AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WOLTERS KLUWER U.S. CORPORATION,
MP ACQUISITION CORP.,
and
WAVERLY, INC.
February 10, 1998
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
THE OFFER AND MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . 8
1.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.7 Articles of Incorporation of
the Surviving Corporation . . . . . . . . . . . . . . . . . . 8
1.8 By-Laws of the Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9 Directors and Officers of the
Surviving Corporation . . . . . . . . . . . . . . . . . . . . 9
1.10 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . 9
1.11 Merger Without Meeting of
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . 11
2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . 14
3.1 Corporate Organization and
Qualification . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Authority Relative to This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.4 Consents and Approvals; No
Violation . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.5 SEC Reports; Financial
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Statements. . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.6 Absence of Certain Changes
Or Events . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.9 Employee Benefit Plans; Labor
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
3.10 Environmental Laws and
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . .21
3.11 Intangible Property; Copyrights . . . . . . . . . . . . . . . .22
3.12 Compliance with Applicable Laws . . . . . . . . . . . . . . . .22
3.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . ..23
3.14 Approvals; Antitakeover
Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.15 Voting Requirements . . . . . . . . . . . . . . . . . . . . . .24
3.16 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . .24
3.17 Opinion of Financial Advisors . . . . . . . . . . . . . . . . .24
3.18 Information Supplied. . . . . . . . . . . . . . . . . . . . . .24
3.19 Confidentiality Agreements. . . . . . . . . . . . . . . . . . .25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.1 Corporate Organization and
Qualification . . . . . . . . . . . . . . . . . . . . . . . . .25
4.2 Authority Relative to This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .26
4.3 Consents and Approvals; No
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . .26
4.4 Interim Operations of Newco . . . . . . . . . . . . . . . . . .27
4.5 Sufficient Funds. . . . . . . . . . . . . . . . . . . . . . . .27
4.6 Share Ownership . . . . . . . . . . . . . . . . . . . . . . . .27
4.7 Information in Proxy Statement
and Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . .27
4.8 Investigation by Parent . . . . . . . . . . . . . . . . . . . .28
4.9 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . . . .29
5.1 Interim Operations of the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.2 Alternative Proposals . . . . . . . . . . . . . . . . . . . . .32
5.3 Certain Filings . . . . . . . . . . . . . . . . . . . . . . . .33
5.4 Satisfaction of Conditions;
Receipt of Necessary Approvals. . . . . . . . . . . . . . . . .33
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5.5 Access to Information . . . . . . . . . . . . . . . . . . . . .34
5.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . .34
5.7 Directors' and Officers' Insurance
and Indemnification . . . . . . . . . . . . . . . . . . . . . .35
5.8 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . .37
5.9 Corporate Presence. . . . . . . . . . . . . . . . . . . . . . .39
5.10 Conduct of Business of Newco. . . . . . . . . . . . . . . . . .39
5.11 Certain Filings . . . . . . . . . . . . . . . . . . . . . . . .39
5.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . .40
6.1 Conditions to Each Party's
Obligations to Effect the Merger. . . . . . . . . . . . . . . .40
6.2 Additional Conditions to the
Obligations of Parent and Newco . . . . . . . . . . . . . . . .41
6.3 Additional Conditions to the
Obligations of the Company. . . . . . . . . . . . . . . . . . .41
ARTICLE VII
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . .42
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . .46
ARTICLE VIII
MISCELLANEOUS AND GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.1 Payment of Expenses and Other
Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.2 Survival of Representations and Warranties; Survival of
Confidentiality Agreement . . . . . . . . . . . . . . . . . . .47
8.3 Modification or Amendment . . . . . . . . . . . . . . . . . . .47
8.4 Waiver of Conditions. . . . . . . . . . . . . . . . . . . . . .47
8.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .47
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .47
8.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
8.8 Entire Agreement; Assignment. . . . . . . . . . . . . . . . . .49
8.9 Parties in Interest . . . . . . . . . . . . . . . . . . . . . .49
8.10 Certain Definitions . . . . . . . . . . . . . . . . . . . . . .49
8.11 Obligation of Parent. . . . . . . . . . . . . . . . . . . . . .50
8.12 Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.13 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . .51
8.14 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.15 Specific Performance. . . . . . . . . . . . . . . . . . . . . .51
iv
8.16 Joint and Several Liability . . . . . . . . . . . . . . . . . .52
8.17 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . .52
ANNEX A; CONDITIONS TO THE OFFER . . . . . . . . . . . . . . . . . . . . . . A-1
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 10, 1998, by and among Wolters Kluwer U.S. Corporation, a Delaware
corporation ("Parent"), MP Acquisition Corp., a Maryland corporation and a
wholly owned subsidiary of Parent ("Newco"), and Waverly, Inc., a Maryland
corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Newco and
the Company have, subject to the conditions of this Agreement, determined
that the Merger (as defined below) is in the best interests of their
respective stockholders and approved this Agreement and the transactions
contemplated hereby; and
WHEREAS, Parent, Newco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and
in consideration of the execution and delivery by Parent, Newco and the
Stockholders named therein of a stock option and tender agreement (the "Stock
Option and Tender Agreement") Parent, Newco and the Company hereby agree as
follows:
ARTICLE I
THE OFFER AND MERGER
1.1 The Offer. (a) As promptly as practicable (but in no event
later than five business days after the public announcement of the execution
hereof), Newco shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer
(the "Offer") to purchase for cash all shares of the issued and outstanding
Common Stock, par value $2.00 per share (referred to herein as either the
"Shares" or "Company Common Stock"), of the Company at a price of $ 39.00 per
Share, net to the
seller in cash (such price, or such higher price per Share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the
Offer, that number of Shares which, together with the Shares beneficially
owned by Parent or Newco, represent at least two-thirds of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the
other conditions set forth in Annex A hereto. Newco shall, on the terms and
subject to the prior satisfaction or waiver (except that the Minimum
Condition may not be waived) of the conditions of the Offer, accept for
payment and pay for Shares tendered as soon as it is legally permitted to do
so under applicable law. The obligations of Newco to commence the Offer and
to accept for payment and to pay for any Shares validly tendered on or prior
to the expiration of the Offer and not withdrawn shall be subject only to the
Minimum Condition and the other conditions set forth in Annex A hereto. The
Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto. Newco
expressly reserves the right to amend any of the terms and conditions of the
Offer; provided that Newco shall not amend or waive the Minimum Condition,
decrease the Offer Price or decrease the number of Shares sought, change the
form of consideration to be paid pursuant to the Offer, impose conditions to
the Offer in addition to those set forth in Annex A hereto, or amend any
other term or condition of the Offer in any manner adverse to the holders of
the Shares or extend the expiration date of the Offer without the prior
written consent of the Company (such consent to be authorized by the Board of
Directors of the Company or a duly authorized committee thereof).
Notwithstanding the foregoing, Newco shall, and Parent agrees to cause Newco
to, extend the Offer for a period of ten business days following the initial
expiration date of the Offer, if any conditions to the Offer have not been
satisfied or waived at such date. In addition, following such first
extension of the Offer as provided in the preceding sentence, Newco shall,
and Parent agrees to cause Newco to, extend the Offer at any time up to six
(6) months from the execution of this Agreement, for one or more periods of
not more than ten business days, if at the expiration date of the Offer, as
extended, all conditions to the Offer have not been satisfied or waived. In
addition,
2
the Offer Price may be increased and the Offer may be extended to the extent
required by law in connection with such increase in each case without the
consent of the Company.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Newco shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-1"). The
Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). Parent and
Newco represent that the Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or Newco with respect to information
supplied by the Company in writing for inclusion in the Offer Documents.
Each of Parent and Newco further agrees to take all steps necessary to cause
the Offer Documents to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and Newco, on the one hand, and the
Company, on the other hand, agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that it
shall have become false and misleading in any material respect and each of
Parent and Newco further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given a reasonable opportunity to review the Schedule 14D-1 and the Offer
Documents before they are filed with the SEC. In addition, Parent and Newco
agree to provide the Company and its counsel in writing with any comments or
other communications that Parent, Newco or their counsel
3
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments or other
communications.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors, at a meeting duly called and
held, has (i) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (collectively, the
"Transactions"), (ii) adopted a resolution by the unanimous vote of the Board
of Directors approving the acquisition of Shares by Parent and Newco pursuant
to the Offer, which resolution constitutes approval of the acquisition of
Shares pursuant to the Offer under Section 3-603 of the Maryland General
Corporation Law (the "MGCL"); (iii) adopted a resolution by the unanimous
vote of the Board of Directors which declares that the Transactions are
advisable on substantially the terms and conditions set forth or referred to
in the resolution in accordance with Section 3-105 of the MGCL; (iv)
unanimously determined that as of the date hereof the Transactions are fair
to and in the best interest of the Company's shareholders and (v) unanimously
resolved to recommend that the shareholders of the Company accept the Offer,
tender their Shares thereunder to Newco and approve and adopt this Agreement
and the Merger; provided, that such recommendation may be withdrawn, modified
or amended if, in the opinion of the Board of Directors, after consultation
with its legal counsel, such recommendation would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable law. The
Company represents that it has previously approved an amendment to the
Company's By-laws that exempts the acquisition of Shares pursuant to the
Transactions from the provisions of Section 3-702 of the MGCL. The Company
has been advised that all of its directors and executive officers intend
either to tender their Shares pursuant to the Offer or to vote their Shares
in favor of the Merger.
