<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)*
Micros-To-Mainframes, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.001 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
594944-10-0
-------------------------------------------
(CUSIP Number)
Edward H. Bersoff
Chairman of the Board, President and Chief Executive Officer
BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, Virginia 22030-7448
(703) 383-8000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 29, 1997
---------------------------------------------------------------
(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(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*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 ("Act") 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> 2
SCHEDULE 13D
<TABLE>
<S> <C>
-------------------------------- ----------------------------
CUSIP No. 594944-10-0 Page 2 of 6 Pages
----------- ----- -----
-------------------------------- ----------------------------
--------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BTG, Inc.
IRS # 54-1194161
--------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
--------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
--------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
--------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
Pursuant to an option to purchase 2,503,245 shares upon
the occurrence of certain events.
NUMBER OF ---------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH ---------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON Pursuant to an option to purchase 2,503,245 shares upon
WITH the occurrence of certain events.
---------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,503,245
--------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.1%
--------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
--------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
Page 3 of 6 Pages
----- -----
The information regarding certain shareholders of
Micros-To-Mainframes, Inc. contained in this Statement on Schedule 13D is
provided to the best knowledge of BTG, Inc. ("BTG") and, unless otherwise
indicated, is based on information provided to BTG by such shareholders.
Item 1. Security and Issuer
This statement on Schedule 13D (this "Statement") relates to
shares of common stock, $.001 par value per share (the "Common Stock"), of
Micros-To-Mainframes, Inc., a New York corporation (the "Issuer"), and is being
filed by BTG. The principal executive offices of the Issuer are located at 614
Corporate Way, Valley Cottage, New York 10989.
Item 2. Identity and Background
This Statement is filed by and on behalf of BTG, a Virginia
company. BTG is engaged in the information technology business and has its
principal office at 3877 Fairfax Ridge Road, Fairfax, Virginia 22030-7448.
The name, citizenship, business address, position and present
principal occupation of each of the executive officers and directors of BTG
(the "Executive Officers and Directors") are set forth in Schedule I of this
Statement.
During the last five years, neither BTG, nor, to the best
knowledge of BTG, any of the persons named in Schedule I to this Statement, has
or have been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, United States federal or state securities laws or finding any violations
with respect to such laws.
Item 3. Source and Amount of Funds or Other Considerations
Pursuant to the Voting and Option Agreement (the "Agreement")
dated as of August 29, 1997, by and among BTG, the Issuer and certain
shareholders of the Issuer listed in Exhibit A to the Agreement (the "M-T-M
Shareholders"), BTG has an option (an "Option" and collectively, the
"Options"), exercisable only in certain circumstances (as described in Item
5(b) below), none of which has occurred, to acquire from each of the M-T-M
Shareholders the shares of Common Stock owned or acquired beneficially or of
record by such Shareholder on the date of exercise of the Option (the
"Shares"). BTG can exercise all or any of the Options, and each Option is
exercisable in whole but not in part. Upon exercise of the Options, each M-T-M
Shareholder shall receive a cash exercise price of $5.62 per Share, as adjusted
upon the declaration of any stock splits, dividends, recapitalizations or other
distributions or changes affecting the Common Stock. It is expected that the
source of funds for the exercise of the Options would be BTG's revolving credit
facility with several lenders for whom NationsBank, N.A. is the agent.
The foregoing description of the Agreement is qualified in its
entirety by reference to the Agreement itself, a copy of which is attached as
Exhibit 1 hereto.
<PAGE> 4
Page 4 of 6 Pages
----- -----
Item 4. Purpose of Transaction.
Pursuant to the terms of the Agreement, each M-T-M Shareholder
granted BTG an Option to purchase all of the Shares owned or acquired
beneficially or of record by such Shareholder on the date of exercise of the
Option. In addition, each M-T-M Shareholder has agreed to vote in favor of the
transactions contemplated by the Merger (as defined below), and against certain
actions that may be adverse to the consummation of the Merger.
The purpose of the transactions under the Agreement is to
enable BTG and BTG Merger Sub, Inc., a New York corporation and a wholly-owned
subsidiary of BTG ("Merger Sub"), to consummate the transactions contemplated
under the Agreement and Plan of Merger, dated as of August 29, 1997, by and
among BTG, Merger Sub and the Issuer (the "Merger Agreement"). In the Merger,
each share of Common Stock will be converted into the right to receive $2.81 in
cash and that number of shares of BTG common stock equal in value to $2.81,
subject to adjustment in accordance with Section 2.1 of the Merger Agreement.
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and
into the Issuer, or Issuer will merge with and into Merger Sub (as described in
the Merger Agreement) (the "Merger"). The surviving corporation will be either
the Issuer or Merger Sub, depending on certain circumstances (as described in
the Merger Agreement). The directors of Merger Sub (or such other or
additional individuals as BTG may designate prior to the closing of the Merger)
immediately prior to the consummation of the Merger shall be the initial
directors of the surviving corporation, and the certificate of incorporation
and bylaws of Merger Sub, substantially as in effect immediately prior to the
consummation of the Merger, shall be the certificate of incorporation and
bylaws of the surviving corporation.
Upon consummation of the Merger, the Common Stock would cease
to exist and cease to be authorized to be quoted on the Nasdaq National Market
and would become eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act.
The foregoing description of the Merger Agreement is qualified
in its entirety by reference to the Merger Agreement itself, a copy of which is
attached as Exhibit 2 hereto.
Except as otherwise set forth in this Item 4, neither BTG nor,
to the best knowledge of BTG, any of the Executive Officers and Directors have
any present plans or proposals with respect to the Issuer which relate to or
would result in any of the actions specified in sub-paragraphs (a) through (j)
in Item 4 of Schedule 13D.
Item 5. Interest in Securities of Issuer.
(a) BTG beneficially owns 2,503,245 shares of Common Stock as
of August 29, 1997, which shares represent 53.1% of the outstanding Common
Stock after giving effect to the exercise of the Options (based on the number
of outstanding shares as contained in the Merger Agreement after giving effect
to the exercise of the Options).
(b) When and if BTG acquires the Shares subject to the
Options, BTG would have sole voting and investment power with respect thereto.
The Agreement provides that the Options to purchase the Shares will become
exercisable only upon one of the following events: (i) a breach by a M-T-M
Shareholder of the Agreement or a breach by the Issuer of its agreement under
Section 7.9 of the Merger Agreement not to engage in the solicitation of
acquisition proposals other than the Merger; (ii) a person or group other than
BTG acquires, or is granted an option to acquire, more than 20% of the
outstanding shares of Common Stock; or (iii) a person or group other than BTG
makes a tender offer or an exchange offer for at least 20% of the outstanding
shares of Common Stock.
<PAGE> 5
Page 5 of 6 Pages
----- -----
Pursuant to the Agreement, each M-T-M Shareholder has agreed
to vote its Shares in favor of the Merger and the adoption of the Merger
Agreement and the transactions contemplated thereby, against approval or
adoption of any extraordinary corporate transaction (other than the Merger, the
Merger Agreement or the transactions contemplated thereby), against approval or
adoption of resolutions which would have the effect of preventing, delaying or
otherwise frustrating consummation of the Merger or otherwise preventing or
materially delaying the Issuer from performing its obligations under the Merger
Agreement, and against any action which would constitute a breach of any
provision of the Merger Agreement or the Agreement.
Except as otherwise set forth above in this Item 5, BTG has no
right to vote or direct the vote, or dispose or direct the disposition of, any
of the Shares.
(c) There have been no transactions in the Common Stock by BTG
or, to the best knowledge of BTG, by any of the Executive Officers and
Directors, during the past 60 days.
(d) To the knowledge of BTG, the right to receive dividends
with respect to the Common Stock to which this Schedule 13D relates, and the
power to direct the receipt of dividends from, or the proceeds of the sale of,
such Common Stock held by each of the M-T-M Shareholders are held by such
Shareholder as reflected on Exhibit A to the Agreement.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the Merger Agreement described in response to Item
4 and the Agreement described in response to Item 3 and the transactions
contemplated thereby, there are no contracts, arrangements, understandings or
relationships between BTG and any other person, or, to the best knowledge of
BTG, among any of the Executive Officers and Directors or between any of the
Executive Officers and Directors and any other person, with respect to the
Common Stock.
Item 7. Material to Be Filed as Exhibits.
Exhibit 1 Voting and Option Agreement dated as of August 29, 1997
Exhibit 2 Agreement and Plan of Merger dated as of August 29, 1997
<PAGE> 6
Page 6 of 6 Pages
----- -----
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: November 7, 1997
BTG, Inc.
By:/s/ John M. Hughes
------------------------------------
Name: John M. Hughes
Title: Chief Financial Officer
<PAGE> 7
SCHEDULE I
Set forth below is the name, position, present principal
occupation and amount of beneficial interest in the Common Stock, if any, of
the directors and executive officers of BTG, Inc. Except as set forth below,
the business address of each of these persons is c/o BTG, Inc., 3877 Fairfax
Ridge Road, Fairfax, Virginia, 22030-7448. Each such person is a citizen of the
United States.
Directors and Executive Officers of BTG, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Name and Position Number of Shares Owned and Percentage
at BTG, Inc. Present Principal Occupation Aggregate Purchase Price Interest
------------ ---------------------------- ------------------------ --------
<S> <C> <C> <C>
Dr. Edward H. Bersoff Chairman of the Board, 0 N/A
President and Chief Executive Officer
Donald M. Wallach President of Wallach Associates, Inc. 0 N/A
Director 6101 Executive Boulevard, Suite 380
Rockville, MD 20852
(301) 231-9000
Dr. Ruth M. Davis President and CEO of the Pymatuning Group, Inc. 0 N/A
Director 4900 Seminary Road,
Suite 570
Alexandria, VA 22311
(703) 671-3500
James V. Kimsey Chairman Emeritus of American Online, Inc. 0 N/A
Director c/o 1801 K Street, N.W., Suite 1207L
Washington, D.C. 20006
Dr. Alan G. Merten President of George Mason University 0 N/A
Director Mason Hall, Suite D103
4400 University Drive
Fairfax, VA 22030
(703) 993-8700
Raymond T. Tate President of Raymond Tate Associates, Inc. 0 N/A
Director 17929 Pond Road
Ashton, MD 20861
(301) 774-7131
</TABLE>
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Ronald L. Turner Executive Vice President of 0 N/A
Director Ceridian Corporation
8800 Queen Avenue, South
Bloomington, MN 55431
(612) 921-6097
John M. Hughes Senior Vice President, Chief 0 N/A
Financial Officer
Marilynn D. Bersoff Senior Vice President, 0 N/A
Administration and Secretary
Clifton Y. Bumgardner Senior Vice President, Chief 0 N/A
Technical Officer
John Littley, III Senior Vice President, 0 N/A
Corporate Development
Randall C. Fuerst Senior Vice President, General 0 N/A
Manager Systems Engineering
Business Unit
</TABLE>
<PAGE> 9
EXHIBIT INDEX
Exhibit 1 Voting and Option Agreement dated August 29, 1997
Exhibit 2 Agreement and Plan of Merger dated August 29, 1997
<PAGE> 1
EXHIBIT 1
VOTING AND OPTION AGREEMENT
THIS VOTING AND OPTION AGREEMENT (this "Agreement") is entered
into as of August 29, 1997, by and among BTG, INC., a Virginia corporation
("Acquiror"), MICROS-TO-MAINFRAMES, INC., a New York corporation (the
"Company"), and the undersigned stockholders of the Company (each a
"Stockholder" and collectively, the "Stockholders").
WHEREAS, the Stockholders are the record and beneficial owners
of the number of shares of common stock, par value $.001 per share, of the
Company ("Company Common Stock") as set forth on Exhibit A hereto;
WHEREAS, Acquiror, BTG MERGER SUB, INC., a New York
corporation and a wholly-owned subsidiary of Acquiror ("Merger Sub"), and the
Company have entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated as of the date hereof, which provides, among other things,
for the merger of the Company with and into Merger Sub or the merger of Merger
Sub with and into the Company (the "Merger") and the conversion and exchange of
Company Common Stock into shares of common stock of Acquiror, no par value
("Acquiror Common Stock"), and cash;
WHEREAS, to induce Acquiror to enter into the Merger Agreement
and to effect the Merger, the Stockholders and the Company have agreed to enter
into this Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise
defined herein shall have the meanings given such terms in the Merger
Agreement.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DISPOSITION OF SHARES
Each Stockholder agrees that such Stockholder will not sell, transfer,
pledge, assign or otherwise encumber or dispose of, enter into any contract,
option or other agreement with respect to, the sale, transfer, pledge,
assignment or other encumbrance or disposition of any shares of the Company
Common Stock now owned or hereafter acquired beneficially or of record by such
Stockholder.
SECTION 2. VOTING
Each Stockholder agrees to vote all of the shares of Company Common
Stock now owned or hereafter acquired beneficially or of record by such
Stockholder (a) in favor of the Merger and the adoption of the Merger Agreement
and the transactions contemplated thereby (including any amendments or
modifications of the terms thereof approved by the board of directors of the
Company and by Acquiror) in connection with any meeting of, or solicitation of
consents from, the stockholders of the Company at which or in connection with
which the Merger and the Merger Agreement are submitted for the consideration
and vote of the stockholders of the Company; (b) against approval or adoption
of any extraordinary corporate transaction (other than the Merger, the Merger
Agreement or the transactions contemplated thereby) including, without
limitation, any transaction involving: (i) the sale or transfer of all or
substantially all of the common stock of the Company, whether by merger,
consolidation or other business combination; (ii) a sale or transfer of all or
substantially all of the assets of the Company and its subsidiaries, (iii) a
reorganization, recapitalization or liquidation of the Company and its
subsidiaries, or (iv) any charter or bylaw amendment creating any new class of
securities of the Company or otherwise affecting the rights of any class of
security as currently in effect; (c) against approval or adoption of
resolutions which would have the effect of preventing, delaying or otherwise
frustrating consummation of the Merger or otherwise preventing or
<PAGE> 2
materially delaying the Company from performing its obligations under the
Merger Agreement; and (d) against any action which would constitute a breach of
any provision of the Merger Agreement or this Agreement. To the extent
inconsistent with the foregoing provisions of this Section 2, each Stockholder
hereby revokes any and all previous proxies with respect to the shares of the
Company Common Stock owned beneficially or of record by such Stockholder. Each
Stockholder hereby waives any rights of appraisal or rights to dissent from the
Merger that such Stockholder may have.
SECTION 3. GRANT OF OPTIONS
(a) Subject to the terms and conditions set forth in this
Agreement, each Stockholder hereby irrevocably grants to Acquiror an option
(each an "Option") to purchase the Company Common Stock now owned or hereafter
acquired beneficially or of record by such Stockholder at a cash exercise price
of Five Dollars and Sixty-Two Cents ($5.62) per share, as adjusted upon the
declaration of any stock splits, dividends, recapitalizations or other
distributions or changes affecting the Company Common Stock (the "Option
Price").
(b) During the period prior to the termination of this
Agreement in accordance with its terms, Acquiror or its designee may exercise
any Option in whole but not in part, at any time (i) upon the occurrence of
(and during the thirty (30) day period following) a breach by a Stockholder of
any of such Stockholder's obligations under this Agreement or a breach by the
Company of its obligations under Section 7.9 of the Merger Agreement; (ii) any
person or group (A) other than Acquiror or its affiliates shall have acquired
or become the beneficial owners (within the meaning of Rule 13d-3 under the
Exchange Act) of more than twenty percent (20%) of the outstanding shares of
Company Common Stock, or (B) any person or group other than Acquiror or its
affiliates shall have been granted any option or right, conditional or
otherwise, to acquire more than twenty percent (20%) of the outstanding shares
of Company Common Stock; or (iii) any person other than Acquiror or its
affiliates shall have made a tender offer or exchange offer (or entered into an
agreement to make such a tender offer or exchange offer) for at least twenty
percent (20%) of the then outstanding shares of Company Common Stock.
(c) If Acquiror elects to exercise an Option at such time
as such Option is exercisable pursuant to Section 3(b), Acquiror shall deliver
written notice (the "Exercise Notice") to the Stockholder specifying Acquiror's
intention to exercise such Option, the total number of shares of Company Common
Stock that Acquiror wishes to purchase and a date and time for the closing of
such purchase (a "Closing"), which Closing shall not be less than three (3) nor
more than thirty (30) days after the later of (i) the date such Exercise Notice
is given and (ii) the expiration or termination of any applicable waiting
period under the HSR Act. All Closings under this Section 3 shall be held at
the principal executive offices of Acquiror or its counsel, or at such other
place as the Stockholder and Acquiror may agree.
