Exhibit 99.2
================================================================================
LIQUENT, INC.,
INFORMATION HOLDINGS INC.
and
FLUID ACQUISITION CORP.
------------------------------
AGREEMENT AND PLAN OF MERGER
------------------------------
------------------------------
Dated as of November 13, 2001
------------------------------
================================================================================
TABLE OF CONTENTS
Page No.
--------
ARTICLE I.
THE TENDER OFFER..................................................2
SECTION 1.1. The Offer..............................................2
SECTION 1.2. Company Action.........................................3
SECTION 1.3. Directors..............................................4
ARTICLE II.
THE MERGER........................................................5
SECTION 2.1. The Merger.............................................5
SECTION 2.2. Effective Time.........................................6
SECTION 2.3. Effect of the Merger...................................6
SECTION 2.4. Subsequent Actions.....................................6
SECTION 2.5. Certificate of Incorporation; By-Laws;
Directors and Officers...............................6
SECTION 2.6. Conversion of Securities...............................7
SECTION 2.7. Dissenting Shares......................................7
SECTION 2.8. Surrender of Shares; Stock Transfer Books..............8
SECTION 2.9. Stock Plans............................................9
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND PURCHASER.......10
SECTION 3.1. Corporate Organization................................10
SECTION 3.2. Authority Relative to this Agreement..................10
SECTION 3.3. No Conflict; Required Filings and Consents............10
SECTION 3.4. Financing Arrangements................................11
SECTION 3.5. No Prior Activities...................................11
SECTION 3.6. Brokers...............................................11
SECTION 3.7. Offer Documents; Proxy Statement......................11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................12
SECTION 4.1. Organization and Qualification; Subsidiaries..........12
SECTION 4.2. Capitalization........................................12
SECTION 4.3. Authority Relative to this Agreement..................14
SECTION 4.4. No Conflict; Required Filings and Consents............14
SECTION 4.5. SEC Filings; Financial Statements.....................14
SECTION 4.6. Absence of Certain Changes or Events..................15
SECTION 4.7. Litigation............................................16
(i)
SECTION 4.8. Employee Benefit Plans................................16
SECTION 4.9. Properties............................................19
SECTION 4.10. Intellectual Property.................................20
SECTION 4.11. Insurance.............................................21
SECTION 4.12. Environmental.........................................22
SECTION 4.13. Governmental Authorizations and Regulations...........23
SECTION 4.14. Material Contracts....................................24
SECTION 4.15. Conduct of Business...................................25
SECTION 4.16. Taxes.................................................25
SECTION 4.17. Labor Relations.......................................27
SECTION 4.18. Transactions with Affiliates..........................28
SECTION 4.19. Offer Documents; Proxy Statement......................28
SECTION 4.20. Brokers...............................................29
SECTION 4.21. Control Share Acquisition.............................29
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER...........................29
SECTION 5.1. Conduct of Business by the Company Pending
the Closing.........................................29
SECTION 5.2. No Solicitation.......................................31
ARTICLE VI.
ADDITIONAL AGREEMENTS............................................34
SECTION 6.1. Proxy Statement.......................................34
SECTION 6.2. Meeting of Stockholders of the Company................34
SECTION 6.3. Compliance with Law...................................35
SECTION 6.4. Notification of Certain Matters.......................35
SECTION 6.5. Access to Information.................................35
SECTION 6.6. Public Announcements..................................35
SECTION 6.7. Reasonable Best Efforts; Cooperation..................35
SECTION 6.8. Agreement to Defend and Indemnify.....................36
SECTION 6.9. State Takeover Laws...................................37
SECTION 6.10. Employee Matters......................................37
SECTION 6.11. Parent Undertaking....................................37
ARTICLE VII.
CONDITIONS OF MERGER.............................................38
SECTION 7.1. Conditions for Each Party's Obligations to Effect
the Merger..........................................38
SECTION 7.2. Conditions for Obligations of Parent and Purchaser....38
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER................................39
SECTION 8.1. Termination...........................................39
SECTION 8.2. Effect ofTermination..................................41
(ii)
ARTICLE IX.
GENERAL PROVISIONS...............................................41
SECTION 9.1. Non-Survival of Representations, Warranties and
Agreements..........................................41
SECTION 9.2. Notices...............................................41
SECTION 9.3. Expenses..............................................42
SECTION 9.4. Certain Definitions...................................42
SECTION 9.5. Headings..............................................43
SECTION 9.6. Severability..........................................43
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries........43
SECTION 9.8. Assignment............................................43
SECTION 9.9. Governing Law.........................................43
SECTION 9.10. Amendment.............................................43
SECTION 9.11. Waiver................................................44
SECTION 9.12. Counterparts..........................................44
(iii)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 13, 2001 (the
"Agreement"), among Liquent, Inc., a Delaware corporation (the "Company"),
Information Holding Inc., a Delaware corporation ("Parent"), and Fluid
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of the Company and Purchaser have each
determined that it is in the best interests of their respective stockholders for
Purchaser to acquire the Company upon the terms and subject to the conditions
set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser will make
a cash tender offer (the "Offer") to acquire all shares (the "Shares") of the
issued and outstanding common stock, $.001 par value, of the Company (the
"Company Common Stock") for $2.27 per share of Company Common Stock or such
higher price as may be paid in the Offer (the "Per Share Amount"), net to the
seller in cash; and
WHEREAS, also in furtherance of such acquisition, the Boards of Directors
of the Company, Purchaser and Parent have each approved the merger of Purchaser
with and into the Company (the "Merger") following the Offer in accordance with
the Delaware General Corporation Law (the "Delaware Code") and upon the terms
and subject to the conditions set forth herein; and
WHEREAS, as an inducement and a condition to Parent's and Purchaser's
entering into this Agreement, contemporaneously with the execution and delivery
of this Agreement, certain stockholders of the Company have entered into a
Stockholders Agreement with Parent and Purchaser (the "Stockholders Agreement"),
pursuant to which each such stockholder has, among other things, agreed to
tender its Shares in the Offer, granted to Parent a proxy with respect to the
voting of such Shares and granted to Parent an option to purchase such Shares,
in each case upon the terms and subject to the conditions set forth in the
Stockholders Agreement; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has approved this Agreement and has determined that the consideration to be paid
for each Share in the Offer and the Merger is fair to the holders of such Shares
and has recommended that the holders of such Shares accept the Offer and approve
this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Purchaser hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
hereto shall have occurred and be existing, Purchaser or a direct or indirect
subsidiary of Parent as designated by Parent shall commence (within the meaning
of Rule 14d-2 under the Securities Exchange Act of 1934 (the "Exchange Act"))
the Offer as promptly as reasonably practicable following the execution of this
Agreement, but in no event later than ten business days after the public
announcement of the execution of this Agreement. The obligation of Purchaser to
accept for payment any Shares tendered shall be subject to the satisfaction of
those conditions set forth in Annex I. Parent expressly reserves the right from
time to time, subject to Sections 1(b) and 1(d) hereof, to waive any such
condition, to increase the Per Share Amount, or to make any other changes in the
terms and conditions of the Offer. The Per Share Amount shall be net to the
seller in cash, subject to reduction only for any applicable federal back-up
withholding or stock transfer taxes payable by the seller. The Company agrees
that no Shares held by the Company or any of its Subsidiaries (as hereinafter
defined) will be tendered pursuant to the Offer.
(b) Without the prior written consent of the Company, Parent shall not
(i) decrease the Per Share Amount or change the form of consideration payable in
the Offer, (ii) decrease the number of Shares sought, (iii) amend or waive
satisfaction of the Minimum Condition (as defined in Annex I) or (iv) impose
additional conditions to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares. Upon the terms and subject to the
conditions of the Offer, Purchaser will, and Parent will cause it to, accept for
payment and purchase, as soon as permitted after expiration of the Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the Offer.
(c) The Offer shall be made by means of an offer to purchase (the "Offer
to Purchase") having only the conditions set forth in Annex I hereto. As soon as
practicable on the date the Offer is commenced, Parent and Purchaser shall file
with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule TO (together with all amendments and supplements thereto, the
"Schedule TO") with respect to the Offer that will comply in all material
respects with the provisions of such Schedule TO and all applicable federal
securities laws, and will contain (including as an exhibit) or incorporate by
reference the Offer to Purchase and forms of the related letter of transmittal
and other ancillary Offer documents pursuant to which the Offer will be made
(which documents, together with any supplements or amendments thereto, are
referred to collectively herein as the "Offer Documents"). Parent and Purchaser
agree promptly to correct the Schedule TO or the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect
(and the Company, with respect to written information supplied by it
specifically for use in the Schedule TO or the Offer Documents, shall promptly
notify Parent of any required corrections of such information and shall
cooperate with Parent and Purchaser with respect to correcting such information)
and to supplement the information provided by it specifically for use in the
Schedule TO or the Offer Documents to include any information that shall become
-2-
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule TO, as so corrected or
supplemented, to be filed with the SEC and the Offer Documents, as so corrected
or supplemented, 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 and comment on any
Offer Documents before they are filed with the SEC. In addition, Parent and
Purchaser agree to use reasonable efforts to provide the Company and its counsel
with any comments, whether written or oral, that Parent or Purchaser or either
of their counsel may receive from time to time from the SEC or its staff with
respect to the Schedule TO promptly after receipt of such comments and to
consult with the Company and its counsel prior to responding to such comments.