(b) As promptly as practicable following the commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on
4
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the fiduciary duties of the Company's directors under applicable law and to
the provisions of this Agreement, contain the recommendation referred to in
clause (v) of Section 1.2(a) hereof. The Company represents that the
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Newco for inclusion in the
Schedule 14D-9. The information supplied by Parent or Newco for inclusion in
the Schedule 14D-9 shall not, on the date filed with the SEC and on the date
first published, 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 were made, not
misleading. The Company further agrees to take all steps necessary to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and Newco,
on the other hand, agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and the Company further agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to holders of the Shares, in each
case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given a reasonable opportunity to review the
initial Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide Parent, Newco and their counsel in writing with any
comments or other communications that the Company or its counsel may receive
from time to time from the SEC or its staff with
5
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications.
(c) In connection with the Offer, if requested by Parent, the
Company will promptly furnish or cause to be furnished to Parent mailing
labels, security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Shares as of
a recent date, and shall furnish Parent with such information and assistance
as Parent or its agents may reasonably request in communicating the Offer to
the shareholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and Newco shall hold in confidence
the information contained in any of such labels and lists and the additional
information referred to in the preceding sentence, will use such information
only in connection with the Offer, and, if this Agreement is terminated, will
upon request of the Company deliver or cause to be delivered to the Company
all copies of such information then in its possession or the possession of
its agents or representatives.
1.3 Directors.
(a) Promptly upon the purchase of and payment for Shares by
Parent or any of its Subsidiaries (as defined in Section 8.10) which
represent at least two-thirds of the outstanding shares of Company Common
Stock (on a fully diluted basis), Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the product of the total number of
directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Newco, Parent and any of their
affiliates bears to the total number of shares of Company Common Stock then
outstanding. The Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors and
to secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's designees to be so elected to the Company's
Board, and shall cause Parent's designees to be so elected. At such times,
the Company will take all action necessary to cause individuals designated by
Parent to constitute the
6
same percentage as such individuals represent on the Company's Board of
Directors of (A) each committee of the Board and (B) each board of directors
(and committee thereof) of each Subsidiary in each case to the extent
permitted by the National Association of Securities Dealers (the "NASD")
Rules. Notwithstanding the foregoing, until the Effective Time (as defined in
Section 1.5 hereof), the Company shall retain as members of its Board of
Directors at least two (2) directors that are directors of the Company on the
date hereof (the "Company Designees"); provided, that subsequent to the
purchase of and payment for Shares pursuant to the Offer, Parent shall always
have its designees represent at least a majority of the entire Board of
Directors. The Company's obligations under this Section 1.3(a) shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions required pursuant to
such Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
this Section 1.3(a), including mailing to shareholders the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors. Parent
or Newco will supply the Company any information with respect to either of
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(b) From and after the time, if any, that Parent's
designees constitute a majority of the Company's Board of Directors, any
amendment of this Agreement, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or Newco hereunder, any waiver of any condition or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the directors of the Company
then in office who were directors of the Company on the date hereof, which
action shall be deemed to constitute the action of the full Board of
Directors; provided, that if there shall be no such directors, such actions
may be effected by the unanimous vote of the entire Board of Directors of the
Company.
1.4 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.5 hereof), the
Company and Newco
7
shall consummate a merger (the "Merger") pursuant to which (a) Newco shall be
merged with and into the Company and the separate corporate existence of
Newco shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger and shall continue to be governed by the
laws of the State of Maryland and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The corporation surviving the
Merger is sometimes hereinafter referred to as the "Surviving Corporation."
The Merger shall have the effects set forth in the MGCL.
1.5 Effective Time. Parent, Newco and the Company will cause
appropriate Articles of Merger (the "Articles of Merger") to be executed and
filed on the date of the Closing (as defined in Section 1.6) (or on such
other date as Parent and the Company may agree) with the State Department of
Assessments and Taxation of the State of Maryland as provided in the MGCL.
The Merger shall become effective at the time at which the Articles of Merger
have been duly filed with the State Department of Assessments and Taxation of
the State of Maryland or at such time as is agreed upon by the parties and
specified in the Articles of Merger, and such time is hereinafter referred to
as the "Effective Time."
1.6 Closing. The closing of the Merger (the "Closing") shall take
place (a) at the offices of Skadden, Arps, Slate, Meagher & Flom, 1440 New
York Avenue, Washington, D.C. as soon as practicable following the
satisfaction or waiver of all of the conditions set forth in Article VI
hereof or (b) at such other place, time and date as Parent and the Company
may agree.
1.7 Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation.
1.8 By-Laws of the Surviving Corporation. The By-Laws of Newco,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided by law,
8
the Articles of Incorporation of the Surviving Corporation and such By-Laws.
1.9 Directors and Officers of the Surviving Corporation. The
directors and officers of Newco at the Effective Time shall, from and after
the Effective Time, be the initial directors and officers, respectively, of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Articles of Incorporation and
By-Laws.
1.10 Shareholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as soon as practicable
following the acceptance for payment and purchase of Shares by Newco
pursuant to the Offer for the purpose of considering and taking action upon
this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and shall
(x) obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement (the "Proxy Statement") to be
mailed to its shareholders and (y) obtain the necessary approvals of the
Merger and this Agreement by its shareholders; and
(iii) subject to the fiduciary obligations of the Board
under applicable law as advised by its legal counsel, include in the Proxy
Statement the recommendation of the Board that shareholders of
9
the Company vote in favor of the approval of the Merger and the adoption of
this Agreement.
(b) Parent agrees that it will provide the Company with the
information concerning Parent and Newco required to be included in the Proxy
Statement and will vote, or cause to be voted, all of the Shares then owned
by it, Newco or any of its other Subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of this Agreement.
(c) The Company represents that the Proxy Statement (or any
amendment thereof or supplement thereto) at the date mailed to Company
stockholders and at the time of the Special Meeting will not contain any
untrue statement of material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied by Parent or Newco in writing for
inclusion in the Proxy Statement. If at any time prior to the Effective Time
any event with respect to the Company or any of its Subsidiaries should occur
which is required to be described in a supplement to the Proxy Statement,
such event shall be so described, and such supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the stockholders of the
Company. With respect to the information relating to the Company, the Proxy
Statement will comply as to form and substance in all material respects with
the requirements of the Exchange Act.
1.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 1.10 hereof, in the event that Parent, Newco or any other Subsidiary
of Parent shall acquire at least 90% of the outstanding shares of each class
of capital stock of the Company, pursuant to the Offer or otherwise, the
parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of shareholders of the Company, in accordance with Section
3-106 of the MGCL.
10
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $ .01 per share, of
Newco ("Newco Common Stock"):
(a) Newco Common Stock. Each issued and outstanding share
of Newco Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
All shares of Company Common Stock that are owned by the Company as treasury
stock and any shares of Company Common Stock owned by Parent, Newco or any
other wholly owned Subsidiary of Parent shall be cancelled and retired and
shall cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Exchange of Shares. Each share of Company Common Stock
issued and outstanding (other than Shares to be cancelled in accordance with
Section 2.1(b) hereof), shall be converted into the right to receive the
Offer Price, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
share of Company Common Stock in the manner provided in Section 2.2. All
such shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2.
(d) Stock Options. Parent and the Company shall take all
actions necessary to provide that, immediately prior to the Effective Time,
(i) the Company shall pay to the holder of each then outstanding stock option
11
to purchase Shares (an "Option") granted under the Company's stock option plans
and agreements (the "Option Plans") with such Options listed on Section 2.1 of
the disclosure schedule delivered to Parent and Newco by the Company
concurrently with the execution hereof (the "Company Disclosure Schedule"),
whether or not then exercisable or vested, an amount in respect thereof equal to
the product of (A) the excess, if any, of the Offer Price over the per share
exercise price of each such Option and (B) the number of Shares subject thereto
(such payment to be net of applicable withholding taxes) and (ii) each such
Option shall be cancelled; provided, however, that the foregoing shall be
subject to the obtaining of any necessary consents of holders of Options, it
being agreed that the Company and Parent will (x) use all reasonable best
efforts to obtain any such consents and (y) make any amendments to the terms of
such stock option or compensation plans or arrangements that are necessary to
give effect to the transactions contemplated by this Section 2.1.