(d) At each Closing hereunder, (i) Acquiror or its
designee will make payment to the Stockholder of the aggregate price for the
shares of Company Common Stock being so purchased by delivery of a certified
check, official bank check or wire transfer of funds pursuant to the
Stockholder's instructions payable to the Stockholder in an amount equal to the
product obtained by multiplying the Option Price by the number of shares of
Company Common Stock to be purchased, and (ii) upon receipt of such payment the
Stockholder will deliver to Acquiror or its designee a certificate or
certificates representing the number of validly issued, fully paid and
non-assessable shares of Company Common Stock so purchased, in the
denominations and registered in such names designated to the Stockholder in
writing by Acquiror.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
(a) Each Stockholder represents and warrants to Acquiror
as follows:
(i) The Stockholder has the necessary power and
authority to enter into this agreement and to perform the Stockholder's
obligations under this Agreement. This Agreement has been duly
-2-
<PAGE> 3
executed and delivered by the Stockholder and constitutes a legal, valid and
binding obligation of the Stockholder, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy and other
similar laws of general applicability relating to or affecting creditors'
rights generally and by the application of general principles of equity.
(ii) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated will not conflict
with or violate any law, regulation, court order, judgment or decree applicable
to the Stockholder or by which the property of the Stockholder is bound or
affected, or conflict with or result in any breach of or constitute a default
under any contract or agreement to which the Stockholder is a party or by which
the Stockholder or his properties are bound or affected, which conflict,
violation, breach or default would adversely affect the Stockholder's ability
to perform its obligations under this Agreement.
(iii) The number of shares set forth on Exhibit A
next to the Stockholder's name are the only shares of voting stock owned
beneficially or of record by Stockholder (the "Shares") and the Stockholder
holds no options, warrants, or other rights to acquire shares of any class of
capital stock of the Company, except as set forth on Exhibit A. The
Stockholder has the sole power respecting voting and transfer of the Shares.
The Shares and the certificates representing the Shares are now, and at all
times during the term hereof will be, owned beneficially and of record by the
Stockholder, free and clear of all liens, claims, security interests, proxies,
options, warrants or other rights, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any such
encumbrances arising under this Agreement.
SECTION 5. TERMINATION
This Agreement shall terminate on the earlier to occur of (a) the date
on which the Merger is consummated or (b) the date on which the Merger
Agreement is terminated; provided, however, that the provisions of Sections 1
and 2 hereof shall survive the termination of this Agreement for the thirty
(30) day period specified in Section 3(b) if Acquiror shall have the right to
exercise the Option as of the date of such termination; provided, further, that
nothing herein shall relieve any party for any breach of this Agreement if this
Agreement.
SECTION 6. ACCEPTANCE BY THE COMPANY
The Company, by the execution of this Agreement, accepts delivery of
this Agreement and agrees not to take any action inconsistent with the terms
and conditions herein. The Company shall make note of this Agreement in the
Company's corporate books and records.
SECTION 7. FURTHER ASSURANCES
Each Stockholder shall execute and deliver such additional instruments
and other documents and shall take such further actions as may be reasonably
necessary to effectuate, carry out and comply with all of such Stockholder's
obligations under this Agreement. Without limiting the generality of the
foregoing, none of the parties hereto shall enter into any agreement or
arrangement (or alter, amend or terminate any existing agreement or
arrangement) or transaction if such action would impair or interfere with the
ability of any party to effectuate, carry out and comply with all of the terms
of this Agreement.
SECTION 8. SPECIFIC PERFORMANCE
Each Stockholder acknowledges and agrees that Acquiror would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed by such Stockholder in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that Acquiror shall be
entitled to an injunction or injunctions
-3-
<PAGE> 4
to prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state hereof having jurisdiction, in addition to any other remedy to
which Acquiror may be entitled at law or equity. Each Stockholder hereby
waives any objection to the imposition of such relief or to the posting of a
bond in connection therewith.
SECTION 9. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLE OF
CONFLICTS OF LAW.
SECTION 10. PARTIES IN INTEREST
This Agreement shall be binding upon each of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence
hereof, 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 or persons any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 11. AMENDMENT
This Agreement shall not be amended, altered or modified except by an
instrument in writing duly executed and delivered on behalf of each of the
parties hereto.
SECTION 12. NOTICES
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
If to any Stockholder:
The address set forth for such Stockholder on Exhibit A.
If to Acquiror:
BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, Virginia 22030
Attention: Deborah Fox
Facsimile: (703) 383-4205
With a copy (which shall not constitute notice) to:
-4-
<PAGE> 5
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: David B.H. Martin, Jr.
Facsimile: (202) 637-5910
If to the Company:
Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, New York 10989
Attention: Steven H. Rothman
Facsimile: (914) 268-9695
With a copy (which shall not constitute notice) to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158
Attention: Jack Becker
Facsimile: (212) 949-7052
SECTION 13. ENTIRE AGREEMENT; ASSIGNMENT
This Agreement (a) constitutes the entire agreement between the
parties hereby pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties and (b) shall not be assigned by operation of law or
otherwise, except that this Agreement shall be binding upon the Stockholders
and their successors and assigns.
SECTION 14. HEADINGS
Section headings are included solely for convenience and are not
considered to be part of this Agreement and are not intended to be an accurate
description of the contents thereof.
SECTION 15. COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Voting and Option Agreement, or have caused this Voting and
Option Agreement to be duly executed and delivered on their behalf as of the
date first above written.
BTG, INC.
By: /s/ Edward H. Bersoff
--------------------------------------
Name: Edward H. Bersoff
------------------------------------
Title: President and CEO
-----------------------------------
MICROS-TO-MAINFRAMES, INC.
By: /s/ Steven H. Rothman
--------------------------------------
Name: Steven H. Rothman
------------------------------------
Title: President and CEO
-----------------------------------
STOCKHOLDERS:
------------
/s/ Steven H. Rothman
-----------------------------------------
STEVEN H. ROTHMAN
/s/ Howard A. Pavony
-----------------------------------------
HOWARD A. PAVONY
/s/ Robert A. Fries
-----------------------------------------
ROBERT A. FRIES
/s/ Ramon Mota
-----------------------------------------
RAMON MOTA
/s/ Frank T. Wong
-----------------------------------------
FRANK T. WONG
-6-
<PAGE> 7
EXHIBIT A
STOCKHOLDERS
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY
OWNED INCLUDING SHARES
SUBJECT TO OPTIONS, WARRANTS NUMBER OF SHARES SUBJECT TO
OR OTHER RIGHTS TO ACQUIRE OTHER OPTIONS, WARRANTS OR
NAME AND ADDRESS CAPITAL STOCK OF THE COMPANY RIGHTS TO ACQUIRE CAPITAL
EXERCISABLE WITHIN 60 DAYS STOCK OF THE COMPANY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Steven H. Rothman 1,158,625 1/ 30,000
c/o Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, NY 10989
2. Howard A. Pavony 1,157,500 2/ 30,000
c/o Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, NY 10989
3. Robert A. Fries 81,000 0
71 Peria Drive
Rocky Hill, CT 06061
4. Ramon Mota 20,065 10,000
c/o Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, NY 10989
5. Frank T. Wong 16,055 3/ 0
c/o Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, NY 10989
</TABLE>
- --------------------
1/ Includes 1,125 shares held by the wife of Mr. Rothman. Also includes an
aggregate of 169,139 shares of Common Stock held in trust for Mr. Rothman's
three children. Mr. Rothman disclaims beneficial ownership of all of such
shares.
2/ Includes an aggregate of 164,044 shares held in trust for Mr. Pavony's
two children. Mr. Pavony disclaims beneficial ownership of all of such shares.
3/ Includes 1,000 shares held by the wife of Mr. Wong.
<PAGE> 8
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BTG, INC.
MICROS-TO-MAINFRAMES, INC.
AND
BTG MERGER SUB, INC.
DATED AS OF AUGUST 29, 1997
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. Certificate of Incorporation; Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.5. Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.6. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.7. Subsequent Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1. Conversion of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. Exchange of Certificates and Payment of Cash. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3. Company Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4. Stock Transfer Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.1. Organization and Qualification; Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.2. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.3. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.4. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.5. No Conflict; Required Filings and Consents. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.6. SEC Filings; Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.7. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.8. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.9. Licenses and Permits; Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.10. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.11. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.12. Company Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.13. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.14. Properties; Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.15. Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.16. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.17. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.18. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
SECTION 3.19. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.20. Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.21. Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.22. Board Approval; Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.23. Opinion of Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.24. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.25. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.1. Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.2. Organizational Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.3. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.4. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.5. No Conflict; Required Filings and Consents. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.6. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.7. SEC Filings; Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.8. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.9. Board Approval; Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.10. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.11. Acquiror Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.12. Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.13. Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.14. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.1. Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.2. Certificate of Incorporation and Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.3. Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.4. No Conflict; Required Filings and Consents. . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.5. Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.6. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.1. Affirmative Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.2. Negative Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.3. Affirmative Covenants of Acquiror. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.4. Negative Covenants of Acquiror. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.1. Access and Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.2. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.3. Registration Statement; Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.4. Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
-ii-
<PAGE> 11
<TABLE>
<S> <C>
SECTION 7.5. Further Action; Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.6. Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.7. Directors' and Officers' Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.8. HSR Act Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.9. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.10. Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.1. Conditions to Obligations of Acquiror, Merger Sub and the Company to Effect the Merger. 45
SECTION 8.2. Additional Conditions to Obligations of Acquiror. . . . . . . . . . . . . . . . . . . . 46
SECTION 8.3. Additional Conditions to Obligations of the Company. . . . . . . . . . . . . . . . . . . 48
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.1. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.2. Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.4. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.5. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.1. Nonsurvival of Representations, Warranties and Agreements. . . . . . . . . . . . . . . 51
SECTION 10.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.3. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.4. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.5. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.6. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.7. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.8. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.9. Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.10. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.12. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
-iii-
<PAGE> 12
EXHIBITS
Exhibit A Form of Opinion of Snow Becker Krauss P.C.
Exhibit B Form of Opinion of Hogan & Hartson L.L.P.
Exhibit C Form of Affiliate Agreement
-i-
<PAGE> 13
Index of Defined Terms
<TABLE>
<CAPTION>
Section
-------
<S> <C>
1993 Company Stock Option Plan . . . . . . . . . . . . . 2.3(a)
1993 Stock Option . . . . . . . . . . . . . . . . . . . . 2.3(a)
1996 Stock Option . . . . . . . . . . . . . . . . . . . . 2.3(b)
1996 Stock Option Plan . . . . . . . . . . . . . . . . . 2.3(b)
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Acquiror Average Closing Price . . . . . . . . . . . . . 2.1(a)
Acquiror Balance Sheet . . . . . . . . . . . . . . . . . 4.13
Acquiror Common Stock . . . . . . . . . . . . . . . . . . 4.3
Acquiror Material Adverse Effect . . . . . . . . . . . . 4.1
Acquiror Material Contracts . . . . . . . . . . . . . . . 4.11
Acquiror Representatives . . . . . . . . . . . . . . . . 7.1
Acquiror SEC Reports . . . . . . . . . . . . . . . . . . 4.7(a)
Acquiror Subsidiaries . . . . . . . . . . . . . . . . . . 4.1
Acquisition Proposal . . . . . . . . . . . . . . . . . . 7.9(a)
affiliate . . . . . . . . . . . . . . . . . . . . . . . . 10.3(a)
Affiliate Agreements . . . . . . . . . . . . . . . . . . 7.10
Aggregate Share Amount . . . . . . . . . . . . . . . . . 2.1(b)(iv)
Aggregate Share Cap . . . . . . . . . . . . . . . . . . . 2.1(b)(iv)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
benefit liabilities . . . . . . . . . . . . . . . . . . . 3.13(c)
beneficial owner . . . . . . . . . . . . . . . . . . . . 10.3(b)
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . 10.3(c)
business day . . . . . . . . . . . . . . . . . . . . . . 10.3(d)
Cash Conversion Number . . . . . . . . . . . . . . . . . 2.3(b)
Certificate of Merger . . . . . . . . . . . . . . . . . . 1.2
Certificates . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Closing Date . . . . . . . . . . . . . . . . . . . . . . 1.6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Commonly Controlled Entity . . . . . . . . . . . . . . . 3.13(a)
Company . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Company Balance Sheet . . . . . . . . . . . . . . . . . . 3.14
Company Common Stock . . . . . . . . . . . . . . . . . . 3.3(a)
Company Material Adverse Effect . . . . . . . . . . . . . 3.1(a)
Company Material Contracts . . . . . . . . . . . . . . . 3.12(a)
Company SEC Reports . . . . . . . . . . . . . . . . . . . 3.6(a)
Company Subsidiary and Company Subsidiaries . . . . . . . 3.1(a)
control, controlled by, under common control with . . . . 10.3(e)
</TABLE>
-i-
<PAGE> 14
<TABLE>
<S> <C>
Determination Date . . . . . . . . . . . . . . . . . . . 2.1(a)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . 2.5
Effective Time . . . . . . . . . . . . . . . . . . . . . 1.2
employee benefit plans . . . . . . . . . . . . . . . . . 3.13(a)
employee pension benefit plan . . . . . . . . . . . . . . 3.13(a)
Encumbrances . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
Environmental Claim . . . . . . . . . . . . . . . . . . . 3.16(d)(i)
Environmental Laws . . . . . . . . . . . . . . . . . . . 3.16(d)(ii)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
ERISA Plan . . . . . . . . . . . . . . . . . . . . . . . 3.13(a)
excess loss account . . . . . . . . . . . . . . . . . . . 3.10
Exchange Act . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Exchange Cash Consideration . . . . . . . . . . . . . . . 2.2(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Forward Merger . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Governmental Entity . . . . . . . . . . . . . . . . . . . 3.5(b)
Hazardous Materials . . . . . . . . . . . . . . . . . . . 3.16(d)(iii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Indemnified Party . . . . . . . . . . . . . . . . . . . . 7.7(b)
Intellectual Property . . . . . . . . . . . . . . . . . . 3.11(b)
intercompany transaction . . . . . . . . . . . . . . . . 3.10
Leased Real Property . . . . . . . . . . . . . . . . . . 3.21
Leases . . . . . . . . . . . . . . . . . . . . . . . . . 3.21
Maximum Amount . . . . . . . . . . . . . . . . . . . . . 7.7(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Merger Consideration . . . . . . . . . . . . . . . . . . 2.2(b)
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Multiemployer Plan . . . . . . . . . . . . . . . . . . . 3.13(d)
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
New York Law . . . . . . . . . . . . . . . . . . . . . . PREAMBLE
Outstanding Company Stock . . . . . . . . . . . . . . . . 2.1(a)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . 3.9
Per Share Amount . . . . . . . . . . . . . . . . . . . . 2.1(a)
person . . . . . . . . . . . . . . . . . . . . . . . . . 10.3(f)
plan of reorganization . . . . . . . . . . . . . . . . . 2.6
Proxy Statement . . . . . . . . . . . . . . . . . . . . . 7.3(a)
qualified . . . . . . . . . . . . . . . . . . . . . . . . 3.13(b)
Registration Statement . . . . . . . . . . . . . . . . . 7.3(a)
Reverse Merger . . . . . . . . . . . . . . . . . . . . . PREAMBLE
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(a)
Securities Act . . . . . . . . . . . . . . . . . . . . . 3.6(a)
Stock Conversion Number . . . . . . . . . . . . . . . . . 2.3(b)
Stockholders' Meeting . . . . . . . . . . . . . . . . . . 7.4
</TABLE>
-ii-
<PAGE> 15
<TABLE>
<S> <C>
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Surviving Corporation . . . . . . . . . . . . . . . . . . 1.1
tax, taxable and taxes . . . . . . . . . . . . . . . . . 3.10
Termination Date . . . . . . . . . . . . . . . . . . . . 9.1(h)
Termination Fee . . . . . . . . . . . . . . . . . . . . . 9.3
unfunded current liability . . . . . . . . . . . . . . . 3.13(c)
Voting Agreement . . . . . . . . . . . . . . . . . . . . PREAMBLE
Voting Shareholders . . . . . . . . . . . . . . . . . . . PREAMBLE
</TABLE>
-iii-
<PAGE> 1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
this 29th day of August, 1997, by and among MICROS-TO-MAINFRAMES, INC., a New
York corporation (the "Company"), BTG, INC., a Virginia corporation
("Acquiror"), and BTG MERGER SUB, INC., a New York corporation and wholly-owned
subsidiary of Acquiror ("Merger Sub").
