Repurchase Price;
provided that the aggregate number of Option Shares as to which the Option may
be repurchased shall not exceed 3,051,887. For purposes of this Agreement, an
exercise of the Option shall be deemed to occur on the Closing Date and not on
the Notice Date relating thereto.
(c) In connection with any exercise of rights under this
Section 7, Issuer shall, within 5 business days after the Section 7 Request
Date, pay the Option Repurchase Price in immediately available funds, and
Grantee or such owner, as the case may be, shall surrender to Issuer the Option.
Upon receipt by the Grantee of the Option Repurchase price, the obligations of
the Issuer to deliver Option Shares pursuant to Section 3 of this Agreement
shall be terminated with respect to the number of Option Shares specified in the
Cash Exercise Notice or the number of Option Shares as to which the Option is
repurchased under Section 7(b).
(d) For purposes of this Agreement, the following terms have
the following meanings:
(i) "Applicable Price", as of any date, means the highest
----------------
of (A) the highest price per Share paid or proposed to be
paid by any third party for Shares or the consideration
per Share received or to be received by holders of
Shares, in each case pursuant to any Acquisition Proposal
for or with Issuer made on or prior to such date or (B)
the highest bid price per Share as quoted on the National
Association of Securities Dealers Automated Quotation
System ("Nasdaq") or, if the Shares are not quoted on
------
Nasdaq, on the principal trading market on which such
Shares are traded as reported by a recognized source
during the 10 trading days preceding such date. If the
consideration to be offered, paid or received pursuant to
the foregoing clause (A) shall be other than in cash, the
value of such consideration shall be determined in good
faith by an independent nationally recognized investment
banking firm selected by Grantee and reasonably
acceptable to Issuer.
(ii) "Section 7 Request Date" means the date on which
----------------------
Issuer or Grantee, as the case may be, exercises its
rights under this Section.
8. Registration Rights. Issuer shall, if requested by Grantee
-------------------
or any Subsidiary of the Grantee which is the owner of Option Shares
(collectively with Grantee, the "Owners") at any time and from time to time
within two years of the first exercise of the Option, as expeditiously as
-5-
<PAGE>
possible prepare and file up to two registration statements under the Securities
Act if such registration is necessary in order to permit the sale or other
disposition of any or all shares of securities that have been acquired by or are
issuable to such Owners upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by such Owners, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use all reasonable efforts to qualify such
shares or other securities under any applicable state securities laws. Issuer
shall use all reasonable efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement effective for such
period at least 90 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of Issuer hereunder to file a registration
statement and to maintain its effectiveness may be suspended for a period of
time not exceeding 90 days in the aggregate if the Board of Directors of Issuer
shall have determined in good faith that the filing of such registration
statement or the maintenance of its effectiveness would require disclosure of
nonpublic information that would materially and adversely affect Issuer (but in
no event shall Issuer exercise such postponement right more than once in any
12-month period). Any registration statement prepared and filed under this
Section 8, and any sale covered thereby, shall be at Issuer's expense except for
underwriting discounts or commissions, brokers' fees and the reasonable fees and
disbursements of Owners' counsel related thereto. The Owners shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time period referred to in the
first sentence of this Section 8 Issuer effects a registration under the
Securities Act of Shares for its own account or for any other stockholders of
Issuer (other than on Form S-4 or Form S-8, or any successor form), it shall
allow the Owners the right to participate in such registration, and such
participation shall not affect the obligation of Issuer to effect two
registration statements for the Owners under this Section 8; provided that, if
the managing underwriters of such offering advise Issuer in writing that in
their opinion the number of Shares requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the offering price, Issuer and the Owners shall each reduce on a pro
rata basis the Shares to be included therein on their respective behalf. In
connection with any registration pursuant to this Section 8, Issuer and the
Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
9. Additional Covenants of Issuer. (a) If Shares or any other
------------------------------
securities to be acquired upon exercise of the Option are then quoted on Nasdaq
or listed on any securities exchange or market, Issuer, upon the request of any
Owner, will promptly file an application to list the Shares or other securities
to be acquired upon exercise of the Options on Nasdaq or any securities exchange
or market or which such Shares are traded and will use its reasonable best
efforts to obtain approval of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to permit
the exercise of the Option in accordance with the terms and conditions hereof,
-6-
<PAGE>
as soon as practicable after the date hereof, including making any appropriate
filing pursuant to the HSR Act and any other applicable law, supplying as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and any other applicable law, and
taking all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(c) Issuer agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger, issuance of
rights, dissolution or sale of assets, or by any other voluntary act) the
observance or performance of any of the covenants, agreements or conditions to
be observed or performed hereunder by it.
(d) Issuer shall take all such steps as may be required to
cause any acquisitions or dispositions by Grantee (or any affiliate who may
become subject to the reporting requirements of Section 16(a) of the Exchange
Act) of any Shares acquired in connection with this Agreement (through
conversion or exercise of the Option or otherwise) to be exempt under Rule 16b-3
promulgated under the Exchange Act.
10. Limitation of Grantee Profit. (a) Notwithstanding any
----------------------------
other provision in this Agreement, in no event shall Grantee's Total Profit (as
defined below) exceed $25.0 million (the "Maximum Profit") and, if it otherwise
--------------
would exceed such amount, Grantee, at its sole discretion, shall either (i)
reduce the number of Shares subject to the Option, (ii) deliver to Issuer for
cancellation Shares (or other securities into which such Option Shares are
converted or exchanged) previously purchased by Grantee, (iii) pay cash to
Issuer, or (iv) any combination of the foregoing, so that Grantee's actually
realized Total Profit shall not exceed the Maximum Profit after taking into
account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Option Shares as would, as of any
Notice Date, result in a Notional Total Profit (as defined below) of more than
the Maximum Amount and, if exercise of the Option otherwise would result in the
Notional Total Profit exceeding such amount, Grantee, at its discretion, may (in
addition to any of the actions specified in Section 10(a) above) (i) reduce the
number of Shares subject to the Option or (ii) increase the Purchase Price for
that number of Option Shares set forth in the Exercise Notice so that the
Notional Total Profit shall not exceed the Maximum Profit; provided that nothing
in this sentence shall restrict any exercise of the Option permitted hereby on
any subsequent date at the Purchase Price set forth in Section 1 hereof.
(c) For purposes of this Agreement, "Total Profit" shall mean:
------------
(i) the aggregate amount (before taxes) of (A) any excess of (x) the net cash
amounts or fair market value of any property received by Grantee pursuant to a
sale of Option Shares (or securities into which such shares are converted or
exchanged) over (y) the Grantee's aggregate purchase price for such Option
Shares (or other securities), plus (B) any amounts received by Grantee on the
repurchase of the Option by Issuer pursuant to Section 7, plus (C) any
termination fee paid by Issuer and received by Grantee pursuant to Section
7.2(b) of the Merger Agreement, minus (ii) the amounts of any cash
-7-
<PAGE>
previously paid by Grantee to Issuer pursuant to this Section 10 plus the value
of the Option Shares (or other securities) previously delivered by Grantee to
Issuer for cancellation pursuant to this Section 10.
(d) For purposes of this Agreement, "Notional Total Profit"
---------------------
with respect to any number of Option Shares as to which Grantee may propose to
exercise the Option shall mean the Total Profit determined as of the Notice Date
assuming that the Stock Option was exercised on such date for such number of
Option Shares and assuming that such Option Shares, together with all other
Option Shares previously acquired upon exercise of the Option and held by
Grantee as of such date, were sold for cash at the closing price per Share on
Nasdaq as of the close of business on the preceding trading day (less customary
brokerage commissions).
(e) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive, nor
relieve Issuer's obligation to pay, any termination fee provided for in Section
7.2(b) of the Merger Agreement provided that if and to the extent the Total
Profit received by the Grantee would exceed the Maximum Profit following the
receipt of such payment, Grantee shall be obligated to promptly comply with the
terms of Section 10(a).
(f) For purposes of Section 10(a) and clause (ii) of Section
10(c), the value of any Option Shares delivered by Grantee to Issuer shall be
the Applicable Price of such Option Shares.
11. Loss, Theft, Etc. of Agreement. This Agreement (and the
------------------------------
Option granted hereby) is exchangeable, without expense, at the option of
Grantee, upon presentation and surrender of this Agreement at the principal
office of Issuer for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase in the aggregate the same
number of Shares purchasable hereunder. The terms "Agreement" and "Option" as
--------- ------
used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
12. Miscellaneous.
-------------
(a) Expenses. Except as otherwise provided in Section 9 hereof
--------
or in the Merger Agreement, each of the parties hereto shall bear and pay all
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
-8-
<PAGE>
(b) Waiver and Amendment. Any provision of this Agreement may
--------------------
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary;
---------------------------------------------
Severability. Except as otherwise set forth in the Merger Agreement, this
- ------------
Agreement, together with the Merger Agreement and the WJ Stock Option Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to acquire,
or does not require Issuer to repurchase, the full number of Shares as provided
in Sections 2 and 7, as adjusted pursuant to Section 6, it is the express
intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of Shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING
EFFECT TO CHOICE OF LAW PRINCIPLES).
(e) Descriptive Headings. The descriptive headings
---------------------
contained herein are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement.
(g) Counterparts. This Agreement and any amendments hereto may
------------
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Grantee may not, without the prior written
----------
consent of Issuer (which shall not be unreasonably withheld), assign this
Agreement or the Option to any other person. This Agreement shall not be
assignable by Issuer except by operation of law. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
-9-
<PAGE>
(i) Representations and Warranties. The representations and
------------------------------
warranties contained in Sections 3.1(a)(i) and 3.2(a)(i) of the Merger
Agreement, and, to the extent they relate to this Agreement, in Sections 3.2(b),
(c), (f) and (g) and Section 3.1(c) of the Merger Agreement, are incorporated
herein by reference.
(j) Further Assurances. In the event of any exercise of the
------------------
Option by Grantee, Issuer and Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(k) 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity. Both parties further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such equitable
relief and that this provision is without prejudice to any other rights that the
parties hereto may have for any failure to perform this Agreement.
(l) Captions. The Article, Section and paragraph captions
--------
herein are for convenience only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
(m) Confidentiality Agreement. Issuer hereby waives the
-------------------------
restrictions on Grantee's acquisition of Shares contained in the Confidentiality
Agreement to the extent necessary to permit Grantee to exercise the Option and
purchase the Option Shares as herein provided.
-10-
<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of March 19, 2000.
OCULAR SCIENCES, INC.
By: /s/ John D. Fruth
-------------------------------
John D. Fruth
Chairman
WESLEY JESSEN VISIONCARE, INC.
By: /s/ Edward J. Kelley
-------------------------------
Edward J. Kelley
Chief Financial Officer
<PAGE>
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 19, 2000
AMONG
WESLEY JESSEN VISIONCARE, INC.,
OSI ACQUISITION CORP.
AND
OCULAR SCIENCES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS............................................................... 2
1.1 The Merger........................................................................ 2
1.2 Closing........................................................................... 2
1.3 Effective Time.................................................................... 2
1.4 Effects of the Merger............................................................. 3
1.5 Certificate of Incorporation...................................................... 3
1.6 Bylaws............................................................................ 3
1.7 Officers and Directors of Surviving Corporation and Newco......................... 3
1.8 Effect on Capital Stock........................................................... 3
1.9 OSI Stock Options and Other Equity-Based Awards................................... 4
1.10 Certain Adjustments............................................................... 5
1.11 Associated Rights................................................................. 6
ARTICLE II
EXCHANGE OF CERTIFICATES.......................................................................... 6
2.1 Exchange Fund..................................................................... 6
2.2 Exchange Procedures............................................................... 6
2.3 Distributions with Respect to Unexchanged Shares.................................. 7
2.4 No Further Ownership Rights in OSI Common Stock................................... 7
2.5 No Fractional Shares of WJ Common Stock........................................... 7
2.6 Termination of Exchange Fund...................................................... 8
2.7 No Liability...................................................................... 8
2.8 Investment of the Exchange Fund................................................... 8
2.9 Lost Certificates................................................................. 8
2.10 Withholding Rights................................................................ 9
2.11 Further Assurances................................................................ 9
2.12 Stock Transfer Books.............................................................. 9
2.13 Affiliates........................................................................ 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES.................................................................... 9
3.1 Representations and Warranties of WJ.............................................. 9
(a) Organization, Standing and Power; Subsidiaries.......................... 10
(b) Capital Structure....................................................... 10
(c) Authority; No Conflicts................................................. 11
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(d) Reports and Financial Statements........................................ 13
(e) Information Supplied.................................................... 13
(f) Board Approval.......................................................... 14
(g) Vote Required........................................................... 14
(h) Litigation; Compliance with Laws........................................ 14
(i) Absence of Certain Changes or Events.................................... 15
(j) Environmental Matters................................................... 15
(k) Intellectual Property................................................... 16
(l) Brokers or Finders...................................................... 17
(m) Opinion of WJ Financial Advisor......................................... 17
(n) Accounting Matters...................................................... 17
(o) Taxes................................................................... 17
(p) Certain Contracts....................................................... 18
(q) WJ Stockholder Rights Plan.............................................. 19
(r) Ownership of OSI Capital Stock.......................................... 19
(s) ERISA Compliance........................................................ 19
3.2 Representations and Warranties of OSI............................................. 21
(a) Organization, Standing and Power; Subsidiaries.......................... 21
(c) Authority; No Conflicts................................................. 23
(d) Reports and Financial Statements........................................ 24
(e) Information Supplied.................................................... 24
(f) Board Approval.......................................................... 25
(g) Vote Required........................................................... 25
(h) Litigation; Compliance with Laws........................................ 25
(i) Absence of Certain Changes or Events.................................... 26
(j) Environmental Matters................................................... 26
(k) Intellectual Property................................................... 27
(l) Brokers or Finders...................................................... 27
(m) Opinion of OSI Financial Advisor........................................ 27
(n) Accounting Matters...................................................... 27
(o) Taxes................................................................... 28
(p) Certain Contracts....................................................... 28
(q) Ownership of WJ Capital Stock........................................... 29
(r) ERISA Compliance........................................................ 29
(s) Employment Agreements................................................... 31
3.3 Representations and Warranties of WJ and Merger Sub............................... 31
(a) Organization............................................................ 31
(b) Corporate Authorization................................................. 31
(c) Non-Contravention....................................................... 31
(d) No Business Activities.................................................. 32
(e) Board Approval.......................................................... 32
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ARTICLE IV........................................................................................ 32
COVENANTS RELATING TO CONDUCT OF BUSINESS......................................................... 32
4.1 Covenants of WJ................................................................... 32
(a) Ordinary Course......................................................... 32
(b) Dividends; Changes in Share Capital..................................... 33
(c) Issuance of Securities.................................................. 33
(d) Governing Documents..................................................... 33
(e) No Acquisitions......................................................... 33
(f) No Dispositions......................................................... 34
(g) Investments; Indebtedness............................................... 34
(h) Pooling; Tax-Free Qualification......................................... 34
(i) Compensation............................................................ 34
(j) Accounting Methods; Income Tax Elections................................ 35
(k) Certain Agreements...................................................... 35
(l) No Change or Amendment to Rights Agreement.............................. 35
(m) No Related Actions...................................................... 35
4.2 Covenants of OSI.................................................................. 35
(a) Ordinary Course......................................................... 35
(b) Dividends; Changes in Share Capital..................................... 36
(c) Issuance of Securities.................................................. 36
(d) Governing Documents..................................................... 36
(e) No Acquisitions......................................................... 37
(f) No Dispositions......................................................... 37
(g) Investments; Indebtedness............................................... 37
(h) Pooling; Tax-Free Qualification......................................... 37
(i) Compensation............................................................ 38
(j) Accounting Methods; Income Tax Elections................................ 38
(k) Certain Agreements...................................................... 38
(l) No Related Actions...................................................... 38
4.3 Governmental Filings.............................................................. 38
4.4 Control of Other Party's Business................................................. 38
ARTICLE V......................................................................................... 39
ADDITIONAL AGREEMENTS............................................................................. 39
5.1 Preparation of Proxy Statement; Stockholders Meetings............................. 39
5.2 Newco Board of Directors; Executive Officers;
Post-Merger Operations............................................................ 41
5.3 Access to Information............................................................. 42
5.4 Reasonable Best Efforts........................................................... 42
5.5 Acquisition Proposals............................................................. 44
5.6 Employee Benefits Matters......................................................... 45
</TABLE>
-iv-
<PAGE>
<TABLE>
<S> <C>
5.7 Fees and Expenses................................................................. 46
5.8 Directors' and Officers' Indemnification and Insurance............................ 46
5.9 Public Announcements.............................................................. 47
5.10 Accountant's Letters.............................................................. 47
5.11 Listing of Shares of WJ Common Stock.............................................. 48
5.12 Registration Rights Agreement..................................................... 48
5.13 Affiliates........................................................................ 48
5.14 Section 16 Matters................................................................ 49
ARTICLE VI........................................................................................ 49
CONDITIONS PRECEDENT.............................................................................. 49
6.1 Conditions to Each Party's Obligation to Effect the Merger........................ 49
(a) Stockholder Approval.................................................... 49
(b) No Injunctions or Restraints, Illegality................................ 49
(c) HSR Act; EC Merger Regulation........................................... 49
(d) Governmental and Regulatory Approvals................................... 49
(e) Nasdaq Listing.......................................................... 50
(f) Effectiveness of the Form S-4........................................... 50
(g) Pooling................................................................. 50
6.2 Additional Conditions to Obligations of WJ and Merger Sub......................... 50
(a) Representations and Warranties.......................................... 50
(b) Performance of Obligations of OSI....................................... 50
(c) Tax Opinion............................................................. 51
6.3 Additional Conditions to Obligations of OSI....................................... 51
(a) Representations and Warranties.......................................... 51
(b) Performance of Obligations of WJ........................................ 51
(c) Tax Opinion............................................................. 51
(d) WJ Rights Agreement..................................................... 51
ARTICLE VII....................................................................................... 51
TERMINATION AND AMENDMENT......................................................................... 51
7.1 Termination....................................................................... 52
7.2 Effect of Termination............................................................. 53
7.3 Amendment......................................................................... 55
7.4 Extension; Waiver................................................................. 55
ARTICLE VIII...................................................................................... 56
GENERAL PROVISIONS................................................................................ 56
8.1 Non-Survival of Representations, Warranties and Agreements........................ 56
8.2 Notices........................................................................... 56
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
8.3 Interpretation.................................................................... 57
8.4 Counterparts...................................................................... 57
8.5 Entire Agreement; No Third Party Beneficiaries.................................... 57
8.6 Governing Law..................................................................... 57
8.7 Severability...................................................................... 57
8.8 Assignment........................................................................ 58
8.9 Submission to Jurisdiction; Waivers............................................... 58
8.10 Enforcement....................................................................... 58
8.11 Definitions....................................................................... 58
</TABLE>
LIST OF EXHIBITS
Exhibit Title
- ------- -----
A Form of OSI Stock Option Agreement
B Form of WJ Stock Option Agreement
C Form of Stockholders Agreement (OSI)
D Form of Stockholders Agreement (WJ)
1.5(b) Form of Amendment to WJ Restated Certificate of Incorporation
5.2(a) Board of Directors and Officers of Newco
5.2(b) Form of Amended and Restated Bylaws of Newco
5.12 Form of Registration Rights Agreement
5.13(a) Form of Affiliate Letter (OSI)
5.13(b) Form of Affiliate Letter (WJ)
<PAGE>
Exhibit C
AGREEMENT AND PLAN OF MERGER, dated as of March 19, 2000 (this
"Agreement"), among Wesley Jessen VisionCare, Inc., a Delaware corporation
---------
("WJ"), OSI Acquisition Corp., a Delaware corporation and a direct wholly owned
--
subsidiary of WJ ("Merger Sub"), and Ocular Sciences, Inc., a Delaware
----------
corporation ("OSI").