(d) The Offer to Purchase shall provide for an initial expiration date of
20 business days (as defined in Rule 14d-1 under the Exchange Act) from the date
of commencement. Purchaser agrees that it shall not terminate or withdraw the
Offer or extend the expiration date of the Offer unless at the expiration date
of the Offer the conditions to the Offer described in Annex I hereto shall not
have been satisfied or earlier waived. If at the expiration date of the Offer,
the conditions to the Offer described in Annex I hereto shall not have been
satisfied or earlier waived, Purchaser may, from time to time extend the
expiration date of the Offer until the date such conditions are satisfied or
earlier waived and Parent becomes obligated to accept for payment and pay for
Shares tendered pursuant to the Offer. Notwithstanding the foregoing, Purchaser
may, without the consent of the Company, (i) extend the expiration date of the
Offer (as it may be extended) for any period required by applicable rules and
regulations of the SEC in connection with an increase in the consideration to be
paid pursuant to the Offer and (ii) extend the expiration date of the Offer (as
it may be extended) for up to ten business days, if on such expiration date the
conditions for the Offer described on Annex I hereto shall have been satisfied
or earlier waived, but the number of Shares that have been validly tendered and
not withdrawn represents less than ninety percent (90%) of the then issued and
outstanding Shares on a fully diluted basis. If any of the conditions to the
Offer are not satisfied or waived on any scheduled expiration date of the Offer,
Purchaser shall extend the Offer, if such condition or conditions could
reasonably be expected to be satisfied, from time to time until the earlier of
(i) the date such conditions are satisfied or waived and (ii) the 60th day after
the commencement of the Offer.
SECTION 1.2. COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors, at a meeting duly called
and held on November 13, 2001, at which all of the Directors were present,
unanimously: (i) approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer, the Merger and Parent's acquisition of
Shares pursuant to the Stockholders Agreement; (ii) recommended that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; (iii) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the stockholders of the Company; and (iv) took all action
necessary to render the limitations on business combinations contained in
Section 203 of the Delaware Code inapplicable to this Agreement, the
Stockholders Agreement and the
-3-
transactions contemplated hereby and thereby. The Company further represents and
warrants that Alliant Partners ("Alliant"), as financial advisor to the Board of
Directors, delivered to the Board of Directors a written opinion, dated as of
November 13, 2001, to the effect that the Per Share Amount to be received by the
stockholders (other than Parent and Purchaser) of the Company pursuant to the
Offer and the Merger is fair to such stockholders from a financial point of
view.
(b) The Company hereby agrees to file with the SEC, as promptly as
practicable after the filing by Parent and Purchaser of the Schedule TO with
respect to the Offer, a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") that (i) will comply in all material respects with the
provisions of all applicable federal securities laws and (ii) will include the
opinion of Alliant referred to in Section 1.2(a) hereof. The Company agrees to
mail such Schedule 14D-9 to the stockholders of the Company along with the Offer
Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendation of the Board of Directors described in Section 1.2(a) hereof. The
Company agrees promptly to correct the Schedule 14D-9 if and to the extent that
it shall become false or misleading in any material respect (and each of Parent
and Purchaser, with respect to written information supplied by it specifically
for use in the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and the Company shall take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the Company's stockholders to the extent required by applicable
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent with mailing labels containing the
names and addresses of all record holders of Shares, non-objecting beneficial
owners lists and security position listings of Shares held in stock
depositories, each as of a recent date, and shall promptly furnish Parent with
such additional information, including updated lists of stockholders, mailing
labels and security position listings, and such other information and assistance
as Parent or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Shares. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents reasonably necessary to
consummate the Offer or the Merger, Parent and Purchaser shall hold in
confidence the information held in such labels and listings, shall use such
information solely in connection with the Offer and the Merger, and if this
Agreement is terminated or if the Offer is otherwise terminated, shall promptly
destroy or cause to be destroyed or deliver or cause to be delivered to the
Company all copies of such information then in their possession or in the
possession of their agents or representatives.
SECTION 1.3. DIRECTORS. Promptly upon the purchase by Purchaser of any
Shares pursuant to the Offer, and from time to time thereafter as Shares are
acquired by Purchaser, Parent shall be entitled to designate such number of
directors, rounded up to the next
-4-
whole number, on the Board of Directors as will give Parent, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors equal to at least that number of directors which equals the product
of the total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent or any affiliate of
Parent (including for purposes of this Section 1.3 such Shares as are accepted
for payment pursuant to the Offer, but excluding Shares held by the Company or
any of its Subsidiaries) bears to the number of Shares outstanding. At each such
time, the Company will also cause (i) each committee of the Board of Directors,
(ii) if requested by Parent, the board of directors of each of the Subsidiaries
and (iii) if requested by Parent, each committee of such board to include
persons designated by Parent constituting the same percentage of each such
committee or board as Parent's designees constitute on the Board of Directors.
The Company shall, upon request by Parent, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3 and shall cause Parent's designees to be so elected; PROVIDED, HOWEVER,
that, in the event that Parent's designees are appointed or elected to the Board
of Directors, until the Effective Time (as defined in Section 2.2 hereof) the
Board of Directors shall have at least one director who is a director on the
date hereof and who is not an officer of the Company and is not a designee,
stockholder, affiliate or associate (within the meaning of the federal
securities laws) of Parent (one or more of such directors, the "Independent
Directors"); PROVIDED, FURTHER, that if no Independent Directors remain, the
other directors shall designate one person to fill one of the vacancies who
shall be neither an officer of the Company nor a designee, stockholder,
affiliate or associate of Parent, and such person shall be deemed to be an
Independent Director for purposes of this Agreement. Subject to applicable law,
the Company shall promptly take all action necessary pursuant to Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill
its obligations under this Section 1.3 and shall include in the Schedule 14D-9
mailed to stockholders promptly after the commencement of the Offer (or an
amendment thereof or an information statement pursuant to Rule 14f-1 if Parent
has not theretofore designated directors) such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.3. Parent
will supply the Company and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to
the contrary, following the time directors designated by Parent constitute a
majority of the Board of Directors and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate this Agreement on behalf of the Company, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Parent's obligations hereunder or (iv) take any other action
by the Company in connection with this Agreement required to be taken by the
Board of Directors.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER. At the Effective Time (as defined in Section
2.2) and subject to and upon the terms and conditions of this Agreement and the
Delaware Code,
-5-
Purchaser shall be merged with and into the Company, the separate corporate
existence of Purchaser shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the Merger
hereinafter sometimes is referred to as the "Surviving Corporation."
SECTION 2.2. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger, in accordance with Section 251 of the Delaware Code, with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the Delaware Code (the time of such
filing being the "Effective Time").
SECTION 2.3. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the Delaware
Code. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4. SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2.5. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS.
(a) Unless otherwise determined by Parent before the Effective Time, at
the Effective Time the Certificate of Incorporation of Purchaser, as in effect
immediately before the Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation.
(b) The By-Laws of Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately before the Effective Time will
be the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time will be the initial officers of
the Surviving Corporation, in each case
-6-
until their successors are elected or appointed and qualified. If, at the
Effective Time, a vacancy shall exist on the Board of Directors or in any office
of the Surviving Corporation, such vacancy may thereafter be filled in the
manner provided by law.
SECTION 2.6. CONVERSION OF SECURITIES. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding immediately
before the Effective Time (other than any Shares to be canceled pursuant to
Section 2.6(b) and any Dissenting Shares (as defined in Section 2.7(a)) shall be
canceled and extinguished and be converted into the right to receive the Per
Share Amount in cash payable to the holder thereof, without interest, upon
surrender of the certificate representing such Share. Each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Per Share Amount, without
interest, upon the surrender of such certificate in accordance with Section 2.8
hereof.
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately before the Effective Time
shall be canceled and extinguished and no payment or other consideration shall
be made with respect thereto.
(c) Each share of common stock, $.00l par value, of Purchaser issued and
outstanding immediately before the Effective Time shall thereafter represent one
validly issued, fully paid and nonassessable share of common stock, $.00l par
value, of the Surviving Corporation.