WHEREAS, the Company, Acquiror and Merger Sub wish to provide that,
upon the terms and subject to the conditions of this Agreement and in
accordance with the New York Business Corporation Law ("New York Law"), Merger
Sub and the Company will enter into a business combination transaction pursuant
to which the Company will merge with and into Merger Sub (the "Forward Merger")
or, alternatively, Merger Sub will merge with and into the Company (the
"Reverse Merger" and, together with the Forward Merger, the "Merger");
WHEREAS, for federal income tax purposes, the Company, Acquiror and
Merger Sub intend, by approving resolutions authorizing this Agreement, that
the Forward Merger qualify as a reorganization under the provisions of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Acquiror to enter into this Agreement, certain shareholders of
the Company (the "Voting Shareholders") have entered into a voting and option
agreement with Acquiror (the "Voting Agreement") pursuant to which, among other
things, such shareholders have agreed to vote their shares of common stock of
the Company in favor of this Agreement, the Merger and the other transactions
contemplated by this Agreement, and to grant options to Acquiror to purchase
their shares of common stock of the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
<PAGE> 2
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with New York Law, at the Effective Time (as
defined in Section 1.2), the Company shall be merged with and into Merger Sub;
provided, however, that if Acquiror elects to structure the Merger as a Reverse
Merger pursuant to Section 2.1(b)(iii), Section 2.1(c)(iii) or Section
2.1(c)(iv), then Merger Sub shall be merged with and into the Company. As a
result of the Forward Merger, the separate corporate existence of the Company
(or, in the case of the Reverse Merger, Merger Sub) shall cease and Merger Sub
(or, in the case of the Reverse Merger, the Company), shall continue as the
surviving corporation of the Merger (sometimes referred to herein as the
"Surviving Corporation") as a wholly-owned subsidiary of Acquiror under the
name of the Company.
SECTION 1.2. EFFECTIVE TIME.
As promptly as practicable after the satisfaction or waiver of the
conditions set forth in Article VIII, the parties hereto shall cause the Merger
to be consummated by filing a certificate of merger (the "Certificate of
Merger"), together with any required related certificates, with the Secretary
of State of the State of New York, in such form as required by, and executed in
accordance with the relevant provisions of, New York Law and in such form as
approved by the Company and Acquiror prior to such filing. The Merger shall
become effective at the time of filing by the Department of State of the State
of New York in accordance with New York Law of the original, properly executed
Certificate of Merger, or at the time specified as the effective time in the
Certificate of Merger. The Certificate of Merger shall be submitted for filing
at the time of the Closing and a draft thereof may be submitted prior thereto
for clearance. The time at which the Merger shall become effective is referred
to herein as the "Effective Time".
SECTION 1.3. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided
in this Agreement, the Certificate of Merger and the applicable provisions of
New York Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Merger Sub and the
Company, shall vest in the Surviving Corporation, and all debts, liabilities
and duties of Merger Sub and the
-2-
<PAGE> 3
Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.4. CERTIFICATE OF INCORPORATION; BYLAWS.
At the Effective Time, (a) the certificate of incorporation of Merger
Sub, as in effect immediately prior to the Effective Time and as amended by the
Certificate of Merger, shall be the certificate of incorporation of the
Surviving Corporation, until thereafter amended in accordance with New York Law
and such certificate of incorporation and (b) the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with New York Law,
such certificate of incorporation and such bylaws.
SECTION 1.5. DIRECTORS AND OFFICERS.
The directors of Merger Sub (or such other or additional individuals
as Acquiror may designate prior to Closing) shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation; and the
officers of the Company shall continue as the officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
SECTION 1.6. CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") will take place as promptly as practicable after
satisfaction of the latest to occur or, if permissible, waiver of the
conditions set forth in Article VIII hereof (the "Closing Date"), at the
offices of Hogan & Hartson L.L.P., 8300 Greensboro Drive, McLean, Virginia
22102, unless another date or place is agreed to in writing by the parties
hereto.
SECTION 1.7. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to
continue in, vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties, privileges, franchises or assets of either of its constituent
corporations acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
directed and authorized to execute and deliver, in the name and on behalf of
either
-3-
<PAGE> 4
of such constituent corporations, all such deeds, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action
on the part of Acquiror, Merger Sub, the Company or the holders of any of the
following securities:
(a) Company Common Stock. Subject to Sections 2.1(b) and (c)
hereof, each share of Company Common Stock issued and outstanding as of the
Effective Time (excluding any shares described in Sections 2.1(d) and (e) and
any Dissenting Shares) (the "Outstanding Company Stock") shall be converted,
subject to the terms hereof, into the right to receive the following: (i) Two
Dollars and Eighty One Cents ($2.81) in cash, without interest; and (ii) that
number of shares of Acquiror Common Stock equal to Two Dollars and Eighty One
Cents ($2.81) divided by the Acquiror Average Closing Price (as defined below)
((i) and (ii) collectively, as adjusted pursuant to Sections 2.1(b) and (c)
below, the "Per Share Amount"). All such shares of Company Common Stock shall
cease to be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each certificate previously evidencing any such
shares shall thereafter represent only the right to receive the Merger
Consideration pursuant to Section 2.2 below. The holders of certificates
previously evidencing such shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock, except as otherwise provided
herein or by law. For purposes of this Agreement, the "Acquiror Average
Closing Price" shall be the average of the reported closing prices of a share
of Acquiror Common Stock on the National Association of Securities Dealers
Automated Quotation System/National Market System ("NASDAQ") (or the last bid
price in the absence of a trade) during the twenty (20) consecutive trading
days ending on such trading day which is seven (7) days prior to the date of
the Stockholders' Meeting (the "Determination Date").
(b) Adjustments to the Per Share Amount. The Per Share Amount
shall be subject to the following adjustments:
-4-
<PAGE> 5
(i) If the Acquiror Average Closing Price is greater than
Eighteen Dollars ($18.00), the Per Share Amount shall be increased by an
additional amount of cash equal to (A) the product of One Thousand Four Hundred
Thirty Dollars ($1,430) times each One Cent ($.01) that the Acquiror Average
Closing Price exceeds Eighteen Dollars ($18.00) and is less than or equal to
Twenty-Six Dollars ($26.00), divided by (B) four million four hundred fifty
thousand three hundred seventy-four (4,450,374).
(ii) If the Acquiror Average Closing Price is less than or
equal to Twelve Dollars and Fifty Cents ($12.50) and greater than Ten Dollars
and Fifty Cents ($10.50), the Per Share Amount shall consist of (A) seven
hundred sixty-four thousand (764,000) shares of Acquiror Common Stock plus six
hundred twenty-five (625) shares of Acquiror Common Stock for each One Cent
($.01) that the Acquiror Average Closing Price is less than Twelve Dollars and
Fifty Cents ($12.50) and is greater than Ten Dollars and Fifty Cents ($10.50),
divided by four million four hundred fifty thousand three hundred seventy-four
(4,450,374), and (B) an amount in cash, without interest, equal to Fifteen
Million Four Hundred Fifty Thousand Dollars ($15,450,000) less One Thousand
Four Hundred Fifty Dollars ($1,450) for each One Cent ($.01) that the Acquiror
Average Closing Price is less than Twelve Dollars and Fifty Cents ($12.50) and
is greater than Ten Dollars and Fifty Cents ($10.50), divided by four million
four hundred fifty thousand three hundred seventy-four (4,450,374).
(iii) If the Acquiror Average Closing Price is less than or
equal to Ten Dollars and Fifty Cents ($10.50), the Per Share Amount shall
consist of (A) Three Dollars and Forty-One Cents ($3.41) in cash, without
interest, and (B) 0.1997584 share of Acquiror Common Stock; provided, however,
that Acquiror may elect, by notifying the Company in writing within two (2)
days after the Determination Date, to structure the Merger as a Reverse Merger.
(iv) Notwithstanding anything herein to the contrary, if
the product of the Per Share Amount (with the stock portion thereof determined
based on the Acquiror Average Closing Price), as adjusted pursuant to this
Section 2.1(b), times the number of shares of Outstanding Common Stock (the
"Aggregate Share Amount") exceeds the amount of Twenty-Seven Million Eight
Hundred Sixty Thousand Eight Hundred Thirty-Three Dollars ($27,860,833) (the
"Aggregate Share Cap"), then the cash portion of the Per Share Amount shall be
reduced by an amount equal to (A) the difference between the Aggregate Share
Amount and the Aggregate Share Cap, divided by (B) the number of shares of
Outstanding Common Stock.
(c) Adjustments to the Form of Merger Consideration. The relative
amounts of cash and Acquiror Common Stock comprising the Per Share Amount
-5-
<PAGE> 6
(prior to the adjustment pursuant to Section 2.1(b)(i)) shall be subject to
the following adjustments:
(i) If the Acquiror Average Closing Price is greater than
Twelve Dollars and Fifty Cents ($12.50) and less than Sixteen Dollars ($16.00),
the Per Share Amount shall consist of (A) 0.1716709 share of Acquiror Common
Stock, and (B) an amount in cash, without interest, equal to Five Dollars and
Sixty-Two Cents ($5.62), less the product of 0.1716709 times the Acquiror
Average Closing Price.
(ii) If the Acquiror Average Closing Price is equal to or
greater than Twenty-Six Dollars ($26.00) and the Company has not made the
election pursuant to Section 2.1(c)(iii), the Per Share Amount shall consist of
(A) 0.1123501 share of Acquiror Common Stock, and (B) an amount in cash,
without interest, equal to Five Dollars and Sixty-Two Cents ($5.62), less the
product of 0.1123501 times the Acquiror Average Closing Price.
(iii) Notwithstanding anything above to the contrary, if
the Acquiror Average Closing Price is equal to or greater than Twenty-Six
Dollars ($26.00), the Company, in its sole discretion, may elect, by notifying
Acquiror in writing within two (2) days after the Determination Date that the
entire Per Share Amount be in the form of Five Dollars and Sixty-Two Cents
($5.62) in cash; provided, however, that if the Company makes such an election,
then (A) the additional amount payable under Section 2.1(b)(i) shall not apply
and (B) Acquiror may elect, by notifying the Company in writing within two (2)
days of receipt of the notice of Company's election under this Section
2.1(c)(iii), to structure the Merger as a Reverse Merger.
(iv) If in the reasonable judgment of Acquiror, the amount
of cash reasonably expected to be paid in respect of the Dissenting Shares may
cause the Forward Merger not to qualify as a tax-free reorganization under
Section 368(a) of the Code, then the relative amounts of cash and Acquiror
Common Stock comprising the Per Share Amount shall be adjusted so that, in the
reasonable judgment of Acquiror, the Forward Merger will qualify as a tax-free
reorganization under Section 368(a) of the Code; provided, however, that if
such adjustment would cause the total number of shares of Acquiror Common Stock
issued in the Merger, plus the total number of shares of Acquiror Common Stock
required to be reserved for the 1996 Stock Options pursuant to Section 2.3(b),
to exceed nine hundred fifty thousand (950,000), then Acquiror may elect, by
notifying the Company in writing no later than five (5) days after the
Stockholders' Meeting, to structure the Merger as a Reverse Merger.
Notwithstanding such an election by Acquiror, the Merger shall be structured as
a Forward Merger if within one (1) day after such election by Acquiror the
Company, in its sole discretion, notifies Acquiror in writing of its election
to reduce the cash portion of the Per Share Amount (and, as a result,
-6-
<PAGE> 7
reduce the total Per Share Amount) by the amount that would result, in the
reasonable judgment of Acquiror, in the Forward Merger qualifying as a tax-free
reorganization under Section 368(a) of the Code. Acquiror and the Company
agree that in all events, the Forward Merger should qualify as a tax-free
reorganization under Section 368(a) of the Code if the sum of the amount of
cash paid in respect of Dissenting Shares and the amount of cash paid as part
of the Per Share Amount to all holders of shares of Outstanding Company Stock
pursuant to Section 2.1, is sixty-two percent (62%) or less of the sum of cash
payable in respect of Dissenting Shares and the Aggregate Share Amount.
(v) Notwithstanding anything to the contrary contained in
this Agreement, the aggregate number of shares of Acquiror Common Stock
issuable in connection with the Merger, plus the total number of shares of
Acquiror Common Stock required to be reserved for the 1996 Stock Options
pursuant to Section 2.3(b), shall not exceed nine hundred fifty thousand
(950,000).
(d) Acquiror-Owned Shares. All shares of capital stock of the
Company owned, directly or indirectly, by Acquiror or Merger Sub shall be
canceled and extinguished without any conversion thereof and no consideration
shall be delivered or deliverable in exchange therefor.
(e) Treasury Stock. All shares of capital stock of the Company
held in the treasury of the Company immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof and no cash
or Acquiror Common Stock shall be delivered or deliverable in exchange
therefor.
(f) Merger Sub Stock. In the case of the Reverse Merger, each
share of common stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one (1) duly and validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(g) No Fractional Shares. No fraction of a share of Acquiror
Common Stock shall be issued in connection with the Merger. In lieu of any
such fractional shares, each holder of Company Common Stock entitled to receive
shares of Acquiror Common Stock in the Merger shall have the right to receive
an amount in cash (without interest), rounded to the nearest cent, determined
by multiplying (i) the Acquiror Average Closing Price by (ii) the fractional
interest in Acquiror Common Stock to which such holder would otherwise be
entitled.
SECTION 2.2. EXCHANGE OF CERTIFICATES AND PAYMENT OF CASH.
(a) Exchange Agent. At or prior to the Effective Time, Acquiror
shall deposit, or shall cause to be deposited, with a bank or trust company
-7-
<PAGE> 8
designated by Acquiror and reasonably acceptable to the Company (the "Exchange
Agent"), in trust for the benefit of the holders of shares of Outstanding
Company Stock, for exchange in accordance with this Article II, through the
Exchange Agent, (i) certificates evidencing the whole shares of Acquiror Common
Stock issuable pursuant to Section 2.1 in exchange for Outstanding Company
Stock, (ii) cash in the aggregate amount required to be exchanged for shares of
Company Common Stock pursuant to Section 2.1 and (iii) cash in an amount
sufficient to permit payment of cash payable in lieu of fractional shares
pursuant to Section 2.1(g) (the cash described in (ii) and (iii), collectively,
the "Exchange Cash Consideration") (such certificates for shares of Acquiror
Common Stock and the Exchange Cash Consideration, being hereafter collectively
referred to as the "Exchange Fund"). Except as contemplated by this Agreement,
the Exchange Fund shall not be used for any other purpose. Any interest,
dividends or other income earned on the investment of the Exchange Cash
Consideration shall be for the account of Acquiror. Acquiror agrees to make
available to the Exchange Agent from time to time, as needed, any additional
cash required to pay any dividends or distributions subsequent to the Effective
Time with respect to certificates for shares of Acquiror Common Stock held by
the Exchange Agent pursuant to Section 2.2(d).
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Acquiror shall instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to
the Effective Time evidenced shares of Outstanding Company Stock (the
"Certificates"), (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 shall
be in such form and have such other provisions as Acquiror may reasonably
specify) and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing shares of Acquiror Common Stock and
cash. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor
(A) certificates evidencing that number of whole shares of Acquiror Common
Stock which such holder has the right to receive in accordance with Section 2.1
in respect of the shares of Company Common Stock formerly evidenced by such
Certificate, (B) cash which such holder has the right to receive in accordance
with Section 2.1, (C) cash in lieu of fractional shares of Acquiror Common
Stock to which such holder is entitled pursuant to Section 2.1(g) and (D) any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d) (the shares of Acquiror Common Stock and cash described in
clauses (A), (B), (C) and (D) being, collectively, the "Merger Consideration"),
and the Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time from and after the Effective Time to evidence only the
-8-
<PAGE> 9
right to receive upon such surrender the Merger Consideration and no rights in
any shares of Company Common Stock.
(c) No Further Rights in Company Common Stock. The Merger
Consideration paid upon conversion of the shares of Company Common Stock in
accordance with the terms of this Article II, and all cash paid pursuant to
Section 2.5, shall be deemed to have been paid in full satisfaction of all
rights pertaining to such shares of Company Common Stock and the holders of
Company Common Stock shall have no further ownership rights therein after the
Effective Time.
(d) Distributions With Respect to Unexchanged Company Shares. No
dividends or other distributions declared or made with respect to Acquiror
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 Acquiror
Common Stock such holder is entitled to receive pursuant to Section 2.1 until
such holder shall surrender such Certificate. Subject to applicable law and
the provisions of this Article II, following the surrender of any such
Certificate there shall be paid to the record holder of the shares of Acquiror
Common Stock issued in exchange for such Certificate, without interest, at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
shares of Acquiror Common Stock.