---
W I T N E S S E T H:
WHEREAS, the Boards of Directors of OSI, WJ and Merger Sub deem it
advisable and in the best interests of each corporation and its respective
stockholders that OSI and WJ engage in a business combination in order to
advance the long-term strategic business interests of OSI and WJ;
WHEREAS, the combination of OSI and WJ shall be effected by the terms of
this Agreement through a merger of Merger Sub with and into OSI (the "Merger"),
------
which shall result in OSI becoming a wholly owned subsidiary of WJ;
WHEREAS, in furtherance thereof, the respective Boards of Directors of OSI
and WJ have approved the Merger, upon the terms and subject to the conditions
set forth in this Agreement, pursuant to which each share of common stock, par
value $0.001 per share, of OSI ("OSI Common Stock") issued and outstanding
----------------
immediately prior to the Effective Time (as defined in Section 1.3), other than
shares owned or held directly or indirectly by WJ or directly or indirectly by
OSI, will be converted into the right to receive shares of common stock, par
value $0.01 per share, of WJ ("WJ Common Stock") as set forth in Section 1.8;
---------------
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, (i) as a condition and inducement to WJ's willingness to enter into
this Agreement and the WJ Stock Option Agreement referred to below, WJ and OSI
are entering into a Stock Option Agreement dated as of the date hereof in the
form of Exhibit A (the "OSI Stock Option Agreement") pursuant to which OSI is
--------- --------------------------
granting to WJ an option to purchase shares of OSI Common Stock and (ii) as a
condition and inducement to OSI's willingness to enter into this Agreement and
the OSI Stock Option Agreement, OSI and WJ are entering into a Stock Option
Agreement dated as of the date hereof in the form of Exhibit B (the "WJ Stock
--------- --------
Option Agreement," and together with the OSI Stock Option Agreement, the "Stock
- ------ --------- -----
Option Agreements"), pursuant to which WJ is granting to OSI an option to
- -----------------
purchase shares of WJ Common Stock;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement and as a condition and inducement to each of WJ's and OSI's
willingness to enter into this Agreement, WJ, Merger Sub and a significant
stockholder of OSI (the "OSI Stockholder") are entering into a stockholders
---------------
agreement dated as of the date hereof in the form of Exhibit C and OSI, WJ and
---------
certain significant stockholders of WJ (the "WJ Stockholders") are entering into
---------------
a stockholders agreement dated as of the date hereof in the form of Exhibit D
---------
(each, a "Stockholders Agreement" and, collectively, the "Stockholders
---------------------- ------------
Agreements") pursuant to which the OSI Stockholder and each of the WJ
- ----------
Stockholders is agreeing to take certain actions to support the transactions
contemplated by this Agreement;
<PAGE>
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
----
promulgated thereunder; and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests transaction under United States
generally accepted accounting principles ("GAAP").
----
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Stock Option Agreements, and intending to be legally bound
hereby and thereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER; CERTAIN RELATED MATTERS
1.1 The Merger. Upon the terms and subject to the conditions set forth in
----------
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Merger Sub shall be merged with and into OSI at the Effective Time.
----
Following the Merger, the separate corporate existence of Merger Sub shall cease
and OSI shall continue as the surviving corporation (the "Surviving
---------
Corporation"), and shall be a wholly owned subsidiary of WJ.
- -----------
1.2 Closing. Upon the terms and subject to the conditions set forth in
-------
Article VI and the termination rights set forth in Article VII, the closing of
the Merger (the "Closing") will take place on the first Business Day after the
-------
satisfaction or waiver (subject to applicable law) of the conditions (excluding
conditions that, by their nature, cannot be satisfied until the Closing Date)
set forth in Article VI, unless this Agreement has been theretofore terminated
pursuant to its terms or unless another time or date is agreed to in writing by
the parties hereto (the actual time and date of the Closing being referred to
herein as the "Closing Date"). The Closing shall be held at the offices of
------------
Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois, 60601, unless
another place is agreed to in writing by the parties hereto.
1.3 Effective Time. As soon as practicable following the satisfaction or
--------------
waiver (subject to applicable law) of the conditions set forth in Article VI, at
the Closing the parties shall (i) file a certificate of merger (the "Certificate
-----------
of Merger") in such form as is required by and executed in accordance with the
- ---------
relevant provisions of the DGCL and (ii) make all other filings or recordings
required under the DGCL to effect the Merger. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State or at such
2
<PAGE>
subsequent time as WJ and OSI shall agree and as shall be specified in the
Certificate of Merger (the date and time the Merger becomes effective being the
"Effective Time").
--------------
1.4 Effects of the Merger. At and after the Effective Time, the Merger
---------------------
will have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of OSI and Merger Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of OSI and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.5 Certificate of Incorporation.
----------------------------
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable law, except that the name of the Surviving
Corporation shall be "Ocular Sciences, Inc."
(b) The certificate of incorporation of WJ shall be amended effective as
of the Effective Time as set forth on Exhibit 1.5(b) hereto (subject to the
Board of Directors of WJ determining, in its sole discretion, that such
amendment is desirable and obtaining the requisite stockholder approval). Such
amendment is referred to herein as the "Certificate Amendment."
---------------------
1.6 Bylaws. The bylaws of Merger Sub, as in effect immediately prior to
------
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
1.7 Officers and Directors of Surviving Corporation and Newco. The
---------------------------------------------------------
officers of Merger Sub as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are duly
elected and qualified, as the case may be. The directors of the Merger Sub as
of the Effective Time shall be the directors of the Surviving Corporation, which
individuals will serve as directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified. The officers
and directors of WJ, as of the Effective Time, will be as provided in Section
5.2. WJ as of and after the Effective Time is sometimes referred to herein as
"Newco."
-----
1.8 Effect on Capital Stock.
-----------------------
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof, each share of OSI Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares of OSI
Common Stock owned by WJ or Merger Sub or held by OSI, all of which shall be
canceled as provided in Section 1.8(c)), shall be converted into .7211 validly
issued, fully paid and non-assessable shares (the "Exchange Ratio") of WJ Common
--------------
Stock and the associated WJ Rights (as hereinafter defined) (together with any
cash in lieu of
3
<PAGE>
fractional shares of WJ Common Stock to be paid pursuant to Section 2.5, the
"Merger Consideration").
- ---------------------
(b) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of OSI Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate which immediately prior to the Effective
Time represented any such shares of OSI Common Stock (a "Certificate") shall
-----------
thereafter cease to have any rights with respect to such shares of OSI Common
Stock, except as provided herein or by law.
(c) Each share of OSI Common Stock issued and owned by WJ or Merger Sub or
held by OSI at the Effective Time shall, by virtue of the Merger, cease to be
outstanding and shall be canceled and retired and no stock of WJ or other
consideration shall be delivered in exchange therefor.
(d) At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof, each share of common stock, par value $0.01
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time, shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
1.9 OSI Stock Options and Other Equity-Based Awards.
-----------------------------------------------
(a) Each OSI Stock Option (as defined in Section 3.2(b)) that was granted
pursuant to the OSI Stock Option Plans (as defined in Section 3.2(b)) prior to
the Effective Time and which remains outstanding immediately prior to the
Effective Time shall cease to represent a right to acquire shares of OSI Common
Stock and shall be converted, at the Effective Time, into an option to acquire,
on the same terms and conditions as were applicable under the OSI Stock Option
that number of shares of WJ Common Stock determined by multiplying the number of
shares of OSI Common Stock subject to such OSI Option by the Exchange Ratio,
rounded, if necessary, to the nearest whole share of WJ Common Stock, at a price
per share (rounded to the nearest one-hundredth of a cent) equal to the per
share exercise price specified in such OSI Stock Option divided by the Exchange
Ratio; provided, however, that in the case of any OSI Stock Option to which
-----------------
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the option price, the number of shares subject to such option and
the terms and conditions of exercise of such option shall be determined in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, Newco shall deliver
to the holders of OSI Stock Options appropriate notices setting forth such
holders' rights pursuant to the OSI Stock Option Plans and the agreements
evidencing the grants of such OSI Stock Options shall continue in effect on the
same terms and conditions (subject to the adjustments required by this Section
1.9 after giving effect to the Merger and the terms of the OSI Stock Option
Plans). To the
4
<PAGE>
extent permitted by law, Newco shall comply with the terms of the OSI Stock
Option Plans and shall take such reasonable steps as are necessary or required
by, and subject to the provisions of, such OSI Stock Option Plans, to have the
OSI Stock Options which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options of Newco after the
Effective Time. Continuous employment with OSI or its Subsidiaries shall be
credited to the OSI Stock Option holders for purposes of determining the vesting
of all assumed OSI Stock Options after the Effective Time.
(c) At the Effective Time, each outstanding purchase right with respect to
all open Offering Periods under the OSI Purchase Plan (as defined in Section
3.2(b)(each an "Assumed Purchase Right") shall be assumed by Newco. Each
------- --------------
Assumed Purchase Right shall continue to have, and be subject to, the terms and
conditions set forth in the OSI Purchase Plan and the documents governing the
Assumed Purchase Right, except that the purchase price of such shares of WJ
Common Stock for each respective Purchase Date under each Assumed Purchase Right
shall be the lower of (i) the quotient determined by dividing eighty-five
percent (85%) of the fair market value of the OSI Common Stock on the Offering
Date of each assumed Offering Period by the Exchange Ratio or (ii) eighty-five
percent (85%) of the fair market value of the WJ Common Stock on each Purchase
Date of each assumed Offering Period occurring after the Effective Time (with
the number of shares rounded down to the nearest whole share and the purchase
price rounded to the nearest whole cent). The Assumed Purchase Rights shall be
exercised at such times following the Effective Time as set forth in the OSI
Purchase Place and each participant shall, accordingly, be issued shares of WJ
Common Stock at such times. The OSI Purchase Plan shall terminate with the
exercise of the last Assumed Purchase Right, and no additional purchase rights
shall be granted under the OSI Purchase Plan following the Effective Time.
Capitalized terms in this Section 1.9(c), if not otherwise defined in this
Agreement, have the meanings ascribed to them in the OSI Purchase Plan.
(d) Newco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of WJ Common Stock for delivery upon
exercise of OSI Stock Options. Promptly after the Effective Time, Newco shall
file a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of WJ Common Stock subject to such options
and shall use commercially reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding. With respect to those individuals who subsequent to
the Merger will be subject to the reporting requirements under Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), where
------------
applicable, Newco shall administer the OSI Stock Option Plans in a manner
consistent with the exemptions provided by Rule 16b-3 promulgated under the
Exchange Act.
1.10 Certain Adjustments. If, between the date of this Agreement and the
-------------------
Effective Time, the outstanding WJ Common Stock or OSI Common Stock shall have
been changed into a different number of shares or different class by reason of
any reclassification, recapitalization, stock split, split-up, combination or
exchange of shares or a stock dividend or dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall
5
<PAGE>
have occurred, the Exchange Ratio shall be appropriately adjusted to provide to
the holders of OSI Common Stock the same economic effect as contemplated by this
Agreement prior to such event.
1.11 Associated Rights. References in Article I and Article II of this
-----------------
Agreement to the WJ Common Stock shall include, unless the context requires
otherwise, the associated WJ Rights.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. Prior to the Effective Time, WJ shall appoint a
-------------
commercial bank or trust company reasonably acceptable to OSI having net capital
of not less than $300,000,000, or a subsidiary thereof, to act as exchange agent
hereunder for the purpose of exchanging Certificates for the Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time, WJ
--------------
shall deposit with the Exchange Agent, in trust for the benefit of holders of
shares of OSI Common Stock, certificates representing the WJ Common Stock
issuable pursuant to Section 1.8 in exchange for outstanding shares of OSI
Common Stock. WJ agrees to make available to the Exchange Agent from time to
time as needed, cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 2.5 and any dividends and other distributions pursuant to
Section 2.3. Any cash and certificates of WJ Common Stock deposited with the
Exchange Agent shall hereinafter be referred to as the "Exchange Fund."
-------------
2.2 Exchange Procedures. Promptly after the Effective Time, the Surviving
-------------------
Corporation shall cause the Exchange Agent to mail to each holder of a
Certificate (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 proper delivery of the Certificates to the Exchange Agent, and which letter
shall be in customary form and have such other provisions as WJ may reasonably
specify and (ii) instructions for effecting the surrender of such Certificates
in exchange for the applicable Merger Consideration. Upon surrender of a
Certificate to the Exchange Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, 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) one or
more shares of WJ Common Stock (which shall be in uncertificated book-entry form
unless a physical certificate is requested) representing, in the aggregate, the
whole number of shares that such holder has the right to receive pursuant to
Section 1.8 (after taking into account all shares of OSI Common Stock then held
by such holder) and (B) a check in the amount equal to the cash that such holder
has the right to receive pursuant to the provisions of this Article II,
including cash in lieu of any fractional shares of WJ Common Stock pursuant to
Section 2.5 and dividends and other distributions pursuant to Section 2.3. No
interest will be paid or will accrue on any cash payable pursuant to Section 2.3
or Section 2.5. In the event of a transfer of ownership of OSI Common Stock
which is not registered in the transfer records of OSI, one or more shares of WJ
Common Stock evidencing, in the
6
<PAGE>
aggregate, the proper number of shares of WJ Common Stock, a check in the proper
amount of cash in lieu of any fractional shares of WJ Common Stock pursuant to
Section 2.5 and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.3, may be issued with respect to such OSI Common
Stock to such a transferee if the Certificate representing such shares of OSI
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
2.3 Distributions with Respect to Unexchanged Shares. No dividends or
------------------------------------------------
other distributions declared or made with respect to shares of WJ Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of WJ Common Stock that
such holder would be entitled to receive upon surrender of such Certificate and
no cash payment in lieu of fractional shares of WJ Common Stock shall be paid to
any such holder pursuant to Section 2.5 until such holder shall surrender such
Certificate in accordance with Section 2.2. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall be paid to such
holder of shares of WJ Common Stock issuable in exchange therefor, without
interest, (a) promptly after the time of such surrender, the amount of any cash
payable in lieu of fractional shares of WJ Common Stock to which such holder is
entitled pursuant to Section 2.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of WJ Common Stock, and (b) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such shares of WJ Common
Stock.
2.4 No Further Ownership Rights in OSI Common Stock. All shares of WJ
-----------------------------------------------
Common Stock issued and cash paid upon conversion of shares of OSI Common Stock
in accordance with the terms of Article I and this Article II (including any
cash paid pursuant to Section 2.3 or 2.5) shall be deemed to have been issued or
paid in full satisfaction of all rights pertaining to the shares of OSI Common
Stock.
2.5 No Fractional Shares of WJ Common Stock.
---------------------------------------
(a) No certificates or scrip or shares of WJ Common Stock representing
fractional shares of WJ Common Stock or book-entry credit of the same 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 have any rights of a
stockholder of WJ or a holder of shares of WJ Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder of
shares of OSI Common Stock exchanged pursuant to the Merger who would otherwise
have been entitled to receive a fraction of a share of WJ Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to the product of (i)
such fractional part of a share of WJ Common Stock multiplied by (ii) the
closing price for a share of WJ Common Stock on the Nasdaq National Market
("Nasdaq") on the
------
7
<PAGE>
date of the Effective Time or, if such date is not a Business Day, the Business
Day immediately following the date on which the Effective Time occurs.
As promptly as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional interests, the Exchange Agent shall so
notify WJ, and WJ shall cause the Surviving Corporation to deposit such amount
with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders of fractional interests subject to and in accordance with the
terms hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund which
----------------------------
remains undistributed to the holders of Certificates for six months after the
Effective Time shall be delivered to Newco or otherwise on the instruction of
Newco, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Newco for the Merger
Consideration with respect to the shares of OSI Common Stock formerly
represented thereby to which such holders are entitled pursuant to Section 1.8
and Section 2.2, any cash in lieu of fractional shares of WJ Common Stock to
which such holders are entitled pursuant to Section 2.5 and any dividends or
distributions with respect to shares of WJ Common Stock to which such holders
are entitled pursuant to Section 2.3. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of OSI Common Stock five years after
the Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental Entity
(as defined in Section 3.1(c) (iii)) shall, to the extent permitted by law,
become the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
2.7 No Liability. None of WJ, Merger Sub, OSI, the Surviving Corporation
------------
or the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall invest any
-------------------------------
cash included in the Exchange Fund as directed by Newco on a daily basis;
provided, that no such investment or loss thereon shall affect the amounts
- --------
payable to OSI stockholders pursuant to Article I and the other provisions of
this Article II. Any interest and other income resulting from such investments
shall promptly be paid to Newco.
2.9 Lost Certificates. If any Certificate shall have been lost, stolen or
-----------------
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of OSI Common Stock
formerly represented thereby, any cash in lieu of fractional shares of
8
<PAGE>
WJ Common Stock, and unpaid dividends and distributions on shares of WJ Common
Stock deliverable in respect thereof, pursuant to this Agreement.
2.10 Withholding Rights. Each of the Surviving Corporation and WJ shall be
------------------
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of OSI Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or WJ, as the case may
be, such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of OSI Common Stock in respect of
which such deduction and withholding was made by the Surviving Corporation or
WJ, as the case may be.
2.11 Further Assurances. At and after the Effective Time, the officers and
------------------
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of OSI or Merger Sub, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
OSI or Merger Sub, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
2.12 Stock Transfer Books. The stock transfer books of OSI shall be closed
--------------------
immediately upon the Effective Time and there shall be no further registration
of transfers of shares of OSI Common Stock thereafter on the records of OSI. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
WJ for any reason shall be converted into the Merger Consideration with respect
to the shares of OSI Common Stock formerly represented thereby (including any
cash in lieu of fractional shares of WJ Common Stock to which the holders
thereof are entitled pursuant to Section 2.5) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 2.3.