SECTION 2.7. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
Shares that are outstanding immediately prior to the Effective Time and that are
held by any stockholder who has delivered to the Company, prior to the vote of
stockholders, if any, required by Section 6.2 hereof, a written notice in
accordance with Section 262 of the Delaware Code of such stockholder's intent to
demand payment for such stockholder's Shares if the Merger is effected and who
shall have not voted such Shares in favor of the approval and adoption of this
Agreement (collectively, the "Dissenting Shares") shall not be converted into
the right to receive cash pursuant to Section 2.6, but the holders of such
Dissenting Shares shall be entitled to payment of the fair value of such
dissenting shares in accordance with the provisions of Section 262 of the
Delaware Code; PROVIDED, HOWEVER, that if such stockholder shall waive such
stockholder's right to demand and obtain payment under Section 262 of the
Delaware Code or a court of competent jurisdiction shall determine that such
stockholder is not entitled to the relief provided by said section, then the
right of such holder of Dissenting Shares to be paid the fair value of such
stockholders Dissenting Shares shall cease and such Dissenting Shares shall
thereupon be deemed to have been converted into, as of the Effective Time, the
right to receive cash pursuant to Section 2.6(a) hereof, without any interest
thereon, upon surrender of the certificate or certificates representing such
Shares.
-7-
(b) The Company shall give Parent (i) prompt notice of any notice or
other instruments received by the Company pursuant to Section 262 of the
Delaware Code and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment for Dissenting Shares. The
Company shall not voluntarily offer to make or make any payment with respect to
any demands for payment for Dissenting Shares and shall not, except with the
prior written consent of Parent, settle or offer to settle any such demands.
(c) Dissenting Shares, if any, shall be canceled after payments of fair
value in respect thereto have been made to dissenting stockholders of the
Company pursuant to the Delaware Code.
SECTION 2.8. SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, the Company shall designate a bank or
trust company to act as agent for the holders of Shares (the "Exchange Agent")
to receive the funds necessary to make the payments contemplated by Section 2.6.
Parent shall, from time to time, deposit, or cause to be deposited, in trust
with the Exchange Agent for the benefit of holders of Shares funds in amounts
and at times necessary for the payments under Section 2.8(b) to which such
holders shall be entitled at the Effective Time pursuant to Section 2.6. Such
funds shall be invested by the Exchange Agent as directed by Parent. Any net
profits resulting from, or interest or income produced by, such investments
shall be payable as directed by Parent.
(b) Each holder of a certificate or certificates representing any Shares
canceled upon the Merger pursuant to Section 2.6(a) may thereafter surrender
such certificate or certificates to the Exchange Agent, as agent for such
holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time.
Purchaser agrees that promptly after the Effective Time it shall cause the
distribution to holders of record of Shares as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares and certificates representing Shares
held by Parent or in the treasury of the Company) shall represent solely the
right to receive the aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made to a
Person other than the Person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument 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 such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company shall
be closed and there shall not be any further registration of transfers of shares
of any shares of capital
-8-
stock thereafter on the records of the Company. If, after the Effective Time,
certificates for Shares are presented to the Surviving Corporation, they shall
be canceled and exchanged for cash as provided in Section 2.6(a). No interest
shall accrue or be paid on any cash payable upon the surrender of a certificate
or certificates which immediately before the Effective Time represented
outstanding Shares.
(e) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to Parent all cash, certificates and
other documents in its possession relating to the transactions contemplated
hereby, and the Exchange Agent's duties shall terminate. Thereafter, each holder
of a certificate representing Shares (other than certificates representing
Dissenting Shares and certificates representing Shares held by Parent or in the
treasury of the Company) may surrender such certificate to Parent and (subject
to applicable abandoned property, escheat and similar laws) receive in
consideration thereof the aggregate Per Share Amount relating thereto, without
any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to the holder of
Shares in cash, subject to reduction only for any applicable Federal back-up
withholding or, as set forth in Section 2.8(c), stock transfer taxes payable by
such holder.
SECTION 2.9. STOCK PLANS.
(a) The Company shall take all actions necessary to provide that, upon
consummation of the Merger, (i) each then outstanding option to purchase shares
of Company Common Stock granted under any of the Company's stock option plans
referred to in Section 4.2, each as amended (collectively, the "Option Plans),
and any and all other outstanding options, stock warrants and stock rights,
whether or not granted pursuant to such Option Plans, whether or not then
exercisable or vested (the "Options"), shall be canceled and shall be of no
further force or effect; PROVIDED, HOWEVER, that with respect to any Options as
to which the Per Share Amount exceeds the applicable per share exercise price,
Parent shall promptly following the Effective Time pay (or cause to be paid) to
the holders of such Options an amount in cash equal to, with respect to each
such Option, the product of (1) the amount by which (x) the Per Share Amount
exceeds (y) the applicable per share exercise price, and (2) the number of
shares subject to the Option at the time of such cancellation. Such amount shall
be subject to reduction by applicable tax withholding.
(b) Except as provided herein or as otherwise agreed to by the parties,
the Company shall cause the Option Plans to terminate as of the Effective Time
and the provisions in any other plan, program or arrangement, providing for the
issuance or grant by the Company or any of its subsidiaries of any interest in
respect of the capital stock of the Company or any of its Subsidiaries shall be
terminated as of the Effective Time.
(c) Except as set forth in Schedule 2.9(c), the Company represents and
warrants that all the Option Plans provide that the Company can take the actions
described in this Section 2.9 without obtaining the consent of any holders of
Options.
-9-
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
SECTION 3.1. CORPORATE ORGANIZATION. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and any necessary governmental authority and approvals to own,
operate or lease the properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted.
SECTION 3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Parent and Purchaser
have the necessary corporate power and authority to enter into this Agreement
and to carry out their obligations hereunder. The execution and delivery of this
Agreement by Parent and Purchaser and the consummation by Parent and Purchaser
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Purchaser and no other
corporate proceeding is necessary for the execution and delivery of this
Agreement by Parent or Purchaser, the performance by Parent or Purchaser of
their respective obligations hereunder and the consummation by Parent or
Purchaser of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Purchaser and constitutes a legal, valid
and binding obligation of each such corporation, enforceable against each of
them in accordance with its terms.
SECTION 3.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Purchaser
do not, and the performance of this Agreement by Parent and Purchaser will not,
(i) assuming that all waivers, consents, approvals or authorizations described
in Section 3.3(b) have been obtained and that all notifications and filings
described in Section 3.3(b) have been made, conflict with or violate any law,
regulation, court order, judgment or decree applicable to Parent or Purchaser or
by which any of their property is bound or affected, (ii) violate or conflict
with either the Certificate of Incorporation or By-Laws or other organizational
documents of either Parent or Purchaser, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of Parent or Purchaser pursuant to, any contract,
instrument, permit, license or franchise to which Parent or Purchaser is a party
or by which Parent or Purchaser or any of its property is bound or affected.
(b) Except for (i) applicable requirements, if any, of the Exchange Act
and (ii) the filing and recordation of appropriate merger documents as required
by the Delaware Code, neither Parent nor Purchaser is required to submit any
notice, report or other filing with any federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity"),
in connection with the execution, delivery or performance of this Agreement or
the
-10-
consummation of the transactions contemplated hereby. Except as set forth in
Schedule 3.3, no waiver, consent, approval or authorization of any Governmental
Entity, is required to be obtained or made by either Parent or Purchaser in
connection with its execution, delivery or performance of this Agreement.
SECTION 3.4. FINANCING ARRANGEMENTS. Parent and/or Purchaser have
available funds sufficient in amount to consummate the Offer and the Merger and
the respective transactions contemplated thereby, and to pay related fees and
expenses.
SECTION 3.5. NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. BROKERS. No broker, finder or investment banker (other than
Wachovia Securities) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Parent or Purchaser.
SECTION 3.7. OFFER DOCUMENTS; PROXY STATEMENT. None of the information
supplied by Parent, its officers, directors, representatives, agents or
employees (the "Parent Information"), for inclusion in the Proxy Statement (as
defined in Section 4.18), or in any amendments thereof or supplements thereto,
will, on the date the Proxy Statement is first mailed to stockholders, at the
time of the Company Stockholders' Meeting (as defined in Section 4.18) or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it will be made, will be false or misleading with
respect to any material fact, or will omit to state any material fact necessary
in order to make the statements therein not false or misleading. Neither the
Offer Documents nor any amendments thereof or supplements thereto will, at any
time the Offer Documents or any such amendments or supplements are filed with
the SEC or 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
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
Parent and Purchaser do not make any representation or warranty with respect to
any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents and any amendments or supplements thereto will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
-11-
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (A) Each of
the Company and its Subsidiaries (defined below in Section 4.1(d)) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and any necessary governmental authority and approvals to own,
operate or lease the properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted, and is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed which would
not have a Material Adverse Effect. For purposes of this Agreement, "Material
Adverse Effect" means any change in or effect on the business of the Company or
any of the Subsidiaries that is or is reasonably likely to be, individually or
in the aggregate, materially adverse to the business, operations, properties
(including intangible properties), condition (financial or otherwise), assets or
liabilities of the Company and the Subsidiaries, taken as a whole; provided,
that a Material Adverse Effect shall not include any adverse effect or change
(I) in the economy or financial markets in general or (II) resulting from the
announcement or pendency of this Agreement or the transactions contemplated
hereby.