(e) Transfers of Ownership. If any certificate for shares of
Acquiror Common Stock is requested to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition to the issuance thereof that the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall have paid (and presented to the
Exchange Agent documents evidencing such payment), any transfer or other taxes
required by reason of the issuance of a certificate for shares of Acquiror
Common Stock in any name other than that of the registered holder of the
Certificate so surrendered, or have established to the satisfaction of Acquiror
that such tax has been paid or is not payable.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for one
hundred eighty (180) days after the Effective Time shall be delivered to
Acquiror, upon demand, and any holders of Company Common Stock that have not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation and Acquiror as general creditors for the Merger
Consideration to which they are entitled.
-9-
<PAGE> 10
(g) No Liability. Neither Acquiror nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any
Acquiror Common Stock or cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Lost, Stolen or Destroyed Certificates. In the event any
Certificate evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, upon the making of an affidavit setting forth that fact by
the person claiming such lost, stolen or destroyed Certificate(s) and granting
a reasonable indemnity against any claim that may be made against Acquiror, the
Surviving Corporation or the Exchange Agent with respect to such
Certificate(s), Acquiror shall cause the Exchange Agent to pay to such person
the Merger Consideration with respect to such lost, stolen or destroyed
Certificate(s).
(i) Withholding Rights. Acquiror or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement (including dividends or distributions with respect
to Acquiror Common Stock) to any holder of shares of Company Common Stock such
amounts as Acquiror or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Acquiror or the Exchange Agent, such withheld amount shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was
made by Acquiror or the Exchange Agent.
SECTION 2.3. COMPANY OPTIONS.
(a) 1993 Stock Option Plan. Immediately prior to the Effective
Time, each outstanding stock option to purchase shares of Company Common Stock
(a "1993 Stock Option") granted under the Company's 1993 Employee Stock Option
Plan, as amended (the "1993 Company Stock Option Plan"), whether or not
exercisable, shall be terminated. Immediately prior to the Effective Time, the
Company shall pay to each holder of a 1993 Stock Option listed on Schedule
2.3(a) that is outstanding as of such time, the amount of cash set forth next
to such holder's name on Schedule 2.3(a). No such payment shall be made with
respect to any such 1993 Stock Options listed on Schedule 2.3(a) that are
exercised prior to or as of the Effective Time. Any such payment shall be
subject to all applicable federal, state and local tax withholding
requirements. Prior to the Closing, the Company shall take all such action as
is necessary to terminate the 1993 Company Stock Option Plan and the 1993 Stock
Options as of the Effective Time so that on and after the Effective Time no
holder of a 1993 Stock Option or participant or former participant in the 1993
Company Stock Option Plan shall have any right to purchase shares of Company
Common Stock or any other equity interest in the
-10-
<PAGE> 11
Company or the Surviving Corporation under the 1993 Company Stock Option Plan
or the 1993 Stock Options.
(b) 1996 Stock Option Plan. Except as set forth on Schedule
2.3(b), at the Effective Time, each outstanding stock option to purchase shares
of Company Common Stock (a "1996 Stock Option") granted under the Company's
1996 Employee Stock Option Plan (the "1996 Stock Option Plan"), whether or not
exercisable, shall be converted into (i) the right to receive from the Company
an amount in cash at Closing equal to (A) the product of the number of shares
of Company Common Stock covered by such 1996 Stock Option, multiplied by the
cash portion of the Per Share Amount into which a share of Company Common Stock
is converted pursuant to Section 2.1, less (B) the product of the Cash
Conversion Number (as defined below) multiplied by the aggregate exercise price
payable for the shares of Company Common Stock covered by such 1996 Stock
Option; and (ii) an option to acquire (A) that number of shares of Acquiror
Common Stock equal to the product of the number of shares of Company Common
Stock covered by such Stock Option immediately prior to the Effective Time
multiplied by the number of shares of Acquiror Common Stock into which a share
of Company Common Stock is converted pursuant to Section 2.1 and rounded down
to the nearest whole number of shares, and (B) with an exercise price per share
of Acquiror Common Stock equal to (x) the product of exercise price per share
of Company Common Stock in effect immediately prior to the Effective Time
multiplied by the Stock Conversion Number (as defined below), divided by (y)
the number of shares of Acquiror Common Stock into which a share of Company
Common Stock is converted pursuant to Section 2.1, with such quotient rounded
up to the nearest cent. Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements.
The "Cash Conversion Number" shall be the number determined by
dividing (i) the cash portion of the Per Share Amount into which a share of
Company Common Stock is converted pursuant to Section 2.1, by (ii) the sum of
the amount determined in (i) plus the product of the number of shares of
Acquiror Common Stock into which a share of Company Common Stock is converted
pursuant to Section 2.1 multiplied by the Acquiror Average Closing Price. The
"Stock Conversion Number" shall be one (1) minus the Cash Conversion Number.
(c) The portion of each 1996 Stock Option that is converted into
an option to acquire Acquiror Common Stock pursuant to Section 2.3(b) shall be
on terms and conditions no less favorable than those applicable to such 1996
Stock Option prior to the Effective Time, except to the extent inconsistent
with or prohibited by the terms and conditions of Acquiror's stock option plans
or this Agreement, in which case the terms and conditions of Acquiror's stock
option plans or this Agreement, as the case may be, shall govern. Nothing in
Section 2.3(b) shall affect the schedule of vesting with respect to the 1996
Stock Options in effect immediately prior to the Effective Time. As soon as
practicable after the Effective
-11-
<PAGE> 12
Time, Acquiror shall deliver to each holder of an outstanding 1996 Stock Option
an appropriate notice setting forth such holder's rights pursuant thereto.
Acquiror shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Acquiror Common Stock for delivery pursuant to
the terms set forth in Section 2.3(b). The shares of Acquiror Common Stock
underlying the portion of the 1996 Stock Options converted into Acquiror
options pursuant to Section 2.3(b) shall be issued under a registration
statement on Form S-8 previously filed by Acquiror. Except with respect to the
portion of the 1996 Stock Options that are converted into options to acquire
Acquiror Common Stock pursuant to Section 2.3(b) and to the extent that the
terms of such 1996 Stock Options are not inconsistent with or prohibited by the
terms and conditions of Acquiror's stock option plans or this Agreement, the
Company shall, prior to the Closing, take all such action as is necessary to
terminate the 1996 Company Stock Option Plan as of the Effective Time so that
on and after the Effective Time no person shall have any right to purchase
shares of Company Common Stock or any other equity interest in the Company or
the Surviving Corporation under the 1996 Company Stock Option Plan.
SECTION 2.4. STOCK TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the Company with
respect to all shares of capital stock of the Company shall be closed and no
further registration of transfers of such shares of capital stock shall
thereafter be made on the records of the Company.
SECTION 2.5. DISSENTING SHARES.
Notwithstanding any other provisions of this Agreement to the
contrary, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
shall not have voted in favor of the Merger or consented thereto in writing and
who shall have, in accordance with Section 623 of New York Law, filed with the
Company a written objection to the Merger including, among other things, a
notice of the stockholders' election to dissent and a demand for payment of
fair value for such shares (collectively, the "Dissenting Shares"), shall not
be converted into or represent the right to receive the Merger Consideration.
Such stockholders shall be entitled to receive payment of the fair value of
such shares of Company Common Stock held by them in accordance with the
provisions of such Section 623, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their dissenters' rights under such Section 623 shall
thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration, upon surrender, in the manner
-12-
<PAGE> 13
provided in Section 2.2, of the certificate or certificates that formerly
evidenced such shares of Company Common Stock.
SECTION 2.6 TAX CONSEQUENCES.
It is intended by the parties hereto that the Forward Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto hereby adopt this Agreement as a "plan of reorganization" within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror and Merger Sub
as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company and each Subsidiary (as defined below) of the
Company (each a "Company Subsidiary" and collectively, the "Company
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. The Company
and each Company Subsidiary is duly qualified to conduct its business, and is
in good standing, in each jurisdiction where the character of its properties
owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failure which would not have a Company
Material Adverse Effect (as defined below). The Company and each Company
Subsidiary has the requisite power and authority and any necessary governmental
authority, franchise, license or permit to own, operate, lease and otherwise to
hold and operate its assets and properties and to carry on the businesses as
now being conducted, except for such failures which would not in the aggregate
have a Company Material Adverse Effect. The Company has no Subsidiaries (as
defined below) or any equity interest or other investment in any person other
than those listed in Schedule 3.1, each of which person is, unless otherwise
indicated on Schedule 3.1, a Company Subsidiary. As used herein, an item or
items would have a "Company Material Adverse Effect" if such item or items
would (i) have a material adverse effect on the business, assets, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole, or (ii) prevent or delay the consummation of the Merger by
the Company in any material respect.
-13-
<PAGE> 14
(b) For purposes of this Agreement, a "Subsidiary" of any person
means any corporation, partnership, joint venture or other legal entity of
which such person (either alone or through or together with any other
Subsidiary) (i) owns, directly or indirectly, fifty percent (50%) or more of
the stock, partnership interests or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation, partnership, joint venture or
other legal entity; or (ii) possesses, directly or indirectly, control over the
direction of management or policies of such corporation, partnership, joint
venture or other legal entity (whether through ownership of voting securities,
by agreement or otherwise).
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
The Company has heretofore made available to Acquiror a complete and
correct copy of the certificate or articles of incorporation and the bylaws of
the Company and each Company Subsidiary, each as amended to date. Each such
certificate or articles of incorporation and bylaws is in full force and
effect. Except as set forth on Schedule 3.2, neither the Company nor any
Company Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation or bylaws or other organizational or
governing document.
SECTION 3.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of: (i)
ten million (10,000,000) shares of common stock, par value $.001 per share
("Company Common Stock"), of which four million four hundred fifty thousand
three hundred seventy-four (4,450,374) shares are issued and outstanding; and
(ii) two million (2,000,000) shares of preferred stock, par value $.001 per
share, of which no shares are issued and outstanding. Two hundred fifty
thousand (250,000) shares of Company Common Stock have been reserved for
issuance upon the exercise of 1993 Stock Options granted under the 1993 Company
Stock Option Plan, of which two hundred twenty thousand (220,000) shares are
issuable upon the exercise of 1993 Stock Options outstanding under the 1993
Company Stock Option Plan as of the date hereof. Three hundred fifty thousand
(350,000) shares of Company Common Stock have been reserved for issuance upon
the exercise of 1996 Stock Options granted under the 1996 Company Stock Option
Plan, of which one hundred eighty-five thousand (185,000) shares are issuable
upon the exercise of 1996 Stock Options outstanding under the 1996 Company
Stock Option Plan as of the date hereof. Except as set forth in Schedule 3.3,
there are no options, warrants or other rights (including, without limitation,
stock appreciation or stock depreciation rights), agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Company or any Company Subsidiary or obligating the Company or any
Company Subsidiary to issue or sell any shares of capital stock
-14-
<PAGE> 15
of, or other equity interests in the Company or any Company Subsidiary,
including any securities directly or indirectly convertible into or exercisable
or exchangeable for any capital stock or other equity securities of the Company
or any Company Subsidiary. Except as set forth in Schedule 3.3, there are no
outstanding obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of its capital stock or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other person. All of the issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued in accordance with applicable laws
and are fully paid and nonassessable and not subject to preemptive rights.
(b) All of the outstanding shares of capital stock of each Company
Subsidiary are (i) duly authorized and validly issued in accordance with
applicable laws and are fully paid and nonassessable and not subject to
preemptive rights, and (ii) owned beneficially and of record by the Company
free and clear of any liens, security interests, pledges, agreements, options,
rights, claims, charges or encumbrances (the "Encumbrances").
(c) As of the date hereof, the only outstanding indebtedness for
borrowed money (exclusive of trade payables arising in the ordinary course of
business) of the Company and the Company Subsidiaries is as set forth in
Schedule 3.3 and all such indebtedness is prepayable in full without premium or
penalty in accordance with its terms.
(d) The Company represents and warrants to Acquiror and Merger Sub
that as of the Effective Time, the aggregate number of outstanding shares of
Company Common Stock on a fully diluted basis (assuming full exercise of the
1993 Stock Options and the 1996 Stock Options), shall not exceed four million
eight hundred forty thousand three hundred and seventy-four (4,840,374) shares.
The aggregate number of shares of Company Common Stock subject to the 1996
Stock Options as of the Effective Time shall not exceed one hundred and seventy
thousand (170,000). As of the Effective Time there shall be no outstanding
options under the 1993 Stock Option Plan or any shares of Company Common Stock
or other securities subject to the 1993 Stock Options.
SECTION 3.4. AUTHORITY.
The Company has the necessary corporate power and authority to enter
into this Agreement and subject to obtaining any necessary stockholder approval
of the Merger and the governmental approvals set forth in Section 3.5(b), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and
-15-
<PAGE> 16
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
other than the approval of this Agreement by the stockholders of the Company in
accordance with New York Law. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Acquiror and Merger Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally, (ii) the refusal of a
particular court to grant equitable remedies, including without limitation,
specific performance and injunctive relief, and (iii) by the application of
general principles of equity.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance by the Company of its obligations under this Agreement
will not, (i) conflict with or violate the certificate or articles of
incorporation, bylaws or other organizational document of the Company or any
Company Subsidiary, (ii) subject to compliance with the requirements set forth
in Section 3.5(b) below, conflict with or violate any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Company or any
Company Subsidiary or by which any of their respective properties is bound or
affected, (iii) except as set forth in Schedule 3.5, result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or any of their respective properties or assets
is bound or affected, except, in the case of clauses (ii) and (iii) above for
any such conflicts, violations, breaches, defaults or other alterations or
occurrences that in the aggregate would not have a Company Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign
(each a "Governmental Entity"), except (i) for (A) compliance with the
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), state securities laws, state takeover laws, the
National Association of Securities Dealers, Inc. (the "NASD"), the
Hart-Scott-Rodino Antitrust
-16-
<PAGE> 17
Improvements Act of 1976, as amended (the "HSR Act"), (B) applicable
requirements, if any, of the consents, approvals, authorizations or permits
described in Schedule 3.5, and (C) filing and recordation of appropriate merger
documents as required by New York Law, and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not in the aggregate have a Company Material Adverse
Effect.
SECTION 3.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, statements and other
documents required to be filed with the Securities and Exchange Commission (the
"SEC") and has heretofore made available to Acquiror, in the form filed with
the SEC, together with any amendments thereto, copies of its (i) Annual Reports
on Form 10-K and all Quarterly Reports on Form 10-Q filed since April 1, 1994,
(ii) all proxy statements relating to meetings of stockholders (whether annual
or special) since April 1, 1994, (iii) all reports on Form 8-K since March 31,
1997 and (iv) all other reports or registration statements filed by the Company
since April 1, 1994 (collectively, the "Company SEC Reports"). As of their
respective filing dates the Company SEC Reports, as amended pursuant to the
amendments described in Schedule 3.6, (i) complied as to form in all material
respects with the requirements of the Exchange Act and the Securities Act of
1933, as amended (the "Securities Act") and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Except as set forth on Schedule 3.6, the financial statements,
including all related notes and schedules, contained in the Company SEC Reports
(or incorporated by reference therein) fairly present the consolidated
financial position of the Company and the Company Subsidiaries as at the
respective dates thereof and the consolidated results of operations and cash
flows of the Company and the Company Subsidiaries for the periods indicated in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be noted
therein) and subject in the case of interim financial statements to normal
year-end adjustments.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement or as set forth in Schedule 3.7, since March 31, 1997,
(a) the Company and the Company Subsidiaries have not incurred any liability or
liabilities, or suffered any loss or losses, which in the aggregate resulted in
or are reasonably likely to have a Company Material Adverse Effect, (b) there
has not occurred any event which in the aggregate had, or would reasonably be
expected to
-17-
<PAGE> 18
have, a Company Material Adverse Effect, (c) the Company and the Company
Subsidiaries have conducted their respective businesses in the ordinary course
consistent with their past practices, (d) except as set forth in Section
2.3(a), the Company has not paid any dividend or distribution in respect of, or
redeemed or repurchased any of, its capital stock or other equity securities,
including securities directly or indirectly convertible into or exercisable or
exchangeable for any of its capital stock or other equity securities, (e) the
Company has not entered into or consummated any transaction with any officer,
director or affiliate of the Company or any person known by the Company to be
an affiliate of any of them, and (f) the Company has not changed its methods of
accounting.