2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as agent for the holders
of shares of Company Common Stock in connection with the Merger (the "Paying
Agent") to receive the funds to which holders of shares of Company Common
Stock shall become entitled pursuant to Section 2.1(c) hereof. Parent shall
take all steps necessary to deposit or cause to be deposited with the Paying
Agent such funds as needed for timely payment hereunder. Such funds shall be
invested by the Paying Agent as directed by Parent or the Surviving
Corporation.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time but in no event more than three business days
thereafter, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose shares were converted pursuant to Section 2.1 hereof into the right to
receive the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
12
Paying Agent and shall be in such form and have such other provisions as
Parent and the Company may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each share of Company Common Stock formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made
to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form
for transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in Company
Common Stock. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, the holders of Certificates evidencing
ownership of shares of Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Article II.
(d) Termination of Fund; No Liability. At any time
following one (1) year after the Effective
13
Time, the Surviving Corporation shall be entitled to require the Paying Agent
to deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall
be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) only as general creditors thereof
with respect to the Merger Consideration payable upon due surrender of their
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Newco that:
3.1 Corporate Organization and Qualification. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation
and is qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except where the failure to so
qualify or be in good standing would not have a Company Material Adverse
Effect (as defined in Section 8.10). Each of the Company and its
Subsidiaries has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power and authority would
not have a Company Material Adverse Effect. The Company has heretofore made
available to Parent complete and correct copies of its Articles of
Incorporation and By-Laws as in effect as of the date hereof.
3.2 Capitalization. The authorized capital stock of the Company
consists of: (i) 12,000,000 Shares,
14
of which, as of the date hereof 9,039,576 Shares were issued and outstanding,
and (ii) 500,000 shares of preferred stock, no par value per share, none of
which, as of the date hereof, were issued and outstanding. All of the
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in Section 3.2 of the Company
Disclosure Schedule, as of the date hereof all outstanding shares of capital
stock of the Company's Subsidiaries are owned by the Company or a direct or
indirect wholly owned subsidiary of the Company, free and clear of all liens,
charges, encumbrances, claims and options of any nature. Except as set forth
on Section 3.2 of the Company Disclosure Schedule, there are not as of the
date hereof any outstanding or authorized options, warrants, calls, rights
(including preemptive rights), commitments or any other agreements of any
character which the Company or any of its Subsidiaries is a party to, or may
be bound by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares
of capital stock of the Company or any of its Subsidiaries.
3.3 Authority Relative to This Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to approval of this Agreement by the holders of two-thirds of
the outstanding Shares in accordance with the MGCL, to consummate the
transactions contemplated hereby. This Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and 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,
with respect to the Merger, the approval of this Agreement by the holders of
two-thirds of the outstanding Shares in accordance with the MGCL). This
Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes the valid and binding agreement of
Parent and Newco, constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating
15
to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law).
3.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Articles of
Incorporation or certificate of incorporation, as the case may be, or
respective By-Laws of the Company or any of its Subsidiaries; (b) except as
set forth on Section 3.4(b) of the Company Disclosure Schedule, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (i) in connection with
the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) pursuant to the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), (iii) the
filing of the Articles of Merger pursuant to the MGCL and appropriate
documents with the relevant authorities of other states in which the Company
or any of its Subsidiaries is authorized to do business all of which states
are set forth on Section 3.4(b)(iii) of the Company Disclosure Schedule, (iv)
as may be required by any applicable state corporation, securities or "blue
sky" laws or state takeover laws, (v) such filings, consents, approvals,
orders, registrations and declarations of the Company as may be required
under the laws of Germany or any other relevant foreign country or (vi) where
the failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not have a Company Material
Adverse Effect; (c) except as set forth on Section 3.4(c) of the Company
Disclosure Schedule, result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration
16
or lien or other charge or encumbrance) under any of the terms, conditions or
provisions of any note, license, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their respective assets may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration or liens or other charges or encumbrances) as to which requisite
waivers or consents have been obtained or which would not have a Company
Material Adverse Effect; or (d) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in this
Section 3.4 are duly and timely obtained or made and the approval of this
Agreement by the Company's stockholders has been obtained, violate any order,
writ, injunction, decree, statute, rule or regulation in effect as of the
date of this Agreement and applicable to the Company or any of its
Subsidiaries or any of their respective assets, except for violations which
would not have a Company Material Adverse Effect.
3.5 SEC Reports; Financial Statements.
(a) The Company has filed all reports required to be filed by
it with the Securities and Exchange Commission (the "SEC") since January 1,
1995 pursuant to the federal securities laws and the SEC rules and
regulations thereunder, all of which as of their respective dates, complied
in all material respects with applicable requirements of the Exchange Act
(collectively, the "Company SEC Reports"). None of the Company SEC Reports,
including, without limitation, any financial statements or schedules included
therein, as of their respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated statements of financial position and the
related consolidated statements of operations, stockholders' equity and cash
flows (including the related notes thereto) of the Company included in the
Company SEC Reports complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a basis consistent with
prior periods (except as otherwise noted therein), and present fairly the
financial position of the Company as of their respective dates, and the
consolidated results of its operations and its cash flows for the periods
presented therein (subject, in the case of
17
the unaudited interim financial statements, to normal year-end adjustments).
(c) The income statement set forth on Section 3.5(c) of the
Company Disclosure Schedule is an accurate summary of the results of
operations for the period presented therein.
3.6 Absence of Certain Changes or Events. As of the date of this
Agreement, except as set forth on Section 3.6 of the Company Disclosure
Schedule or as a consequence of, or as contemplated by this Agreement, since
December 31, 1996, the business of the Company has been carried on only in
the ordinary and usual course, and other than in the ordinary course of
business, there has not occurred any change (other than a change affecting
the Company's industry generally) which has resulted or is reasonably likely
to result in a Company Material Adverse Effect.
3.7 Litigation. As of the date hereof, except as set forth on
Section 3.7 of the Company Disclosure Schedule there is no action, claim,
suit, proceeding or governmental investigation pending or, to the knowledge
of the Company, threatened against the Company or its Subsidiaries by or
before any court, governmental or regulatory authority or by any third party.
3.8 Taxes.
(a) The Company and its Subsidiaries have filed (or have
obtained extensions to file) all Tax Returns (as defined below) required to
be filed by the Company and its Subsidiaries for taxable periods ending on or
prior to the Closing other than those Tax Returns the failure of which to
file would not have a Company Material Adverse Effect. Such Tax Returns are
true, correct and complete in all material respects.
(b) All Taxes (as defined below) shown on such Tax Returns
have been paid in full or adequate provisions have been made to reflect such
items on the Company's or its Subsidiaries' balance sheet (in accordance with
GAAP).
(c) There are no material liens for Taxes upon the assets of
either the Company or its Subsidiaries
18
except for statutory liens for current taxes not yet due.
(d) Neither the Company nor any Subsidiary has waived in
writing any statute of limitation with respect to Taxes of the Company or any
Subsidiary.
(e) For the purpose of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local, or foreign taxing authority, including,
but not limited to income, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, including any interest,
penalties or additions attributable thereto, and "Tax Return" shall mean any
return, report, information return or other document (including any related
or supporting information) with respect to Taxes.
3.9 Employee Benefit Plans; Labor Matters. (a) Section 3.9 of
the Company Disclosure Schedule sets forth a true and complete list of all
collective bargaining agreements, employment, consulting, severance, deferred
compensation and non-competition agreements, executive compensation plans,
stock purchase, stock award and stock option plans and agreements, restricted
stock awards, bonus and incentive plans, directors fee arrangements, both tax
qualified and non-qualified and statutory and non-statutory employee pension
plans, employee profit sharing plans, 401(k) savings plans, multiemployer
plans, employee welfare plans, group life insurance, hospitalization
insurance other similar plans or arrangements (either written or oral but
only to the extent an oral plan provides material benefits) providing for
benefits to any employees, consultants or director of the Company or any
Subsidiaries or affiliates of the Company. With respect to the employee
benefit plans, stock option plans, restricted stock award programs and other
programs and arrangements maintained or contributed to by the Company or any
of its Subsidiaries (the "Company Plans"), except as specifically set forth
on Section 3.9 of the Company Disclosure Schedule: (i) each Company Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (the "IRS")
that it is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the
19
qualified status of such Company Plan; (ii) each Company Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable law; (iii) neither the Company nor any of its
Subsidiaries has incurred any direct or indirect liability under, arising out
of or by operation of Title IV of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in connection with the termination of, or
withdrawal from, any Company Plan or other retirement plan or arrangement,
and no fact or event exists that could reasonably be expected to give rise to
any liability. Except as set forth on Section 3.9 of the Company Disclosure
Schedule, the aggregate accumulated benefit obligations of each Company Plan
subject to Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Company Plan) do not exceed the fair market value
of the assets of such Company Plan (as of the date of such valuation).
(b) The Company is not subject to any collective bargaining
or other labor union contracts applicable to persons employed by the Company
or its Subsidiaries as of the date of this Agreement. As of the date of this
Agreement, there is no pending or threatened in writing labor dispute, strike
or work stoppage against the Company or any of its Subsidiaries which may
interfere with the respective business activities of the Company or its
Subsidiaries.
(c) As of the date of this Agreement, there are no more than
973,750 options issued and outstanding under the Company's stock option
plans. No options have been issued to employees or directors of the Company
or its Subsidiaries since January 1, 1998. There are no restricted stock
awards which have been issued by the Company that are currently outstanding.