(b) A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation or organization of each Subsidiary, the
jurisdictions in which each Subsidiary is licensed or qualified to do business
and the percentage of each Subsidiary's outstanding capital stock or other
equity interests owned by the Company or another Subsidiary, is set forth in
Schedule 4.1 hereto.
(c) For purposes of this Agreement, "Subsidiary" means any corporation or
other legal entity of which the Company (either alone or through or together
with any other Subsidiary) (i) owns, directly or indirectly, more than 50% of
the stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity, or (ii) in the case of partnerships,
serves as a general partner, or (iii) in the case of a limited liability
company, serves as managing member or owns a majority of the equity interests or
(iv) otherwise has the ability to elect a majority of the directors, trustees or
managing members thereof.
SECTION 4.2. CAPITALIZATION. (A) The authorized capital stock of the
Company consists of: (i) 50,000,000 shares of Company Common Stock and (ii)
6,000,000 shares of preferred stock, $.001 par value per share (the "Company
Preferred Stock"). As of the date hereof, (A) 17,988,695 shares of Company
Common Stock were issued and outstanding, all of which were duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights, (B) no shares of Company Preferred Stock were issued and outstanding,
(C) 10,380,170 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding Options under the Company's 1995 Stock Incentive
Plan and (D) 350,000 shares of
-12-
Company Common Stock were reserved for issuance under the Company's Employee
Stock Purchase Plan. Except as set forth in Schedule 4.2(a) or in this Section
4.2(a): (x) there are no other options, calls, warrants or rights, agreements,
arrangements or commitments of any character obligating the Company or any of
its Subsidiaries to issue, deliver or sell any shares of capital stock of or
other equity interests in the Company or any of the Subsidiaries; (y) there are
no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote; and
(z) except as set forth in Schedule 4.2(a), there are no stockholders
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting, registration
or disposition of any shares of the capital stock of the Company (including any
such agreements or understandings that may limit in any way the solicitation of
proxies by or on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to the Merger) or granting to any
person or group of persons the right to elect, or to designate or nominate for
election, a director to the Board of Directors. Except as set forth in Schedule
4.2(a), there are no programs in place or outstanding contractual obligations of
the Company or any of the Subsidiaries (1) to repurchase, redeem otherwise
acquire any shares of capital stock of the Company or (2) to vote or to dispose
of any shares of the capital stock of any of the Subsidiaries.
(b) All the outstanding capital stock of each of the Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights and, except as set forth in Schedule 4.1, is owned by the
Company or a Subsidiary free and clear of any liens, security interests,
pledges, agreements, claims, charges or encumbrances of any nature whatsoever.
There are no existing options, calls, warrants or other rights, agreements
arrangements or commitments of any character relating to the issued or unissued
capital stock or other equity interests or securities of any Subsidiary. Except
for the Subsidiaries and except as set forth in Schedule 4.2(b), the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in any other corporation, partnership, joint venture or other
business association or entity. Except as set forth in Schedule 4.2(b), neither
the Company nor any Subsidiary is under any current or prospective obligation to
make a capital contribution or investment in or loan to, or to assume any
liability or obligation of, any corporation, partnership, joint venture or the
business association or entity.
-13-
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary stockholder approval of the Merger, to carry
out its obligations hereunder. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the Delaware Code. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
The affirmative vote of the holders of a majority of the shares of Company
Common Stock entitled to vote approving this Agreement is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 4.4 hereto, the execution and
delivery of this Agreement by the Company does not, and the performance of such
agreement by the Company will not, (i) assuming that all waivers, consents,
approvals or authorizations described in Section 4.4(b) have been obtained and
that all notifications and filings described in Section 4.4(b) have been made,
conflict with or violate any law, regulation, court order, judgment or decree
applicable to the Company or any of the Subsidiaries or by which its or any of
their property is bound or affected, (ii) violate or conflict with the Second
Amended and Restated Certificate of Incorporation (the "Company Charter") of the
Company or the Second Amended and Restated Bylaws (the "Company By-Laws") of the
Company or equivalent organizational documents of any Subsidiary, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time of both would become a default) under, or result in any, or
give rise to any rights of termination, cancellation or acceleration of any
obligations or any loss of any material benefit under or, result in the creation
of a lien or encumbrance on any of the properties or assets of the Company or
any of the Subsidiaries pursuant to, any Scheduled Contract (as defined in
Section 4.14).
(b) Except for (i) applicable requirements, if any, of the Exchange Act
and (ii) the filing and recordation of appropriate merger or other documents as
required by the Delaware Code, the Company and each of the Subsidiaries are not
required to submit any notice, report or other filing with any Governmental
Entity, in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby. No
waiver, consent, approval or authorization of any Governmental Entity is
required to be obtained or made by the Company in connection with its execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.5. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents (including all
exhibits thereto) required to be filed with the SEC since June 16, 1999, and has
heretofore delivered to Parent, in the form filed with the SEC, its (i) Annual
Report on Form 10-K for the fiscal year ended Xxxxx 00, 0000, (xx) Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2001, (iii) all proxy
statements relating to the Company's meetings of
-14-
stockholders (whether annual or special) held since June 16, 1999 and (iv) all
other reports or registration statements filed by the Company with the SEC since
June 16, 1999 (collectively, the "SEC Reports"). Except as set forth in Schedule
4.5, the SEC Reports (i) at the time filed complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and (ii) did not at
the time they were filed contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. None of the Subsidiaries is required to file any
statements or reports with the SEC pursuant to Sections 13(a) or 15(d) of the
Exchange Act.
(b) The consolidated financial statements contained in the SEC Reports
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly presented the consolidated financial
position of the Company and its Subsidiaries as at the respective dates thereof
and the consolidated results of operations and changes in financial position of
the Company and its Subsidiaries for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments (which in the aggregate are not material in
amount).
(c) Except as (i) set forth in Schedule 4.5(c) or (ii) disclosed in any
SEC Report filed prior to the date of this Agreement, and except for liabilities
and obligations incurred in the ordinary course of business consistent with past
practice since the date of the most recent consolidated balance sheet included
in the SEC Reports filed and publicly available prior to the date of this
Agreement, the Company and the Subsidiaries have no liabilities of any nature
(whether accrued, absolute, contingent or otherwise).
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as expressly
permitted by this Agreement or as set forth in SEC Reports filed prior to the
date of this Agreement or as set forth in Schedule 4.6 hereto, since March 31,
2001 the business of the Company and the Subsidiaries has been conducted in the
ordinary course consistent with past practice and there has not been:
(a) any Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by insurance)
with respect to any of the assets of the Company or any of its Subsidiaries
having a Material Adverse Effect;
(c) any redemption or other acquisition of Company Common Stock by the
Company or any of the Subsidiaries or any declaration or payment of any dividend
or other distribution in cash, stock or property with respect to Company Common
Stock, except for purchases heretofore made pursuant to the terms of the
Company's employee benefit plans;
(d) any change by the Company in accounting methods, principles or
practices;
-15-
(e) any revaluation by the Company of any asset (including, without
limitation, any writing down of the value of inventory or writing off of notes
or accounts receivable), other than in the ordinary course of business
consistent with past practice;
(f) any entry by the Company or any Subsidiary into any commitment or
transaction material to the Company and the Subsidiaries taken as a whole, other
than commitments or transactions entered into in the ordinary course of business
consistent with past practice;
(g) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards) stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any directors, officers or key
employees of the Company or any Subsidiary, except in the ordinary course of
business consistent with past practice;
(h) any entry by the Company or any Subsidiary into any employment,
consulting, severance, termination or indemnification agreement with any
director, officer or key employee of the Company or any Subsidiary;
(i) (i) any settlement or compromise by the Company or any Subsidiary of
any claim, litigation or other legal proceeding, other than in the ordinary
course of business consistent with past practice in an amount not involving more
than $100,000 or (ii) any payment, discharge or satisfaction by the Company or
any Subsidiary of any other claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than (A) in the
ordinary course of business and consistent with past practice or (B) with
respect to any other such claims, liabilities or obligations reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company; or
(j) any agreement, in writing or otherwise, by the Company or any
Subsidiary to take any of the actions described in this Section 4.6, except as
expressly contemplated by this Agreement.