SECTION 3.8. ABSENCE OF LITIGATION.
Except as set forth in Schedule 3.8, there are (a) no claims,
actions, suits, investigations, or proceedings pending or, to the Company's
knowledge, threatened against the Company or any of the Company Subsidiaries
before any court, administrative, governmental, arbitral, mediation or
regulatory authority or body, domestic or foreign, and (b) no judgments,
decrees, injunctions or orders of any Governmental Entity or arbitrator
outstanding against the Company or any Company Subsidiary. To the Company's
knowledge there is no reasonable factual basis for any claim, action, suit,
investigation or proceeding against the Company or any of the Company
Subsidiaries that, if adversely determined against the Company or a Company
Subsidiary, would in the aggregate have a Company Material Adverse Effect.
SECTION 3.9. LICENSES AND PERMITS; COMPLIANCE WITH LAWS.
The Company and the Company Subsidiaries hold (and will hold as of
the Closing Date), all permits, licenses and approvals from all Governmental
Entities (collectively, the "Permits") necessary for the Company and the
Company Subsidiaries to own, lease and operate their respective properties and
to carry on their respective businesses as now being conducted (and as
conducted as of the Closing Date), and no such Permit has been modified or
rescinded and all such Permits are in full force and effect except as would not
in the aggregate have a Company Material Adverse Effect. The businesses of the
Company and the Company Subsidiaries are being and have been conducted in
compliance with applicable laws, statutes, ordinances, regulations, judgments,
Permits, orders, decrees, concessions, grants and other authorizations of any
Governmental Entity, except for violations that would not in the aggregate have
a Company Material Adverse Effect.
-18-
<PAGE> 19
SECTION 3.10. TAXES.
Except as set forth in Schedule 3.10, the Company and the Company
Subsidiaries have (or, in the case of returns becoming due after the date
hereof and on or before the Effective Time, will have prior to the Effective
Time) prepared and filed on a timely basis with all appropriate Governmental
Entities all returns in respect of taxes that they are required to file on or
prior to the Effective Time or by such date therefor including extensions, and
all such returns are (or, in he case of returns becoming due after the date
hereof and on or before the Effective Time, will be) correct and complete in
all material respects. Except as set forth in Schedule 3.10, the Company and
the Company Subsidiaries have paid (or, in the case of taxes becoming due after
the date hereof and on or before the Effective Time, will have paid) in full
all taxes due on or before the Effective Time and, in the case of taxes
accruing on or before the Effective Time that are not due on or before the
Effective Time, the Company has or will have established adequate reserves on
its books and records and financial statements for such payment in accordance
with generally accepted accounting principles consistently applied. Except as
set forth in Schedule 3.10, the Company and the Company Subsidiaries have
withheld from each payment made to any of its present or former employees,
officers and directors all amounts required by law to be withheld and has,
where required, remitted such amounts within the applicable periods to the
appropriate Governmental Entities. In addition, except as set forth in
Schedule 3.10, (a) there are no assessments of the Company or any Company
Subsidiary with respect to taxes that have been issued and are outstanding; (b)
no Governmental Entity has audited or, to the Company's knowledge, examined the
Company or any Company Subsidiary in respect of taxes; (c) neither the Company
nor any Company Subsidiary has executed or filed any agreement extending the
period of assessment or collection of any taxes which has not yet expired by
its terms; and (d) neither the Company nor any Company Subsidiary has received
written notification from any Governmental Entity of its intention to commence
any audit or investigation. Except as set forth in Schedule 3.10, neither the
Company nor any Company Subsidiary is a party to, is bound by or has any
obligation under any tax sharing or tax indemnification agreement, provision or
arrangement, whether formal or informal, and no power of attorney, which is
currently in effect, has been granted with respect to any matter relating to
taxes of the Company or any Company Subsidiary. Except as set forth in
Schedule 3.10, neither the Company nor any Company Subsidiary is presently
required or will be required to include any adjustment in taxable income under
Section 481 of the Code (or any similar provision of the tax laws of any
jurisdiction) as a result of any change in method of accounting or otherwise.
Except as set forth in Schedule 3.10, neither the Company nor any Company
Subsidiary has entered into any "intercompany transaction" as to which any item
of deferred gain or loss has not been restored, and no "excess loss account"
exists with respect to the stock of any Company Subsidiary, as those terms are
defined in the Treasury Regulations issued under Section 1504 of the Code. For
the purpose of this Agreement, the term
-19-
<PAGE> 20
"tax" (including, with correlative meaning, the terms "taxes" and "taxable")
shall include except where the context otherwise requires, all federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts.
SECTION 3.11. INTELLECTUAL PROPERTY.
(a) Except as set forth in Schedule 3.11, the Company or one of
the Company Subsidiaries owns or possesses (and will own or possess as of the
Closing Date) all right, title and interest in and to, or a valid and
enforceable license or other right to use all of the Intellectual Property (as
defined below), and all of the rights, benefits and privileges associated
therewith, that is material to the conduct of the business of the Company and
the Company Subsidiaries as currently conducted (and as conducted as of the
Closing Date). To the knowledge of the Company, neither the Company nor any
Company Subsidiary has infringed, misappropriated or otherwise violated any
Intellectual Property of any other person, and neither the Company nor any
Company Subsidiary is aware of any such infringement, misappropriation or
violation which would reasonably be expected to occur prior to the Closing
Date. To the knowledge of the Company, no person is materially infringing upon
any Intellectual Property right of the Company or any Company Subsidiary.
(b) "Intellectual Property" shall mean all patents, patent
applications and patent disclosures; all inventions (whether or not patentable
and whether or not reduced to practice); all trademarks, service marks, trade
dress, trade names and corporate names and all the goodwill associated
therewith; all mask works; all registered and unregistered statutory and common
law copyrights; all registrations, applications and renewals for any of the
foregoing; and all trade secrets, confidential information, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research information, drawings, specifications, design plans, improvements,
proposals, technical and computer data, documentation and software, financial
business and marketing plans, customer and supplier lists and related
proprietary information, marketing materials and all other proprietary rights.
SECTION 3.12. COMPANY MATERIAL CONTRACTS.
(a) Schedule 3.12 sets forth a complete and correct list of all
agreements of the following type to which the Company or a Company Subsidiary
is a party or may be bound and all or any portion of which are currently in
effect (collectively, the "Company Material Contracts"): (i) agreements filed
as an exhibit to the Company SEC Reports and each agreement entered into after
March 31,
-20-
<PAGE> 21
1997 that would have been required to be filed as an exhibit to the Company SEC
Reports had such agreement been entered into as of the date of filing any such
Company SEC Report; (ii) employment, severance, termination, consulting and
retirement agreements; (iii) loan agreements, indentures, letters of credit,
mortgages, notes and other similar debt instruments; (iv) agreements that
require aggregate future payments to or by the Company or any Company
Subsidiary of more than Fifty Thousand Dollars ($50,000); (v) outstanding
purchase orders of the Company and the Company Subsidiaries as of July 31,
1997; (vi) agreements containing any "change of control" provisions which, if
triggered, would involve, individually or in the aggregate, payments by the
Company or any Company Subsidiary in excess of Fifty Thousand Dollars ($50,000)
or other material rights or obligations; (vii) agreements, arrangements or
understandings with any employee, director, officer, or person known to the
Company to be a direct or indirect stockholder of the Company or any affiliate
thereof; (viii) agreements prohibiting the Company or any Company Subsidiary
from engaging or competing in any line of business or limiting such
competition; (ix) joint venture, partnership and similar agreements involving a
sharing of profits; (x) acquisition or divestiture agreements relating to the
(A) sale of assets or stock of the Company or any Company Subsidiary (other
than sales of inventory in the ordinary course of business) or (B) the purchase
of assets or stock of any other person (other than the purchase of inventory,
supplies or equipment in the ordinary course of business); (xi) brokerage,
finder's or financial advisory agreements; (xii) guarantees of indebtedness for
borrowed money of any person; (xiii) customer contracts with completion dates
after December 31, 1997; (xiv) supply contracts, reseller and dealer agreements
and (xv) agreements that, individually or together with one or more related
agreements, are material to the assets or the financial condition of the
business and operations of the Company and the Company Subsidiaries, taken as a
whole.
(b) Except as set forth in Schedule 3.12, all the Company Material
Contracts are valid and in full force and effect except to the extent they have
previously expired in accordance with their terms, and neither the Company nor
any Company Subsidiary has (or has any knowledge that any other party thereto
has) violated any provision of, or committed or failed to perform any act which
with or without notice, lapse of time or both would constitute a default under
the provisions of, any Company Material Contract, except for defaults which in
the aggregate would not have a Company Material Adverse Effect. True and
complete copies of all Company Material Contracts and any other contracts
described on Schedule 3.12 have been delivered to Acquiror or made available
for inspection.
SECTION 3.13. EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.13 sets forth a list of all of the pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus or other material incentive
plans, all other material
-21-
<PAGE> 22
written employee programs, arrangements or agreements and all other material
employee benefit plans or fringe benefit plans, including, without limitation,
all "employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by the Company or for which the Company could incur a liability
or any entity required to be aggregated with the Company (each, a "Commonly
Controlled Entity") pursuant to Section 414 of the Code for the benefit of
present and former employees or directors of the Company and of each Company
Subsidiary or their beneficiaries, or providing benefits to such persons in
respect of services provided to any such entity (collectively, the "Benefit
Plans"). Any of the Benefit Plans which is an "employee pension benefit plan",
as that term is defined in Section 3(2) of ERISA, is referred to herein as an
"ERISA Plan".
(b) Each of the Benefit Plans intended to be "qualified" within
the meaning of Section 401(a) or 501 of the Code has been determined by the
Internal Revenue Service to be so qualified and to the Company's knowledge, no
circumstances exist that could reasonably be expected by the Company to result
in the revocation of any such determination. Each of the Benefit Plans is in
compliance with their terms and the applicable terms of ERISA and the Code and
any other applicable laws, rules and regulations the breach or violation of
which could result in a material liability to the Company or any Commonly
Controlled Entity.
(c) No ERISA Plan which is a defined benefit pension plan has any
"unfunded current liability", as that term is defined in Section 302(d)(8)(A)
of ERISA, and the present fair market value of the assets of any such plan
equals or exceeds the plan's "benefit liabilities", as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that
would apply if the plan terminated in accordance with all applicable legal
requirements. All contributions, premiums and other payments with respect to
each ERISA Plan which have become due and payable have been paid.
(d) Except as disclosed in Schedule 3.13, no Benefit Plan is or
has been a multiemployer plan within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan"). Neither the Company nor any Commonly Controlled Entity
has completely or partially withdrawn from any Multiemployer Plan. No
termination liability to the Pension Benefit Guaranty Corporation or withdrawal
liability to any Multiemployer Plan that is material in the aggregate has been
or is reasonably expected to be incurred with respect to any Multiemployer Plan
by the Company or any Commonly Controlled Entity.
(e) The Company has made available to Acquiror complete copies, as
of the date hereof, of all of the Benefit Plans that have been reduced to
writing, together with all documents establishing or constituting any related
trust, annuity contract, insurance contract or other funding instrument. The
Company has made available to Acquiror complete copies of current plan
summaries, employee booklets, personnel manuals and other material documents or
written materials
-22-
<PAGE> 23
concerning the Benefit Plans that are in the possession of the Company as of
the date hereof.
(f) To the Company's knowledge, except as set forth in Schedule
3.13 and except for claims for benefits in the ordinary course of business, no
claim, lawsuit, arbitration or other action has been threatened or instituted
against any Benefit Plan.
(g) Except as set forth in Schedule 3.13 or as otherwise
contemplated by the terms of this Agreement, the consummation of the
transactions contemplated by this Agreement will not give rise to any
liability, including, without limitation, liability for severance pay or
termination pay, or accelerate the time of payment or vesting or increase the
amount of compensation or benefits due to any employee, director or stockholder
of the Company (whether current, former, or retired) or their beneficiaries
solely by reason of such transactions. No amounts payable under any Benefit
Plan will fail to be deductible for federal income tax purposes by virtue of
Section 280G or 162(m) of the Code.
(h) Except as set forth in Schedule 3.13, neither the Company nor
any Company Subsidiary maintains, contributes to, or in any way provides for
any benefits of any kind (other than under Section 4980B of the Code, the
Federal Social Security Act, or a plan qualified under Section 401(a) of the
Code) to any current or future retiree or terminee.
(i) Neither the Company, any Company Subsidiary nor any Commonly
Controlled Entity has (or could incur) any liability under Title IV of ERISA.
SECTION 3.14. PROPERTIES; ASSETS.
Except as set forth in Schedule 3.14, the Company or one of the
Company Subsidiaries (a) has good and marketable title to all the properties
and assets reflected in the audited consolidated balance sheet of the Company
dated as of March 31, 1997 (the "Company Balance Sheet") as being owned by the
Company or one of the Company Subsidiaries (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business), and
those properties acquired after the date thereof which, taken as a whole, are
material to the businesses of the Company and the Company Subsidiaries, free
and clear of all Encumbrances except (i) statutory liens securing payments not
yet due, and (ii) such imperfections or irregularities of title, claims, liens,
charges, security interests or encumbrances which do not secure monetary
obligations and which do not materially affect the use of the properties or
assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties, and (b) is the lessee of all leasehold
estates reflected in the Company Balance Sheet (except for leases that have
expired by their terms since the date thereof) or such leasehold estates
acquired after the date thereof which are material to the businesses of the
Company and the Company Subsidiaries, taken as a whole, and is in possession of
the properties purported to be leased thereunder. Each such lease
-23-
<PAGE> 24
is valid without default thereunder by the lessee or, to the Company's
knowledge, lessor, except for such defaults which would not in the aggregate
have a Company Material Adverse Effect. The assets and properties of the
Company and the Company Subsidiaries are (and will be as of the Closing Date)
in good operating condition and repair (ordinary wear and tear excepted), and
constitute (and will constitute as of the Closing Date) all of the assets,
rights and properties which are necessary for the businesses and operations of
the Company and the Company Subsidiaries as presently conducted (and as
conducted as of the Closing Date).
SECTION 3.15. LABOR RELATIONS.
Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of the Company or
any Company Subsidiary. The Company and each Company Subsidiary is in
compliance in all material respects with all laws relating to the employment or
the workplace, including, without limitation, provisions relating to wages,
hours, collective bargaining, safety and health, work authorization, equal
employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions. There are no pending or, to the
Company's knowledge, threatened proceedings or grievances with respect to
labor matters concerning the Company or any Company Subsidiary which
individually or in the aggregate would have a Company Material Adverse Effect.
SECTION 3.16. ENVIRONMENTAL MATTERS.
(a) Except for matters which would not in the aggregate have a
Company Material Adverse Effect, (i) the Company and each Company Subsidiary
has complied and is in compliance with all applicable Environmental Laws (as
defined below); (ii) neither the Company nor any Company Subsidiary has
received any written communication that alleges that the Company or any Company
Subsidiary is not in compliance with all applicable Environmental Laws or that
the Company or any Company Subsidiary has incurred liability under
Environmental Laws; (iii) all Permits and other governmental authorizations
currently held by the Company and each Company Subsidiary pursuant to the
Environmental Laws are in full force and effect, the Company and each Company
Subsidiary is in compliance with all of the terms of such Permits and
authorizations, and no other Permits or authorizations are required by the
Company or any Company Subsidiary for the conduct of their respective
businesses; (iv) the management, handling, storage, transportation, treatment,
and disposal by the Company and each Company Subsidiary of any Hazardous
Materials (as defined below) has been in compliance with all applicable
Environmental Laws; and (v) neither the Company nor any Company Subsidiary has
treated, stored, disposed of, arranged for or permitted the
-24-
<PAGE> 25
disposal of, transported, handled, or released any substance, including without
limitation, any Hazardous Material, or owned or operated any property or
facility (and, to the Company's knowledge, no such property or facility is
contaminated by any such substance), in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resource damages, or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal
Act, as amended, or any other Environmental Laws.
(b) There is no Environmental Claim (as defined below) pending or,
to the knowledge of the Company, threatened against or involving the Company or
any of the Company Subsidiaries or against any person or entity whose liability
for any material Environmental Claim the Company or any of the Company
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the Company, there are no past or present
actions or activities by the Company or any Company Subsidiary including the
storage, treatment, release, emission, discharge, disposal or arrangement for
disposal of any Hazardous Materials, that could reasonably form the basis of
any Environmental Claim against the Company or any of the Company Subsidiaries
or against any person or entity whose liability for any Environmental Claim the
Company or any Company Subsidiary may have retained or assumed either
contractually or by operation of law.