(d) The consummation of the transactions contemplated by this
Agreement will not give rise to an obligation on behalf of the Company to
make severance payments to any individuals, except such as may arise from
actions of the Company taken at the direction of Parent following the
Effective Time.
(e) No payments made to any individual by the Company or any
Subsidiary as a result of the consummation of the transactions contemplated
by this Agreement
20
would be non-deductible under either Section 162(m) of the Code or Section
280G of the Code.
(f) Neither the Company nor any Subsidiary has taken any
action or failed to take any action which would result in the imposition of a
material excise tax on the Company pursuant to Sections 4975, 4980B and 4999
of the Code.
3.10 Environmental Laws and Regulations. As of the date of this
Agreement, except as set forth on Section 3.10 of the Company Disclosure
Schedule, (i) the Company and each of its Subsidiaries is in compliance with
all applicable federal, state and local laws and regulations relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata) (collectively, "Environmental Laws"), except for
non-compliance that would not have a Company Material Adverse Effect; (ii)
neither the Company nor any of its Subsidiaries (a) has received written
notice of any action, cause of action, claim, investigation, demand or notice
by any person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") or (b) to the knowledge of the
Company is subject to any Environmental Claim which is reasonably likely to
have a Company Material Adverse Effect; (iii) there has not been a Release of
Hazardous Materials at any property currently or formerly owned or operated
by the Company, any of its Subsidiaries or predecessor in interest except
where such Release would not have a Company Material Adverse Effect; (iv) to
the knowledge of the Company there has not been a Release of Hazardous
Materials at any disposal or treatment facility that received Hazardous
Materials generated by the Company, its Subsidiaries or a predecessor in
interest. For the purpose of this Section, "Hazardous Materials" means (a)
any element, compound, or chemical that is defined, listed or otherwise
classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous
substance, extremely hazardous substance or chemical, hazardous waste,
special waste, or solid waste under Environmental Laws; (b) petroleum,
petroleum-based or petroleum-derived products; (c) polychlorinated byphenyls;
(d) any substance exhibiting a hazardous waste characteristic including but
not limited to corrosivity, ignitability, toxicity or reactivity as well as
any radioactive or
21
explosive materials; and (e) any asbestos-containing materials. The term
"Release" means any spilling, leaking, pumping, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping or disposing
of Hazardous Materials (including the abandonment or discarding of barrels,
containers or other closed receptacles containing Hazardous Materials) into
the environment.
3.11 Intangible Property; Copyrights. The Company and its
Subsidiaries own or have all rights to use all patents, trademarks, trade
names, service marks, brands, logos, copyrights, licenses, trade secrets,
customer lists and other proprietary intellectual property rights
(collectively "Intellectual Property") required for, used in or incident to
the businesses of the Company and its Subsidiaries as now conducted or
proposed to be conducted. All Intellectual Property owned by the Company is
valid and enforceable except as such invalidity or unenforceability would not
have or would reasonably be expected to have a Company Material Adverse
Effect. The Company has not received notice of any infringement, and has no
reason to know of any claim or threatened infringement of the rights of
others with respect to any Intellectual Property used or owned by the
Company, the loss of which could have a Company Material Adverse Effect.
Except as set forth in Section 3.11 of the Company Disclosure Schedule, the
Company and its Subsidiaries have not been sued within the past two years (or
with respect to a Subsidiary, since such Subsidiary was acquired by the
Company if acquired less than two years prior to the date hereof) for
infringing on the Intellectual Property of another entity or person. To the
knowledge of the Company, the Company is not now using, and has not in the
past used without appropriate authorization, any confidential information or
trade secrets of any third party. The Company has never received any notice
alleging such conduct. The Company has timely and accurately made all
requisite filings and payments with the Register of Copyrights and is
otherwise in compliance with all applicable rules and regulations of the
Copyright Office except where such noncompliance would not have a Company
Material Adverse Effect.
3.12 Compliance with Applicable Laws. Except as set forth in
Section 3.12 of the Company Disclosure Schedule, to the knowledge of the
Company, since January
22
1, 1996 neither the Company nor any of its Subsidiaries has violated or
failed to comply with any statute, law, regulation, rule, judgment, decree or
order of any governmental entity applicable to its business or operations,
except for violations and failures to comply that would not, individually or
in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect. The conduct of the business of the Company and its
Subsidiaries is in conformity with all federal, state and local governmental
and regulatory requirements applicable to its business and operations, except
where such nonconformities would not, in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect. The Company and its
Subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except
for such permits, licenses and franchises the absence of which would not, in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect.
3.13 Insurance. To the knowledge of the Company, the Company and
its Subsidiaries have obtained and maintained in full force and effect
insurance with responsible and reputable insurance companies or associations
in such amounts, on such terms and covering such risks, including fire and
other risks insured against by extended coverage, as is reasonably prudent,
and each has maintained in full force and effect public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with the activities of the Company or its
Subsidiaries or any properties owned, occupied or controlled by the Company
or its Subsidiaries, in such amount as reasonably deemed necessary by the
Company or its Subsidiaries.
3.14 Approvals; Antitakeover Provisions. The Company has taken
all action necessary to approve the Transactions under the MGCL (except for
shareholder approval and the filing of a certificate or articles of merger),
including, but not limited to, all actions required to render the provisions
of Sections 3-601 through 3-604 of the MGCL restricting business combinations
with "interested shareholders" inapplicable to the Transactions. The Company
has taken all actions required to render the provisions of Section 3-702 of
the MGCL restricting voting rights of "control shares" inapplicable
23
to Shares acquired by Parent, Newco or their affiliates pursuant to the Offer
or the Merger.
3.15 Voting Requirements. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock is the only vote
of the holders of any class of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated by this Agreement.
3.16 Brokers and Finders. Other than as set forth on Section 3.16
of the Company Disclosure Schedule, the Company has not employed any
investment banker, broker, finder, advisor, consultant or intermediary in
connection with the transactions contemplated by this Agreement which would
be entitled to any investment banking, brokerage, finder's, advisory or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
3.17 Opinion of Financial Advisors. The Board of Directors has
received the opinion of Morgan Stanley & Co. Incorporated dated February 10,
1998, to the effect that, as of such date, the applicable Merger
Consideration is fair to the stockholders of the Company from a financial
point of view.
3.18 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement") or (iv) the
proxy statement (together with any amendments or supplements thereto, the
"Proxy Statement") relating to the Special Meeting, if any, will, in the case
of the Offer Documents, the Schedule 14D-9 and the Information Statement, at
the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with the SEC or first published, sent or
given to the Company's stockholders, or, in the case of the Proxy Statement,
at the time the Proxy Statement is first mailed to the Company's stockholders
or at the time of the Special Meeting, if any, 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
24
light of the circumstances under which they are made, not misleading. If at
any time prior to the Effective Time any event with respect to the Company or
its Subsidiaries should occur which is required to be described in a
supplement to (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement, or (iv) the Proxy Statement, such event shall be so
described, and such supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company and to
Parent. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
3.19 Confidentiality Agreements. Except as set forth in Section
3.19 of the Company Disclosure Schedule, the confidentiality agreements
entered into with any other potential purchasers are in substantially the
same form as the Confidentiality Agreement (as defined in Section 5.5) and
all benefits under such agreements shall inure to the Company as of the
Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND NEWCO
Each of Parent and Newco represents and warrants jointly and severally
to the Company that:
4.1 Corporate Organization and Qualification. Each of Parent,
Newco and each of Parent's Subsidiaries which is both owned directly or
indirectly by Parent and directly or indirectly owns Newco is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation. Each of Parent, Newco and Parent's
Subsidiaries is qualified and in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where the
failure to so qualify or be in good standing would not have a Parent Material
Adverse Effect (as defined in Section 8.10).
25
4.2 Authority Relative to This Agreement. Each of Parent and
Newco has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by Parent and Newco of the transactions
contemplated hereby have been duly and validly authorized by the respective
Boards of Directors of Parent and Newco and by Parent as the sole stockholder
of Newco, and no other corporate proceedings on the part of Parent and Newco
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Newco and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes the
valid and binding agreement of each of Parent and Newco, enforceable against
each of them in accordance with its terms, except that the enforcement hereof
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by Parent or Newco nor the consummation by
Parent and Newco of the transactions contemplated hereby will (a) conflict
with or result in any breach of any provision of the Articles of
Incorporation or the By-Laws, respectively, of Parent or Newco; (b) except as
set forth in Section 4.3 of the Disclosure Schedule delivered to the Company
by Parent concurrently with the execution hereof (the "Parent Disclosure
Schedule"), require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
except (i) in connection with the applicable requirements of the HSR Act,
(ii) pursuant to the applicable requirements of the Exchange Act, (iii) the
filing of the Articles of Merger pursuant to the MGCL and appropriate
documents with the relevant authorities of other states in which Parent or
Newco is authorized to do business or (iv) as may be required by any
applicable state corporation, securities or "blue sky" laws or state takeover
laws, (v) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications would not
have a Parent Material
26
Adverse Effect; (c) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or liens or other
charges or encumbrances) under any of the terms, conditions or provisions of
any note, license, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party or by which any of them or any
of their respective assets may be bound, except for such violations, breaches
and defaults (or rights of termination, cancellation or acceleration or lien
or other charge or encumbrance) as to which requisite waivers or consents
have been obtained or which would not have a Parent Material Adverse Effect;
or (d) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in this Section 4.3 are duly and timely
obtained or made, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent or any of its Subsidiaries or to any of
their respective assets, except for violations which would not have a Parent
Material Adverse Effect.