2.13 Affiliates. Notwithstanding anything to the contrary herein, to the
----------
fullest extent permitted by law and "pooling of interests" accounting treatment,
no certificates representing shares of WJ Common Stock or cash shall be
delivered to a Person who may be deemed an "affiliate" of OSI in accordance with
Section 5.13 hereof for purposes of Rule 145 under the Securities Act of 1933,
as amended (the "Securities Act"), or for purposes of qualifying the Merger for
--------------
pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable rules and regulations of the Securities and
Exchange Commission (the "SEC") until such Person has executed and delivered an
---
Affiliate Agreement (as defined in Section 5.13) to WJ.
9
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of WJ. Except as set forth in the WJ
------------------------------------
Disclosure Schedule delivered by WJ to OSI prior to the execution of this
Agreement (the "WJ Disclosure Schedule") (each section of which qualifies the
----------------------
correspondingly numbered representation and warranty or covenant to the extent
specified therein), WJ represents and warrants to OSI as follows:
(a) Organization, Standing and Power; Subsidiaries.
----------------------------------------------
(i) Each of WJ and each of its Subsidiaries (as defined in Section
8.11) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failures to be so
organized, existing and in good standing or to have such power and authority, in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on WJ, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failures so to qualify or to be in good standing, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
WJ. The copies of the certificate of incorporation and bylaws of WJ, which were
previously furnished or made available to OSI, are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(ii) Section 3.1(a)(ii) of the WJ Disclosure Schedule sets forth all
the Subsidiaries of WJ which, as of the date of this Agreement, are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC) . All the
outstanding shares of capital stock of, or other equity interests in, each such
Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are, except as set forth on the WJ Disclosure Schedule, owned
directly or indirectly by WJ, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively "Liens") and free of any other restriction (including any
-----
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests), except for restrictions imposed by
applicable securities laws. Except as set forth in the WJ SEC Reports (as
defined in Section 3.1(d)) filed prior to the date hereof, as of the date of
this Agreement, neither WJ nor any of its Subsidiaries directly or indirectly
owns any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture or
other business association or entity (other than Subsidiaries), that is or would
reasonably be expected to be material to WJ and its Subsidiaries taken as a
whole.
10
<PAGE>
(b) Capital Structure.
-----------------
(i) As of March 17, 2000, the authorized capital stock of WJ consisted of
(A) 50,000,000 shares of WJ Common Stock of which 18,175,585 shares were
outstanding and 555,498 shares were held in the treasury of WJ and (B) 5,000,000
shares of Preferred Stock, par value $0.01 per share, of which 50,000 shares
have been designated Junior Participating Preferred Stock, Series A and reserved
for issuance upon exercise of the rights (the "WJ Rights") distributed to the
---------
holders of WJ Common Stock pursuant to the Rights Agreement, dated as of
November 13, 1999, between WJ and American Stock Transfer & Trust Company (the
"WJ Rights Agreement"). Since March 17, 2000 to the date of this Agreement,
-------------------
there have been no issuances of shares of the capital stock of WJ or any other
securities of WJ other than issuances of shares (and accompanying WJ Rights)
pursuant to options or rights outstanding as of March 17, 2000 under the Benefit
Plans (as defined in Section 8.11(b)) of WJ. All issued and outstanding shares
of the capital stock of WJ are, and when shares of WJ Common Stock are issued in
the Merger or upon exercise of stock options converted in the Merger pursuant to
Section 1.9, such shares will be, duly authorized, validly issued, fully paid
and nonassessable and free of any preemptive rights. There were outstanding as
of March 17, 2000, no options, warrants or other rights to acquire capital stock
from WJ other than (x) the WJ Rights, (y) options to acquire capital stock from
WJ representing in the aggregate the right to purchase approximately 2,722,975
shares of WJ Common Stock (collectively, the "WJ Stock Options") under 1995
----------------
Stock Purchase and Option Plan, 1996 Stock Option Plan, Stock Incentive Plan and
Non-Employee Director Stock Option Plan (collectively, the "WJ Stock Option
---------------
Plans") and (z) rights to purchase an aggregate of no more than 2,500 shares of
- -----
WJ Common Stock under the Employee Stock Discount Purchase Plan and the
International Employee Discount Purchase Plan (collectively, the "WJ Purchase
-----------
Plans"). Section 3.1(b) of the WJ Disclosure Schedule sets forth a complete and
- -----
correct list, as of March 17, 2000, of the number of shares of WJ Common Stock
subject to WJ Stock Options or other rights to purchase or receive WJ Common
Stock granted under the WJ Benefit Plans or otherwise, the dates of grant and
the exercise prices thereof.
(ii) No bonds, debentures, notes or other indebtedness of WJ having the
right to vote on any matters on which holders of capital stock of WJ may vote
("WJ Voting Debt") are issued or outstanding.
- ----------------
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 1.8 and Section 1.9, 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 WJ or any of its
Subsidiaries is a party or by which any of them is bound obligating WJ 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 WJ or any
of its Subsidiaries or obligating WJ 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 no outstanding obligations of WJ or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of WJ or
any of its Subsidiaries.
11
<PAGE>
(c) Authority; No Conflicts.
-----------------------
(i) WJ has all requisite corporate power and authority to enter into
this Agreement, the Stock Option Agreements and the Registration Rights
Agreement (as defined in Section 5.12) and to consummate the transactions
contemplated hereby and thereby, subject to obtaining the requisite stockholder
approval (the "WJ Stockholder Approval") of the issuance of the shares of WJ
-----------------------
Common Stock to be issued in the Merger (the "Share Issuance"). The execution
--------------
and delivery of this Agreement, the Stock Option Agreements and the Registration
Rights Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of WJ, subject to obtaining the WJ Stockholder Approval. This Agreement and
the Stock Option Agreements have been duly executed and delivered by WJ and
constitute (and the Registration Rights Agreement when executed and delivered
will constitute) valid and binding agreements of WJ, enforceable against it in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(ii) The execution and delivery of this Agreement, the Stock Option
Agreements and the Registration Rights Agreement by WJ does not or will not, as
the case may be, and the consummation by WJ of the Merger and the other
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result by its terms in the,
termination, amendment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on, or the loss of, any assets, including
Intellectual Property (any such conflict, violation, default, right of
termination, amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the certificate of incorporation
- ----------
or bylaws of WJ or any material Subsidiary of WJ, (B) the Amended and Restated
Registration Agreement, dated October 22, 1996, between WJ and the stockholders
named therein or (C) except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on WJ, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below, any loan or credit agreement,
note, mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to WJ, any
material Subsidiary, or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal, local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any quasi-
governmental or private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority (a "Governmental Entity"), is
-------------------
required by or with respect to WJ or any Subsidiary of WJ in connection with the
execution and delivery of this
12
<PAGE>
Agreement and the Stock Option Agreements by WJ or the consummation of the
Merger and the other transactions contemplated hereby and thereby, except for
those required under or in relation to (A) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) state securities or
-------
"blue sky" laws (the "Blue Sky Laws"), (C) the Securities Act, (D) the Exchange
-------------
Act, (E) the DGCL with respect to the filing of the Certificate of Merger, (F)
rules and regulations of the Nasdaq, (G) antitrust or other competition laws of
other jurisdictions, and (H) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failures of which to make or obtain,
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on WJ. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the foregoing
clauses (A) through (G) are hereinafter referred to as "Necessary Consents."
------------------
(d) Reports and Financial Statements.
--------------------------------
(i) WJ has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 1998 (collectively, including all exhibits
thereto, the "WJ SEC Reports"). No Subsidiary of WJ is required to file any
--------------
form, report, registration statement, prospectus or other document with the SEC.
None of the WJ SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement or the Closing Date,
then on the date of such filing), contained or will contain any untrue statement
of a material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the financial
statements (including the related notes) included in the WJ SEC Reports presents
fairly, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of WJ and its consolidated
Subsidiaries as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to the absence of notes and normal year-
end adjustments that have not been and are not expected to be material in
amount. All of such WJ SEC Reports, as of their respective dates (and as of the
date of any amendment to the respective WJ SEC Report), complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the WJ SEC Reports filed prior to the date
hereof, since December 31, 1998, WJ and its Subsidiaries have not incurred any
liabilities that are of a nature that would be required to be disclosed on a
balance sheet of WJ and its Subsidiaries or the footnotes thereto prepared in
conformity with GAAP, other than (A) liabilities incurred in the ordinary course
of business or (B) liabilities that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on WJ.
13
<PAGE>
(e) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by WJ for
inclusion or incorporation by reference in (A) the Form S-4 (as defined in
Section 5.1) 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 and (B) the Joint Proxy Statement/Prospectus
(as defined in Section 5.1) will, on the date it is first mailed to OSI
stockholders or WJ stockholders or at the time of the OSI Stockholders Meeting
or the WJ Stockholders Meeting (each as defined in Section 5.1), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The Form
S-4 and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section 3.1(e),
no representation or warranty is made by WJ with respect to statements made or
incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by OSI for inclusion or
incorporation by reference therein.
(f) Board Approval. The Board of Directors of WJ, by resolutions duly
--------------
adopted by unanimous vote of those voting at a meeting duly called and held and
not subsequently rescinded or modified in any way (the "WJ Board Approval"), has
-----------------
duly (i) determined that this Agreement and the Merger and the WJ Stock Option
Agreement are fair to and in the best interests of WJ and its stockholders, (ii)
approved and declared advisable this Agreement, the WJ Stock Option Agreement,
the Merger, the Certificate Amendment, and the Share Issuance and (iii)
recommended that the stockholders of WJ approve the Share Issuance and adopt the
Certificate Amendment and directed that the Certificate Amendment and the Share
Issuance be submitted for consideration by WJ's stockholders at the WJ
Stockholders Meeting. The WJ Board Approval constitutes approval of this
Agreement, the WJ Stock Option Agreement and the Merger so that, for purposes of
Section 203 of the DGCL, its restrictions on business combinations are
inapplicable to this Agreement, the WJ Stock Option Agreement and the Merger. To
the knowledge of WJ, except for Section 203 of the DGCL (which has been rendered
inapplicable), no state takeover statute is applicable to this Agreement, the WJ
Stock Option Agreement or the Merger or the other transactions contemplated
hereby or thereby.
(g) Vote Required. The approval of the Stock Issuance by a majority
-------------
of the votes cast thereon by the holders of shares of WJ Common Stock is the
only vote of the holders of any class or series of WJ capital stock necessary to
approve the transactions contemplated by the Merger Agreement, including the
Share Issuance.
14
<PAGE>
(h) Litigation; Compliance with Laws.
--------------------------------
(i) Except as disclosed in the WJ SEC Reports filed prior to the date
of this Agreement, there are no suits, actions or proceedings (collectively
"Actions") pending or, to the knowledge of WJ, threatened, against or affecting
- --------
WJ or any Subsidiary of WJ which, in the aggregate, would reasonably be expected
to have a Material Adverse Effect on WJ, nor are there any judgments, decrees,
injunctions, rules or orders of any Governmental Entity or arbitrator
outstanding against WJ or any Subsidiary of WJ which, in the aggregate, would
reasonably be expected to have a Material Adverse Effect on WJ.
(ii) Except as disclosed in the WJ SEC Reports filed prior to the date
of this Agreement and except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on WJ, WJ and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the businesses of
WJ and its Subsidiaries, taken as a whole (the "WJ Permits"). WJ and its
----------
Subsidiaries are in compliance with the terms of the WJ Permits, except where
the failures to so comply, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on WJ. Except as disclosed in the WJ SEC Reports
filed prior to the date of this Agreement, neither WJ nor its Subsidiaries is in
violation of, and WJ and its Subsidiaries have not received any notices of
violations with respect to, any laws, ordinances or regulations of any
Governmental Entity, except for violations which, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on WJ.
(i) Absence of Certain Changes or Events.
------------------------------------
(i) Except for liabilities incurred in connection with this Agreement
or the transactions contemplated hereby, except as disclosed in the WJ SEC
Reports filed prior to the date of this Agreement, and except as permitted by
Section 4.1, since December 31, 1998, (i) WJ and its Subsidiaries have conducted
their business only in the ordinary course and (ii) there has not been any
action taken by WJ or any of its Subsidiaries during the period from December
31, 1998 through the date of this Agreement that, if taken during the period
from the date of this Agreement through the Effective Time, would constitute a
breach of Section 4.1. Except as disclosed in the WJ SEC Reports filed prior to
the date of this Agreement, since December 31, 1998, there have not been any
changes, circumstances or events which, in the aggregate, have had, or would
reasonably be expected to have, a Material Adverse Effect on WJ.
(ii) Since December 31, 1998 and except for as set forth on Schedule
3.1(i)(ii) of the WJ Disclosure Schedule, there has not been any (i) adoption by
WJ or any of its Subsidiaries of any Benefit Plan to which any of WJ's officers
is a participant or (ii) amendment to any WJ Benefit Plan that resulted in
material increase in the benefits received or to be received thereunder by any
officer of WJ. Since December 31, 1998, there has not been any material
increase in the aggregate benefits provided under the WJ Benefit Plans.
15
<PAGE>
(j) Environmental Matters. Except as, in the aggregate, would not
---------------------
reasonably be expected to have a Material Adverse Effect on WJ and except as
disclosed in the WJ SEC Reports filed prior to the date of this Agreement (i)
the operations of WJ and its Subsidiaries have been and are in compliance with
all Environmental Laws (as defined below), and with all WJ Permits required by
Environmental Laws, (ii) there are no pending or, to the knowledge of WJ,
threatened, Actions under or pursuant to Environmental Laws against WJ or its
Subsidiaries or involving any real property currently or, to the knowledge of
WJ, formerly owned, operated or leased by WJ or its Subsidiaries, (iii) WJ and
its Subsidiaries are not subject to any Environmental Liabilities (as defined
below), and, to the knowledge of WJ, no facts, circumstances or conditions
relating to, arising from, associated with or attributable to any real property
currently or, to the knowledge of WJ, formerly owned, operated or leased by WJ
or its Subsidiaries or operations thereon would reasonably be expected to result
in Environmental Liabilities, (iv) all real property owned and to the knowledge
of WJ all real property operated or leased by WJ or its Subsidiaries is free of
contamination from Hazardous Material (as defined below) that would have an
adverse effect on human health or the environment and (v) there is not now, nor,
to the knowledge of WJ, has there been in the past, on, in or under any real
property owned, leased or operated by WJ or any of its predecessors (a) any
underground storage tanks regulated pursuant to 40 C.F.R. Part 280 or delegated
state programs, dikes or impoundments containing more than a reportable quantity
of Hazardous Materials, (b) any friable asbestos-containing materials or (c) any
polychlorinated biphenyls.
As used in this Agreement, "Environmental Laws" means any and all
------------------
federal, state, foreign, interstate, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating, relating to or imposing
liability or standards of conduct concerning pollution, Hazardous Materials or
protection of human health, safety or the environment, as currently in effect
and includes, without limitation, 42 U.S.C. ss. 7401 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss. 5101 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the
Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C. ss.
7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 136 et seq.,
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq. and the Oil
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, and
all analogous state or local statutes. As used in this Agreement, "Environmental
-------------
Liabilities" with respect to any person means any and all liabilities of or
- -----------
relating to such person or any of its Subsidiaries (including any entity which
is, in whole or in part, a predecessor of such person or any of such
Subsidiaries), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to matters covered
by Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date. As used in this Agreement, "Hazardous
---------
Materials" means any materials or wastes, defined, listed, classified or
- ---------
regulated as hazardous, toxic, a pollutant, a contaminant or dangerous in or
under any Environmental Laws which includes petroleum, petroleum products,
friable asbestos, urea formaldehyde, radioactive materials and polychlorinated
biphenyls.
16
<PAGE>
(k) Intellectual Property. Except as, in the aggregate, would not
---------------------
reasonably be expected to have a Material Adverse Effect on WJ and except as
disclosed in the WJ SEC Reports filed prior to the date of the Agreement, to the
knowledge of WJ: (a) WJ and each of its Subsidiaries owns, controls or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) used in or necessary for the conduct of its business
as currently conducted; (b) WJ and its Subsidiaries are not infringing or
otherwise violating the Intellectual Property of any Person and are acting in
accordance with any applicable license pursuant to which WJ or any Subsidiary
acquired the right to use any Intellectual Property; (c) no Person is
challenging or claiming the invalidity or unenforceability of any Intellectual
Property owned or controlled by and/or licensed to WJ or its Subsidiaries used
in or necessary for the conduct of its business as currently conducted; and (d)
neither WJ nor any of its Subsidiaries has received any written notice or
otherwise has knowledge of any pending or threatened claim, order or proceeding
with respect to any Intellectual Property owned, controlled, licensed or used by
WJ or its Subsidiaries and no Intellectual Property owned, controlled and/or
licensed by WJ or its Subsidiaries is being used or enforced in a manner that
would reasonably be expected to result in the abandonment, cancellation or
unenforceability of such Intellectual Property. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks, brand names,
---------------------
certification marks, trade dress and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
utility models and all divisions, continuations, continuations in part and
renewal applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential or
proprietary information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights.
(l) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of WJ, except Bear, Stearns & Co. Inc. and Bain Capital, Inc., each
of whose fees and expenses will be paid by WJ in accordance with WJ's agreement
with such firm, copies of which have been provided to OSI.
(m) Opinion of WJ Financial Advisor. WJ has received the opinion of
-------------------------------
Bear, Stearns & Co. Inc., dated the date of this Agreement, to the effect that,
as of such date, the Exchange Ratio is fair, from a financial point of view, to
WJ and its stockholders, a copy of which opinion has been made available to OSI.
(n) Accounting Matters. To the knowledge of WJ, neither WJ nor any
------------------
of its affiliates has taken or agreed to take any action, and no fact or
circumstance is known to WJ
17
<PAGE>
(including any facts relating to OSI), that would prevent WJ from accounting for
the Merger as a "pooling of interests," or would prevent the Merger from
qualifying as a "reorganization" under section 368 of the Code.
(o) Taxes.
-----
(i) Each of WJ and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained) and has paid
all Taxes required to have been paid by it, except where failure to file such
Tax Returns or pay such Taxes would not, in the aggregate, have a Material
Adverse Effect on WJ. All such Tax Returns are correct and complete in all
material respects.
(ii) Each of WJ and its Subsidiaries has paid all Taxes which have
become due and payable, except where the failure to pay such Taxes would not
have a Material Adverse Effect on WJ. Each of WJ and its Subsidiaries has made
adequate provision in reserves established in its financial statements and
accounts for all Taxes which have accrued but are not yet due and payable.