(d) As used herein, these terms shall have the following meanings:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written) by any person or governmental authority
alleging potential liability arising out of, based on or resulting from the
presence, or release or threatened release into the environment, of any
Hazardous Materials at any location owned or leased by the Company or any
Company Subsidiary or other circumstances forming the basis of any violation or
alleged violation of any Environmental Law.
(ii) "Environmental Laws" means all applicable foreign,
federal, state (including, without limitation, the New Jersey Industrial Site
Recovery Act, as amended, and all regulations promulgated thereto) and local
laws (including the common law), rules, requirements and regulations relating
to pollution, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or protection of
human health as it relates to the environment including, without limitation,
laws and regulations relating to releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials or relating to
management of asbestos in buildings.
-25-
<PAGE> 26
(iii) "Hazardous Materials" means wastes, substances, or
materials (whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined
as "hazardous substances", "toxic substances", "radioactive materials", or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws.
SECTION 3.17. INSURANCE.
Schedule 3.17 contains a list and description of all insurance
policies of title, property, fire, casualty, liability, life, workmen's
compensation, business interruption, libel and slander, and other forms of
insurance in force with respect to the Company and the Company Subsidiaries.
All such insurance policies: (a) insure against such risks, and are in such
amounts, as appropriate and reasonable considering the Company and the Company
Subsidiaries' properties, businesses and operations; (b) are in full force and
effect; and (c) are valid, outstanding, and enforceable. Neither the Company
nor any of the Company Subsidiaries has received or given notice of
cancellation with respect to any of the material insurance policies.
SECTION 3.18. ACCOUNTS RECEIVABLE.
The accounts receivable of the Company and the Company Subsidiaries
have arisen from bona fide transactions in the ordinary course of their
respective businesses and are reflected on the books and records of the Company
and the Company Subsidiaries in accordance with generally accepted accounting
principles applied on a consistent basis. Except as set forth on Schedule
3.18, adequate reserves for the uncollectability of such accounts receivable
have been established on the books and records of the Company and the Company
Subsidiaries in accordance with generally accepted accounting principles
applied on a consistent basis, and the Company has no knowledge of any facts or
circumstances generally (other than general economic conditions) which would
result in any material increase in the uncollectability of such receivables in
excess of such reserves.
SECTION 3.19. INVENTORY.
Except as set forth on Schedule 3.19, the values at which the
inventories of the Company and the Company Subsidiaries are shown on the books
and records of the Company have been determined in all material respects in
accordance with the normal valuation policies of the Company and the Company
Subsidiaries, consistently applied and in accordance with generally accepted
accounting principles. Such inventories shown on the Company Balance Sheet
(and items of inventory acquired subsequent to the date of the Company Balance
Sheet) consist of a mix which is consistent in all material respects with the
Company's and the Company Subsidiaries' past practices.
-26-
<PAGE> 27
SECTION 3.20. UNDISCLOSED LIABILITIES.
The Company and the Company Subsidiaries have no debts, liabilities,
commitments or obligations (including, without limitation, unasserted claims
whether known or unknown), whether absolute or contingent, liquidated or
unliquidated, or due or to become due or otherwise, except for liabilities and
obligations (a) reflected or reserved for on the Company Balance Sheet (none of
which results from, arises out of, relates to, is in the nature of or was
caused by any breach of contract, breach of warranty, tort, infringement, or
environmental matter), (b) that have arisen since the date of the Company
Balance Sheet in the ordinary course of business of the Company and the Company
Subsidiaries (none of which results from, arises out of, relates to, is in the
nature of or was caused by any breach of contract, breach of warranty, tort,
infringement, or environmental matter), (c) relating to performance obligations
under contracts in accordance with the terms and conditions thereof (none of
which results from, arises out of, relates to, is in the nature of or was
caused by any breach of contract, breach of warranty, tort, infringement, or
environmental matter), (d) which would not in the aggregate have a Company
Material Adverse Effect or (e) as expressly set forth in Schedule 3.20.
SECTION 3.21. REAL PROPERTY.
The Company does not hold any fee simple interest in any real
property. Schedule 3.21 contains a true, correct and complete list and brief
description of all real property leased or subleased by the Company and the
Company Subsidiaries, all of which are hereinafter referred to as the "Leased
Real Property". The Company has made available to Acquiror true, correct and
complete copies of the leases of the Leased Real Property (the "Leases"). The
Company is in compliance in all material respects with all of the provisions of
such Leases and is not in default thereunder in any material respect, and to
the knowledge of the Company, no other party to any of the Leases is in default
thereunder in any material respect. Each such leasehold interest (i) is valid,
subsisting and in full force and effect; and (ii) is not subject to any
Encumbrances (other than collateral assignments of the Leases granted by the
landlords thereunder to the extent permitted by the terms of such Leases and
which do not interfere with or detract from the Company's use of the property
subject to such Leases). The rental set forth in each of the Leases listed in
Schedule 3.21 is the actual rental currently being paid by the Company, there
are no separate agreements or understandings with respect to same and the
Company is current on such rental obligations. The Company currently has the
full right to exercise any renewal options contained in any of the Leases on
the terms and conditions contained therein and, upon due exercise, currently
would be entitled to enjoy the use of each Leased Real Property premises for
the full term of such renewal options. To the knowledge of the Company, the
Leased Real Property is occupied under a valid and current occupancy permit or
the like to the extent
-27-
<PAGE> 28
required by law and assuming all requisite consents are received; except as set
forth in Schedule 3.21, there are no facts known to the Company which would
prevent any Leased Real Property premises from being occupied after the Closing
in substantially the same manner as before.
SECTION 3.22. BOARD APPROVAL; VOTE REQUIRED.
The Board of Directors of the Company has determined that the
transactions contemplated by this Agreement are in the best interests of the
Company and its stockholders and has resolved to and will, subject to Section
7.9, recommend to such stockholders that they vote in favor thereof. The
affirmative vote of two-thirds of the votes entitled to be cast by the holders
of outstanding shares of the Company Common Stock is the only vote of any class
or series of capital stock of the Company necessary to approve the transactions
contemplated under this Agreement and the Merger.
SECTION 3.23. OPINION OF FINANCIAL ADVISOR.
The Company's Board of Directors has received the opinion of
BlueStone Capital Investment and Merchant Banking that the consideration to be
received in the Merger by the stockholders of the Company is fair to such
stockholders from a financial point of view, a written copy of which opinion
has been provided to Acquiror, and such opinion has not been withdrawn or
modified in any material respect.
SECTION 3.24. BROKERS.
Except as set forth in Schedule 3.24, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.25. DISCLOSURE.
No representations or warranties by the Company in this
Agreement and no statement or information contained in the Schedules hereto or
any certificate furnished or to be furnished by the Company to Acquiror
pursuant to the provisions of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
-28-
<PAGE> 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
Acquiror is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation. Acquiror is
duly qualified to conduct its business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased or
the nature of its activities makes such qualification necessary, except for
such failure which would not have an Acquiror Material Adverse Effect (as
defined below). Acquiror has the requisite power and authority and any
necessary governmental authority, franchise, license or permit to own, operate,
lease and otherwise to hold and operate its assets and properties and to carry
on the business as now being conducted, except for such failure which would not
have an Acquiror Material Adverse Effect. As used herein, an item or items
would have an "Acquiror Material Adverse Effect" if such item or items would
(i) have a material adverse effect on the business, assets, financial condition
or results of operations of Acquiror and its subsidiaries (collectively, the
"Acquiror Subsidiaries") taken as a whole, or (ii) would prevent or delay the
consummation of the Merger by Acquiror or Merger Sub in any material respect.
SECTION 4.2. ORGANIZATIONAL DOCUMENTS.
Acquiror has heretofore made available to the Company a complete and
correct copy of the certificate of incorporation and bylaws of Acquiror, each
as amended to date. Such certificate of incorporation and bylaws are in full
force and effect. Acquiror is not in violation of any of the provisions of its
certificate of incorporation or bylaws.
SECTION 4.3. CAPITALIZATION.
The authorized capital stock of Acquiror consists of: (i) ten
million (10,000,000) shares of common stock, no par value per share ("Acquiror
Common Stock"), of which eight million five hundred twenty-four thousand nine
hundred fifty-six (8,524,956) shares are issued and outstanding; and (ii) one
million (1,000,000) shares of preferred stock, no par value per share, of which
no shares are issued and outstanding. Except as set forth in Schedule 4.3,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of Acquiror to issue or sell
-29-
<PAGE> 30
any shares of capital stock of, or other equity interests in Acquiror. Except
as set forth in Schedule 4.3, there are no outstanding contractual obligations
of Acquiror to repurchase, redeem or otherwise acquire any shares of its
capital stock. All of the issued and outstanding shares of Acquiror Common
Stock have been, and the shares of Acquiror Common Stock to be issued under
this Agreement (including the shares to be issued in respect of the portion of
the 1996 Stock Options converted into options to acquire Acquiror Common Stock
pursuant to Section 2.3(b)), when issued, will be, duly authorized, validly
issued and fully paid and nonassessable and not subject to preemptive rights.
As of the date hereof, the only outstanding indebtedness for borrowed money
(exclusive of trade payables arising in the ordinary course of business) of
Acquiror is as set forth in Schedule 4.3.
SECTION 4.4. AUTHORITY.
Acquiror has the necessary power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Acquiror and the consummation by Acquiror of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other proceedings on the part of Acquiror are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Acquiror and, assuming the
due authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of Acquiror, enforceable in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally, (ii) the
refusal of a particular court to grant equitable remedies, including without
limitation, specific performance and injunctive relief, and (iii) by the
application of general principles of equity.
SECTION 4.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 4.5, the execution and
delivery of this Agreement by Acquiror do not, and the performance by Acquiror
of its obligations under this Agreement will not, (i) conflict with or violate
the certificate of incorporation or bylaws of Acquiror, (ii) subject to
compliance with the requirements set forth in Section 4.5(b) below, conflict
with or violate any law, statute, ordinance, rule, regulation, order, judgment
or decree applicable to Acquiror or by which any of its properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of Acquiror pursuant to, any note,
-30-
<PAGE> 31
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror is a party or by
which Acquiror or any of its properties or assets is bound or affected, except,
in the case of clauses (ii) and (iii) above for any such conflicts, violations,
breaches, defaults or other alterations or occurrences that would not have an
Acquiror Material Adverse Effect.
(b) The execution and delivery of this Agreement by Acquiror does
not, and the performance of this Agreement by Acquiror will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for (A) compliance with applicable
requirements, if any, of the Exchange Act, state takeover laws, state
securities laws, NASD and the HSR Act, (B) applicable requirements, if any, of
the consents, approvals, authorizations or permits described in Schedule 4.5,
and (C) filing and recordation of appropriate merger documents as required by
New York Law and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
in the aggregate have an Acquiror Material Adverse Effect.
SECTION 4.6. ABSENCE OF LITIGATION.
Except as set forth in Schedule 4.6, as of the date hereof there are
(a) no claims, actions, suits, investigations, or proceedings pending or, to
Acquiror's knowledge, threatened against Acquiror before any court,
administrative, governmental, arbitral, mediation or regulatory authority or
body, domestic or foreign, and (b) no judgments, decrees, injunctions or orders
of any Governmental Entity or arbitrator outstanding against Acquiror. To
Acquiror's knowledge, as of the date hereof there is no reasonable factual
basis for any claim, action, suit, investigation or proceeding against Acquiror
that, if adversely determined against Acquiror, would in the aggregate have an
Acquiror Material Adverse Effect.
SECTION 4.7. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Acquiror has filed all forms, reports, statements and other
documents required to be filed with the SEC, and has heretofore made available
to the Company, in the form filed with the SEC since such date, together with
any amendments thereto, copies of its (i) Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q filed since April 1, 1994, (ii) all proxy
statements relating to meetings of stockholders (whether annual or special)
since April 1, 1994 (iii) all reports on Form 8-K since March 31, 1997, and
(iv) all other reports or registration statements filed by Acquiror since April
1, 1994 (collectively, the "Acquiror SEC Reports"). As of their respective
filing dates the Acquiror SEC Reports (i) complied as to form in all material
respects with the requirements of the Exchange Act and the Securities Act and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
-31-
<PAGE> 32
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the Acquiror SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Acquiror and the
Acquiror Subsidiaries as at the respective dates thereof and the consolidated
results of operations and cash flows of Acquiror and the Acquiror Subsidiaries
for the periods indicated in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as may be noted therein) and subject in the case of interim financial
statements to normal year-end adjustments.
SECTION 4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the Acquiror SEC Reports filed prior to the
date of this Agreement or as set forth in Schedule 4.8, since March 31, 1997,
(a) Acquiror has not incurred any liability or liabilities, or suffered any
loss or losses, which in the aggregate resulted in or are reasonably likely to
have an Acquiror Material Adverse Effect, (b) there has not occurred any event
which in the aggregate has had, or would reasonably be expected to have, an
Acquiror Material Adverse Effect, (c) Acquiror has conducted its business in
the ordinary course consistent with its past practices, and (d) Acquiror has
not paid any dividend or distribution in respect of, or redeemed or repurchased
any of, its capital stock or other equity securities, including securities
directly or indirectly convertible into or exercisable or exchangeable for any
of its capital stock or other equity securities.
SECTION 4.9. BOARD APPROVAL; VOTE REQUIRED.
The Board of Directors of Acquiror has determined that the
transactions contemplated by this Agreement are in the best interests of
Acquiror and its stockholders. No vote of the stockholders of Acquiror is
necessary to approve any of the transactions contemplated hereby.
SECTION 4.10. BROKERS.
Except as set forth in Schedule 4.10, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Acquiror.
-32-
<PAGE> 33
SECTION 4.11. ACQUIROR MATERIAL CONTRACTS.
Except as set forth in Schedule 4.11, all the Acquiror Material
Contracts (as defined below) are valid and in full force and effect except to
the extent they have previously expired in accordance with their terms, and
Acquiror has not (nor does Acquiror have any knowledge that any other party
thereto has) violated any provision of, or committed or failed to perform any
act which with or without notice, lapse of time or both would constitute a
default under the provisions of, any Acquiror Material Contract, except for
defaults which in the aggregate would not have an Acquiror Material Adverse
Effect. As used herein, "Acquiror Material Contracts" shall mean the
agreements which are currently in effect that were filed as an exhibit to the
Acquiror SEC Reports and each agreement entered into after March 31, 1997, that
would have been required to be filed as an exhibit to the Acquiror SEC Reports
had such agreement been entered into as of the date of filing of any such
Acquiror SEC Report.
SECTION 4.12. LABOR RELATIONS.
As of the date hereof, there are no pending or, to Acquiror's
knowledge, threatened proceedings or grievances with respect to labor matters
concerning Acquiror which individually or in the aggregate would have an
Acquiror Material Adverse Effect.
SECTION 4.13. UNDISCLOSED LIABILITIES.
As of the date hereof, Acquiror has no debts, liabilities, commitments
or obligations (including, without limitation, unasserted claims whether known
or unknown), whether absolute or contingent, liquidated or unliquidated, or due
or to become due or otherwise, except for liabilities and obligations (a)
reflected or reserved for on the audited consolidated balance sheet of Acquiror
dated as of March 31, 1997 (the "Acquiror Balance Sheet") (none of which
results from, arises out of, relates to, is in the nature of or was caused by
any breach of contract, breach of warranty, tort, infringement, or
environmental matter), (b) that have arisen since the date of the Acquiror
Balance Sheet in the ordinary course of business of Acquiror (none of which
results from, arises out of, relates to, is in the nature of or was caused by
any breach of contract, breach of warranty, tort, infringement, or
environmental matter), (c) relating to performance obligations under contracts
in accordance with the terms and conditions thereof (none of which results
from, arises out of, relates to, is in the nature of or was caused by any
breach of contract, breach of warranty, tort, infringement, or environmental
matter), (d) which would not in the aggregate have an Acquiror Material Adverse
Effect or (e) as expressly set forth in Schedule 4.13.
-33-
<PAGE> 34
SECTION 4.14. DISCLOSURE.
No representations or warranties by Acquiror in this Agreement
and no statement or information contained in the Schedules hereto or any
certificate furnished or to be furnished by Acquiror to the Company pursuant to
the provisions of this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF MERGER SUB
Acquiror and Merger Sub jointly and severally represent and warrant
to the Company as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION.
Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. As of the date of this Agreement, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger Sub
has not incurred, directly or indirectly, any obligations or liabilities or
engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 5.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Merger Sub has heretofore made available to the Company a complete
and correct copy of the certificate of incorporation and the bylaws of Merger
Sub, each as amended to date. Such certificate of incorporation and bylaws are
in full force and effect. Merger Sub is not in violation of any of the
provisions of its certificate of incorporation or bylaws.
SECTION 5.3. AUTHORITY.
Merger Sub has the necessary corporate power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated
-34-
<PAGE> 35
hereby. This Agreement has been duly executed and delivered by Merger Sub and,
assuming the due authorization, execution and delivery by the Company and
Acquiror, constitutes a legal, valid and binding obligation of Merger Sub,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
SECTION 5.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Merger Sub do
not, and the performance by Merger Sub of its obligations under this Agreement
will not, (i) conflict with or violate the certificate of incorporation or
bylaws of Merger Sub, (ii) subject to compliance with the requirements set
forth in Section 5.4(b) below, conflict with or violate any law, statute,
ordinance, rule, regulation, order, judgment or decree applicable to Merger Sub
or by which any of its properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the properties or assets of Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Merger
Sub is a party or by which Merger Sub or any of its properties or assets is
bound or affected, except, in the case of clauses (ii) and (iii) above for any
such conflicts, violations, breaches, defaults or other alterations or
occurrences that would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Merger Sub from performing its
obligations under this Agreement in any material respect.
(b) The execution and delivery of this Agreement by Merger Sub
does not, and the performance of this Agreement by Merger Sub will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) for (A) compliance with
applicable requirements, if any, of the Exchange Act, state takeover laws,
state securities laws, the NASD and the HSR Act, (B) applicable requirements,
if any, of the consents, approvals, authorizations or permits described in
Schedule 5.4, and (C) filing and recordation of appropriate merger documents as
required by New York Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Merger in any material respect.
-35-
<PAGE> 36
SECTION 5.5. VOTE REQUIRED.
The affirmative vote of Acquiror, the sole stockholder of Merger Sub,
is the only vote of the holders of any class or series of Merger Sub capital
stock necessary to approve any of the transactions contemplated hereby.
SECTION 5.6. DISCLOSURE.
No representations or warranties by Merger Sub in this
Agreement and no statement or information contained in the Schedules hereto or
any certificate furnished or to be furnished by Merger Sub to the Company
pursuant to the provisions of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
ARTICLE VI
COVENANTS
SECTION 6.1. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees that, prior to the Effective
Time, unless otherwise expressly contemplated by this Agreement or consented to
in writing by Acquiror, the Company shall, and shall cause each Company
Subsidiary to, (a) operate its business in the usual and ordinary course
consistent with past practices and in accordance with applicable laws
(including complying with the Exchange Act and other securities laws and rules
and regulations of the NASDAQ); (b) preserve substantially intact its business
organization, maintain its rights and franchises, use its best efforts to
retain the services of its respective principal officers and key employees and
maintain its relationship with its respective suppliers, contractors,
distributors, customers and others having business relationships with it; (c)
maintain and keep its properties and assets in as good repair and condition as
at present, ordinary wear and tear excepted; and (d) keep in full force and
effect insurance comparable in amount and scope of coverage to that currently
maintained.
SECTION 6.2. NEGATIVE COVENANTS OF THE COMPANY.
Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Acquiror, from the date hereof until the Effective
Time, the Company shall not, and shall cause each Company Subsidiary not to, do
any of the following:
-36-
<PAGE> 37
(a) (i) increase the compensation payable to or to become payable
to any of its directors, officers or employees, except for increases in
salary, wages or bonuses payable or to become payable in the ordinary course of
business and consistent with past practice and except for the cash payments to
be made immediately prior to the Effective Time pursuant to Section 2.3 with
respect to the 1993 Stock Options and the 1996 Stock Options; (ii) grant any
severance or termination pay to, or enter into or modify any employment or
severance agreement with, any of its directors, officers or employees; or (iii)
adopt or amend any employee benefit plan or arrangement, except as may be
required by applicable law;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock;
(c) (i) redeem, repurchase or otherwise reacquire any share of its
capital stock or any securities or obligations convertible into or exchangeable
for any share of its capital stock, or any options, warrants or conversion or
other rights to acquire any shares of its capital stock or any such securities
or obligations; (ii) effect any reorganization or recapitalization; or (iii)
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;
(d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale (including the grant of
any Encumbrances) of, any shares of any class of its capital stock (including
shares held in treasury) or other equity securities, any securities or
obligations directly or indirectly convertible into or exercisable or
exchangeable for any such shares, or any rights (including, without limitation,
stock appreciation or stock depreciation rights), warrants or options to
acquire, any such shares or securities or any rights, warrants or options
directly or indirectly to acquire any such shares or securities (except for the
issuance of shares upon the exercise of Stock Options outstanding as of the
date hereof); or (ii) amend or otherwise modify the terms of any such
securities, obligations, rights, warrants or options in a manner inconsistent
with the provisions of this Agreement or the effect of which shall be to make
such terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a 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 of any other person (other than the purchase of inventory
in the ordinary course of business and consistent with past practice), or make
or commit to make any capital expenditures other than capital expenditures in
the ordinary course of business consistent with past practice and in amounts
which are set forth and described in
-37-
<PAGE> 38
the Company's 1997 Capital Budget, a true and complete copy of which has been
provided to Acquiror;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, any of its assets except for the grant of security
interests in connection with the indebtedness permitted under Section 6.2(i)
and dispositions of inventory and equipment in the ordinary course of business
and consistent with past practice;
(g) propose or adopt any amendments to its certificate of
incorporation or bylaws;
(h) (i) change any of its methods of accounting in effect at April
1, 1997, or (ii) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending March 31, 1997, except, in the case of
clause (i) or clause (ii), as may be required by law or generally accepted
accounting principles, consistently applied;
(i) prepay, before the scheduled maturity thereof, any of its
long-term debt, or incur any obligation for borrowed money, whether or not
evidenced by a note, bond, debenture or similar instrument, other than (i)
indebtedness incurred in the ordinary course of business under the existing
loan agreements described on Schedule 3.3 hereto, and (ii) trade payables
incurred in the ordinary course of business consistent with past practices.
(j) enter into or modify in any material respect any agreement
which, if in effect as of the date hereof, would have been required to be
disclosed on Schedule 3.12 as a Material Contract;
(k) take any action that would or could reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being untrue or in any of the conditions to the Merger set forth in Article
VIII not being satisfied; or
(l) agree in writing or otherwise to do any of the foregoing.
SECTION 6.3. AFFIRMATIVE COVENANTS OF ACQUIROR.
Acquiror hereby covenants and agrees that, prior to the Effective
Time, unless otherwise expressly contemplated by this Agreement or consented to
in writing by the Company, Acquiror shall (a) operate its business in
accordance with applicable laws (including complying with the Exchange Act and
other securities
-38-
<PAGE> 39
laws and rules and regulations of the NASDAQ); and (b) preserve substantially
intact its business organization.
SECTION 6.4. NEGATIVE COVENANTS OF ACQUIROR.
Except as expressly contemplated by this Agreement or otherwise
consented to in writing by the Company, from the date hereof until the
Effective Time, Acquiror shall not (a) declare, set aside or pay any dividend
on, or make any other distribution in respect of, any of its capital stock; (b)
except as set forth on Schedule 6.4, (i) redeem, repurchase or otherwise
reacquire any share of its capital stock or any securities or obligations
convertible into or exchangeable for any share of its capital stock, or any
options, warrants or conversion or other rights to acquire any shares of its
capital stock or any such securities or obligations; (ii) effect any
reorganization or recapitalization; or (iii) split, combine or reclassify any
of its capital stock; or (c) acquire or agree to acquire all or substantially
all of the assets of or equity interests in any corporation, partnership,
association or other business organization in exchange for shares of Acquiror
Common Stock or options, warrants or other rights to acquire Acquiror Common
Stock.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS AND INFORMATION.
From the date hereof to the Effective Time, the Company shall, and
shall cause the Company Subsidiaries to, afford to Acquiror and its officers,
employees, accountants, consultants, legal counsel, representatives of current
and prospective sources of financing for the Merger and other representatives
of Acquiror (collectively, the "Acquiror Representatives"), reasonable access
during normal business hours to the properties, executive personnel and all
information concerning the business, properties, contracts, records and
personnel of the Company and the Company Subsidiaries as Acquiror may
reasonably request.
SECTION 7.2. CONFIDENTIALITY.
Acquiror shall, at all times prior to the Effective Time, maintain
strict confidentiality with respect to all documents and information furnished
to Acquiror by or on behalf of the Company in connection with the Merger.
Nothing shall be deemed to be confidential information that: (a) is known to
Acquiror at the time of its disclosure to Acquiror; (b) becomes publicly known
or available other than through disclosure by Acquiror; (c) is received by
Acquiror from a third party not actually known by Acquiror to be bound by a
confidentiality agreement with or
-39-
<PAGE> 40
obligation to the Company; provided, however, that Acquiror did not have actual
knowledge at such time that said information was confidential; or (d) is
independently developed by Acquiror. Notwithstanding the foregoing provisions
of this Section 7.2, Acquiror may disclose such confidential information (a) to
the extent required to comply with applicable laws; (b) to the Acquiror
Representatives with respect to the transactions contemplated hereby (so long
as such parties agree to maintain the confidentiality of such information); and
(c) to any Governmental Entity in connection with the transactions contemplated
hereby.
SECTION 7.3. REGISTRATION STATEMENT; PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, Acquiror and the Company shall prepare and file with the SEC
preliminary proxy materials which shall consist of the preliminary proxy
statement in connection with the vote of the Company's stockholders with
respect to the Merger and the other transactions contemplated hereby, and a
preliminary prospectus in connection with the registration under the Securities
Act of the Acquiror Common Stock to be issued in connection with the Merger.
As promptly as practicable after all comments are received from the SEC with
respect to the preliminary proxy materials and after the furnishing by Acquiror
and the Company of all information required to be contained therein, the
Company shall file with the SEC the definitive proxy statement to be sent or
given in connection with the vote of the Company's stockholders at the
Stockholders' Meeting (together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's
stockholders, the "Proxy Statement") and Acquiror shall file with the SEC the
registration statement on Form S-4 containing the Proxy Statement and form of
prospectus to be sent or given in connection with the registration under the
Securities Act of the Acquiror Common Stock to be issued in connection with the
Merger (together with any amendments thereto, the "Registration Statement").
Each of Acquiror and the Company will use all reasonable efforts to have or
cause the Registration Statement to become effective as promptly as
practicable, and shall take any action required to be taken under any
applicable federal or state securities laws in connection with the issuance of
shares of Acquiror Common Stock in the Merger. Each of Acquiror and the
Company shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions.
(b) The information supplied by the Company for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective (or at the time any amendment thereof or supplement thereto
is sent or given to the Company's stockholders), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
supplied by the
-40-
<PAGE> 41
Company for inclusion in the Proxy Statement to be sent to the stockholders of
the Company in connection with the Stockholders' Meeting shall not, at the date
the Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to stockholders of the Company or, except to the extent amended or
supplemented, at the time of the 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 the
light of the circumstances under which they are made, not misleading. If at
any time prior to the Stockholders' Meeting any event or circumstance relating
to the Company or any of its affiliates, or its or their respective officers or
directors, should be discovered by the Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
the Company shall promptly inform Acquiror. All documents that the Company is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act.
(c) The information supplied by Acquiror for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective (or at the time any amendment thereof or supplement thereto
is sent or given to the Company's stockholders), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
supplied by Acquiror for inclusion in the Proxy Statement to be sent to the
stockholders of the Company in connection with the Stockholders' Meeting shall
not, at the date the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to stockholders of the Company or, except to the
extent amended or supplemented, at the time of the 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 the light of the circumstances under which they are made, not
misleading. If at any time prior to the Stockholders' Meeting any event or
circumstance relating to Acquiror or any of its respective affiliates, or its
or their respective officers or directors, should be discovered by Acquiror
which should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Acquiror shall promptly inform the Company.
All documents that Acquiror is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(d) All obligations of Acquiror with respect to the Registration
Statement shall terminate if the Company makes the all cash election pursuant
to Section 2.1(c)(iii).
-41-
<PAGE> 42
SECTION 7.4. STOCKHOLDER APPROVAL.
The Company, acting through its Board of Directors, shall, in
accordance with applicable law and its certificate of incorporation and bylaws
(a) duly call, give notice of, convene and hold one or more meetings of the
Company's stockholders as soon as practicable following the date on which the
Registration Statement becomes effective, to approve and adopt this Agreement
and the Merger (the "Stockholders' Meeting"), and (b) except as provided in
Section 7.9, include in the Proxy Statement the unanimous recommendation of the
Board of Directors that the Company's stockholders approve and adopt this
Agreement and the Merger. The Company shall use its best efforts to solicit
from stockholders of the Company proxies in favor of the approval and adoption
of this Agreement and the Merger and to take all other actions reasonably
necessary or in Acquiror's reasonable judgment advisable to secure such vote as
promptly as practicable.
SECTION 7.5. FURTHER ACTION; REASONABLE BEST EFFORTS.
(a) Each of the parties shall use reasonable best efforts to take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable laws or otherwise to
consummate and make effective the transactions contemplated by this Agreement
as promptly as practicable, including, without limitation, using its best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with the Company and Acquiror as are necessary for the transactions
contemplated herein. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
commercially reasonable efforts to take all such action.
(b) From the date of this Agreement until the Effective Time, each
of the parties shall promptly notify the other in writing of any pending or, to
the knowledge of such party, threatened action, proceeding or investigation by
any Governmental Entity or any other person (i) challenging or seeking damages
in connection with the Merger or the conversion of the Company Common Stock
into the Merger Consideration pursuant to the Merger or (ii) seeking to
restrain or prohibit the consummation of the Merger or otherwise limit the
right of Acquiror to own or operate all or any portion of the business or
assets of the Company.
(c) The Company shall give prompt written notice to Acquiror, and
Acquiror and Merger Sub shall give prompt written notice to the Company, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date of this Agreement to the Effective Time. Each party shall use its
best efforts to
-42-
<PAGE> 43
not take any action, or enter into any transaction, which would cause any of
its representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
SECTION 7.6. PUBLIC ANNOUNCEMENTS.
Acquiror and the Company shall consult with each other before issuing
any press release or otherwise making any public statements with respect to the
Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement of Acquiror or the Company with any exchange on which the
securities of the Company or Acquiror are traded.
SECTION 7.7. DIRECTORS' AND OFFICERS' INSURANCE.
(a) Acquiror shall cause to be maintained in effect for not less
than six (6) years after the Effective Time the current policies of directors'
and officers' liability insurance and fiduciary liability insurance maintained
by the Company with respect to matters occurring prior to the Effective Time;
provided, however, that (i) Acquiror may substitute therefor policies of
substantially the same coverage containing terms and conditions that are
substantially the same for the officers and directors covered thereby to the
extent reasonably available and (ii) Acquiror shall not be required to pay an
annual premium for such insurance in excess of two hundred percent (200%) of
the last annual premium paid prior to the date of this Agreement (the "Maximum
Amount"), but in the event the premium for such coverage would exceed the
Maximum Amount, then the Surviving Corporation shall purchase such coverage as
it may purchase with the Maximum Amount.
(b) The bylaws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the bylaws of the
Company on the date hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six (6) years after the Effective Time in
any manner that would adversely affect the rights thereunder of individuals who
on or prior to the Effective Time were identified as prospective indemnitees
under the Bylaws of the Company (the "Indemnified Party"), in respect of
actions or omissions occurring prior to the Effective Time, unless such
amendment, repeal or modification is required by law.
(c) This Section shall survive the consummation of the Merger, is
intended to benefit the Company, the Surviving Corporation and the Indemnified
Parties, shall be binding on all successors and assigns of Acquiror and the
Surviving Corporation and shall be enforceable by the parties being
indemnified.
-43-
<PAGE> 44
SECTION 7.8. HSR ACT MATTERS.
Acquiror, Merger Sub and the Company (as may be required pursuant to
the HSR Act) promptly will complete all documents required to be filed with the
Federal Trade Commission and the United States Department of Justice in order
to comply with the HSR Act and, not later than fifteen (15) days after the date
hereof, together with the persons who are required to join in such filings,
shall file the same with the appropriate Governmental Entities. Acquiror,
Merger Sub and the Company shall promptly furnish all materials thereafter
required by any of the Governmental Entities having jurisdiction over such
filings, and shall take all reasonable actions and shall file and use best
efforts to have declared effective or approved all documents and notifications
with any such Governmental Entity, as may be required under the HSR Act or
other Federal antitrust laws for the consummation of the Merger and the other
transactions contemplated hereby.