SECTION 4.7. LITIGATION. Except as disclosed in Schedule 4.7 hereto,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, or any properties or rights of the Company or any of its
Subsidiaries, before any Governmental Entity or arbitrator which are reasonably
likely to have a Material Adverse Effect. As of the date hereof, neither the
Company nor any of its Subsidiaries nor any of their property is subject to any
order, judgment, injunction or decree.
SECTION 4.8. EMPLOYEE BENEFIT PLANS.
(a) (i) Schedule 4.8(a) sets forth a list of all "employee benefit
plans", as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and all other employee benefit or executive
compensation arrangements, perquisite programs or payroll practices, including,
without limitation, any such arrangements or payroll
-16-
practices providing severance pay, sick leave, vacation pay, salary continuation
for disability, retirement benefits, deferred compensation, bonus pay, incentive
pay, stock options (including those held by Directors, employees, and
consultants), hospitalization insurance, medical insurance, life insurance,
scholarships or tuition reimbursements, that are maintained by the Company, any
Subsidiary or any entity within the same "controlled group" as the Company or
Subsidiary, within the meaning of Section 4001(a)(14) of ERISA (a "Company ERISA
Affiliate") or to which the Company, any Subsidiary or Company ERISA Affiliate
is obligated to contribute thereunder for current or former employees of the
Company, any Subsidiary or Company ERISA Affiliate (the "Company Employee
Benefit Plans").
(ii) Schedule 4.8(a)(ii) sets forth, with respect to each Option
that is outstanding under the Option Plans as of the date hereof, the
name of the holder of such Option, the number of shares of Company Common
Stock subject to such Option and the exercise price per share of such
Option.
(iii) The representations set forth in subsections (b) through (h)
below apply to the Company Employee Benefit Plans maintained for
employees resident in the United States.
(b) Except as set forth in Schedule 4.8(b), none of the Company Employee
Benefit Plans is a "multiemployer plan", as defined in Section 4001(a)(3) of
ERISA (the "Company Multiemployer Plan"). Neither the Company, any Subsidiary
nor any Company ERISA Affiliate has withdrawn in a complete or partial
withdrawal from any Company Multiemployer Plan, nor has any of them incurred any
liability due to the termination or reorganization of a Company Multiemployer
Plan.
(c) None of the Company Employee Benefit Plans is a "single employer
plan", as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV
of ERISA. Neither the Company, any Subsidiary nor any Company ERISA Affiliate
has incurred any outstanding liability under Section 4062 of ERISA to the
Pension Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
Except as set forth in Schedule 4.8(c), neither the Company nor any Subsidiary
maintains, or is required, either currently or in the future, to provide medical
benefits to employees, former employees or retirees after their termination of
employment, other than pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985.
(d) Except as set forth in Schedule 4.8(d), each Company Employee Benefit
Plan that is intended to qualify under Section 401 of Internal Revenue Code of
1986, as amended (the "Code"), and each trust maintained pursuant thereto, has
been determined to be exempt from federal income taxation under Section 501 of
the Code by the IRS, and, to the Company's knowledge, nothing has occurred with
respect to the operation of any such Company Employee Benefit Plan that would
cause the loss of such qualification or exemption or the imposition of any
material liability, penalty or tax under ERISA or the Code.
(e) All contributions (including all employer contributions and employee
salary reduction contributions) required to have been made under any of the
Company Employee
-17-
Benefit Plans to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof.
(f) There has been no material violation of ERISA or the Code with
respect to the filing of applicable reports, documents and notices regarding the
Company Employee Benefit Plans with the Secretary of Labor or the Secretary of
the Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Employee Benefit Plans.
(g) None of the Company, the Subsidiaries, the officers of the Company or
any of the Subsidiaries or the Company Employee Benefits Plans which are subject
to ERISA, any trusts created thereunder or any trustee or administrator thereof,
has engaged in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any of the Subsidiaries or any
officer of the Company or any of the Subsidiaries to any material tax or penalty
on prohibited transactions imposed by such Section 4975 or to any material
liability under Section 502(i) or (1) of ERISA.
(h) Except as set forth in Schedule 4.8(h), neither the Company nor any
of the Subsidiaries is a party to any contract, agreement or other arrangement
which is expected to result in the payment of amounts that are nondeductible by
reason of Section 162(m) or Section 280G of the Code.
(i) True, correct and complete copies of the following documents, with
respect to each of the Company Benefit Plans, have been delivered or made
available to Parent by the Company: (i) all Company Employee Benefit Plans
and related trust documents, and amendments thereto; (ii) the most recent
Forms 5500 and (iii) summary plan descriptions.
(j) There are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the Company's knowledge, threatened, against the
Company Employee Benefit Plans, the assets of any of the trusts under such plans
or the plan sponsor or the plan administrator, or against any fiduciary of the
Company Employee Benefit Plans with respect to the operation of such plans
(other than routine benefit claims).
(k) Except as set forth in Schedule 4.8(k), all Company Employee Benefit
Plans subject to ERISA or the Code have been maintained and administered, in all
material respects, in accordance with their terms and with all provisions of
ERISA and the Code, respectively (including rules and regulations thereunder),
and other applicable federal and state laws and regulations and all employees
required to be included as participants by the terms of such plans have been
properly included.
(l) All Company Employee Benefit plans maintained for employees resident
outside the United States are in compliance in material respect with all
applicable laws and have been operated in material respects in accordance with
the plans' respective terms.
-18-
SECTION 4.9. PROPERTIES.
(a) The Company and each of the Subsidiaries have good and marketable
title to, or a valid leasehold interest in, all its properties and assets, free
and clear of all liens and other encumbrances except for (i) any lien or other
encumbrance for taxes, assessments and other governmental charges incurred in
the ordinary course of business which are not yet due and payable, (ii) any lien
or other encumbrance that does not materially detract from the value of, or
interfere with the use of, the property subject thereto or affected thereby,
(iii) as to leaseholds, interests of the lessors thereof and (iv) liens set
forth on Schedule 4.9. All tangible personal property, fixtures and equipment
which comprise the assets of the Company and the Subsidiaries, or are otherwise
used in connection with its respective businesses, are in a good state of repair
sufficient for normal operation (ordinary wear and tear excepted) and operating
condition.
(b) Schedule 4.9(b) sets forth a true and complete list and description
of (i) all real property and interests in real property owned in fee by the
Company or any Subsidiary ("Owned Real Property") and (ii) each lease or
sublease relating to Leased Real Property (as defined below) that involves
annual expenditures by the Company or any Subsidiary of $50,000 or more
(collectively, the "Company Material Leases").
(c) Except as set forth in Schedule 4.9(c), there is no material
violation of any law, ordinance or regulation (including, without limitation,
any building, planning or zoning law, ordinance or regulation) relating to any
of the real property or interests in real property leased by the Company or any
Subsidiary, as lessee or lessor (the "Leased Real Property"), or relating to any
of the Owned Real Property. Except as set forth in Schedule 4.9(c), neither the
Company nor any Subsidiary has assigned its interest under any Company Material
Lease, or subleased all or any part of the space demised thereby, to any third
party.
(d) The Company has, or has caused to be, delivered to Parent true and
complete copies of the Company Material Leases and any and all ancillary
documents pertaining thereto (including, but not limited to, all amendments,
consents for alterations and documents recording variations and evidence of
commencement dates and expiration dates). With respect to each of the Company
Material Leases, (i) such lease or sublease is legal, valid, binding,
enforceable and in full force and effect, (ii) except as otherwise set forth in
Schedule 4.9(d), such lease or sublease will not cease to be legal, valid,
binding, enforceable and in full force and effect on terms identical to those
currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of such transactions
constitute a breach or default under such lease or sublease or otherwise give
the landlord a right to terminate such lease or sublease and (iii) neither the
Company nor any Subsidiary knows of, or has given or received notice of, any
violation or default thereunder (nor, to the knowledge of the Company, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default thereunder).
(e) All improvements on real property constructed by or on behalf of the
Company or any Subsidiary, to the best knowledge of the Company, were
constructed in material compliance with applicable laws, ordinances and
regulations (including, but not limited to, any
-19-
building or zoning laws, ordinances and regulations) affecting such Owned Real
Property or Leased Real Property.
SECTION 4.10. INTELLECTUAL PROPERTY.
(a) Except as set forth in Schedule 4.10(a), each of the Company and its
Subsidiaries owns all right, title and interest in and to, or is licensed or
otherwise possesses rights to use, all trademarks, service marks, trade names,
logos, and other indications of origin and all goodwill associated therewith,
patents, registered designs, inventions, trade secrets, know-how, methodology,
research and development, copyrights, computer software, databases and database
rights, domain names and Internet Web sites and pages and all other proprietary
and intellectual property rights and applications and registrations to the
foregoing (collectively, the "Intellectual Property") used by the Company and
the Subsidiaries in their respective businesses as currently conducted, with the
exception of such Intellectual Property the absence of which would not have a
Material Adverse Effect (such Intellectual Property owned by or licensed to the
Company and its Subsidiaries, subject to such exception, collectively, the
"Company Intellectual Property").