(iii) There is no action, suit, taxing authority proceeding or audit
now in progress or pending with respect to WJ or any of its Subsidiaries.
Neither WJ nor any of its Subsidiaries has waived or extended, or requested any
waiver of extension of, any limitation period for audit or assessment of any Tax
liability.
(iv) No deficiency for any amount of Tax has been asserted or
assessed against WJ or any of its Subsidiaries which (i) has not been paid,
settled or adequately provided for through reserves established in the financial
statements and accounts and (ii) would have a Material Adverse Effect on WJ if
required to be paid.
(v) No election under Section 341(f) of the Code has been made to
treat WJ or any of its Subsidiaries as a consenting corporation (as defined in
Section 341(f) of the Code). Neither WJ nor any of its Subsidiaries is a U.S.
real property holding corporation within the meaning of Section 897(c)(2) of the
Code.
(vi) Neither WJ nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code (or any similar provision of
state, local or foreign law) as a result of the transactions contemplated by
this Agreement.
For purposes of this Agreement: (i) "Tax" (and, with correlative meaning,
---
"Taxes") means any federal, state, local or foreign income, gross receipts,
-----
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority or any
18
<PAGE>
obligation to pay Taxes imposed on any entity for which a party to this
Agreement is liable as a result of any indemnification provision or other
contractual obligation, and (ii) "Tax Return" means any return, report or
----------
similar statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
(p) Certain Contracts. As of the date hereof, except as set forth
-----------------
in the WJ SEC Reports filed prior to the date of this Agreement, neither WJ nor
any of its Subsidiaries is a party to or bound by (i) any "material contracts"
(as such term is defined in Item 601(b) (10) of Regulation S-K of the SEC) or
(ii) any non-competition agreements or any other agreements or arrangements that
limit or otherwise restrict WJ or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, to the knowledge of WJ, limit or restrict Newco or any of its
affiliates (including the Surviving Corporation) or any successor thereto, from
engaging or competing in any line of business or in any geographic area, which
agreements or arrangements, in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Newco and its Subsidiaries (including the
Surviving Corporation and its Subsidiaries), taken together, after giving effect
to the Merger.
(q) WJ Stockholder Rights Plan. The Board of Directors of WJ has
--------------------------
amended the WJ Rights Agreement in accordance with its terms to render it
inapplicable to the transactions contemplated by this Agreement and the WJ Stock
Option Agreement including the issuance of shares in accordance with the terms
hereof and thereof. WJ has delivered to OSI a true and correct copy of the WJ
Rights Agreement, as amended, in effect as of execution and delivery of this
Agreement.
(r) Ownership of OSI Capital Stock. Except as contemplated herein
------------------------------
or for shares owned by WJ Benefit Plans or shares held or managed for the
account of another person or as to which WJ is required to act as a fiduciary or
in a similar capacity, as of the date hereof, neither WJ nor, to its knowledge
without independent investigation, any of its affiliates, (i) beneficially owns,
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of capital stock of OSI.
(s) ERISA Compliance.
----------------
(i) With respect to WJ Benefit Plans, no event has occurred and, to
the knowledge of WJ, there exists no condition or set of circumstances, in
connection with which WJ or any of its Subsidiaries could be subject to any
liability that individually or in the aggregate would have a Material Adverse
Effect on WJ under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code or any other applicable law.
-----
(ii) Each WJ Benefit Plan has been administered in accordance with its
terms, all applicable laws, including ERISA and the Code, and the terms of all
applicable collective bargaining agreements, except for any failures so to
administer any WJ Benefit Plan that individually or in the
19
<PAGE>
aggregate would not reasonably be expected to have a Material Adverse Effect on
WJ. WJ, its Subsidiaries and all of the WJ Benefit Plans are in compliance
with the applicable provisions of ERISA, the Code and all other applicable laws
and the terms of all applicable collective bargaining agreements, except for any
failures to be in such compliance that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on WJ. Each WJ
Benefit Plan that is intended to be qualified under Section 401(a) or 401(k) of
the Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that it is so qualified and each trust established in
---
connection with any WJ Benefit Plan that is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a determination
letter from the IRS that such trust is so exempt. To the knowledge of WJ, no
fact or event has occurred since the date of any determination letter from the
IRS which is reasonably likely to affect adversely the qualified status of any
such WJ Benefit Plan or the exempt status of any such trust, except for any
occurrence that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on WJ, and to the knowledge of WJ,
all contributions to, and payments from, such Plans which are required to be
made in accordance with such Plans, ERISA or the Code have been timely made
other than any failures that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on WJ.
(iii) Except as any of the following either individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
WJ, (x) neither WJ nor any trade or business, whether or not incorporated (an
"ERISA Affiliate"), which together with WJ would be deemed to be a "single
---------------
employer" within the meaning of Section 4001(b) of ERISA, has incurred any
liability under Title IV of ERISA and no condition exists that presents a risk
to WJ or any ERISA Affiliate of WJ of incurring any such liability (other than
liability for benefits or premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), (y) no WJ Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) whether or not waived and (z) to the knowledge of WJ,
there are not any facts or circumstances that would materially change the funded
status of any WJ Benefit Plan that is a "defined benefit" plan (as defined in
Section 3(35) of ERISA) since the date of the most recent actuarial report for
such plan.
(iv) Neither WJ nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contract applicable to persons
employed by WJ or any of its Subsidiaries and no collective bargaining agreement
is being negotiated by WJ or any of its Subsidiaries, in each case that is
material to WJ and its Subsidiaries taken as a whole. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against WJ or any
of its Subsidiaries pending or, to the knowledge of WJ, threatened which may
interfere with the respective business activities of WJ or any of its
Subsidiaries, except where such dispute, strike or work stoppage individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect on WJ. As of the date of this Agreement, (x) to the knowledge of WJ, none
of WJ, any of its Subsidiaries or any of their respective representatives or
employees has committed any unfair labor practice in connection with the
operation of the respective businesses of WJ or any of its Subsidiaries, and (y)
there is no charge or complaint against WJ or any of its subsidiaries by the
National Labor Relations Board or any
20
<PAGE>
comparable governmental agency pending or threatened in writing, except for any
occurrence that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on WJ.
(v) No WJ Benefit Plan provides medical benefits (whether or not
insured) with respect to current or former employees after retirement or other
termination of service the cost of which is material to WJ and its Subsidiaries
taken as a whole.
(vi) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of WJ or any ERISA
Affiliate of WJ to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, (B) accelerate the time
of payment or vesting, or increase the amount of compensation due any such
employee, officer or director or (C) constitute a "change of control" under any
WJ Benefit Plan.
(vii) With respect to each WJ Benefit Plan: (x) no actions, suits,
claims or disputes are pending or, to the knowledge of WJ, threatened, other
than claims for benefits made in accordance with the terms of such WJ Benefit
Plan, except for such actions, suits, claims or disputes that individually or in
the aggregate would not reasonably be expected to have a Material Adverse Effect
on WJ; (y) no audits are pending with any governmental or regulatory agency and
to the knowledge of WJ there are no facts which could give rise to any liability
in the event of such an audit that either individually or in the aggregate would
have a Material Adverse Effect on WJ; and (z) to the knowledge of WJ, all
reports and returns required to be filed with any governmental agency or
distributed to any participant in any WJ Benefit Plan have been so duly filed or
distributed other than any failure to file or distribute such reports or returns
that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on WJ.
(viii) WJ has not incurred any liability under Code Section 4975, and
no fact exists which could result in a liability to WJ under Code Section 4975
that would reasonably be expected to have a Material Adverse Effect on WJ.
(ix) Neither WJ nor any ERISA Affiliate contributes to a
multiemployer plan described in Section 3(37) of ERISA, no withdrawal liability
has been incurred with respect to any such plan and no withdrawal liability
would be incurred upon the withdrawal from any such plan by WJ or any ERISA
Affiliate as of the date hereof, except for any withdrawal that individually or
in the aggregate would not have a Material Adverse Effect on WJ.
(t) Employment Agreements. Except as disclosed in the WJ SEC
---------------------
Reports, there are no employment, consulting, severance or indemnification
arrangements, agreements or understandings between WJ or any Subsidiary, on the
one hand, and any directors, officers or other management employees of WJ or any
Subsidiary, on the other hand.
21
<PAGE>
3.2 Representations and Warranties of OSI. Except as set forth in
-------------------------------------
the OSI Disclosure Schedule delivered by OSI to WJ prior to the execution of
this Agreement (the "OSI Disclosure Schedule") (each section of which qualifies
-----------------------
the correspondingly numbered representation and warranty or covenant to the
extent specified therein), OSI represents and warrants to WJ as follows:
(a) Organization, Standing and Power; Subsidiaries.
----------------------------------------------
(i) Each of OSI and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failures to be so organized, existing
and in good standing or to have such power and authority, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on OSI, and
is duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary other than in such jurisdictions where the
failures so to qualify or to be in good standing, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on OSI. The copies of
the certificate of incorporation and Bylaws of OSI, which were previously
furnished or made available to WJ, are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(ii) Section 3.2(a)(ii) of the OSI Disclosure Schedule sets forth all
the Subsidiaries of OSI which, as of the date of this Agreement, are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC). All the
outstanding shares of capital stock of, or other equity interests in, each such
Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are, except as set forth on the OSI Disclosure Schedule, owned
directly or indirectly by OSI, free and clear of all Liens and free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), except for
restrictions imposed by applicable securities laws. Except as set forth in the
OSI SEC Reports (as defined in Section 3.2 (d)) filed prior to the date hereof,
as of the date of this Agreement, neither OSI nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity (other than
Subsidiaries), that is or would reasonably be expected to be material to OSI and
its Subsidiaries taken as a whole.
(b) Capital Structure.
-----------------
(i) As of March 17, 2000, the authorized capital stock of OSI
consisted of (A) 80,000,000 shares of OSI Common Stock, of which 23,004,105
shares were outstanding and no shares were held in the treasury of OSI and (B)
4,000,000 shares of preferred stock, par value $0.001per share, none of which
were outstanding. Since March 17, 2000 to the date of this Agreement, there have
been no issuances of shares of the capital stock of OSI or any other securities
of OSI other than issuances of shares pursuant to options or rights outstanding
as of March 17, 2000
22
<PAGE>
under the Benefit Plans of OSI. All issued and outstanding shares of the capital
stock of OSI are duly authorized, validly issued, fully paid and nonassessable,
and no class of capital stock is entitled to preemptive rights. There were
outstanding as of March 17, 2000 no options, warrants or other rights to acquire
capital stock from OSI other than (x) options and other rights to acquire
capital stock of OSI representing in the aggregate the right to purchase
3,857,328 shares of OSI Common Stock (collectively, the "OSI Stock Options")
-----------------
under the 1989 Stock Option Plan, the 1992 Officers and Directors Stock Option
Plan, the 1997 Equity Incentive Plan and the 1997 Directors Stock Option
(collectively, the "OSI Stock Option Plans") and (y) rights to purchase no
-----------------------
shares of OSI Common Stock under the 1997 Employee Stock Purchase Plan (the "OSI
---
Purchase Plan"). Section 3.2(b) of the OSI Disclosure Schedule sets forth a
- -------------
complete and correct list, as of March 17, 2000, of the number of shares of OSI
Common Stock subject to OSI Stock Options or other rights to purchase or receive
OSI Common Stock granted under the OSI Benefit Plans or otherwise, the dates of
grant and the exercise prices thereof.
(ii) No bonds, debentures, notes or other indebtedness of OSI having
the right to vote on any matters on which stockholders may vote ("OSI Voting
----------
Debt") are issued or outstanding.
- ----
(iii) Except as otherwise set forth in this Section 3.2(b) and as
contemplated by Section 1.8 and Section 1.9, 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 OSI or any of its
Subsidiaries is a party or by which any of them is bound obligating OSI 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 OSI or
any of its Subsidiaries or obligating OSI 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 no outstanding obligations of OSI or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of OSI or any of its Subsidiaries.
(c) Authority; No Conflicts.
-----------------------
(i) OSI has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreements and to consummate the
transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the Required OSI
Vote (as defined in Section 3.2(g)). The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of OSI, subject in the case of the consummation of the Merger to the adoption of
this Agreement by the Required OSI Vote. This Agreement and the Stock Option
Agreements have been duly executed and delivered by OSI and constitute valid and
binding agreements of OSI, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
23
<PAGE>
(ii) The execution and delivery of this Agreement and the Stock
Option Agreements by OSI does not or will not, as the case may be, and the
consummation by OSI of the Merger and the other transactions contemplated hereby
and thereby will not, conflict with, or result in a Violation pursuant to: (A)
any provision of the certificate of incorporation or bylaws of OSI or any
material Subsidiary of OSI or (B) except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on OSI or, subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii) below,
any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to OSI, any material Subsidiary of OSI or their respective properties
or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to OSI or any Subsidiary of OSI in connection with the execution
and delivery of this Agreement and the Stock Option Agreements by OSI or the
consummation of the Merger and the other transactions contemplated hereby and
thereby, except the Necessary Consents and such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
make or obtain, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on OSI.
(d) Reports and Financial Statements.
--------------------------------
(i) OSI has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents required
to be filed by it with the SEC since January 1, 1998 (collectively, including
all exhibits thereto, the "OSI SEC Reports"). No Subsidiary of OSI is required
---------------
to file any form, report, registration statement, prospectus or other document
with the SEC. None of the OSI SEC Reports, as of their respective dates (and, if
amended or superseded by a filing prior to the date of this Agreement or the
Closing Date, then on the date of such filing), contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Each
of the financial statements (including the related notes) included in the OSI
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of OSI
and its consolidated Subsidiaries as of the respective dates or for the
respective periods set forth therein, all in conformity with GAAP consistently
applied during the periods involved except as otherwise noted therein, and
subject, in the case of the unaudited interim financial statements, to the
absence of notes and normal and recurring year-end adjustments that have not
been and are not expected to be material in amount. All of such OSI SEC Reports,
as of their respective dates (and as of the date of any amendment to the
respective OSI SEC Report), complied as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder.
24
<PAGE>
(ii) Except as disclosed in the OSI SEC Reports filed prior to the
date hereof, since December 31, 1998, OSI and its Subsidiaries have not incurred
any liabilities that are of a nature that would be required to be disclosed on a
balance sheet of OSI and its Subsidiaries or the footnotes thereto prepared in
conformity with GAAP, other than (A) liabilities incurred in the ordinary course
of business or (B) liabilities that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on OSI.
(e) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by OSI for
inclusion or incorporation by reference in (A) 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, and
(B) the Joint Proxy Statement/Prospectus will, on the date it is first mailed to
OSI stockholders or WJ stockholders or at the time of the OSI Stockholders
Meeting or the WJ Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Form S-4 and the
Joint Proxy Statement/Prospectus will comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act and the rules
and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by OSI with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by WJ or Merger Sub for
inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of OSI, by resolutions
--------------
duly adopted by unanimous vote of those voting at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "OSI Board
---------
Approval"), has duly (i) determined that this Agreement and the Merger and the
- --------
OSI Stock Option Agreement are fair to and in the best interests of OSI and its
stockholders, (ii) approved and declared advisable this Agreement, the OSI Stock
Option Agreement and the Merger and (iii) recommended that the stockholders of
OSI adopt this Agreement and approve the Merger and directed that this Agreement
and the transactions contemplated hereby be submitted for consideration by OSI's
stockholders at the OSI Stockholders Meeting. The OSI Board Approval constitutes
approval of this Agreement, the OSI Stock Option Agreement and the Merger so
that, for purposes of Section 203 of the DGCL, its restrictions on business
combinations are inapplicable to this Agreement, the OSI Stock Option Agreement
and the Merger. To the knowledge of OSI, except for Section 203 of the DGCL
(which has been rendered inapplicable), no state takeover statute is applicable
to this Agreement, the OSI Stock Option Agreement or the Merger or the other
transactions contemplated hereby or thereby.
25
<PAGE>
(g) Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of OSI Common Stock to adopt this Agreement
and approve the Merger (the "Required OSI Vote") is the only vote of the holders
-----------------
of any class or series of OSI capital stock necessary to adopt this Agreement
and approve the Merger and the other transactions contemplated hereby.
(h) Litigation; Compliance with Laws.
--------------------------------
(i) Except as disclosed in the OSI SEC Reports filed prior to the
date of this Agreement, there are no Actions pending or, to the knowledge of
OSI, threatened, against or affecting OSI or any Subsidiary of OSI which, in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
OSI, nor are there any judgments, decrees, injunctions, rules or orders of any
Governmental Entity or arbitrator outstanding against OSI or any Subsidiary of
OSI which, in the aggregate, would reasonably be expected to have a Material
Adverse Effect on OSI.
(ii) Except as disclosed in the OSI SEC Reports filed prior to the
date of the Agreement and except as would, in the aggregate, not reasonably be
expected to have a Material Adverse Effect on OSI, OSI and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the businesses of
OSI and its Subsidiaries, taken as a whole (the "OSI Permits"). OSI and its
-----------
Subsidiaries are in compliance with the terms of the OSI Permits, except where
the failures to so comply, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on OSI. Except as disclosed in the OSI SEC
Reports filed prior to the date of this Agreement, neither OSI nor its
Subsidiaries is in violation of, and OSI and its Subsidiaries have not received
any notices of violations with respect to, any laws, ordinances or regulations
of any Governmental Entity, except for violations which, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on OSI.
(i) Absence of Certain Changes or Events.
------------------------------------
(i) Except for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, except as disclosed in the
OSI SEC Reports filed prior to the date of this Agreement, and except as
permitted by Section 4.2, since December 31, 1998, (i) OSI and its Subsidiaries
have conducted their business only in the ordinary course and (ii) there has not
been any action taken by OSI or any of its Subsidiaries during the period from
December 31, 1998 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 4.2. Except as disclosed in the OSI SEC Reports
filed prior to the date of this Agreement, since December 31, 1998, there have
not been any changes, circumstances or events which, in the aggregate, have had,
or would reasonably be expected to have, a Material Adverse Effect on OSI.
(ii) Since December 31, 1998 and except for as set forth on Schedule
3.2(i)(ii) of the OSI Disclosure Schedule, there has not been any (i) adoption
by OSI or any of its Subsidiaries
26
<PAGE>
of any Benefit Plan to which any of OSI's officers is a participant or (ii)
amendment to any OSI Benefit Plan that resulted in material increase in the
benefits received or to be received thereunder by any officer of OSI. Since
December 31, 1998, there has not been any material increase in the aggregate
benefits provided under the OSI Benefit Plans.