4.4 Interim Operations of Newco. Newco was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
4.5 Sufficient Funds. Either Parent or Newco has sufficient
funds available (through existing credit arrangements or otherwise) to
purchase all of the Shares outstanding on a fully diluted basis and to pay
all fees, expenses and payments related to the Transactions.
4.6 Share Ownership. None of Parent and Newco, or any of their
respective "affiliates" or Associates (as such terms are defined in Rule
12b-2 under the Exchange Act), beneficially own any Shares.
4.7 Information in Proxy Statement and Schedule 14D-9. None of
the information supplied by Parent or Newco for inclusion or incorporation by
reference in the Proxy Statement or the Schedule 14D-9 will, at the date
mailed to stockholders and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated
27
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or any of its
Subsidiaries should occur which is required to be described in a supplement
to the Proxy Statement or the Schedule 14D-9, such event shall be so
described, and such supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company and Parent.
With respect to information relating to Parent or Newco, the Proxy Statement
will comply in all material respects with the provisions of the Exchange Act
and the rules and regulations thereunder.
4.8 Investigation by Parent. Parent and Newco have conducted
their own independent review and analysis of the businesses, assets,
condition, operations and prospects of the Company and its Subsidiaries and
acknowledge that Parent and Newco have been provided access to the
properties, premises and records of the Company and its Subsidiaries for this
purpose. In entering into this Agreement, Parent and Newco:
(a) acknowledge that none of the Company, its Subsidiaries or any
of their respective directors, officers, employees, affiliates, agents or
representatives makes any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information
provided or made available to Parent and Newco or their agents or
representatives prior to the execution of this Agreement, and
(b) agree, to the fullest extent permitted by law, that none of the
Company, its Subsidiaries or any of their respective directors, officers,
employees, affiliates, agents or representatives shall have any liability or
responsibility whatsoever to Parent and Newco on any basis based upon any
information provided or made available, or statements made, to Parent and
Newco prior to the execution of this Agreement, except that the foregoing
limitations shall not apply with respect to representations or warranties of
the Company in any Company SEC Report or in Article III of this Agreement and
in the Company Disclosure Schedule, but always subject to the limitations and
restrictions contained in such representations and warranties.
28
4.9 Brokers and Finders. Other than Credit Suisse First Boston
Corporation, which has been retained by Parent's Board of Directors, Parent
and Newco have not employed any investment banker, broker, finder, advisor,
consultant or intermediary in connection with the transactions contemplated
by this Agreement which would be entitled to any investment banking,
brokerage, finder's, advisory or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Interim Operations of the Company. Except as set forth on
Section 5.1 of the Company Disclosure Schedule, during the period from the
date of this Agreement to the time the directors of Newco have been elected
to, and shall constitute a majority of, the Board of Directors of the Company
pursuant to Section 1.3 (unless Parent shall otherwise agree in writing and
except as otherwise contemplated by this Agreement), the Company will conduct
its operations according to its ordinary and usual course of business
consistent with past practice and seek to preserve intact its current
business organizations, keep available the service of its current officers
and employees and preserve its relationships with customers, suppliers and
others having business dealings with it. Without limiting the generality of
the foregoing, and except as otherwise contemplated by this Agreement or as
set forth on Section 5.1 of the Company Disclosure Schedule, the Company will
not, without the prior written consent of Parent:
(i) issue, sell, grant, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance of (A) any additional
shares of capital stock of any class (including the Shares), or any
securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for any shares of capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of any
character to purchase or acquire any shares of capital stock or any
29
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose
to redeem, purchase or otherwise acquire, any of its outstanding
Shares;
(iii) split, combine, subdivide or reclassify any
Shares or declare, set aside for payment or pay any dividend, or make
any other actual, constructive or deemed distribution in respect of
any Shares or otherwise make any payments to stockholders in their
capacity as such, other than the declaration and payment of regular
quarterly cash dividends in accordance with past dividend policy and
except for dividends by a direct or indirect wholly owned Subsidiary
of the Company;
(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its direct or indirect
Subsidiaries (other than the Merger);
(v) adopt any amendments to its Articles of
Incorporation or By-Laws or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any direct or indirect Subsidiary of the
Company;
(vi) make any material acquisition, by means of
merger, consolidation or otherwise, or material disposition, of assets
or securities (other than the Merger);
(vii) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue any
30
debt securities or make any loans, advances or capital contributions to, or
investments in, any other person other than the Company or any direct or
indirect wholly owned Subsidiary of the Company;
(viii) grant any material increases in the
compensation of any of its directors, officers or key employees,
except in the ordinary course of business and in accordance with past
practice, provided, however, that the Company shall be entitled to
pay, prior to the Effective Time, bonuses with respect to 1997
pursuant to the Company's Incentive Plan, and shall further be
entitled to disregard for purposes of the calculation of the amount of
such bonuses any effect that results from, or action that is taken in
contemplation of, this Agreement or the transaction contemplated
hereby;
(ix) enter into any new or amend any existing
employment or severance or termination agreement with any director or
officer of the Company;
(x) except as may be required to comply with
applicable law, become obligated under any new pension plan, welfare
plan, multiemployer plan, employee benefit plan, severance plan,
benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, or amend, other than in the ordinary
course of business consistent with past practice, any such plan or
arrangement in existence on the date hereof if such amendment would
have the effect of materially enhancing any benefits thereunder;
(xi) (A) take, or agree or commit to take, any action
that would make any representation or warranty of the Company
hereunder inaccurate at the Effective Time (except for representations
and warranties which speak as of a particular date, which need be
accurate only as of such date), (B) omit, or agree or commit to omit,
to take any action necessary to
31
prevent any such representation or warranty from being inaccurate in any
material respect at the Effective Time (except for representations and
warranties which speak as of a particular date, which need be accurate only
as of such date), provided however that the Company shall be permitted to
take or omit to take such action which can be cured, and in fact is cured,
at or prior to the Effective Time or (C) take, or agree or commit to take,
any action that would result in, or is reasonably likely to result in, any
of the conditions of the Merger set forth in Article VI not being
satisfied; or
(xii) authorize, recommend, propose or announce an
intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
5.2 Alternative Proposals. Subject to the last sentence of this
Section 5.2, from and after the date hereof and prior to the Effective Time,
the Company (a) will not, and will cause its officers, directors, employees,
representatives and agents not to, initiate, solicit or encourage, directly
or indirectly, any Alternative Proposal (as defined in Section 8.10) or
engage in any negotiations or enter into any agreement or provide any
confidential information or data to any person in connection with or relating
to any Alternative Proposal; (b) will immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Alternative Proposal; and (c) will notify Parent as soon
as practicable if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations and/or discussions
are sought to be initiated or continued with, the Company. Notwithstanding
the foregoing, nothing in this Section 5.2 shall require the Board of
Directors of the Company on behalf of the Company to act, or refrain from
acting, in any manner which, in the opinion of the Board of Directors of the
Company after consultation with its counsel, could reasonably be deemed
inconsistent with its fiduciary duties to the Company's stockholders under
applicable law.
32
5.3 Certain Filings. The Company and Newco shall reasonably
cooperate with one another (a) in connection with the preparation of the
Proxy Statement and the Schedule 14D-9, and (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals, or
waivers or making any such filings, furnishing information required in
connection therewith or with the Proxy Statement and the Schedule 14D-9 and
seeking timely to obtain any such actions, consents, approvals or waivers.
5.4 Satisfaction of Conditions; Receipt of Necessary Approvals.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to (i) promptly effect all necessary
registrations, submissions and filings, including, but not limited to,
filings under the HSR Act, German Law Against Restraints of Competition and
submissions of information requested by governmental authorities, which may
be necessary or required in connection with the consummation of the
transactions contemplated by this Agreement, (ii) use its reasonable best
efforts to secure federal antitrust clearance (including taking steps to
avoid or set aside any preliminary or permanent injunction or other order of
any federal or state court of competent jurisdiction or other governmental
authority), (iii) use its reasonable best efforts to take all other action
and to do all other things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by
this Agreement and (iv) use its reasonable best efforts to obtain all other
necessary or appropriate waivers, consents and approvals (including but not
limited to such filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in
which the Company or any of its Subsidiaries or Parent or any of its
Subsidiaries conducts any business or owns any assets) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible), subject, however, to the
requisite
33
vote of the stockholders of the Company. Parent represents and warrants to
the Company that Parent's affiliates have full power and authority to effect
the transactions contemplated by this Section 5.4.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to use its reasonable efforts or take any action pursuant to this
Section 5.4 if in the opinion of the Board of Directors after consultation
with its counsel such actions could reasonably be deemed inconsistent with
its fiduciary duties to the Company's stockholders under applicable law.