(b) Schedule 4.10(b) sets forth a list of all patents, patent
applications, trademark and service xxxx applications and registrations,
copyright registrations and applications, domain names and material unregistered
copyrights, trademarks and trade names owned anywhere in the world by the
Company or any of the Subsidiaries (collectively, the "Owned Intellectual
Property"). Except as set forth in Schedule 4.10(b), all Owned Intellectual
Property is subsisting, unexpired, in proper form in all material respects,
enforceable and, to the knowledge of the Company and its Subsidiaries, valid,
all renewal fees and other maintenance fees that have fallen due on or prior to
the effective date of this Agreement have been paid and no Owned Intellectual
Property is the subject of any proceeding before any governmental, registration
or other authority in any jurisdiction, including any office action or other
form of preliminary or final refusal of registration, with the exception of any
such proceeding in which an unfavorable outcome would not have a Material
Adverse Effect.
(c) Schedule 4.10(c) sets forth a list of all the material licensing
agreements, other than licensing agreements for off-the-shelf software, to which
the Company or any of its Subsidiaries is a party relating to the ownership or
use of the Company Intellectual Property. Except as set forth in Schedule
4.10(c), the Company and its Subsidiaries are in material compliance with the
contractual obligations of all such agreements and neither the Company nor any
Subsidiary is under any obligation to pay royalties or make other payments in
connection with any such agreement, nor will any such agreement terminate in the
event of a change of control of the Company or its Subsidiaries, with the
exception of such agreements the absence of which would not have a Material
Adverse Effect.
(d) The Company Intellectual Property constitutes all Intellectual
Property sufficient to allow the Company and its Subsidiaries to conduct, and
continue to conduct, their respective businesses as currently conducted, and the
consummation of the transactions contemplated hereby will not alter or impair
such ability in any respect, with the exception of such Intellectual Property
the absence of which would not have a Material Adverse Effect.
-20-
(e) Except as set forth in Schedule 4.10(e), or as would not have a
Material Adverse Effect: (i) the conduct of the business of the Company and its
Subsidiaries as currently conducted does not infringe any Intellectual Property
or other proprietary right of any third party; and (ii) there is no claim, suit,
action or proceeding pending or, to the knowledge of the Company and its
Subsidiaries, threatened against the Company or any Subsidiary: (A) alleging any
such infringement with any third party's Intellectual Property or other
proprietary rights; or (B) challenging the Company's or any Subsidiary's
ownership or use of, or the validity or enforceability of, any Company
Intellectual Property, nor, to the knowledge of the Company and its
Subsidiaries, is there any basis for such claim, suit, action or proceeding.
(f) Except as set forth in Schedule 4.10(f), to the knowledge of the
Company no present or former employee, officer or director of the Company or any
Subsidiary, or agent or outside contractor of the Company or any Subsidiary,
holds any right, title or interest, in whole or in part, in or to any Company
Intellectual Property.
(g) Except as set forth in Schedule 4.10(g), to the knowledge of the
Company the Company and its Subsidiaries have obtained from all individuals who
participated in any respect in the invention or authorship of any Owned
Intellectual Property (as employees of the Company or any Subsidiary, as
consultants, or as employees of consultants) effective waivers of any and all
ownership rights of such individuals in such Owned Intellectual Property, and
assignments to the Company or its Subsidiaries of all rights with respect
thereto, other than with respect to copyrightable works identified by the
Company and its Subsidiaries as "works made for hire" within the meaning of
Section 101 of the Copyright Act of 1976.
(h) Except as set forth in Schedule 4.10(h), to the knowledge of the
Company: (i) none of the Company's trade secrets or confidential information has
been disclosed or made available to any Person without prior thereto having
obtained an enforceable agreement of confidentiality from such Person; (ii) no
Company Intellectual Property has been used or appropriated to the detriment of
the Company or any Subsidiary for the benefit of any Person other than the
Company and its Subsidiaries; and (iii) no employee, independent contractor or
agent of the Company or any Subsidiary has misappropriated any trade secrets or
other confidential information of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of the Company or any Subsidiary.
SECTION 4.11. INSURANCE. Schedule 4.11 sets forth a true and complete
list of all insurance policies carried by, or covering the Company and the
Subsidiaries with respect to their businesses, assets and properties, together
with, in respect of each such policy, the name of the insurer, the policy
number, the type of policy, the amount of coverage and the deductible. True and
complete copies of each such policy have previously been provided to Parent. All
such policies are in full force and effect, and no notice of cancellation has
been given with respect to any such policy. All premiums due on such policies
have been paid in a timely manner and the Company and the Subsidiaries have
complied in all material respects with the terms and provisions of such
policies.
-21-
SECTION 4.12. ENVIRONMENTAL.
Except as set forth in Schedule 4.12:
(a) Except as could not, in all such cases taken individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, (i)
the Company and the Subsidiaries are and have been in compliance with all
applicable Environmental Laws, (ii) have obtained all required Environmental
Permits and are in compliance with their requirements, and (iii) have resolved
all past non-compliance with Environmental Laws and Environmental Permits
without any pending, on-going or future obligation, cost or liability.
(b) Neither the Company nor any of the Subsidiaries has (i) to the
knowledge of the Company and its Subsidiaries, placed, held, located, released,
transported or disposed, or caused to be disposed or released, any Hazardous
Substances on, under, from or at any of the Company's or any of the
Subsidiaries' currently or formerly owned or operated properties in a manner
that could reasonably be expected to result in a material liability under an
Environmental Law, (ii) any knowledge that any other party has placed, held,
located, disposed or released any Hazardous Substance on, under, from or at any
of the Company's or any of the Subsidiaries' currently or formerly owned or
operated properties in a manner that could reasonably be expected to result in a
material liability under Environmental Laws, or (iii) received any written
notice (A) of any violation of or liability under any Environmental Laws, (B) of
the institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in connection with
any such violation or liability, (C) requiring the response to or remediation of
Hazardous Substances at or arising from any of the Company's or any of the
Subsidiaries' current or former properties or operations or any other
properties, (D) alleging noncompliance by the Company or any of the Subsidiaries
with the terms of any Environmental Permit in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties;
(c) To the knowledge of the Company and the Subsidiaries, no
Environmental Law imposes any obligation upon the Company or the Subsidiaries
arising out of or as a condition to any transaction contemplated by this
Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. To the knowledge of the Company and
the Subsidiaries, no lien or other encumbrance has been placed upon any of the
Company's or the Subsidiaries' properties under any Environmental Law;
(d) The Company and the Subsidiaries have provided Parent with copies of
any environmental assessment, audit report, Environmental Permit or other
similar studies or analyses in the possession of the Company or the Subsidiaries
relating to any real property currently or formerly owned, leased or occupied by
the Company or the Subsidiaries.
-22-
(e) As used in this Agreement, the following terms have the meanings set
forth below:
(i) "Environmental Law" means any law, as amended, and any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to
pollution or protection of the environment, health or safety or natural
resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Substances.
(ii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
(iii) "Hazardous Substances" means (a) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (b) any
other chemicals, materials or substances regulated as toxic or hazardous
or as a pollutant, contaminant or waste under any applicable
Environmental Law.
(iv) This Section 4.12 shall contain the only representations and
warranties relating to environmental matters, including compliance with
and liability under any Environmental Laws.
SECTION 4.13. GOVERNMENTAL AUTHORIZATIONS AND REGULATIONS. Except as set
forth in Schedule 4.13, the Company and each Subsidiary has complied and is
currently in compliance with each, and is not in violation of any law, ordinance
or governmental or regulatory rule or regulation, whether federal, state, local
or foreign to which such entity's business, operations, assets or properties is
subject ("Regulations"), except where such noncompliance would not, individually
or in the aggregate, have a Material Adverse Effect. Except as set forth in
Schedule 4.13, each of the Company and the Subsidiaries owns, holds, possesses
or lawfully uses in the operation of its business all franchises, licenses,
permits, easements, rights, applications, filings, registrations and other
authorizations ("Authorizations") which are in any manner necessary for it to
conduct its business as now or previously conducted or for the ownership and use
of the assets owned or used by the Company and such Subsidiary in the conduct of
its business, free and clear of all liens, claims, charges, restrictions and
encumbrances and in substantial compliance with all Regulations, other than any
such Authorizations which, if not owned, held, possessed or lawfully used by the
Company and each Subsidiary, would not, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in material
default or noncompliance, nor has the Company or any Subsidiary received any
notice of any claim of default or noncompliance, with respect to any such
Authorization. Except as set forth in Schedule 4.13, there are no actions or
proceedings to revoke, withdraw or suspend any license to conduct any of its
businesses. This Section 4.13 does not apply to any ERISA, real property,
environmental or tax matter specifically covered by Sections 4.8, 4.9, 4.12 or
4.16.