(j) Environmental Matters. Except as, in the aggregate, would not
---------------------
reasonably be expected to have a Material Adverse Effect on OSI and except as
disclosed in the OSI SEC Reports filed prior to the date of this Agreement, (i)
the operations of OSI and its Subsidiaries have been and are in compliance with
all Environmental Laws and with all OSI Permits required by Environmental Laws
(ii) there are no pending or, to the knowledge of OSI, threatened, Actions under
or pursuant to Environmental Laws against OSI or its Subsidiaries or involving
any real property currently or, to the knowledge of OSI, formerly owned,
operated or leased by OSI or its Subsidiaries, (iii) OSI and its Subsidiaries
are not subject to any Environmental Liabilities and, to the knowledge of OSI,
no facts, circumstances or conditions relating to, arising from, associated with
or attributable to any real property currently or, to the knowledge of OSI,
formerly owned, operated or leased by OSI or its Subsidiaries or operations
thereon would reasonably be expected to result in Environmental Liabilities,
(iv) all real property owned and to the knowledge of OSI all real property
operated or leased by OSI or its Subsidiaries is free of contamination from
Hazardous Material that would have an adverse effect on human health or the
environment and (v) there is not now, nor, to the knowledge of OSI, has there
been in the past, on, in or under any real property owned, leased or operated by
OSI or any of its predecessors (a) any underground storage tanks, regulated
pursuant to 40 C.F.R. Part 280 or delegated state programs, dikes or
impoundments containing more than a reportable quantity of Hazardous Materials,
(b) any friable asbestos-containing materials or (c) any polychlorinated
biphenyls.
(k) Intellectual Property. Except as, in the aggregate, would not
---------------------
reasonably be expected to have a Material Adverse Effect on OSI and except as
disclosed in the OSI SEC Reports filed prior to the date of this Agreement, to
the knowledge of OSI, (a) OSI and each of its Subsidiaries owns, controls or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property used in or necessary for the conduct of its business as currently
conducted; (b) OSI and its Subsidiaries are not infringing or otherwise
violating the Intellectual Property of any Person and are acting in accordance
with any applicable license pursuant to which OSI or any Subsidiary acquired the
right to use any Intellectual Property; (c) no Person is challenging or claiming
the invalidity or unenforceability of any Intellectual Property owned or
controlled by and/or licensed to OSI or its Subsidiaries used in or necessary
for the conduct of its business as currently conducted; and (d) neither OSI nor
any of its Subsidiaries has received any written notice or otherwise has
knowledge of any pending or threatened claim, order or proceeding with respect
to any Intellectual Property owned, controlled, licensed or used by OSI or its
Subsidiaries and no Intellectual Property owned, controlled and/or licensed by
OSI or its Subsidiaries is being used or enforced in a manner that would
reasonably be expected to result in the abandonment, cancellation or
unenforceability of such Intellectual Property.
27
<PAGE>
(l) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of OSI except Morgan Stanley & Co. Incorporated and Edgar J.
Cummins, each of whose fees and expenses will be paid by OSI in accordance with
OSI's agreements with such firm and person, copies of which have been provided
to WJ.
(m) Opinion of OSI Financial Advisor. OSI has received the opinion
--------------------------------
of Morgan Stanley & Co. Incorporated, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to the holders of OSI Common Stock, a copy of which opinion has been
made available to WJ.
(n) Accounting Matters. To the knowledge of OSI, neither OSI nor
------------------
any of its affiliates has taken or agreed to take any action, and no fact or
circumstance is known to OSI (including any facts relating to WJ), that would
prevent WJ from accounting for the Merger as a "pooling of interests," or that
would prevent the Merger from qualifying as a "reorganization" under section 368
of the Code.
(o) Taxes.
-----
(i) Each of OSI and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained) and has paid
all Taxes required to have been paid by it, except where failure to file such
Tax Returns or pay such Taxes would not, in the aggregate, have a Material
Adverse Effect on OSI. All such Tax Returns are correct and complete in all
material respects.
(ii) Each of OSI and its Subsidiaries has paid all Taxes which have
become due and payable, except where the failure to pay such Taxes would not
have a Material Adverse Effect on OSI. Each of OSI and its Subsidiaries has made
adequate provision in reserves established in its financial statements and
accounts for all Taxes which have accrued but are not yet due and payable.
(iii) There is no action, suit, taxing authority proceeding or audit
now in progress or pending with respect to OSI or any of its Subsidiaries.
Neither OSI nor any of its Subsidiaries has waived or extended, or requested any
waiver of extension of, any limitation period for audit or assessment of any Tax
liability.
(iv) No deficiency for any amount of Tax has been asserted or
assessed against OSI or any of its Subsidiaries which (i) has not been paid,
settled or adequately provided for through reserves established in the financial
statements and accounts and (ii) would have a Material Adverse Effect on OSI if
required to be paid.
(v) No election under Section 341(f) of the Code has been made to
treat OSI or any of its Subsidiaries as a consenting corporation (as defined in
Section 341(f) of the Code).
28
<PAGE>
Neither OSI nor any of its Subsidiaries is a U.S. real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
(vi) Neither OSI nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code (or any similar provision of
state, local or foreign law) as a result of the transactions contemplated by
this Agreement.
(p) Certain Contracts. As of the date hereof, except as set forth
-----------------
in the OSI SEC Reports filed prior to the date of this Agreement, neither OSI
nor any of its Subsidiaries is a party to or bound by (i) any "material
contracts" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) or (ii) any non-competition agreements or any other agreements or
arrangements that limit or otherwise restrict OSI or any of its Subsidiaries or
any of their respective affiliates or any successor thereto or that would, after
the Effective Time, to the knowledge of OSI, limit or restrict Newco or any of
its affiliates (including the Surviving Corporation) or any successor thereto,
from engaging or competing in any line of business or in any geographic area,
which agreements or arrangements, in the aggregate, would reasonably be expected
to have a Material Adverse Effect on Newco and its Subsidiaries (including the
Surviving Corporation and its Subsidiaries), taken together, after giving effect
to the Merger.
(q) Ownership of WJ Capital Stock. Except as contemplated herein or
-----------------------------
for shares owned by OSI Benefit Plans or shares held or managed for the account
of another person or as to which OSI is required to act as a fiduciary or in a
similar capacity, as of the date hereof, neither OSI nor, to its knowledge
without independent investigation, any of its affiliates, (i) beneficially owns,
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of capital stock of WJ.
(r) ERISA Compliance.
----------------
(i) With respect to OSI Benefit Plans, no event has occurred and,
to the knowledge of OSI, there exists no condition or set of circumstances, in
connection with which OSI or any of its Subsidiaries could be subject to any
liability that individually or in the aggregate would have a Material Adverse
Effect on OSI under ERISA, the Code or any other applicable law.
(ii) Each OSI Benefit Plan has been administered in accordance with
its terms, all applicable laws, including ERISA and the Code, and the terms of
all applicable collective bargaining agreements, except for any failures so to
administer any OSI Benefit Plan that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on OSI. OSI, its
Subsidiaries and all of the OSI Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws and the
terms of all applicable collective bargaining agreements, except for any
failures to be in such compliance that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on OSI.
29
<PAGE>
Each OSI Benefit Plan that is intended to be qualified under Section 401(a) or
401(k) of the Code has received a favorable determination letter from the IRS
that it is so qualified and each trust established in connection with any OSI
Benefit Plan that is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from the IRS that
such trust is so exempt. To the knowledge of OSI, no fact or event has occurred
since the date of any determination letter from the IRS which is reasonably
likely to affect adversely the qualified status of any such OSI Benefit Plan or
the exempt status of any such trust, except for any occurrence that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect on OSI, and to the knowledge of OSI, all contributions to, and payments
from, such Plans which are required to be made in accordance with such Plans,
ERISA or the Code have been timely made other than any failures that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on OSI.
(iii) Except as any of the following either individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
OSI, (x) neither OSI nor any trade or business, whether or not incorporated (an
"ERISA Affiliate"), which together with OSI would be deemed to be a "single
---------------
employer" within the meaning of Section 4001(b) of ERISA, has incurred any
liability under Title IV of ERISA and no condition exists that presents a risk
to OSI or any ERISA Affiliate of OSI of incurring any such liability (other than
liability for benefits or premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), (y) no OSI Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) whether or not waived and (z) to the knowledge of OSI,
there are not any facts or circumstances that would materially change the funded
status of any OSI Benefit Plan that is a "defined benefit" plan (as defined in
Section 3(35) of ERISA) since the date of the most recent actuarial report for
such plan.
(iv) Neither OSI nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contract applicable to persons
employed by OSI or any of its Subsidiaries and no collective bargaining
agreement is being negotiated by OSI or any of its Subsidiaries, in each case
that is material to OSI and its Subsidiaries taken as a whole. As of the date of
this Agreement, there is no labor dispute, strike or work stoppage against OSI
or any of its Subsidiaries pending or, to the knowledge of OSI, threatened which
may interfere with the respective business activities of OSI or any of its
Subsidiaries, except where such dispute, strike or work stoppage individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect on OSI. As of the date of this Agreement, (x) to the knowledge of OSI,
none of OSI, any of its Subsidiaries or any of their respective representatives
or employees has committed any unfair labor practice in connection with the
operation of the respective businesses of OSI or any of its Subsidiaries, and
(y) there is no charge or complaint against OSI or any of its Subsidiaries by
the National Labor Relations Board or any comparable governmental agency pending
or threatened in writing, except for any occurrence that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
OSI.
30
<PAGE>
(v) No OSI Benefit Plan provides medical benefits (whether or not
insured) with respect to current or former employees after retirement or other
termination of service the cost of which is material to OSI and its Subsidiaries
taken as a whole.
(vi) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of OSI or any ERISA
Affiliate of OSI to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, (B) accelerate the time
of payment or vesting, or increase the amount of compensation due any such
employee, officer or director or (C) constitute a "change of control" under any
OSI Benefit Plan.
(vii) With respect to each OSI Benefit Plan: (x) no actions, suits,
claims or disputes are pending or, to the knowledge of OSI, threatened, other
than claims for benefits made in accordance with the terms of such OSI Benefit
Plan, except for such actions, suits, claims or disputes that individually or in
the aggregate would not reasonably be expected to have a Material Adverse Effect
on OSI; (y) no audits are pending with any governmental or regulatory agency and
to the knowledge of OSI there are no facts which could give rise to any
liability in the event of such an audit that either individually or in the
aggregate would have a Material Adverse Effect on OSI; and (z) to the knowledge
of OSI, all reports and returns required to be filed with any governmental
agency or distributed to any participant in any OSI Benefit Plan have been so
duly filed or distributed other than any failure to file or distribute such
reports or returns that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on OSI.
(viii) OSI has not incurred any liability under Code Section 4975, and
no fact exists which could result in a liability to OSI under Code Section 4975
that would reasonably be expected to have a Material Adverse Effect on OSI.
(ix) Neither OSI nor any ERISA Affiliate contributes to a
multiemployer plan described in Section 3(37) of ERISA, no withdrawal liability
has been incurred with respect to any such plan and no withdrawal liability
would be incurred upon the withdrawal from any such plan by OSI or any ERISA
Affiliate as of the date hereof, except for any withdrawal that individually or
in the aggregate would not have a Material Adverse Effect on OSI.
(s) Employment Agreements. Except as disclosed in the OSI SEC
---------------------
Reports, there are no employment, consulting, severance or indemnification
arrangements, agreements or understandings between OSI or any Subsidiary, on the
one hand, and any directors, officers or other management employees of OSI or
any Subsidiary, on the other hand.
3.3 Representations and Warranties of WJ and Merger Sub. WJ and
---------------------------------------------------
Merger Sub represent and warrant to OSI as follows:
31
<PAGE>
(a) Organization. Merger Sub is a corporation duly incorporated,
------------
validly existing and in good standing under the laws of Delaware. Merger Sub is
a direct wholly-owned subsidiary of WJ.
(b) Corporate Authorization. Merger Sub has all requisite corporate
-----------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Non-Contravention. The execution, delivery and performance by
-----------------
Merger Sub of this Agreement and the consummation by Merger Sub of the
transactions contemplated hereby do not and will not contravene or conflict with
the certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
----------------------
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
(e) Board Approval. The Board of Directors of Merger Sub, by
--------------
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"Merger Sub Board Approval"), has duly (i) determined that this Agreement and
-------------------------
the Merger are fair to and in the best interests of Merger Sub and its
stockholder and (ii) approved and declared advisable this Agreement and the
Merger.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of WJ. During the period from the date of this
---------------
Agreement and continuing until the Effective Time, WJ agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, the Stock Option Agreements or the WJ Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that OSI shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed):
32
<PAGE>
(A) Ordinary Course.
---------------
(i) WJ and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material respects,
in substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; provided, however, that no action by WJ or its Subsidiaries with
-------- -------
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a) (i) unless such action would
constitute a breach of one or more of such other provisions.
(ii) Other than in connection with acquisitions permitted by Section
4.1(e), WJ shall not, and shall not permit any of its Subsidiaries to enter into
(A) any new material line of business or (B) any material commitment or
transaction (including any borrowing, capital expenditure or purchase, sale or
lease of assets) other than in the ordinary course of business consistent with
past practice and which, together with all such agreements, commitments and
transactions entered into since January 1, 2000, does not require expenditures
by WJ in excess of the amounts set forth in Section 4.1(a) of the WJ Disclosure
Schedule.
(b) Dividends; Changes in Share Capital. WJ shall not, and shall
-----------------------------------
not permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except for dividends by wholly owned Subsidiaries of WJ, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of WJ which remains a wholly owned Subsidiary after
consummation of such transaction or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except for the purchase from
time to time by WJ of WJ Common Stock (and the associated WJ Rights) in the
ordinary course of business consistent with past practice in connection with the
WJ Benefit Plans. Prior to the Effective Time, WJ shall not redeem the WJ
Rights.
(c) Issuance of Securities. WJ shall not, and shall not permit any
----------------------
of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
WJ Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants, calls or options to acquire, any such shares or WJ Voting
Debt, or enter into any commitment, arrangement, undertaking or agreement with
respect to any of the foregoing, other than (i) the issuance of WJ Common Stock
(and the associated WJ Rights) upon the exercise of WJ Stock Options or in
connection with other stock-based benefit plans outstanding on the date hereof,
in each case in accordance with their present terms or pursuant to WJ Stock
Options or other stock based awards granted pursuant to clause (ii) below, (ii)
the granting of WJ Stock Options or other stock based awards to acquire shares
of WJ Common Stock granted under stock based benefit plans outstanding on the
date hereof in the ordinary course of business consistent
33
<PAGE>
with past practice not in excess of the amounts set forth in Section 4.1(c) of
the WJ Disclosure Schedule, (iii) issuances by a wholly owned Subsidiary of WJ
of capital stock to such Subsidiary's parent or another wholly owned Subsidiary
of WJ, (iv) pursuant to the arrangements set forth in Section 4.1(c) of the WJ
Disclosure Schedule, (v) issuances in accordance with the WJ Rights Agreement or
(vi) issuances pursuant to the WJ Stock Option Agreement.
(d) Governing Documents. Except to the extent required to comply with
-------------------
their respective obligations hereunder or with applicable law, WJ and Merger Sub
shall not amend or propose to so amend their respective certificates of
incorporation, bylaws or other governing documents (other than the Certificate
Amendment).
(e) No Acquisitions. Other than (i) pursuant to the OSI Stock Option
---------------
Agreement or (ii) acquisitions disclosed on the WJ Disclosure Schedule, WJ shall
not, and shall not permit any of its Subsidiaries to, acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (other than the acquisition of assets used in the operations of the
business of WJ and its Subsidiaries in the ordinary course, which assets do not
constitute a business unit, division or all or substantially all of the assets
of the transferor); provided, however, that the foregoing shall not prohibit (x)
-------- -------
internal reorganizations or consolidations involving existing Subsidiaries of WJ
or (y) the creation of new Subsidiaries of WJ organized to conduct or continue
activities otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
---------------
consolidations involving existing Subsidiaries of WJ, (ii) dispositions referred
to in WJ SEC Reports filed prior to the date of this Agreement or (iii) as may
be required by or in conformance with law or regulation in order to permit or
facilitate the consummation of the transactions contemplated hereby or the
transactions disclosed in the WJ Disclosure Schedule, WJ shall not, and shall
not permit any of its Subsidiaries to, sell, lease or otherwise dispose of, or
agree to sell, lease or otherwise dispose of, any of its assets (including
capital stock of Subsidiaries of WJ but excluding inventory in the ordinary
course of business), if the fair market value of the total consideration
(including the value of the indebtedness acquired or assumed) therefor exceeds
the amount specified in the aggregate for all such dispositions in Section
4.1(f) of the WJ Disclosure Schedule.
(g) Investments; Indebtedness. WJ shall not, and shall not permit any of
-------------------------
its Subsidiaries to, other than in connection with actions permitted by Section
4.1(e), (i) make any loans, advances or capital contributions to, or investments
in, any other Person, other than (x) by WJ or a Subsidiary of WJ to or in WJ or
any Subsidiary of WJ, (y) pursuant to any contract or other legal obligation of
WJ or any of its Subsidiaries existing at the date of this Agreement or (z) in
the ordinary course of business consistent with past practice in an aggregate
amount not in excess of the aggregate amount specified in Section 4.1(g) of the
WJ Disclosure Schedule (provided that none of such transactions referred to in
this clause (z) presents a material risk of making it more difficult to obtain
any approval or authorization required in connection with the Merger under
Regulatory Laws)
34
<PAGE>
or (ii) create, incur, assume or suffer to exist any indebtedness, issuances of
debt securities, guarantees, loans or advances not in existence as of the date
of this Agreement except pursuant to the credit facilities, indentures and other
arrangements in existence on the date of this Agreement or in the ordinary
course of business consistent with past practice, in each case as such credit
facilities, indentures and other arrangements may be amended, extended,
modified, refunded, renewed or refinanced after the date of this Agreement.
(h) Pooling; Tax-Free Qualification. WJ shall use its reasonable best
-------------------------------
efforts not to, and shall use its reasonable best efforts not to permit any of
its Subsidiaries to, take any action (including any action otherwise permitted
by this Section 4.1) that would prevent or impede the Merger from qualifying as
a "pooling of interests" for accounting purposes or as a "reorganization" under
Section 368 of the Code; provided, however, that nothing hereunder shall limit
-------- -------
the ability of WJ to exercise its rights and/or fulfill its obligations under
the Stock Option Agreements.
(i) Compensation. Other than as contemplated by Section 5.6 or by Section
------------
4.1(c) or 4.1(i) of the WJ Disclosure Schedule, WJ shall not increase the amount
of compensation of any director, officer or other management employee except in
the ordinary course of business consistent with past practice or as required by
an existing agreement, make any increase in or commitment to increase any
employee benefits, issue any additional WJ Stock Options, adopt or make any
commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any WJ Benefit
Plan.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in WJ
----------------------------------------
SEC Reports filed prior to the date of this Agreement, or as required by a
Governmental Entity, WJ shall not change its methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP as concurred in by WJ's
independent public accountants. WJ shall not (i) change its fiscal year or (ii)
make any material tax election, other than in the ordinary course of business
consistent with past practice.