5.5 Access to Information. To the extent permitted by applicable
law, upon reasonable notice, the Company shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such
period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request. Parent will hold any such information which is
nonpublic in confidence in accordance with the provisions of the
Confidentiality Agreement between the Company and Parent, dated as of
December 5, 1997 (the "Confidentiality Agreement").
5.6 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without prior consultation with the other party, except
as may be required by law, the rules and regulations of any national
securities exchange or over-the-counter market or by any listing agreement
with a national securities exchange.
34
5.7 Directors' and Officers' Insurance and Indemnification.
(a) From and after the consummation of the Offer, Parent
shall, and shall cause the Company (or, if after the Effective Time, the
Surviving Corporation) to, indemnify, defend and hold harmless any person who
is now, or has been at any time prior to the date hereof, or who becomes
prior to the Effective Time, an officer or director (the "Company Indemnified
Party") of the Company and its Subsidiaries against all losses, claims,
damages, liabilities, costs and expenses (including attorney's fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on,
or arises out of, the fact that such person is or was a director or officer
of the Company or any of its Subsidiaries, and to the extent that any such
Claim pertains to any matter or fact arising out of any act or omission prior
to or at the Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the full extent
permitted under applicable law or the Company's Articles of Incorporation,
By-laws or indemnification agreements in effect at the date hereof identified
on Section 5.7 of the Company Disclosure Schedule, or otherwise as permitted
by contracts identified on Section 5.7 of the Company Disclosure Schedule,
including provisions relating to advancement of expenses incurred in the
defense of any action or suit. Without limiting the foregoing, in the event
any Company Indemnified Party becomes involved in any capacity in any Claim,
then from and after consummation of the Offer Parent shall, or shall cause
the Company (or the Surviving Corporation if after the Effective Time) to,
periodically advance to such Company Indemnified Party its legal and other
expenses (including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Company Indemnified
Party of an undertaking to reimburse the amounts so advanced in the event of
a final non-appealable determination by a court of competent jurisdiction
that such Company Indemnified Party is not entitled thereto.
(b) Parent and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of a
Company Indemnified Party as provided
35
in the Company's Articles of Incorporation and By-laws as in effect as of the
date hereof shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six years from the
Effective Time to the extent such rights are consistent with the MGCL;
provided, that in the event any claim or claims are asserted or made within
such six year period, all rights to indemnification in respect of any such
claim or claims shall continue until disposition of any and all such claims;
provided further, that nothing in this Section 5.7 shall impair any rights or
obligations of any present or former directors or officers of the Company
(c) Parent shall cause to be maintained in effect for the
Indemnified Parties (as defined below) for not less than six years after the
Effective Time policies of directors' and officers' liability insurance and
fiduciary liability insurance with respect to matters occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) providing substantially the same coverage
and containing terms and conditions which are no less advantageous, in any
material respect, to those currently maintained by the Company for the
benefit of the Company's present or former directors, officers, employees or
agents covered by such insurance policies prior to the Effective Time (the
"Indemnified Parties").
(d) In the event Parent or Newco or any of their successors
or assigns (i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
to the extent necessary to effectuate the purposes of this Section 5.7,
proper provision shall be made so that the successors and assigns of Parent
and Newco assume the obligations set forth in this Section 5.7 and none of
the actions described in clauses (i) or (ii) shall be taken until such
provision is made.
36
5.8 Employees.
(a) Parent agrees that individuals who are employed by the
Company and its Subsidiaries immediately prior to the Effective Time shall be
employees of the Company and its Subsidiaries as of the Effective Time (each
such employee, an "Affected Employee" and together with all former employees
of the Company and its Subsidiaries "Company Employees").
(b) Parent will, or will cause the Surviving Corporation to,
give Affected Employees full credit for purposes of eligibility and vesting
and determination of the level of benefits under any employee benefit plans
or arrangements maintained by Parent, the Surviving Corporation or any
Subsidiary of Parent for such Affected Employees' service with the Company or
any Subsidiary of the Company to the same extent recognized by the Company
immediately prior to the Effective Time.
(c) Parent will, or will cause the Surviving Corporation to,
(i) waive all limitations as to preexisting conditions exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Company Employees under any welfare benefit plans that such employees may
be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Company Employees immediately prior
to the Effective Time, and (ii) provide each Company Employee with credit for
any co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Effective Time.
(d) Parent agrees that until December 31, 2000, the coverage
and benefits provided to Affected Employees pursuant to employee benefit
plans or arrangements maintained by Parent, the Surviving Corporation, or any
Subsidiaries of the Parent shall be, in the aggregate, not less favorable
than those provided to such employees immediately prior to the Effective Time
determined in accordance with the benefits set forth on Section 5.8(d)(i) of
the Company Disclosure Schedule, and after
37
December 31, 2000, Parent agrees to provide or cause the Surviving
Corporation to provide coverage and benefits in the aggregate, at least as
favorable to the Affected Employees as the coverage and benefits provided to
Parent's employees. Without limiting the generality of the foregoing, Parent
agrees to honor, or to cause the Surviving Corporation to honor, until
December 31, 2000, the severance policy of the Company as in effect as of the
Effective Time, as set forth on Section 5.8(d)(ii) of the Company Disclosure
Schedule.
(e) Through December 31, 2000, Parent agrees to provide, or
to cause the Surviving Corporation to provide, to each currently retired
Company Employee and to each Company Employee who retires prior to December
31, 2000 (the "Retired Employees"), the benefits (other than stock options)
set forth on Section 5.8(e)(i) of the Company Disclosure Schedule. From
December 31, 2000 until December 31, 2002, Parent agrees to continue to
provide or to cause the Surviving Corporation to provide the Retired
Employees with the post-retirement medical insurance premium percentage
subsidy (as described on Section 5.8(e)(i) of the Company Disclosure
Schedule) which each such Retired Employee is receiving as of December 31,
2000 and that in all other respects, the post-retirement medical benefits
available to Retired Employees will be no less favorable than those available
to Parent's employees who are eligible for post-retirement medical benefits
under its retiree medical benefit plan. From and after December 31, 2002,
Parent will provide the Retired Employees the post-retirement medical
coverage provided to employees or former employees of Parent who are eligible
for post-retirement medical benefits, treating for all purposes of such
coverage the Retired Employee's service with the Company as service with
Parent.
(f) Parent and the Surviving Corporation hereby agree to
honor without modification and assume the employment agreements, executive
termination agreements and individual benefit arrangements set forth on
Section 5.8(f) of the Company Disclosure Schedule, all as in effect at the
Effective Time.
(g) Parent shall advise the employees of the Company, in a
written communication issued to the Company Employees as soon as practicable
following the
38
date of this Agreement, of Parent's undertakings set forth in this Section
5.8.
(h) Until December 31, 2000, Parent agrees that there shall
be no termination or merger or consolidation of the Waverly, Inc. Pension
Plan (the "Pension Plan") and the Pension Plan shall not be amended except as
required by applicable law.
5.9 Corporate Presence. Parent and Newco agree that the Surviving
Corporation shall maintain a substantial operating presence in the City of
Baltimore, Maryland, including maintaining a substantial work force and
operations in Baltimore, for a period of five (5) years following the
Effective Time.
5.10 Conduct of Business of Newco. During the period of time from
the date of this Agreement to the Effective Time, Newco shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
5.11 Certain Filings. The Company and Newco shall reasonably
cooperate with one another (a) in connection with the preparation of the
Proxy Statement and the Schedule 14D-9, and (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals, or
waivers or making any such filings, furnishing information required in
connection therewith or with the Proxy Statement and the Schedule 14D-9 and
seeking timely to obtain any such actions, consents, approvals or waivers.
5.12 Further Assurances. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. The provisions of Sections 5.7 are intended to benefit the
Company Indemnified Parties, and with respect to paragraph 5.7(c)
39
hereof the Indemnified Parties, as the case may be, and shall be binding on
all successors and assigns of Parent, Newco, the Company and the Surviving
Corporation and shall be enforceable by the Company Indemnified Parties and
the Indemnified Parties, as the case may be, after the Effective Time.
Parent hereby guarantees the performance by the Surviving Corporation of the
obligations pursuant to Sections 5.7, 5.8. and 5.9.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved by the stockholders of the Company entitled to vote with
respect thereto in accordance with applicable law and the Articles of
Incorporation and By-Laws of the Company.
(b) Injunction. There shall not be in effect any statute,
rule, regulation, executive order, decree, ruling or injunction or other
order of a court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated herein not be
consummated or otherwise materially limiting or restricting ownership or the
operation of the business of the Surviving Corporation; provided, however,
that, subject to the terms and provisions herein provided (including but not
limited to Section 5.4 of this Agreement), prior to invoking this condition
each party shall use its reasonable efforts to have any such decree, ruling,
injunction or order vacated.