-23-
SECTION 4.14. MATERIAL CONTRACTS.
(a) Except as set forth in the SEC Reports filed prior to the date of
this Agreement or Schedule 4.14 (collectively, the "Scheduled Contracts"),
neither the Company nor any of the Subsidiaries is a party to or bound by:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any contract or agreement for the purchase or lease (as
lessee) of materials or personal property from any supplier or for the
furnishing of services to the Company or any Subsidiary that involves or
is likely to involve future aggregate payments by the Company or any of
the Subsidiaries of $100,000 or more;
(iii) any contract or agreement for the sale, license or lease (as
lessor) by the Company or any Subsidiary of services, materials,
products, supplies or other assets, owned or leased by the Company or the
Subsidiaries, that involves or is likely to involve future aggregate
payments to the Company or any of the Subsidiaries of $100,000 or more;
(iv) any contract, agreement or instrument relating to or
evidencing indebtedness for borrowed money of the Company or any
Subsidiary;
(v) any non-competition agreement or any other agreement or
obligation which purports to limit in any respect the manner in which, or
the localities in which, the business of the Company or the Subsidiaries
may be conducted;
(vi) any agreement with any present or former affiliates of the
Company;
(vii) any partnership, joint venture, strategic alliance or
cooperation agreement (or any agreement similar to any of the foregoing);
(viii) any voting or other agreement governing how any Shares
shall be voted;
(ix) any agreement with any stockholders of the Company; or
(x) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement.
The foregoing contracts and agreements to which the Company or any Subsidiary
are parties or are bound are collectively referred to herein as "Company
Material Contracts."
-24-
(b) Each Company Material Contract is in full force and effect and is a
legal, valid and binding obligation of the Company (or, to the extent a
Subsidiary is a party, such Subsidiary) and, to the knowledge of the Company,
each of the other parties thereto, enforceable in accordance with its terms,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies. The Company and each Subsidiary have performed, in
all material respects, all obligations required to be performed by them to date
under each Company Material Contract. Neither the Company nor any Subsidiary
knows of, or has given or received notice of, any material violation or default
under (nor, to the knowledge of the Company, does there exist any condition
which with the passage of time or the giving of notice or both would result in
such a material violation or default under) any Company Material Contract.
(c) Except as disclosed in the SEC Reports filed prior to the date of
this Agreement or in Schedule 4.14 or as expressly provided for in this
Agreement, neither the Company nor any of the Subsidiaries is a party to any
oral or written (i) employment, consulting or severance agreement that cannot be
terminated without liability to the Company or any Subsidiary on ninety days' or
less notice, (ii) agreement with any officer or other employee of the Company or
any of the Subsidiaries the benefits of which are contingent or vest, or the
terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any the Subsidiaries of the nature contemplated by this
Agreement, (iii) agreement with respect to any officer or other key employee of
the Company or any of the Subsidiaries providing any term of employment or
compensation guarantee or (iv) stock or stock purchase plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of such transactions.
SECTION 4.15. CONDUCT OF BUSINESS. The business and operations of the
Company and the Subsidiaries are not being conducted in default or violation of
any term, condition or provision of (i) their respective certificate of
incorporation or by-laws or similar organizational documents, or (ii) any
material note, bond, mortgage, indenture, contract, agreement, lease or other
instrument or agreement of any kind to which the Company or any of the
Subsidiaries is now a party or by which the Company or any of the Subsidiaries
or any of their respective properties or assets may be bound, except with
respect to (ii), defaults or violations that would not have a Material Adverse
Effect.
SECTION 4.16. TAXES.
(a) Except as set forth in Schedule 4.16(a), all Tax Returns (as defined
below) for or on behalf of the Company or any Subsidiary or any affiliated,
combined or unitary group of which the Company or any Subsidiary is or was a
member have been duly and timely filed with the appropriate taxing authorities
and were, in all material respects, true, complete and correct. No jurisdiction
where the Company or any Subsidiary has not filed a Tax Return has made a claim
that the Company or such Subsidiary is required to file a Tax Return in such
jurisdiction. Neither the Company nor any Subsidiary has requested any extension
of time within which to file any Tax Return in respect of any taxable year,
which Tax Return has not since been filed.
-25-
(b) Except as set forth in Schedule 4.16(a), the Company and each
Subsidiary has paid or will have paid to the appropriate taxing authority on its
behalf, within the time and in the manner prescribed by law, all material Taxes
(as defined below) for which it is liable. The Company and each Subsidiary has
established on its books and records adequate reserves for the payment of all
Taxes for which it is liable which are not yet due and payable, and with respect
to any such Taxes which have been proposed, assessed or asserted against them.
There are no outstanding waivers or comparable consents that have been given by
the Company or any Subsidiary or with respect to any Tax Return of the Company
or any Subsidiary regarding the application of any statute of limitation with
respect to any Taxes or Tax Returns of the Company or any such Subsidiary and
the applicable statutes of limitation for all material Tax Returns for years
through 1998 have expired.
(c) Except as set forth in Schedule 4.16(a), the Company and each
Subsidiary has complied in all material respects with all applicable laws, rules
and regulations relating to the payment and withholding of Taxes for which it is
liable (including, without limitation, withholding of such Taxes pursuant to
sections 1441 and 1442 of the Code or similar provisions under any state, local
or foreign laws), and has, within the time and in the manner prescribed by law,
withheld and paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over under all applicable domestic and
foreign laws.
(d) Except as set forth in Schedule 4.16 (which shall set forth the
nature of the proceeding, the type of return, the deficiencies claimed,
asserted, proposed or assessed and the amount thereof, and the taxable year in
question), no United States federal, state, local or foreign audits,
investigations, other administrative proceedings or court proceedings are
presently pending against the Company or any Subsidiary that could materially
affect the liability for Taxes of the Company or any Subsidiary or against the
Company or any Subsidiary with regard to any Taxes or Tax Returns of the Company
or any Subsidiary and no notification has been received by the Company or any
Subsidiary of the Company that such an audit, investigation or other proceeding
is pending or threatened.
(e) The Company and each Subsidiary (i) are members of an affiliated
group of corporations within the meaning of section 1504(a) of the Code; and
such affiliated group filed a consolidated return with respect to United States
federal income taxes and (ii) neither the Company nor any Subsidiary has
liability for the Taxes of any person (other than members of the affiliated
group described in clause (i) of this Section 4.15(e)) under Treasury
Regulations section 1.1502-6 (or a similar or corresponding provision of state,
local, or foreign law);
(f) There are no encumbrances for Taxes upon the assets or properties of
the Company or any Subsidiary except for statutory encumbrances for Taxes not
yet due.
(g) Neither the Company or any Subsidiary is a party to, is bound by or
has an obligation under any Tax sharing agreement, Tax indemnification agreement
or similar contract or arrangement (including any agreement, contract or
arrangement providing for the sharing or ceding of credits or losses) or has a
potential liability or obligation to any person as a result of or pursuant to
any such agreement, contract, arrangement or commitment. No closing agreement
pursuant to section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local or foreign law has been entered into by or
on behalf of the Company or any
-26-
Subsidiary. No power of attorney or similar document which is currently in force
has been granted by the Company or any Subsidiary with respect to any matter
relating to Taxes.
(h) Except as set forth in Schedule 4.16(h),Neither the Company nor any
Subsidiary is a party to any agreement, plan, contract or arrangement that is
expected to result, individually or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of section 280G of the Code or
similar provision or other law.
(i) The Company and each Subsidiary have previously delivered or made
available to Purchaser complete and accurate copies of each of (i) all audit
reports, letter rulings and technical advice memoranda and correspondence with
applicable taxing authorities, relating to United States federal, state, local
or foreign Taxes due with respect to the income or business of the Company or
any Subsidiary, (ii) all Tax Returns filed with any taxing authority (or the
relevant portions of any combined, consolidated, or unitary Tax Return filed in
any jurisdiction of which the Company or any Subsidiary is a member, including,
without limitation, information relating to the computation of taxable income)
filed by or on behalf of the Company or any Subsidiary for tax years 1998
through 2000, (iii) any closing agreement, settlement agreement or similar
agreement or arrangement entered into by or on behalf of the Company or any
Subsidiary with any taxing authority, and (iv) any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement entered into by or
on behalf of the Company or any Subsidiary.
(j) Neither the Company nor any Subsidiary has an overall foreign loss
(as defined in section 904 of the Code and allocated under Treasury Regulation
section 1.1502-9) as of the taxable year ending December 31, 1999. For all prior
periods for which the statute of limitations has not expired, through the
Closing, the Company and each Subsidiary have not and will not take any action
or engage in any transaction including, without limitation, causing the Company
or any Subsidiary to incur additional liabilities and/or additional expenses
(other than (i) any actions or transaction made in the ordinary course of
business, or (ii) any transactions contemplated by this Agreement) that would
create an overall foreign loss allocable to the Company or any Subsidiary under
Treasury Regulation section 1.1502-9.