(k) Certain Agreements. WJ shall not, and shall not permit any of its
------------------
Subsidiaries to, enter into any agreements or arrangements that limit or
otherwise restrict WJ or any of its Subsidiaries or any of their respective
affiliates or any successor thereto or that could, after the Effective Time,
limit or restrict Newco or any of its affiliates (including the Surviving
Corporation) or any successor thereto, from engaging or competing in any line of
business or in any geographic area which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Newco and its Subsidiaries (including the Surviving
Corporation and its Subsidiaries), taken together, after giving effect to the
Merger.
(l) No Change or Amendment to Rights Agreement. WJ shall not amend, modify
------------------------------------------
or waive any provision of the WJ Rights Agreement, and shall not take any action
to redeem the rights or render the rights inapplicable to any transaction, other
than the Merger and the transactions contemplated by the WJ Stock Option
Agreement.
35
<PAGE>
(m) No Related Actions. WJ will not, and will not permit any of its
------------------
Subsidiaries to, agree or commit to do any of the foregoing.
4.2 Covenants of OSI. During the period from the date of this Agreement
----------------
and continuing until the Effective Time, OSI agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, the Stock Option Agreements or the OSI Disclosure Schedule or as
required by a Governmental Entity of competent jurisdiction or to the extent
that WJ shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed).
(a) Ordinary Course.
---------------
(i) OSI and its Subsidiaries shall carry on their respective businesses in
the usual, regular and ordinary course in all material respects, in
substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present lines of business, maintain
their rights and franchises and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that their
ongoing businesses shall not be impaired in any material respect at the
Effective Time; provided, however, that no action by OSI or its Subsidiaries
-------- -------
with respect to matters specifically addressed by any other provision of this
Section 4.2 shall be deemed a breach of this Section 4.2(a)(i) unless such
action would constitute a breach of one or more of such other provisions.
(ii) Other than in connection with acquisitions permitted by Section
4.2(e), OSI shall not, and shall not permit any of its Subsidiaries to enter
into (A) any new material line of business or (B) any material commitment or
transaction (including any borrowing, capital expenditure or purchase, sale or
lease of assets) other than in the ordinary course of business consistent with
past practice and which, together with all such agreements, commitments and
transactions since January 1, 2000, does not require expenditures by OSI in
excess of the amounts set forth in Section 4.2(a) of the OSI Disclosure
Schedule.
(b) Dividends; Changes in Share Capital. OSI shall not, and shall not
-----------------------------------
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except for dividends by wholly owned Subsidiaries of OSI, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly owned Subsidiary of OSI which remains a wholly owned Subsidiary
after consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except for the purchase from
time to time by OSI of OSI Common Stock in the ordinary course of business
consistent with past practice in connection with the OSI Benefit Plans.
(c) Issuance of Securities. OSI shall not, and shall not permit any of its
----------------------
Subsidiaries to, issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any
36
<PAGE>
shares of its capital stock of any class, any OSI Voting Debt or any securities
convertible into or exercisable for, or any rights, warrants, calls or options
to acquire, any such shares or OSI Voting Debt, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing,
other than (i) the issuance of OSI Common Stock upon the exercise of OSI Stock
Options or in connection with other stock-based benefits plans outstanding on
the date hereof, in each case in accordance with their present terms or pursuant
to OSI Stock Options or other stock based awards granted pursuant to clause
(iii) below, (ii) issuances by a wholly owned Subsidiary of OSI of capital stock
to such Subsidiary's parent or another wholly owned subsidiary of OSI, (iii) the
granting of OSI Stock Options or other stock based awards to acquire shares of
OSI Common Stock granted under stock based benefit plans outstanding on the date
hereof in the ordinary course of business consistent with past practice not in
excess of the amounts set forth in Section 4.2(c) of the OSI Disclosure
Schedule, (iv) pursuant to the arrangements set forth in Section 4.2(c) of the
OSI Disclosure Schedule or (v) issuances pursuant to the OSI Stock Option
Agreement.
(d) Governing Documents. Except to the extent required to comply with its
-------------------
obligations hereunder or with applicable law, OSI shall not amend or propose to
so amend its respective certificates of incorporation, bylaws or other governing
documents.
(e) No Acquisitions. Other than (i) pursuant to the WJ Stock Option
---------------
Agreement or (ii) acquisitions disclosed on the OSI Disclosure Schedule, OSI
shall not, and shall not permit any of its Subsidiaries to, acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (other than the acquisition of assets used in the operations of the
business of OSI and its Subsidiaries in the ordinary course, which assets do not
constitute a business unit, division or all or substantially of the assets of
the transferor); provided, however, that the foregoing shall not prohibit (x)
-------- -------
internal reorganizations or consolidations involving existing Subsidiaries of
OSI or (y) the creation of new Subsidiaries of OSI organized to conduct or
continue activities otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
---------------
consolidations involving existing Subsidiaries of OSI, (ii) dispositions
referred to in OSI SEC Reports filed prior to the date of this Agreement or
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
the transactions disclosed in the OSI Disclosure Schedule, OSI shall not, and
shall not permit any of its Subsidiaries to, sell, lease or otherwise dispose
of, or agree to sell, lease or otherwise dispose of, any of its assets
(including capital stock of Subsidiaries of OSI but excluding inventory in the
ordinary course of business), if the fair market value of the total
consideration (including the value of the indebtedness acquired or assumed)
therefor exceeds the amount specified in the aggregate for all such dispositions
in Section 4.2(f) of the OSI Disclosure Schedule.
(g) Investments; Indebtedness. OSI shall not, and shall not permit any of
-------------------------
its Subsidiaries to, other than in connection with actions permitted by Section
4.2(e), (i) make any loans,
37
<PAGE>
advances or capital contributions to, or investments in, any other Person, other
than (x) by OSI or a Subsidiary of OSI to or in OSI or any Subsidiary of OSI,
(y) pursuant to any contract or other legal obligation of OSI or any of its
Subsidiaries existing at the date of this Agreement or (z) in the ordinary
course of business consistent with past practice in an aggregate amount not in
excess of the aggregate amount specified in Section 4.2(g) of the OSI Disclosure
Schedule (provided that none of such transactions referred to in this clause (z)
presents a material risk of making it more difficult to obtain any approval or
authorization required in connection with the Merger under Regulatory Laws) or
(ii) create, incur, assume or suffer to exist any indebtedness, issuances of
debt securities, guarantees, loans or advances not in existence as of the date
of this Agreement except pursuant to the credit facilities, indentures and other
arrangements in existence on the date of this Agreement or in the ordinary
course of business consistent with past practice, in each case as such credit
facilities, indentures and other arrangements and other existing indebtedness
may be amended, extended, modified, refunded, renewed or refinanced after the
date of this Agreement.
(h) Pooling; Tax-Free Qualification. OSI shall use its reasonable best
-------------------------------
efforts not to, and shall use its reasonable best efforts not to permit any of
its Subsidiaries to, take any action (including any action otherwise permitted
by this Section 4.2) that would prevent or impede the Merger from qualifying as
a "pooling of interests" for accounting purposes or as a "reorganization" under
Section 368 of the Code; provided, however, that nothing hereunder shall limit
-------- -------
the ability of OSI to exercise its rights and/or fulfill its obligations under
the Stock Option Agreements.
(i) Compensation. Other than as contemplated by Section 5.6 or by Sections
------------
4.2(c) or 4.2(i) of the OSI Disclosure Schedule, OSI shall not increase the
amount of compensation of any director, officer or other management employee
except in the ordinary course of business consistent with past practice or as
required by an existing agreement, make any increase in or commitment to
increase any employee benefits, issue any additional OSI Stock Options, adopt or
make any commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any OSI Benefit
Plan.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in OSI
----------------------------------------
SEC Reports filed prior to the date of this Agreement, or as required by a
Governmental Entity, OSI shall not change its methods of accounting in effect at
December 31, 1998, except as required by changes in GAAP as concurred in by
OSI's independent public accountants. OSI shall not (i) change its fiscal year
or (ii) make any material tax election, other than in the ordinary course of
business consistent with past practice.
(k) Certain Agreements. OSI shall not, and shall not permit any of its
------------------
Subsidiaries to, enter into any agreements or arrangements that limit or
otherwise restrict OSI or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, or that could, after the Effective Time,
limit or restrict Newco or any of its affiliates (including the Surviving
Corporation) or any successor thereto, from engaging or competing in any line of
business or in any geographic area which agreements or arrangements,
individually or in the aggregate, would reasonably be
38
<PAGE>
expected to have a Material Adverse Effect on Newco and its Subsidiaries
(including the Surviving Corporation and its Subsidiaries), taken together,
after giving effect to the Merger.
(l) No Related Actions. OSI will not, and will not permit any of its
------------------
Subsidiaries to, agree or commit to any of the foregoing.
4.3 Governmental Filings. Each party shall (a) confer on a regular and
--------------------
frequent basis with the other and (b) report to the other (to the extent
permitted by law or regulation or any applicable confidentiality agreement) on
operational matters. OSI and WJ shall file all reports required to be filed by
each of them with the SEC (and all other Governmental Entities) between the date
of this Agreement and the Effective Time and shall (to the extent permitted by
law or regulation or any applicable confidentiality agreement) deliver to the
other party copies of all such reports, announcements and publications promptly
after the same are filed.
4.4 Control of Other Party's Business. Nothing contained in this Agreement
---------------------------------
shall give OSI, directly or indirectly, the right to control or direct WJ's
operations prior to the Effective Time. Nothing contained in this Agreement
shall give WJ, directly or indirectly, the right to control or direct OSI's
operations prior to the Effective Time. Prior to the Effective Time, each of OSI
and WJ shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Stockholders Meetings.
-----------------------------------------------------
(a) As promptly as reasonably practicable following the date hereof, WJ
and OSI shall prepare and file with the SEC mutually acceptable proxy materials
which shall constitute the Joint Proxy Statement/Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
-----
Proxy Statement/Prospectus") and WJ shall prepare and file a registration
- --------------------------
statement on Form S-4 with respect to the issuance of WJ Common Stock in the
Merger (the "Form S-4"). The Joint Proxy Statement/Prospectus will be included
--------
in and will constitute a part of the Form S-4 as WJ's prospectus. The Form S-4
and the Joint Proxy Statement/Prospectus shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act and the rules and regulations thereunder. Each of WJ and OSI shall use
reasonable best efforts to have the Form S-4 declared effective by the SEC and
to keep the Form S-4 effective as long as is necessary to consummate the Merger
and the transactions contemplated thereby. WJ and OSI shall, as promptly as
practicable after receipt thereof, provide the other party copies of any written
comments and advise the other party of any oral comments, with respect to the
Joint Proxy Statement/Prospectus received from the SEC. WJ will provide OSI with
a reasonable opportunity to review and comment on any amendment or supplement to
the Form S-4 prior to filing such with the SEC, and will provide OSI with a copy
of all such filings made with the SEC. Except
39
<PAGE>
otherwise provided for herein, no amendment or supplement (including by
incorporation by reference) to the Joint Proxy Statement/Prospectus or the Form
S-4 shall be made without the approval of both parties, which approval shall not
be unreasonably withheld or delayed; provided, that with respect to documents
--------
filed by a party which are incorporated by reference in the Form S-4 or Joint
Proxy Statement/Prospectus, this right of approval shall apply only with respect
to information relating to the other party or its business, financial condition
or results of operations; and provided, further, that WJ, in connection with a
-------- -------
Change in the WJ Recommendation, and OSI, in connection with a Change in the OSI
Recommendation, may amend or supplement the Joint Proxy Statement/Prospectus or
Form S-4 (including by incorporation by reference) pursuant to a Qualifying
Amendment (as defined below) to effect such a Change, and in such event, this
right of approval shall apply only with respect to information relating to the
other party or its business, financial condition or results of operations, and
shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions to be accurately described. A "Qualifying
----------
Amendment" means an amendment or supplement to the Joint Proxy
- ---------
Statement/Prospectus or Form S-4 (including by incorporation by reference) to
the extent it contains (i) a Change in the WJ Recommendation or a Change in the
OSI Recommendation (as the case may be), (ii) a statement of the reasons of the
Board of Directors of WJ or OSI (as the case may be) for making such Change in
the WJ Recommendation or Change in the OSI Recommendation (as the case may be)
and (iii) additional information reasonably related to the foregoing. WJ will
use reasonable best efforts to cause the Joint Proxy Statement/Prospectus to be
mailed to WJ stockholders, and OSI will use reasonable best efforts to cause the
Joint Proxy Statement/Prospectus to be mailed to OSI's stockholders, in each
case after the Form S-4 is declared effective under the Securities Act. WJ shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the Share Issuance and OSI shall furnish all information
concerning OSI and the holders of OSI Common Stock as may be reasonably
requested in connection with any such action. Each party will advise the other
party, promptly after it receives notice thereof, of the time when the Form S-4
has become effective, the issuance of any stop order, the suspension of the
qualification of the WJ Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Joint Proxy Statement/Prospectus or the Form S-4. If at any time prior to
the Effective Time any information relating to WJ or OSI, or any of their
respective affiliates, officers or directors, should be discovered by WJ or OSI
which should be set forth in an amendment or supplement to any of the Form S-4
or the Joint Proxy Statement/Prospectus so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such information
shall promptly notify the other party hereto and, to the extent required by law,
rules or regulations, an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and disseminated to the
stockholders of WJ and OSI.
(b) OSI shall, duly take (subject to the accuracy of the provisions of
Section 3.1(e) and Section 3.2 (e) (provided that OSI shall have used reasonable
best efforts to ensure that such representation is true and correct)), all
lawful action to call, give notice of, convene and hold a
40
<PAGE>
meeting of its stockholders on a date determined in accordance with the mutual
agreement of OSI and WJ (the "OSI Stockholders Meeting") for the purpose of
------------------------
obtaining the Required OSI Vote with respect to the transactions contemplated by
this Agreement and shall take all lawful action to solicit the adoption of this
Agreement by the Required OSI Vote; and the Board of Directors of OSI shall
recommend adoption of this Agreement by the stockholders of OSI to the effect as
set forth in Section 3.2(f) (the "OSI Recommendation"), and shall not withdraw,
------------------
modify or qualify (or propose to withdraw, modify or qualify) in any manner
adverse to WJ such recommendation or take any action or make any statement in
connection with the OSI Stockholders Meeting inconsistent with such
recommendation (collectively, a "Change in the OSI Recommendation"); provided
--------------------------------
the foregoing shall not prohibit accurate disclosure (and such disclosure shall
not be deemed to be a Change in the OSI Recommendation) of factual information
regarding the business, financial condition or results of operations of WJ or
OSI or the fact that an Acquisition Proposal has been made, the identity of the
party making such proposal or the material terms of such proposal (provided,
that the Board of Directors of OSI does not withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to WJ its
recommendation) in the Form S-4 or the Joint Proxy Statement/Prospectus, to the
extent such information, facts, identity or terms is required to be disclosed
therein under applicable law, rule or regulation; and, provided further, that
the Board of Directors of OSI may make a Change in the OSI Recommendation
pursuant to Section 5.5 hereof. Notwithstanding any Change in the OSI
Recommendation, this Agreement shall be submitted to the stockholders of OSI at
the OSI Stockholders Meeting for the purpose of adopting the Agreement and
approving the Merger and nothing contained in this Section 5.1(b) shall be
deemed to relieve OSI of such obligation.
(c) WJ shall duly take (subject to the accuracy of the provisions of
Section 3.2 (e) and Section 3.1(e) (provided that WJ shall have used reasonable
best efforts to ensure that such representation is true and correct) all lawful
action to call, give notice of, convene and hold a meeting of its stockholders
on a date determined in accordance with the mutual agreement of WJ and OSI (the
"WJ Stockholders Meeting") for the purpose of obtaining the WJ Stockholder
-----------------------
Approval and shall take all lawful action to solicit the approval of the Share
Issuance and the adoption of the Certificate Amendment; and the Board of
Directors of WJ shall recommend approval of the Share Issuance and the adoption
of the Certificate Amendment by the stockholders of WJ to the effect as set
forth in Section 3.1(f) (the "WJ Recommendation"), and shall not withdraw,
-----------------
modify or qualify (or propose to withdraw, modify or qualify) in any manner
adverse to OSI such recommendation or take any action or make any statement in
connection with the WJ Stockholders Meeting inconsistent with such
recommendation (collectively, a "Change in the WJ Recommendation"); provided the
-------------------------------
foregoing shall not prohibit accurate disclosure (and such disclosure shall not
be deemed to be a Change in the WJ Recommendation) of factual information
regarding the business, financial condition or operations of WJ or OSI or the
fact that an Acquisition Proposal has been made, the identity of the party
making such proposal or the material terms of such proposal (provided, that the
Board of Directors of WJ does not withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to OSI its recommendation) in
the Form S-4 or the Joint Proxy Statement/Prospectus, to the extent such
information, facts, identity or terms is required to be disclosed therein under
applicable law, rule or regulation; and, provided further, that the Board of
41
<PAGE>
Directors of WJ may make a Change in the WJ Recommendation pursuant to Section
5.5 hereof. Notwithstanding any Change in the WJ Recommendation, a proposal to
approve the Share Issuance, and a proposal to adopt the Certificate Amendment
shall be submitted to the stockholders of WJ at the WJ Stockholders Meeting for
the purpose of obtaining the WJ Stockholder Approval and nothing contained in
this Section 5.1(c) shall be deemed to relieve WJ of such obligation.
(d) For purposes of this Agreement, a Change in the OSI Recommendation
shall be deemed to include, without limitation, a recommendation by the OSI
Board of Directors of a third party Acquisition Proposal with respect to OSI and
a Change in the WJ Recommendation shall be deemed to include, without
limitation, a recommendation by the WJ Board of Directors of a third party
Acquisition Proposal with respect to WJ.
5.2 Newco Board of Directors; Executive Officers; Post-Merger Operations.
--------------------------------------------------------------------
(a) At or prior to the Effective Time, WJ will take all action necessary
to (i) reconstitute the Board of Directors of Newco and the committees thereof
as of the Effective Time in accordance with Exhibit 5.2(a) hereto, (ii) cause
Kevin J. Ryan to be appointed as Chief Executive Officer of Newco, to be
effective as of the Effective Time in accordance with Exhibit 5.2(a) hereto,
(iii) cause John D. Fruth to be appointed as non-executive Chairman of the Board
of Newco, to be effective as of the Effective Time in accordance with Exhibit
5.2(a) hereto, (iv) cause the other individuals listed in Exhibit 5.2(a) hereto
to be appointed as officers of Newco as of the Effective Time in accordance with
Exhibit 5.2(a) hereto and (v) amend the WJ bylaws to read in their entirety as
set forth on Exhibit 5.2(b) hereto.