(c) Governmental Filings and Consents. Subject to the terms
and provisions herein provided (including but not limited to Section 5.4
hereof), all governmental consents, orders and approvals legally required for
the consummation of the Merger and the transactions contemplated hereby shall
have been obtained and be in effect at the Effective Time, other than
non-material consents, orders or approvals and the waiting periods
40
under the HSR Act and under antitrust laws of applicable jurisdictions
outside the United States shall have expired or been terminated.
6.2 Additional Conditions to the Obligations of Parent and Newco.
The respective obligations of Parent and Newco to effect the Merger are
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
by Parent or Newco, as the case may be, to the extent permitted by applicable
law.
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct as of the Effective Time as though made on and as of the Effective
Time (except for changes permitted by this Agreement and that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), except in any case where
such failures to be true and correct in the aggregate would not have a
Company Material Adverse Effect.
(b) Performance. The Company shall have performed in all
material respects all of its respective covenants and agreements under this
Agreement theretofore to be performed.
(c) Officer's Certificate. Parent shall have received at the
Effective Time a certificate dated the Effective Time and executed by the
President or a Vice President of the Company certifying to the fulfillment of
the conditions specified in Sections 6.2(a) and (b) hereof.
6.3 Additional Conditions to the Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction
at or prior to the Effective Time of the following conditions, any and all of
which may be waived in whole or in part by the Company to the extent
permitted by applicable law:
(a) Representations and Warranties. The representations and
warranties of Parent and Newco set forth in this Agreement shall be true and
correct as of the Effective Time as though made on and as of the Effective
Time (except for changes permitted by this Agreement
41
and that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date), except
in any case where such failures to be true and correct in the aggregate would
not have a Parent Material Adverse Effect.
(b) Performance. Parent and Newco shall have performed in
all material respects all of their respective covenants and agreements under
this Agreement theretofore to be performed.
(c) Officer's Certificate. The Company shall have received
at the Effective Time a certificate dated the Effective Time and executed by
the President or a Vice President of Parent certifying to the fulfillment of
the conditions specified in Sections 6.3(a) and (b) hereof.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after shareholder approval thereof:
(a) By the mutual consent of Parent, Newco and the Company.
(b) By either the Company or Parent:
(i) if shares of Company Common Stock shall not have
been purchased pursuant to the Offer on or prior to six (6) months
from the execution of this Agreement; provided, however, that the
right to terminate this Agreement under this Section 7.1(b)(i) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of Parent or Newco, as the case may be, to purchase shares of
Company Common Stock pursuant to the Offer on or prior to such date;
or
(ii) if any governmental entity of competent
jurisdiction in the United States
42
or other country in which the Company or Parent directly or indirectly
has material assets or operations shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their respective reasonable best
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement
and such order, decree, ruling or other action shall have become final
and non-appealable.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company
Common Stock pursuant to the Offer, (a) the Board of Directors of the
Company shall have entered into or shall have publicly announced its
intention to enter into an agreement or an agreement in principle with
respect to any Alternative Proposal that the Board of Directors
determines, in good faith after consultation with its financial
advisors, is a Superior Proposal (as defined in Section 8.10); (b)
the Board of Directors of the Company shall have withdrawn, or
modified or changed in a manner adverse to Parent or Newco its
approval or recommendation of the Offer, this Agreement or the Merger
or shall have recommended a Superior Proposal or shall have executed,
or shall have announced its intention to enter into, an agreement in
principle or definitive agreement relating to an Superior Proposal
with a person or entity other than Parent, Newco or their affiliates
(or the Board of Directors of the Company resolves to do any of the
foregoing); (c) any person or group (as defined in Section 13(d)(3) of
the Exchange Act) (other than Parent, Newco or any affiliate thereof)
shall have become, after the date of this Agreement, the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of
a majority of the outstanding Shares, or (d) any representation or
warranty made by Parent or Newco in this Agreement shall not have been
true and correct in all material respects when made, or
43
Parent or Newco shall have failed to observe or perform in any material
respect any of its material obligations under this Agreement; provided
that prior to exercising such right of termination, the Company shall
give prompt written notice to Parent of such misrepresentation or breach
of warranty or failure to observe or perform; provided, further, that
the Company shall not have such right of termination if the condition
resulting in such misrepresentation or breach of warranty or failure to
observe or perform is cured (i) in the event such notice is delivered on
or prior to the fourth business day prior to the then-scheduled
expiration date of the Offer, not later than the earlier of (A) such
expiration date and (B) ten business days following delivery of such
notice and (ii) in the event such notice is delivered on or after the
third business day prior to such expiration date, not later than three
business days following such delivery (it being agreed that in such
event the Offer shall be extended as necessary at least until the end of
such cure period); or
(ii) if Parent or Newco shall have terminated the
Offer, or the Offer shall have expired, without Parent or Newco, as
the case may be, purchasing any shares of Company Common Stock
pursuant thereto; provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(ii) if the Company is in
material breach of this Agreement; or
(iii) if Parent, Newco or any of their affiliates
shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(iii) if the Company is in material
breach of this Agreement.
(d) By Parent or Newco:
(i) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to satisfy any
44
of the conditions set forth in Annex A hereto, Parent, Newco, or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement
of the Offer; provided that Parent may not terminate this Agreement
pursuant to this Section 7.1(d)(i) if Parent or Newco is in material
breach of this Agreement; or
(ii) prior to the purchase of shares of Company Common
Stock pursuant to the Offer, if (a) the Company shall have received
any Alternative Proposal which the Board of Directors of the Company
has determined is a Superior Proposal; (b) the Board of Directors of
the Company shall have withdrawn, or modified or changed in a manner
adverse to Parent or Newco its approval or recommendation of the
Offer, this Agreement or the Merger or shall have recommended an
Alternative Proposal or shall have executed, or shall have announced
its intention to enter into, an agreement in principle or definitive
agreement relating to an Alternative Proposal with a person or entity
other than Parent, Newco or their affiliates (or the Board of
Directors of the Company resolves to do any of the foregoing); (c) any
person or group (as defined in Section 13(d)(3) of the Exchange Act)
(other than Parent, Newco or any affiliate thereof) shall have become,
after the date of this Agreement, the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of more than one-third
of the outstanding Shares, or (d) any representation or warranty made
by the Company in this Agreement shall not have been true and correct
in all material respects when made, or the Company shall have failed
to observe or perform in any material respect any of its material
obligations under this Agreement; provided that prior to exercising
such right of termination, Parent and Newco shall give prompt written
notice to the Company of such misrepresentation or breach of warranty
or failure to observe or perform; provided, further, that Parent and
Newco shall not have such right of termination if the condition
45
resulting in such misrepresentation or breach of warranty or failure to
observe or perform is cured (i) in the event such notice is delivered on
or prior to the fourth business day prior to the then-scheduled
expiration date of the Offer, not later than the earlier of (A) such
expiration date and (B) ten business days following delivery of such
notice and (ii) in the event such notice is delivered on or after the
third business day prior to such expiration date, not later than three
business days following such delivery (it being agreed that in such
event the Offer shall be extended as necessary at least until the end of
such cure period).
7.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part
of Parent, Newco or the Company or their respective directors, officers,
employees, representatives, agents, advisors or shareholders other than the
obligations pursuant to this Section 7.2, except that the agreements
contained in Sections 8.1, 8.2, 8.3, 8.4, 8.6, 8.7, 8.8, 8.12, 8.14, 8.15,
8.16 and the last sentence of Section 5.5 shall survive the termination
hereof, provided, however, that if Parent or Newco terminates this Agreement
pursuant to Section 7.1(d)(ii)(a), (b) and (c) hereof, then immediately
following such termination the Company shall pay to Parent $10,000,000 in
full satisfaction of the obligations of the Company under this Agreement.
Nothing contained in this Section 7.2 shall relieve any party from liability
for fraud or for willful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Payment of Expenses and Other Payments. Whether or not the
Merger shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and
the consummation of the transactions contemplated hereby.
46
8.2 Survival of Representations and Warranties; Survival of
Confidentiality Agreement. The representations and warranties made herein
shall not survive beyond the earlier of termination of this Agreement or the
Effective Time. This Section 8.2 shall not limit any covenant or agreement
of the parties hereto which by its terms contemplates performance after the
Effective Time. The Confidentiality Agreement shall survive any termination
of this Agreement, and the provisions of such Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.
8.3 Modification or Amendment. Subject to the applicable
provisions of the MGCL, at any time prior to the Effective Time, the parties
hereto may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties; provided,
however, that after approval of this Agreement by the stockholders of the
Company, no amendment shall be made which reduces or changes the
consideration payable in the Merger or adversely affects the rights of the
Company's stockholders hereunder without the approval of such stockholders.
8.4 Waiver of Conditions. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two 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.
8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of
47
the State of Maryland without giving effect to the principles of conflicts of
law thereof.
8.7 Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the other parties shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile transmission (with a confirming copy sent by
overnight courier), as follows:
(a) If to the Company, to
Waverly, Inc.