SECTION 7.9. NO SOLICITATION.
(a) The Company shall not, directly or indirectly,
through any officer, director, employee, representative or agent of the Company
or any of its subsidiaries, (i) solicit, initiate or encourage any inquiries or
proposals regarding any merger, sale of substantial assets, sale of the
outstanding shares of capital stock (including without limitation by way of a
tender offer) or similar transactions involving or with respect to the Company
or any Company Subsidiary other than the Merger (any of the foregoing inquiries
or proposals being referred to herein as an "Acquisition Proposal"), (ii)
engage in negotiations or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition Proposal, or (iii) agree
to, approve or recommend any Acquisition Proposal. Nothing contained in this
Section 7.9(a) shall prevent the Board of Directors of the Company from
considering, negotiating, discussing, approving and recommending to the
stockholders of the Company a bona fide Acquisition Proposal not solicited,
initiated or encouraged in violation of this Agreement, provided the Board of
Directors of the Company determines in good faith upon the advice of outside
legal counsel that it is required to do so in order to discharge properly its
fiduciary duties. Nothing contained in this Section 7.9 shall prohibit the
Board of Directors of the Company from complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer.
(b) The Company shall promptly notify Acquiror after receipt of
any Acquisition Proposal, or any material modification of or amendment to any
Acquisition Proposal. Such notice to Acquiror shall indicate the name of the
person making such Acquisition Proposal, the terms and conditions of such
Acquisition Proposal, and whether the Company is providing or intends to
provide the person making the Acquisition Proposal with access to information
concerning the Company as provided in Section 7.9(c), and the Company shall
furnish Acquiror with copies of any written Acquisition Proposal and the
contents of any
-44-
<PAGE> 45
communications in response thereto and shall keep Acquiror informed as to the
status of any discussion or negotiations relating to such Acquisition proposal
or request for information. The Company shall not waive any provisions of any
"standstill" agreements between the Company and any party, except to the extent
that such waiver is, as advised by outside legal counsel, required by the
fiduciary duties of the directors of the Company.
(c) If the Board of Directors of the Company receives a request
for nonpublic information by a person who makes, or indicates that it is
considering making, a bona fide Acquisition Proposal, and the Board of
Directors determines in good faith upon the advice of outside legal counsel
that it is required to cause the Company to act as provided in this Section 7.9
in order to discharge properly the directors' fiduciary duties, then, provided
such person has executed a confidentiality agreement with the Company in a form
reasonably acceptable to Acquiror and the Company has complied with its
obligations under Sections 7.9(a) and (b), the Company may provide such person
with access to information regarding the Company.
SECTION 7.10. AFFILIATE AGREEMENTS.
At least ten (10) business days prior to the date of the
Stockholders' Meeting, the Company shall deliver to Acquiror a list of names
and addresses of those persons who were, at the record date for the
Stockholders' Meeting, "affiliates" of the Company within the meaning of Rule
145 under the Securities Act and who have not previously executed an Affiliate
Agreement (as defined below). The Company shall use its best efforts to
deliver or cause to be delivered to Acquiror, prior to the Effective Time, from
each of the Affiliates of the Company identified in the foregoing list,
agreements (collectively, the "Affiliate Agreements") substantially in the form
attached to this Agreement as Exhibit C.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR, MERGER SUB AND
THE COMPANY TO EFFECT THE MERGER.
The respective obligations of Acquiror, Merger Sub and the Company to
effect the Merger and the other transactions contemplated herein shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
-45-
<PAGE> 46
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable law.
(b) No Order. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
Merger or any other transactions contemplated in this Agreement, and no action
or proceeding before any Governmental Entity or federal or state court of
competent jurisdiction shall be pending wherein an unfavorable judgment,
decree, injunction or order would prevent or prohibit the consummation of the
Merger or any of the other transactions contemplated by this Agreement or
declare unlawful or cause to be rescinded the Merger or any such other
transaction; provided, however, that the parties shall use their reasonable
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted, and any such action or proceeding to be dismissed.
(c) HSR Act. Any waiting period with any extensions thereof
under the HSR Act shall have expired or been terminated.
(d) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC under the
Securities Act and shall not be the subject of any stop order or proceeding by
the SEC seeking a stop order.
(e) NASDAQ Quotation. The shares of Acquiror Common Stock
issuable to the holders of the Company Stock pursuant to the Merger shall have
been authorized for quotation on the NASDAQ, upon official notice of issuance.
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR.
The obligations of Acquiror to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and
warranties of the Company made in this Agreement (except for the
representations and warranties contained in Section 3.3(d)) shall be true and
correct in all material respects, on and as of the Effective Time with the same
effect as though such representations and warranties had been made on and as of
the Effective Time (provided that any representation or warranty contained
herein that is qualified by a materiality standard shall not be further
qualified hereby), except for
-46-
<PAGE> 47
representations and warranties that speak as of a specific date or time other
than the Effective Time (which need only be true and correct in all material
respects as of such date or time). The representations and warranties of the
Company made in Section 3.3(d) shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made as of the Closing Date. Acquiror shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company to that effect.
(b) Agreements and Covenants. The agreements and covenants of the
Company required to be performed on or before the Effective Time (except for
the agreements and covenants contained in Section 6.2(d)) shall have been
performed in all material respects. The agreements and covenants of the
Company contained in Section 6.2(d) shall have been performed in all respects.
Acquiror shall have received a certificate of the Chief Executive Officer or
Chief Financial Officer of the Company to that effect.
(c) Pending Proceedings. No action or proceeding before any
Governmental Entity shall be pending or threatened wherein an unfavorable
judgment, decree, injunction or order would, by reason of the consummation of
the Merger or any other transaction contemplated by this Agreement, require the
payment of any material amount of damages, fine or penalty by Acquiror, Merger
Sub, the Surviving Corporation or any Company Subsidiary, materially adversely
affect the right of Acquiror to control the Company and the Company
Subsidiaries or the operations of the Company and the Company Subsidiaries
after the Closing or have a Company Material Adverse Effect.
(d) Legal Opinions. Acquiror shall have received an opinion from
Snow Becker Krauss P.C., counsel to the Company, in substantially the form
attached hereto as Exhibit A.
(e) Dissenting Shares. The Dissenting Shares shall constitute not
greater than five percent (5%) of the shares of Company Common Stock
outstanding on the Closing Date.
(f) No Company Material Adverse Effect. Since the date of this
Agreement, no Company Material Adverse Effect shall have occurred and be
continuing.
(g) Required Consents. The Company shall have delivered to
Acquiror at or before Closing all consents or notices necessary to effect valid
assignments of the contracts listed on Schedule 3.5, except for the contracts
indicated thereon with an asterisk, all in form and substance reasonably
acceptable to Acquiror. Acquiror shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of the Company to that
effect.
-47-
<PAGE> 48
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and
warranties of Acquiror and Merger Sub made in this Agreement shall be true and
correct in all material respects, on and as of the Effective Time with the same
effect as though such representations and warranties had been made on and as of
the Effective Time (provided that any representation or warranty contained
herein that is qualified by a materiality standard shall not be further
qualified hereby), except for representations and warranties that speak as of a
specific date or time other than the Effective Time (which need only be true
and correct in all material respects as of such date or time). The Company
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of Acquiror to that effect.
(b) Agreements and Covenants. The agreements and covenants of
Acquiror and Merger Sub required to be performed on or before the Effective
Time shall have been performed in all material respects. The Company shall
have received a certificate of the Chief Executive Officer or Chief Financial
Officer of Acquiror to that effect.
(c) Legal Opinion. The Company shall have received an opinion
from Hogan & Hartson L.L.P., counsel to Acquiror and Merger Sub, in
substantially the form attached hereto as Exhibit B.
(d) No Acquiror Material Adverse Effect. Since the date of this
Agreement, no Acquiror Material Adverse Effect shall have occurred and be
continuing; provided, however, that if the Company makes the all-cash election
pursuant to Section 2.1(c)(iii), the Company shall be deemed to have waived, in
accordance with Section 9.5, the condition set forth in this Section 8.3(d).
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of this Agreement and the Merger by the
stockholders of the Company:
-48-
<PAGE> 49
(a) by mutual written consent of each of Acquiror and the Company;
(b) by Acquiror if the Company or the Voting Shareholders shall
have breached, or failed to comply with, in any material respect any of their
respective obligations under this Agreement or the Voting Agreement, as the
case may be, or any representation or warranty made by the Company in this
Agreement or the Voting Shareholders in the Voting Agreement shall have been
incorrect in any material respect when made or shall have since ceased to be
true and correct in any material respect, such that as a result of such breach,
failure or misrepresentation the conditions set forth in Section 8.2(a), 8.2(b)
or 8.2(g) would not be satisfied, and such breach, failure or misrepresentation
is not cured within thirty (30) days after notice thereof;
(c) by the Company if Acquiror or Merger Sub shall have breached,
or failed to comply with, in any material respect any of its obligations under
this Agreement or any representation or warranty made by Acquiror or Merger Sub
shall have been incorrect in any material respect when made or shall have since
ceased to be true and correct in any material respect, such that as a result of
such breach, failure or misrepresentation the conditions set forth in Section
8.3(a) or 8.3(b) would not be satisfied, and such breach, failure or
misrepresentation is not cured within thirty (30) days after notice thereof;
(d) by either Acquiror or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting consummation
of the Merger shall have become final and nonappealable;
(e) by either Acquiror or the Company if the Agreement shall fail
to receive the requisite vote for approval and adoption by the stockholders of
the Company at the Stockholders' Meeting and the Merger shall not have been
consummated within thirty (30) days thereafter;
(f) by the Company if the Acquiror Average Closing Price is less
than Ten Dollars and Fifty Cents ($10.50);
(g) by the Company if any person other than Edward H. Bersoff, the
Company or their respective affiliates either (i) acquires more than fifty
percent (50%) of the outstanding shares of Acquiror Common Stock or (ii)
obtains the right to designate and control a majority of the Board of Directors
of Acquiror; and
(h) by either the Company or Acquiror if the merger shall not have
been consummated before December 31, 1997 (the "Termination Date"); provided,
however, that (i) the right to terminate this Agreement under this Section
9.1(h) shall not be available to the Company if the Company's failure to
fulfill any
-49-
<PAGE> 50
obligation under this Agreement or the Voting Shareholders' failure to fulfill
any obligation under the Voting Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date, and (ii) the right to terminate this Agreement under this Section 9.1(h)
shall not be available to Acquiror if Acquiror's or Merger Sub's failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date.
SECTION 9.2. EFFECT OF TERMINATION.
Except as provided in Section 9.3 or Section 10.1, in the event of
the termination of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become void, there shall be no liability on the part of Acquiror,
Merger Sub or the Company or any of their respective officers or directors to
the other parties hereto and all rights and obligations of any party hereto
shall cease.
SECTION 9.3. REMEDIES.
Without in any way limiting the rights and obligations of the parties
under Section 10.7 of this Agreement, in the event that this Agreement is
terminated (a) by Acquiror under Section 9.1(b), and the breach on which
Acquiror bases its election to terminate is either a breach of a representation
or warranty by the Company of which any officer or director of the Company
listed on Schedule 9.3 had actual knowledge at the time such representation or
warranty was made, or is an intentional breach by the Company of a covenant
hereunder, or (b) by the Company under Section 9.1(c), and the breach on which
the Company bases its election to terminate is either a breach of a
representation or warranty by Acquiror of which any officer or director of
Acquiror listed on Schedule 9.3 had actual knowledge at the time such
representation or warranty was made, or is an intentional breach by Acquiror of
a covenant hereunder, then the non-terminating party shall pay to the
terminating party, as liquidated damages, the amount of Five Hundred Thousand
Dollars in cash ($500,000) (the "Termination Fee"), and upon such payment the
parties hereto shall be discharged from all further liability under this
Agreement. The parties have provided for the Termination Fee to be liquidated
damages as a remedy for each party after having carefully considered the actual
and anticipated harms and losses that would be incurred if the other party
defaults and thus fails to perform its obligations to consummate the
transactions contemplated hereunder, the difficulty of ascertaining at this
time the actual amount of damages, special and general, that the non-defaulting
party will suffer in such event, and the inconvenience or nonfeasibility of
otherwise obtaining an adequate remedy in such event; provided, however, that
the foregoing shall not in any way limit the rights and obligations of parties
under Section 10.7 hereof.
-50-
<PAGE> 51
SECTION 9.4. AMENDMENT.
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective Boards of Directors at any time prior to
the Effective Time; provided, however, that, after approval of this Agreement
and the Merger by the stockholders of the Company, no amendment may be made
which would reduce the amount or change the type of consideration into which
each share of Company Common Stock shall be converted pursuant to this
Agreement upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.5. WAIVER.
At any time prior to the Effective Time, the parties may (a) extend
the time for the performance of any of the obligations or other acts of the
other party, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
The representations, warranties and agreements in this Agreement (and
in any certificate delivered in connection with the Closing) shall be deemed to
be conditions to the Merger and shall not survive the Effective Time or
termination of this Agreement, except for the agreements set forth in Articles
I (the Merger) and II (Conversion of Securities; Exchange of Certificates) and
Sections 7.7 (Indemnification and Insurance), each of which shall survive the
Effective Time indefinitely, and Sections 7.2 (Confidentiality), 9.2 (Effect of
Termination), 9.3 (Remedies) and 10.12 (Fees and Expenses), each of which shall
survive termination of this Agreement indefinitely. Nothing set forth in this
Section 10.1 shall relieve Acquiror of liability for violations by Acquiror of
the securities laws with respect to the Acquiror Common Stock issued in the
Merger.
-51-
<PAGE> 52
SECTION 10.2. NOTICES.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to Acquiror:
BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, Virginia 22030
Telecopier No.: (703) 383-4205
Attention: Deborah Fox
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Telecopier No.: (202) 637-5910
Attention: David B.H. Martin, Jr.
(b) If to the Company:
Micros-to-Mainframes, Inc.
614 Corporate Way
Valley Cottage, New York 10989
Telecopier No.: (914) 268-9695
Attention: Steven H. Rothman
With a copy (which shall not constitute notice) to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158
Telecopier No.: (212) 949-7052
Attention: Jack Becker
-52-
<PAGE> 53
SECTION 10.3. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "beneficial owner" means with respect to any shares of Company
Common Stock a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 of the Exchange
Act) has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding voting or disposing of any
such shares or (iv) pursuant to Section 13(d) of the Exchange Act and any rules
or regulations promulgated thereunder;
(c) "Blue Sky Laws" shall mean state securities or "blue sky"
laws;
(d) "business day" shall mean any day other than a day on which
banks in the State of New York are authorized or obligated to be closed;
(e) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise; and
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act).
SECTION 10.4. HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
-53-
<PAGE> 54
SECTION 10.5. SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.6. ENTIRE AGREEMENT.
This Agreement (together with the Exhibits, the Schedules and the
other documents delivered pursuant hereto) constitutes the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
SECTION 10.7. SPECIFIC PERFORMANCE.
The transactions contemplated by this Agreement are unique.
Accordingly, each of the parties acknowledges and agrees that, in addition to
all other remedies to which it may be entitled, each of the parties hereto is
entitled to a decree of specific performance, provided such party is not in
material default hereunder.
SECTION 10.8. ASSIGNMENT.
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 party; provided, however, that Acquiror and Merger Sub shall have the
right to assign this Agreement for collateral purposes without the prior
written consent of the Company. 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.
-54-
<PAGE> 55
SECTION 10.9. THIRD PARTY BENEFICIARIES.
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.
SECTION 10.10. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of law.
SECTION 10.11. COUNTERPARTS.
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 10.12. FEES AND EXPENSES.
Except as otherwise provided for in this Agreement, each party hereto
shall pay its own fees, costs and expenses incurred in connection with this
Agreement and in the preparation for and consummation of the transactions
provided for herein.
-55-
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT AND
PLAN OF MERGER to be executed and delivered as of the date first written above.
BTG, INC.
By: /s/ Edward H. Bersoff
-----------------------------
Name: Edward H. Bersoff
---------------------------
Title: President and CEO
--------------------------
BTG MERGER SUB, INC.
By: /s/ Edward H. Bersoff
-----------------------------
Name: Edward H. Bersoff
---------------------------
Title: President
--------------------------
MICROS-TO-MAINFRAMES, INC.
By: /s/ Steven H. Rothman
-----------------------------
Name: Steven H. Rothman
---------------------------
Title: President and CEO
--------------------------
-56-