(b) WJ and OSI acknowledge that after the Effective Time WJ will undertake
to integrate the operations of OSI with those of WJ and that following the
completion of such integration process, Newco and its Subsidiaries will be
operated on a consolidated basis under the direction of Newco's chief executive
officer, subject to the oversight of the Newco Board of Directors.
5.3 Access to Information. Upon reasonable notice, each party shall (and
---------------------
shall cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other party
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its properties, books, contracts, commitments, records,
officers and employees and, during such period, such party shall (and shall
cause its Subsidiaries to) furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
documents which such party is not permitted to disclose under applicable law),
and (b) all other information concerning it and its business, properties and
personnel as such other party may reasonably request (including consultation on
a regular basis with respect to litigation matters); provided, however, that
-------- -------
either party may restrict the foregoing access to the extent that (i) any law,
treaty, rule or regulation of any Governmental Entity applicable to such party
requires such party or its Subsidiaries to restrict or
42
<PAGE>
prohibit access to any such properties or information or (ii) the information is
subject to confidentiality obligations to a third party. The parties will hold
any such information obtained pursuant to this Section 5.3 in confidence in
accordance with, and shall otherwise be subject to, the provisions of the
Confidentiality Agreement, dated November 4, 1999, between OSI and WJ (the
"Confidentiality Agreement"), as if such Confidentiality Agreement were in full
- --------------------------
force and effect. Any investigation by WJ or OSI shall not affect the
representations and warranties of OSI or WJ, as the case may be.
5.4 Reasonable Best Efforts.
-----------------------
(a) Subject to the terms and conditions of this Agreement, each party will
use its reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under this
Agreement and applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement as soon as practicable after
the date hereof, including (i) preparing and filing as promptly as practicable
all documentation to effect all necessary applications, notices, petitions,
filings, tax ruling requests and other documents and to obtain as promptly as
practicable all consents, waivers, licenses, orders, registrations, approvals,
permits, tax rulings and authorizations necessary or advisable to be obtained
from any third party and/or any Governmental Entity in order to consummate the
Merger or any of the other transactions contemplated by this Agreement and (ii)
taking all reasonable steps as may be necessary to obtain all such material
consents, waivers, licenses, registrations, permits, authorizations, tax
rulings, orders and approvals. In furtherance and not in limitation of the
foregoing, each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act and any other Regulatory
Law (as defined below) with respect to the transactions contemplated hereby as
promptly as practicable after the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other Regulatory Law and to take all
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable. Nothing in this
Agreement shall require any of WJ and its Subsidiaries or OSI and its
Subsidiaries to sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or agree to sell, hold separate or otherwise
dispose of or conduct their business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of WJ, OSI or their
respective Subsidiaries or the conduct of their business in a specified manner,
whether as a condition to obtaining any approval from a Governmental Entity or
any other Person or for any other reason, if such sale, holding separate or
other disposition or the conduct of their business in a specified manner is not
conditioned on the Closing or, in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Newco and its Subsidiaries (including the
Surviving Corporation and its Subsidiaries), taken together, after giving effect
to the Merger.
(b) Each of WJ and OSI shall, in connection with the efforts referenced in
Section 5.4 (a) to obtain all requisite material approvals and authorizations
for the transactions contemplated by this Agreement under the HSR Act or any
other Regulatory Law, use its reasonable best efforts to (i) cooperate in all
respects with each other in connection with any filing or submission and in
43
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connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) promptly inform the other party of any
communication received by such party from, or given by such party to, the
Antitrust Division of the Department of Justice (the "DOJ"), the Federal Trade
---
Commission (the "FTC") or any other Governmental Entity and of any material
---
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby, and
(iii) permit the other party to review any communication given by it to, and
consult with each other in advance of any meeting or conference with, the DOJ,
the FTC or any such other Governmental Entity or, in connection with any
proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences. For purposes of this
Agreement, "Regulatory Law" means the Sherman Act, as amended, Council
--------------
Regulation No. 4064/89 of the European Community, as amended (the "EC Merger
---------
Regulation"), the Clayton Act, as amended, the HSR Act, the Federal Trade
- ----------
Commission Act, as amended, and all other federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws that are designed or intended to prohibit, restrict or
regulate (i) foreign investment or (ii) actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition.
(c) Subject to the terms and conditions of this Agreement, in furtherance
and not in limitation of the covenants of the parties contained in Sections
5.4(a) and 5.4(b), if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Regulatory Law, each of WJ and OSI shall cooperate in all
respects with each other and use its respective reasonable best efforts,
including without limitation, selling, holding separate or otherwise disposing
of or conducting their business in a specified manner, or agreeing to sell, hold
separate or otherwise dispose of or conduct their business in a specified manner
or permitting the sale, holding separate or other disposition of, any assets of
WJ, OSI or their respective Subsidiaries or the conducting of their business in
a specified manner, in order to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of WJ and OSI shall
use its reasonable best efforts to resolve any such objections or challenge as
such Governmental Entity or private party may have to such transactions under
such Regulatory Law so as to permit consummation of the transactions
contemplated by this Agreement.
44
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(e) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.4 shall limit a party's right to terminate
this Agreement pursuant to Article VII; provided that the foregoing is subject
in all respects to the last sentence of Section 5.4(a).
5.5 Acquisition Proposals.
---------------------
Without limitation on any of such party's other obligations under this
Agreement (including under Article IV hereof), each of WJ and OSI agrees that
neither it nor any of its Subsidiaries nor any of the officers and directors of
it or its Subsidiaries shall, and that it shall use its reasonable best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, initiate, solicit,
encourage or knowingly facilitate (including by way of furnishing information)
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving it,
or any purchase or sale of the consolidated assets (including without limitation
stock of Subsidiaries) of such party and its Subsidiaries, taken as a whole,
having an aggregate value equal to 10% or more of the market capitalization of
such party, or any purchase or sale of, or tender or exchange offer for, 10% or
more of the equity securities of such party (any such proposal or offer (other
than a proposal or offer made by the other party or an affiliate thereof) being
hereinafter referred to as an "Acquisition Proposal"). Each of WJ and OSI
--------------------
further agrees that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall use
its reasonable best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding anything in this Agreement to the contrary, each of
WJ and OSI or its respective Board of Directors shall be permitted to (A) to the
extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal, (B) effect a Change in the
WJ or OSI Recommendation, as the case may be, or (C) engage in any discussions
or negotiations with, or provide any information to, any Person in response to
an unsolicited bona fide written Acquisition Proposal by any such Person, if and
only to the extent that, in any such case as is referred to in clause (B) or
(C), (i) its Stockholders Meeting shall not have occurred, (ii) (x) in the case
of clause (B) above, it has received an unsolicited bona fide written
Acquisition Proposal from a third party and its Board of Directors concludes in
good faith that such Acquisition Proposal constitutes a Superior Proposal (as
defined in Section 8.11) and (y) in the case of clause (C) above, its Board of
Directors concludes in good faith that there is a reasonable likelihood that
such Acquisition Proposal could result in a Superior Proposal, (iii) prior to
providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, its Board of Directors receives from
such Person an executed confidentiality agreement containing terms at least as
stringent as those contained in the Confidentiality Agreement and (iv) prior to
providing any information or data to any Person or entering into discussions or
negotiations with any Person, such
45
<PAGE>
party notifies the other party promptly of such inquiries, proposals or offers
received by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any inquiries, proposals or
offers. Each of WJ and OSI agrees that it will promptly keep the other party
informed of the status and terms of any such proposals or offers and the status
and terms of any such discussions or negotiations. Each of WJ and OSI agrees
that it will, and will cause its officers, directors and representatives to,
immediately cease and cause to be terminated any activities, discussions or
negotiations existing as of the date of this Agreement with any parties
conducted heretofore with respect to any Acquisition Proposal. Each of WJ and
OSI agrees that it will use reasonable best efforts to promptly inform its
directors, officers, key employees, agents and representatives of the
obligations undertaken in this Section 5.5. Nothing in this Section 5.5 shall
(x) permit WJ or OSI to terminate this Agreement (except as specifically
provided in Article VII hereof) or (y) affect any other obligation of WJ or OSI
under this Agreement.
5.6 Employee Benefits Matters.
-------------------------
(a) It is the intention of Newco to normalize the compensation and benefit
programs (including annual and long-term incentive programs) provided to the
former employees of OSI and its Subsidiaries with those employee benefits that
are provided to similarly situated employees of WJ and its Subsidiaries.
(b) Following the Effective Time, Newco shall honor, cause the Surviving
Corporation to honor, all OSI Benefit Plans and related funding arrangements in
accordance with their respective terms. For at least one year after the
Effective Time, Newco shall provide compensation and employee benefits under
Benefit Plans (as defined in Section 8.11) to the employees and former employees
of WJ and OSI and their respective Subsidiaries (the "Newco Employees") that
---------------
are, in the aggregate, no less favorable in any material respects than those
provided to such persons pursuant to the Benefit Plans in effect on the date
hereof. Nothing herein shall require Newco to continue any particular Benefit
Plan or prevent the amendment or termination thereof (subject to the
maintenance, in the aggregate, of the benefits as provided in the preceding
sentence); provided, however, that Newco shall not take any action (by way of
-------- --------
amendment, termination or otherwise) which is in violation of the terms of any
Benefit Plan or applicable law.
5.7 Fees and Expenses. Whether or not the Merger is consummated, all
-----------------
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on OSI or its
Subsidiaries, (b) Expenses incurred in connection with the filing, printing and
mailing of the Joint Proxy Statement/Prospectus, which shall be shared equally
by WJ and OSI, (c) Expenses incurred by OSI shall be paid as soon as practicable
by WJ in the event that OSI terminates this Agreement pursuant to Section 7.1(j)
and (d) Expenses incurred by WJ shall be paid as soon as practicable by OSI in
the event that WJ terminates this Agreement pursuant to Section 7.1(i). As used
in this
46
<PAGE>
Agreement, "Expenses" includes all out-of-pocket expenses (including, without
--------
limitation, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Joint Proxy Statement/Prospectus and the solicitation of
stockholder approvals and all other matters related to the transactions
contemplated hereby.
5.8 Directors' and Officers' Indemnification and Insurance. The Surviving
------------------------------------------------------
Corporation shall, and Newco shall cause the Surviving Corporation to, (i)
indemnify and hold harmless, and provide advancement of expenses to, all past
and present directors, officers and employees of OSI and its Subsidiaries (in
all of their capacities) (a) to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement by
OSI pursuant to OSI's certificate of incorporation, bylaws and indemnification
agreements, if any, in existence on the date hereof with any directors, officers
and employees of OSI and its Subsidiaries and (b) without limitation to clause
(a), to the fullest extent permitted by law, in each case for acts or omissions
occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the consummation
of the transactions contemplated hereby), (ii) include and cause to be
maintained in effect in the Surviving Corporation's (or any successor's)
certificate of incorporation and bylaws for a period of six years after the
Effective Time, the current provisions regarding elimination of liability of
directors, indemnification of officers, directors and employees and advancement
of expenses contained in the certificate of incorporation and bylaws of OSI and
(iii) cause to be maintained for a period of six years after the Effective Time
the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by OSI (provided that the Surviving
Corporation (or any successor) may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective Time; provided,
--------
however, that in no event shall the Surviving Corporation be required to expend
- -------
in any one year an amount in excess of 200% of the annual premiums currently
paid by OSI for such insurance. The obligations of the Surviving Corporation
under this Section 5.8 shall not be terminated or modified in such a manner as
to adversely affect any indemnitees to whom this Section 5.8 applies without the
consent of such affected indemnitees (it being expressly agreed that the
indemnitees to whom this Section 5.8 applies shall be third party beneficiaries
of this Section 5.8).
5.9 Public Announcements. WJ and OSI shall use reasonable best efforts to
--------------------
develop a joint communications plan and each party shall use reasonable best
efforts (i) to ensure that all press releases and other public statements with
respect to the transactions contemplated hereby shall be consistent with such
joint communications plan, and (ii) unless otherwise required by applicable law
or by obligations pursuant to any listing agreement with or rules of any
securities exchange, to consult with each other before issuing any press release
or, to the extent practical, otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby. In addition to the
foregoing, except to the extent disclosed in or consistent
47
<PAGE>
with the Joint Proxy Statement/Prospectus in accordance with the provisions of
Section 5.1, neither WJ nor OSI shall issue any press release or otherwise make
any public statement or disclosure concerning the other party or the other
party's business, financial condition or results of operations without the
consent of the other party, which consent shall not be unreasonably withheld or
delayed.
5.10 Accountant's Letters.
--------------------
(a) WJ shall use reasonable best efforts to cause to be delivered to OSI
two letters from WJ's independent public accountants, one dated approximately
the date on which the Form S-4 shall become effective and one dated the Closing
Date, each addressed to WJ and OSI, in form reasonably satisfactory to OSI and
customary in scope for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
WJ shall use reasonable best efforts to cause to be delivered to OSI, a copy of
a letter from WJ's independent accountants dated as of the Closing Date, stating
that accounting for the Merger as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations is
appropriate if the Merger is closed and consummated as contemplated by this
Agreement.
(b) OSI shall use reasonable best efforts to cause to be delivered to WJ
two letters from OSI's independent public accountants, one dated approximately
the date on which the Form S-4 shall become effective and one dated the Closing
Date, each addressed to OSI and WJ, in form reasonably satisfactory to WJ and
customary in scope for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
OSI shall use reasonable best efforts to cause to be delivered to WJ a copy of a
letter from OSI's independent public accountants, addressed to OSI, dated as of
the Closing Date, stating that, as of the date of their report, no conditions
exist that would preclude OSI's ability to be a party in a business combination
to be accounted for as a pooling of interests.
(c) Each of WJ and OSI shall use reasonable best efforts to cause the
transactions contemplated by this Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by the SEC.
5.11 Listing of Shares of WJ Common Stock. WJ shall use its reasonable
------------------------------------
best efforts to cause the shares of WJ Common Stock to be issued in the Merger
and the shares of WJ Common Stock to be reserved for issuance upon exercise of
the OSI Stock Options to be approved for listing on the Nasdaq, subject to
official notice of issuance, prior to the Closing Date.
5.12 Registration Rights Agreement. At or prior to the Effective Time, WJ
------------------------------
shall enter into a Registration Rights Agreement (the "Registration Rights
-------------------
Agreement") with John D. Fruth substantially in the form of Exhibit 5.12 hereto
- ---------
with respect to all shares of WJ Common Stock to be received by him in the
Merger.
48
<PAGE>
5.13 Affiliates.
----------
(a) Not less than 45 days prior to the Effective Time, OSI shall deliver
to WJ a letter identifying all persons who, in the judgment of OSI, may be
deemed at the time this Agreement is submitted for adoption by the stockholders
of OSI, "affiliates" of OSI for purposes of Rule 145 under the Securities Act or
for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations, and such list shall be updated as necessary to reflect
changes from the date thereof. OSI shall use reasonable best efforts to cause
each person identified on such list to deliver to WJ not less than 30 days prior
to the Effective Time, a written agreement substantially in the form attached as
Exhibit 5.13(a) hereto (an "Affiliate Agreement"). Not less than 45 days prior
-------------------
to the Effective Time, WJ shall deliver to OSI a letter identifying all persons
who, in the judgment of WJ, may be deemed "affiliates" of WJ for purposes of
qualifying the Merger for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations, and such list shall be updated as necessary to reflect changes from
the date hereof. WJ shall use reasonable best efforts to cause each person
identified on such list to deliver to OSI not less than 30 days prior to the
Effective Time in the form attached as Exhibit 5.13(b) hereto.
(b) Newco shall use its reasonable best efforts to publish no later than
90 days after the end of the first month after the Effective Time in which there
are at least 30 days of post-Merger combined operations (which month may be the
month in which the Effective Time occurs), combined sales and net income figures
as contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
5.14 Section 16 Matters. Prior to the Effective Time, WJ and OSI shall
------------------
take all such steps as may be required to cause any dispositions of OSI Common
Stock (including derivative securities with respect to OSI Common Stock) or
acquisitions of WJ Common Stock (including derivative securities with respect to
WJ Common Stock) resulting from the transactions contemplated by Article I or
Article II of this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to OSI, to be
exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be
taken in accordance with the No-Action Letter dated January 12, 1999, issued by
the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligations of OSI, WJ and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
49
<PAGE>
(a) Stockholder Approval. (i) OSI shall have obtained the Required OSI
--------------------
Vote in connection with the adoption of this Agreement by the stockholders of
OSI and (ii) WJ shall have obtained the WJ Stockholder Approval in connection
with the approval of the Share Issuance by the stockholders of WJ.
(b) No Injunctions or Restraints, Illegality. No Laws shall have been
----------------------------------------
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, (i) having the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger or
(ii) which otherwise, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Newco and its Subsidiaries
(including the Surviving Corporation and its Subsidiaries), taken together after
giving effect to the Merger.
(c) HSR Act; EC Merger Regulation. The waiting period (and any extension
-----------------------------
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired and approval of the Merger of the European Commission
shall have been obtained pursuant to the EC Merger Regulation.
(d) Governmental and Regulatory Approvals. Other than the filing provided
-------------------------------------
for under Section 1.3 and filings pursuant to the HSR Act and EC Merger
Regulation (which are addressed in Section 6.1(c)), all consents, approvals and
actions of, filings with and notices to any Governmental Entity required of WJ,
OSI or any of their Subsidiaries to consummate the Merger, the Share Issuance
and the other transactions contemplated hereby, the failure of which to be
obtained or taken, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Newco and its Subsidiaries
(including the Surviving Corporation and its Subsidiaries), taken together after
giving effect to the Merger, shall have been obtained; provided however, that
the provisions of this Section 6.1(d) shall not be available to any party whose
failure to fulfill its obligations pursuant to Section 5.4 shall have been the
cause of, or shall have resulted in, the failure to obtain such consent or
approval.
(e) Nasdaq Listing. The shares of WJ Common Stock to be issued in the
--------------
Merger and such other shares to be reserved for issuance in connection with the
Merger shall have been approved for listing on the Nasdaq, subject to official
notice of issuance.