351 West Camden Street
Baltimore, Maryland 21117
(410) 528-4000 (telephone)
(410) 528-4414 (telecopier)
with copies to:
Michael P. Rogan
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
(202) 371-7000 (telephone)
(202) 393-5760 (telecopier)
Ariel Vannier
Venable, Baetjer, Howard & Civiletti,
LLP
1201 New York Avenue, N.W.
Suite 1000
Washington, D.C. 20005
(202) 962-4800 (telephone)
(202) 962 8300 (telecopier)
(b) If to Parent or Newco, to
Bruce C. Lenz, Executive Vice
President
Wolters Kluwer United States Inc.
161 North Clark Street
Chicago, IL 60601
(312) 425-7020 (telephone)
(312) 425-0233 (telecopier)
48
with a copy to:
Arnold J. Schaab, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
(212) 326-0168 (telephone)
(212) 326-0806 (telecopier)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
8.8 Entire Agreement; Assignment. This Agreement and the
Confidentiality Agreement (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, among the parties
or any of them with respect to the subject matter hereof and (b) shall not be
assigned by operation of law or otherwise without the prior written consent
of the other parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and assigns.
8.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns. Nothing in this Agreement, express or implied, other
than the right to receive the consideration payable in the Merger pursuant to
Article II hereof, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement; provided, however, that the provisions of Sections 5.7 shall
inure to the benefit of the Company Indemnified Parties and the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Newco,
the Company and the Surviving Corporation and shall be enforceable by the
Company Indemnified Parties and the Indemnified Parties, as the case may be,
after the Effective Time.
8.10 Certain Definitions. As used herein:
(a) "Alternative Proposal" shall mean any proposal or offer
for a merger, asset acquisition or other
49
business combination involving the Company or any proposal or offer to
acquire a significant equity interest in, or a significant portion of the
assets of, the Company other than the transactions contemplated by this
Agreement.
(b) "Company Material Adverse Effect" shall mean any adverse
change in the assets, liabilities, financial condition, or results of
operations of the Company or any of its Subsidiaries which is material to the
Company and its Subsidiaries taken as a whole other than any change or effect
arising out of general economic conditions.
(c) "Parent Material Adverse Effect" shall mean any material
adverse change in the assets, liabilities, financial condition, or results of
operations of Parent or any of its Subsidiaries which is material to Parent
and its Subsidiaries taken as a whole other than any change or effect arising
out of general economic conditions.
(d) "Subsidiary" shall mean, when used with reference to any
entity, any corporation a majority of the outstanding voting securities of
which are owned directly or indirectly by such entity.
(e) "Superior Proposal" means any bona fide proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the Shares then outstanding or all or substantially all
the assets of the Company, and otherwise on terms which the Board of
Directors of the Company determines in good faith to be more favorable to the
Company and its shareholders than the Offer and the Merger (after
consultation with the Company's financial advisor).
8.11 Obligation of Parent. Whenever this Agreement requires Newco
to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Newco to take such action and a
guarantee of the performance thereof.
8.12 Validity. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
50
of this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party.
8.13 Interpretation. The words "hereof", "herein", and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, paragraph, exhibit and schedule
references are to the articles, sections, paragraphs, exhibits and schedules
of this Agreement unless otherwise specified. Whenever the words "include",
"includes" or "including" are used in this Agreement they shall be deemed to
be followed by the words "without limitation". The words describing the
singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons shall
include corporations and partnerships and vice versa. The phrase "to the
best knowledge of" or any similar phrase shall mean such facts and other
information which as of the date of this Agreement are actually known (or
after reasonable inquiry would have been known) to (i) in the case of the
Company, any officer of the Company; and (ii) in the case of Parent or Newco,
any of their respective officers. The phrase "made available" in this
Agreement shall mean that the information referred to has been made available
if requested by the party to whom such information is to be made available.
The phrases "the date of this Agreement", "the date hereof", and terms of
similar import, unless the context otherwise requires, shall be deemed to
refer to February 10, 1998. As used in this Agreement, the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act. No presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Agreement.
8.14 Captions. The Article, Section and paragraph captions herein
are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
8.15 Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any
51
breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (b)
shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this
Agreement in any action instituted in a court of competent jurisdiction.
8.16 Joint and Several Liability. Parent and Newco hereby agree
that they will be jointly and severally liable for all covenants, agreements,
obligations and representations and warranties made by either of them in this
Agreement.
8.17 Schedules. The Company Disclosure Schedule and the Parent
Disclosure Schedule shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim
herein. No such disclosure shall be deemed to be an admission or
representation as to the materiality of the item so disclosed.
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized officers as of the date
first above written.
Attest: WAVERLY, INC.
[seal]
By: /s/ William M. Passano, Jr.
---------------------------------
Name: William M. Passano, Jr.
Title: Chairman
Attest: WOLTERS KLUWER U.S. CORPORATION
[seal]
By: /s/ Peter W. van Wel
---------------------------------
Name: Peter W. van Wel
Title: President
Attest: MP ACQUISITION CORP.
[seal]
By: /s/ Bruce C. Lenz
---------------------------------
Name: Bruce C. Lenz
Title: Vice President
53
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the meanings
ascribed to them in the Agreement and Plan of Merger to which it is attached,
except that the term "Merger Agreement" shall be deemed to refer to such
Agreement and Plan of Merger.
Notwithstanding any other provisions of the Offer, and in addition
to (and not in limitation of) Newco's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), Newco shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
under the Exchange Act (relating to Newco's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay
for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer if (i) any applicable waiting period under the HSR Act or
the antitrust laws of applicable jurisdictions outside the United States has
not expired or terminated prior to the expiration of the Offer, (ii) the
Minimum Condition has not been satisfied, (iii) at any time on or after the
date hereof, and before the expiration of the Offer any of the following
conditions exist:
(a) there shall be any statute, rule, regulation, judgment,
order or injunction promulgated, entered, enforced, enacted, issued or
applicable to the Offer or the Merger by any governmental entity of competent
jurisdiction in the United States or other country in which the Company or
Parent directly or indirectly has material assets or operations which (l)
seeks to prohibit the consummation of the Offer or the Merger, (2) as a
result of the Offer or the Merger, seeks to restrain or prohibit, or impose
any material limitations on, Parent's or Newco's ownership or operation of
all or a material portion of the businesses or assets of the Company and its
Subsidiaries, taken as a whole, or of Parent and its subsidiaries, taken as a
whole, or compel Parent or any of its subsidiaries or affiliates to dispose
of or hold
A-1
separate all or any material portion of the business or assets of the Company
and its Subsidiaries, taken as a whole, or of Parent and its subsidiaries,
taken as a whole or requires the Company, Parent or Newco to pay damages that
are material in relation to the Company and its Subsidiaries, taken as a
whole, (3) seeks to challenge, prohibit, or make illegal the acceptance for
payment, payment for or purchase of Shares pursuant to, or consummation of,
the Offer or the Merger, (4) seeks to impose material limitations on the
ability of Newco or Parent effectively to exercise full rights of ownership
of the Shares accepted for payment pursuant to the Offer, including, without
limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's shareholders (5) seeks to require
divestiture by Parent or any of its Subsidiaries or affiliates of any Shares,
provided that Parent shall have used all reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
(b) there shall be threatened, instituted or pending any
action, suit, or proceeding by any governmental entity of competent
jurisdiction in the United States, or any other country in which the Company
or Parent directly or indirectly has material assets or operations, that is
reasonably likely, directly or indirectly, to result in any of the
consequences referred to in clauses (1) through (5) of paragraph (a) above;
(c) there has been since the date hereof any event,
occurrence or development or state of circumstances or facts which has had or
would reasonably be expected to have a Company Material Adverse Effect (as
defined in Section 8.10);
(d) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate as of the date
of consummation of the Offer as though made on or as of such date or the
Company shall have breached or failed in any material respect to perform or
comply with any material obligation, agreement or covenant required by the
Merger Agreement to be performed or complied with by it except, (i) those
representations and warranties that address matters only as of a particular
date or only with respect to a specified period of time which need only be
true and accurate as of such date or with respect to such period or (ii)
A-2
where the failure of such representations and warranties to be true and
accurate, or the breach, non-performance or non-compliance with such
obligations, agreements or covenants, do not have, individually or in the
aggregate, or would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in
accordance with its terms;
(f) the Company shall have entered into a definitive
agreement or agreement in principle with any person with respect to an
Alternative Proposal;
(g) the Company's Board of Directors shall have withdrawn,
or modified or changed in a manner adverse to Parent or Newco (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, or recommended an Alternative Proposal, or shall
have resolved to do any of the foregoing;
which in the sole judgment of Parent or Newco, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payments.
The foregoing conditions are for the sole benefit of Newco and
Parent and may be waived by Parent or Newco, in whole or in part at any time
and from time to time in the sole discretion of Parent or Newco.
A-3
Agreement and Plan of Merger - Wolters Kluwer U.S. Corp. and Waverly Inc.
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