(f) Effectiveness of the Form S-4. The Form S-4 shall have been declared
-----------------------------
effective by the SEC under the Securities Act. No stop order suspending the
effectiveness of the Form S-4 shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(g) Pooling. OSI shall have received and delivered to WJ and WJ's
-------
independent public accountants, a letter from its independent public
accountants, dated as of the Closing Date, stating that as of the date of their
letter, no conditions exist that would preclude OSI's ability to be a party in a
business combination to be accounted for as a pooling of interests. WJ shall
have
50
<PAGE>
received and delivered to OSI, a letter from its independent public accountants,
dated as of the Closing Date, stating that accounting for the Merger as a
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations is appropriate if the Merger is closed and
consummated as contemplated by this Agreement.
6.2 Additional Conditions to Obligations of WJ and Merger Sub. The
---------------------------------------------------------
obligations of WJ and Merger Sub to effect the Merger are subject to the
satisfaction of, or waiver by WJ, on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of OSI set forth in this Agreement that is qualified as to Material
Adverse Effect shall be true and correct, and each of the representations and
warranties of OSI set forth in this Agreement that is 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 in either case that such representations and
warranties speak as of another date); and WJ shall have received a certificate
of the chief executive officer and the chief financial officer of OSI to such
effect.
(b) Performance of Obligations of OSI. OSI shall have performed or
---------------------------------
complied with all agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are qualified as to Material
Adverse Effect and shall have performed or complied in all material respects
with all other agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are not so qualified, and WJ
shall have received a certificate of the chief executive officer and the chief
financial officer of OSI to such effect.
(c) Tax Opinion. WJ shall have received from Kirkland & Ellis, counsel to
-----------
WJ, on the Closing Date, a written opinion dated as of such date to the effect
that for federal income tax purposes the Merger will constitute a reorganization
within the meaning of section 368(a) of the Code and that each of WJ, OSI and
Merger Sub will be a party to the reorganization within the meaning of section
368(b) of the Code.
6.3 Additional Conditions to Obligations of OSI. The obligations of OSI
-------------------------------------------
to effect the Merger are subject to the satisfaction of, or waiver by OSI, on or
prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of WJ set forth in this Agreement that is qualified as to Material
Adverse Effect shall be true and correct, and each of the representations and
warranties of WJ set forth in this Agreement that is 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 in either case that such representations and
warranties speak as of another date) and OSI shall
51
<PAGE>
have received a certificate of the chief executive officer and the chief
financial officer of WJ to such effect.
(b) Performance of Obligations of WJ. WJ shall have performed or complied
---------------------------------
with all agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are qualified as to Material
Adverse Effect and shall have performed or complied in all material respects
with all other agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are not so qualified, and
OSI shall have received a certificate of the chief executive officer and the
chief financial officer of WJ to such effect.
(c) Tax Opinion. OSI shall have received from Pillsbury Madison & Sutro,
-----------
counsel to OSI, on the Closing Date, a written opinion dated as of such date to
the effect that for federal income tax purposes the Merger will constitute a
reorganization within the meaning of section 368(a) of the Code and that each of
WJ, OSI and Merger Sub will be a party to the reorganization within the meaning
of section 368(b) of the Code.
(d) WJ Rights Agreement. No Stock Acquisition Date or Distribution Date
-------------------
(as such terms are defined in the WJ Rights Agreement) shall have occurred
pursuant to the WJ Rights Agreement.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, and except as provided below, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of OSI or WJ:
(a) By mutual written consent of WJ and OSI;
(b) By either OSI or WJ, if the Effective Time shall not have occurred on
or before July 31, 2000 (the "Termination Date") or, if the Merger shall not
----------------
have occurred by such date because of the failure of the condition set forth in
section 6.1(c) or section 6.1(f), October 31, 2000; provided, however, that the
-------- -------
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement (including without limitation such party's obligations set forth in
Section 5.4) has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before the Termination Date;
(c) By either OSI or WJ, if any Governmental Entity (i) shall have issued
an order, decree or ruling or taken any other action (which such party shall
have used its reasonable best efforts to resist, resolve or lift, as applicable,
in accordance with Section 5.4) permanently
52
<PAGE>
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (ii) shall have failed to issue an order, decree or
ruling or to take any other action (which order, decree, ruling or other action
such party shall have used its reasonable best efforts to obtain, in accordance
with Section 5.4), in the case of each of (i) and (ii) which is necessary to
fulfill the conditions set forth in subsections 6.1(c) and (d), as applicable,
and such denial of a request to issue such order, decree, ruling or take such
other action shall have become final and nonappealable; provided, however, that
-------- -------
the right to terminate this Agreement under this Section 7.1(c) shall not be
available to any party whose failure to comply with Section 5.4 has been the
cause of such action or inaction;
(d) By either OSI or WJ, if the approvals of the stockholders of either WJ
or OSI contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote for the Merger or the Share Issuance at
a duly held meeting of stockholders or of any adjournment thereof at which the
vote was taken;
(e) By WJ, if OSI shall have failed to make the OSI Recommendation or
effected a Change in the OSI Recommendation (or resolved to take any such
action), whether or not permitted by the terms hereof, or shall have materially
breached its obligations under this Agreement by reason of a failure to call the
OSI Stockholders Meeting in accordance with Section 5.1(b); or
(f) By OSI, if WJ shall have failed to make the WJ Recommendation or
effected a Change in the WJ Recommendation (or resolved to take any such
action), whether or not permitted by the terms hereof, or shall have materially
breached its obligations under this Agreement by reason of a failure to call the
WJ Stockholders Meeting in accordance with Section 5.1(c);
(g) By OSI, if at any time prior to the OSI Stockholders Meeting OSI shall
have failed to make the OSI Recommendation or effected a change in the OSI
Recommendation so long as (i) the OSI Board of Directors, after consultation
with its legal counsel and financial advisor, determines that an Acquisition
Proposal is a Superior Proposal and, after consultation with and based upon
advice of legal counsel, determines in good faith that such action is necessary
for the OSI Board of Directors to comply with its fiduciary duties to
stockholders under applicable law, (ii) OSI pays to WJ all amounts due under
Section 7.2 and (iii) OSI provides to WJ at least five Business Days prior to
such termination written notice of its intention to terminate this Agreement and
the material terms and conditions of the Acquisition Proposal;
(h) By WJ, if at any time prior to the WJ Stockholders Meeting WJ shall
have failed to make the WJ Recommendation or effected a change in the WJ
Recommendation so long as (i) the WJ Board of Directors, after consultation with
its legal counsel and financial advisor, determines that an Acquisition Proposal
is a Superior Proposal and, after consultation with and based upon advise of
legal counsel, determines in good faith that such action is necessary for the WJ
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law, (ii) WJ pays to OSI all amounts due under Section 7.2 and (iii)
WJ provides to OSI at least five Business Days
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prior to such termination written notice of its intention to terminate this
Agreement and the material terms and conditions of the Acquisition Proposal;
(i) By WJ, if there shall be a breach by OSI of any representation,
warranty, covenant or agreement contained in this Agreement which would result
in a failure of a condition set forth in paragraph 6.2(a) or 6.2(b) and cannot
be or is not cured within 20 Business Days of such breach; or
(j) By OSI, if there shall be a breach by WJ of any representation,
warranty, covenant or agreement contained in this Agreement which would result
in a failure of a condition set forth in paragraph 6.3(a) or 6.3(b) and cannot
be or is not cured within 20 Business Days of such breach.
7.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either OSI or WJ as
provided in Section 7.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of WJ or OSI or their respective
officers or directors except as provided in Section 3.1(l), Section 3.2(l), the
second sentence of Section 5.3, Section 5.7, this Section 7.2 and Article VIII,
which provisions shall survive such termination, and except that,
notwithstanding anything to the contrary contained in this Agreement, neither WJ
nor OSI shall be relieved or released from any liabilities or damages arising
out of its willful and material breach of this Agreement.
(b) If (A) (I) either party shall terminate this Agreement pursuant to
Section 7.1(d) (provided that the basis for such termination is the failure of
WJ's stockholders to approve the Share Issuance) and (II) at any time after the
date of this Agreement and at or before the date of the WJ Stockholders Meeting
a Business Combination (as defined in Section 7.2(d)) proposal with respect to
WJ shall have been publicly announced or otherwise communicated to the WJ Board
of Directors, (B) OSI shall terminate this Agreement pursuant to Section 7.1(f)
or (C) WJ shall terminate this Agreement pursuant to Section 7.1(h);
then:
(i) in the case of clauses (B) or (C), WJ shall pay to OSI (in the case of
clause (B) not later than two Business Days after the date of termination and in
the case of clause (C) immediately prior to the termination of this Agreement an
amount equal to $20 million and
(ii) in the case of clause (A), (i) WJ shall pay OSI, not later than two
Business Days after the date of termination of this Agreement, an amount equal
to $10 million and (ii) if within twelve months of termination of this
Agreement, WJ enters into a definitive agreement with any third party with
respect to a Business Combination or any Business Combination with respect to WJ
is consummated, then WJ shall pay to OSI, not later than two Business Days after
the earlier
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of the date such agreement is entered into or such Business Combination is
consummated, an additional amount equal to $10 million.
(c) If (A) (I) either party shall terminate this Agreement pursuant to
Section 7.1(d) (provided that the basis for such termination is the failure of
OSI's stockholders to adopt this Agreement or approve the Merger) and (II) at
any time after the date of this Agreement and at or before the date of the OSI
Stockholders Meeting a Business Combination proposal with respect to OSI shall
have been publicly announced or otherwise communicated to the OSI Board of
Directors, (B) WJ shall terminate this Agreement pursuant to Section 7.1(e) or
(C) OSI shall terminate this Agreement pursuant to Section 7.1(g);
then:
(i) in the case of clauses (B) or (C), OSI shall pay to WJ (in the case
of clause (B) not later than two Business Days after the date of termination and
in the case of clause (C) immediately prior to the termination of this Agreement
an amount equal to $20 million and
(ii) in the case of clause (A), (i) OSI shall pay WJ, not later than two
Business Days after the date of termination of this Agreement, an amount equal
to $10 million and (ii) if within twelve months of termination of this
Agreement, OSI enters into a definitive agreement with any third party with
respect to a Business Combination or any Business Combination with respect to
OSI is consummated, then OSI shall pay to WJ, not later than two Business Days
after the earlier of the date such agreement is entered into or such Business
Combination is consummated, an additional amount equal to $10 million.
(d) For the purposes of this Section 7.2, "Business Combination" means
with respect to WJ or OSI, as the case may be, (i) a merger, reorganization,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving such party as a result
of which either (A) such party's stockholders prior to such transaction (by
virtue of their ownership of such party's shares) in the aggregate cease to own
at least 55% of the voting securities of the entity surviving or resulting from
such transaction (or the ultimate parent entity thereof) or, regardless of the
percentage of voting securities held by such stockholders, if any Person shall
beneficially own, directly or indirectly, at least 30% of the voting securities
of such ultimate parent entity, or (B) the individuals comprising the board of
directors of such party prior to such transaction do not constitute a majority
of the board of directors of such ultimate parent entity, (ii) a sale, lease,
exchange, transfer or other disposition of at least 30% of the assets of such
party and its Subsidiaries, taken as a whole, in a single transaction or a
series of related transactions, or (iii) the acquisition, directly or
indirectly, by a Person of beneficial ownership of 30% or more of the common
stock of such party whether by merger, consolidation, share exchange, business
combination, tender or exchange offer or otherwise (other than a merger,
reorganization, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction upon the
consummation of which such party's stockholders would in the aggregate
beneficially own at least 55% of the voting securities of such Person).
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(e) All payments under this Section 7.2 shall be made by wire transfer of
immediately available funds to an account designated by the party entitled to
receive payment.
(f) OSI agrees that nothing in this Section 7.2 shall release OSI of any
liability in the event that this Agreement is terminated by WJ pursuant to
Section 7.1(i) for a willful and material breach of this Agreement by OSI and WJ
agrees that nothing in the Section 7.2 shall release WJ of any liability in the
event that this Agreement is terminated by OSI pursuant to Section 7.1(j) for a
willful and material breach of this Agreement by WJ.
7.3 Amendment. This Agreement may be amended by the parties hereto, by
---------
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of OSI and WJ, but, after any such approval, no amendment
shall be made which by law or in accordance with the rules of any relevant stock
exchange requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. None of
----------------------------------------------------------
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein (including Section
5.8) that by their terms apply or are to be performed in whole or in part after
the Effective Time and this Article VIII.
8.2 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telescope or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of
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dispatch if delivered by a recognized next-day courier service, or (c) on the
tenth Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to WJ or Merger Sub, to:
Wesley Jessen VisionCare, Inc.
333 East Howard Avenue
Des Plaines, IL 60018
Fax: (847) 294-3434
Attention: President
with a copies to:
Kirkland & Ellis Sweeney, Lev & Blinkoff
200 East Randolph Drive 400 Bloomfield Avenue, #200
Chicago, Illinois 60601 Montclair, New Jersey 07042
Fax: (312) 861-2200 Fax: (973) 509-1074
Attn: Dennis M. Myers, Esq. Attn: Gerald Sweeney, Esq.
(b) if to OSI to:
Ocular Sciences, Inc.
475 Eccles Avenue
South San Francisco, California 94080
Fax: (650) 583-1108
Attention: Chairman of the Board
with a copy to:
Pillsbury Madison & Sutro
50 Fremont Street
San Francisco, California 94105
Fax: (415) 983-1200
Attention: Nathaniel M. Cartmell III, Esq.
8.3 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section of or
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 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."
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8.4 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 party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries.
----------------------------------------------
(a) This Agreement, the Stock Option Agreements, the Stockholders
Agreements, the Confidentiality Agreement and the other agreements of the
parties referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Section 5.8 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
8.6 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware (without giving effect to
choice of law principles thereof).
8.7 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
under this Agreement to any direct wholly owned Subsidiary of WJ without the
consent of OSI, but no such assignment shall relieve Merger 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.
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8.9 Submission to Jurisdiction; Waivers. Each of WJ and OSI irrevocably
-----------------------------------
agrees that any legal action or proceeding with respect to this Agreement or for
recognition and enforcement of any judgment in respect hereof brought by the
other party hereto or its successors or assigns may be brought and determined in
the Chancery or other Courts of the State of Delaware, and each of WJ and OSI
hereby irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
nonexclusive jurisdiction of the aforesaid courts. Each of WJ and OSI hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to lawfully
serve process (b) that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (c) to the
fullest extent permitted by applicable law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper and (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.
8.10 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. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.11 Definitions. As used in this Agreement:
-----------
(a) "beneficial ownership" or "beneficially own" shall have the meaning
-------------------- ----------------
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "Benefit Plans" means, with respect to any Person, each employee
-------------
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any bonus,
-----
deferred compensation, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, stay agreement or bonus, change in control and
severance plan, program, arrangement and contract) in effect on the date of this
Agreement or disclosed on the OSI Disclosure Schedule or the WJ Disclosure
Schedule, as the case may be, to which such Person or its Subsidiary is a party,
which is maintained or contributed to by such Person, or with respect to which
such Person could incur material liability under Section 4069, 4201 or 4212(c)
of ERISA.
(c) "Board of Directors" means the Board of Directors of any specified
------------------
Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required or
------------
authorized to close in the City of Chicago.
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(e) "known" or "knowledge" means, with respect to any party, the knowledge
----- ---------
of such party's executive officers after reasonable inquiry.
(f) "Material Adverse Effect" means, with respect to any entity any event,
-----------------------
change, circumstance or effect that is or is reasonably likely to be materially
adverse to (i) the business, financial condition, results of operations or
prospects of such entity and its Subsidiaries taken as a whole, other than (A)
any event, change, circumstance or effect relating to (v) the economy or
financial markets in general, (w) the industries in which such entity operates
in general and not specifically relating to (or having the effect of
specifically relating to or having a materially disproportionate effect
(relative to most other industry participants) on) such entity, (x) the
announcement or pendency of the Merger, (y) changes after the date hereof in
laws or regulations relating to the design, manufacture or distribution of
contact lenses or (z) a change in the market price or trading volume of the
shares of such entity (provided that a change in the market price or trading
price may be used, if applicable, as evidence of some other event, change,
circumstance or effect that has or is reasonably likely to have a Material
Adverse Effect) or (B) any event, change, circumstance or effect that was
disclosed to a director, officer or member of the due diligence team of the
other party in the due diligence process prior to the date of this Agreement to
the extent of such disclosure, or (ii) the ability of such entity to consummate
the transactions contemplated by this Agreement; all references to Material
Adverse Effect on WJ or its Subsidiaries contained in this Agreement shall be
deemed to refer solely to WJ and its Subsidiaries without including its
ownership of OSI and its Subsidiaries after the Merger.
(g) "the other party" means, with respect to OSI, WJ and means, with
---------------
respect to WJ, OSI.
(h) "Person" means an individual, corporation, limited liability company,
------
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(i) "Subsidiary" when used with respect to any party means any corporation
----------
or other organization, whether incorporated or unincorporated, (i) of which such
party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interests in
such partnership) or (ii) at least a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
(j) "Superior Proposal" means with respect to WJ or OSI, as the case may
-----------------
be, a written proposal made by a Person other than either such party which is
for (I) (i) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation,
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dissolution or similar transaction involving such party as a result of which
either (A) such party's stockholders prior to such transaction (by virtue of
their ownership of such party's shares) in the aggregate cease to own at least
75% of the voting securities of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof) or (B) the individuals
comprising the board of directors of such party prior to such transaction do not
constitute a majority of the board of directors of such ultimate parent entity,
(ii) a sale, lease, exchange, transfer or other disposition of at least 25% of
the assets of such party and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or (iii) the acquisition,
directly or indirectly, by a Person of beneficial ownership of 25% or more of
the common stock of such party whether by merger, consolidation, share exchange,
business combination, tender or exchange offer or otherwise (other than a
merger, consolidation, share exchange, business combination, tender or exchange
offer or other transaction upon the consummation of which such party's
stockholders would in the aggregate beneficially own greater than 75% of the
voting securities of such Person), and which is (II) otherwise on terms which
the Board of Directors of such party in good faith concludes (after consultation
with its financial advisors and outside counsel), taking into account, among
other things, all legal, financial, regulatory and other aspects of the proposal
and the Person making the proposal, (i) would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being completed
taking into consideration, among other things, the terms of the Stock Option
Agreements.
* * * * * *
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IN WITNESS WHEREOF, WJ, Merger Sub and OSI have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
WESLEY JESSEN VISIONCARE, INC.
By: /s/ Kevin J. Ryan
---------------------------------------------
Kevin J. Ryan
President, Chief Executive Officer and Chairman
OSI ACQUISITION CORP.
By: /s/ Edward J. Kelley
----------------------------------------------
Edward J. Kelley
Chief Financial Officer
OCULAR SCIENCES, INC.
By: /s/ John D. Fruth
----------------------------------------------
John D. Fruth
Chairman