(k) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, AD VALOREM, goods and
services, capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, severance, stamp, occupation, real and
personal property, social security, estimated, recording, gift, value assessed,
windfall profits or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties, additions
to tax or other additional amounts imposed by any taxing authority (domestic or
foreign). For purposes of this Agreement, "Tax Return" shall mean any return,
declaration, report, estimate, information or other document (including any
documents, statements or schedules attached thereto) required to be filed with
any federal, state, local or foreign tax authority with respect to Taxes.
SECTION 4.17. LABOR RELATIONS. Except as set forth in the SEC Reports
filed prior to the date of this Agreement or Schedule 4.17: (i) each of the
Company and the Subsidiaries is, and has at all times been, in material
compliance with all applicable laws, rules,
-27-
regulations and orders respecting employment and employment practices, terms and
conditions of employment, wages, hours or work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law; (ii) there is no labor
grievance, arbitration, strike, slowdown, stoppage or lockout pending, or, to
the knowledge of the Company, threatened against or affecting the Company or any
of the Subsidiaries; (iii) neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining or similar agreement with any
union or other labor organization or is engaged in any labor negotiations with
any labor union; (iv) there are no proceedings pending between the Company and
any of the Subsidiaries or any of their respective employees before any federal
or state agency; and (v) to the best knowledge of the Company, there are no
activities or proceedings of any labor union to organize any non-union employees
of the Company or any of the Subsidiaries.
SECTION 4.18. TRANSACTIONS WITH AFFILIATES. Except as disclosed in
Schedule 4.18 or the SEC reports filed prior to the date of this Agreement, no
present or former affiliate of the Company has, or since March 31, 2000 has had,
(i) any interest in any property (whether real, personal or mixed and whether
tangible or intangible) used in or pertaining to any of the businesses of the
Company or any of the Subsidiaries, (ii) business dealings or a material
financial interest in any transaction with the Company or any of the
Subsidiaries (other than compensation and benefits received in the ordinary
course of business as an employee or director of the Company or any of the
Subsidiaries) or (iii) an equity interest or any other financial or profit
interest in any Person that has had business dealings or a material financial
interest in any transaction with the Company or any of the Subsidiaries.
SECTION 4.19. OFFER DOCUMENTS; PROXY STATEMENT. The Schedule 14D-9 will
comply as to form in all material respects with the Exchange Act and the rules
and regulations thereunder. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule TO or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule TO and
the Offer Documents or any amendments or supplements thereto are filed with the
SEC and are first published, sent or given to stockholders of the Company,
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
made therein, in light of the circumstances under which they were made, not
misleading. No representation is made by the Company with respect to written
information supplied by Parent or Purchaser specifically for inclusion in the
Schedule 14D-9. The proxy statement to be sent to the stockholders of the
Company in connection with the meeting of the Company's stockholders to consider
the Merger (the "Company Stockholders' Meeting") or the information statement to
be sent to such stockholders, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein referred to as the
"Proxy Statement"), will comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is being made by the
Company with respect to Parent Information. The Proxy Statement will not, at the
time the Proxy Statement (or any amendment or supplement thereto) is filed with
the SEC or first sent to stockholders, at the time of the Company Stockholders
Meeting or at the Effective Time, 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.
-28-
SECTION 4.20. BROKERS. No broker, finder or investment banker (other than
Alliant) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company. The Company has heretofore
furnished to Parent true and complete copies of all agreements and other
arrangements between the Company and Alliant.
SECTION 4.21. CONTROL SHARE ACQUISITION. Section 203 of the Delaware Code
nor any other "fair price", "moratorium", "control share acquisition",
"interested stockholder" or similar antitakeover statute or regulation enacted
under Delaware Law applicable to the Company or any of its Subsidiaries is
applicable to the Offer, the Merger, this Agreement, the Stockholders Agreement
or any of the transactions contemplated by this Agreement or the Stockholders
Agreement.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. From
the date of this Agreement to the Effective Time, except as expressly
contemplated by this Agreement, the Company shall, and shall cause each of the
Subsidiaries, to (i) carry on its respective businesses in the ordinary course,
(ii) use all reasonable best efforts to preserve intact its current business
organizations and keep available the services of its current officers and key
employees, (iii) use all reasonable best efforts to preserve its relationships
with customers, suppliers and other Persons with which it has business dealings,
(iv) comply in all material respects with all laws and regulations applicable to
it or any of its properties, assets or business and (v) maintain in full force
and effect all Authorizations necessary for such business. Without limiting the
generality of the foregoing, except as (x) expressly contemplated by this
Agreement, (y) set forth in Schedule 5.1 or (z) approved in writing by Parent,
in its sole discretion, requests for which shall be made pursuant to the
provisions of Section 9.2, the Company shall not, and shall cause each of the
Subsidiaries not to:
(a) amend its certificate of incorporation or by-laws or similar
organizational documents or change the number of directors constituting its
entire board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock or other
equity interests, except that a wholly owned Subsidiary may declare and pay a
dividend or make advances to its parent or the Company or (B) redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock or other
securities; (ii) issue, sell, pledge, dispose of or encumber any (A) additional
shares of its capital stock or other equity interests, (B) securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of its capital stock or other
equity interests, or (C) of its other securities, other than Shares issued upon
the exercise of Options outstanding on the date hereof in accordance with the
Option Plans as in effect on the date hereof; or (iii) split, combine or
reclassify any of its outstanding capital stock or other equity interests;
-29-
(c) acquire or agree to acquire (A) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof (including entities which are
Subsidiaries) or (B) any assets, including real estate, except purchases in the
ordinary course of business consistent with past practice in an amount not
involving more than $50,000;
(d) authorize or make any single capital expenditure in excess of $50,000
or capital expenditures in excess of $300,000 in the aggregate;
(e) except in the ordinary course of business, amend or terminate any
Company Material Contract, or waive, release or assign any material rights or
claims;
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any property or assets other than in the ordinary course of business
and consistent with past practice;
(g) (i) enter into any employment, consulting or severance agreement with
or, except in accordance with the existing policies of the Company, grant any
severance or termination pay to any officer, director or employee of the Company
or any Subsidiary; or (ii) hire or agree to hire any new or additional key
employees or officers;
(h) except as required to comply with applicable law, (A) adopt, enter
into, terminate, amend or increase the amount or accelerate the payment or
vesting of any benefit or award or amount payable under any Company Employee
Benefit Plan or other arrangement for the current or future benefit or welfare
of any director, officer or current or former employee, (B) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or, other than in the ordinary course of business consistent
with past practice in an amount not to exceed 3% in the aggregate, employee, (C)
pay any benefit not provided for under any Benefit Plan, (D) grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Company Employee Benefit Plan (including the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing restrictions
in any Company Employee Benefit Plans or agreements or awards made thereunder)
or (E) take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Company Employee Benefit Plan;
(i) (i) incur or assume any long-term debt, or except in the ordinary
course of business in amounts consistent with past practice, incur or assume any
short-term indebtedness; (ii) incur or modify any material indebtedness or other
liability; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries or
customary loans or advances to employees in accordance with past practice); (v)
settle any claims other than in the ordinary course of business, in accordance
with past practice, and without admission of liability; or (vi) enter into any
material commitment or transaction;
-30-
(j) make, revoke or change the accounting methods, including accounting
methods with respect to Taxes, used by it unless required by generally accepted
accounting principles;
(k) make any Tax election or settle or compromise any Tax liability;
(l) (i) settle or compromise any claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with past
practice in an amount not involving more than $50,000 or (ii) pay, discharge or
satisfy any other claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of (A) any such other claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or (B) of any such other claims, liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of the Company;
(m) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
Subsidiary is a party;
(n) permit any insurance policy naming the Company or any Subsidiary as a
beneficiary or a loss payable payee to be canceled or terminated without notice
to Parent, except in the ordinary course of business and consistent with past
practice;
(o) take any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue and incorrect in
any material respect as of the date when made if such action had then been
taken, or would result in any of the conditions set forth in Annex I hereto or
the conditions set forth in Article VII hereof not being satisfied; or
(p) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
SECTION 5.2. NO SOLICITATION. (A) The Company shall not, and it shall
cause the Subsidiaries and the officers, directors, employees, agents and
representatives of the Company or any of the Subsidiaries (collectively, the
"Company Representatives") not to, (i) solicit or initiate, or encourage,
directly or indirectly, any inquiries regarding or the submission of, any
Takeover Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information or data with
respect to, or take any other action to knowingly facilitate the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal; PROVIDED,
HOWEVER, that nothing contained in this Section 5.2 or any other provision
hereof shall prohibit the Company or the Board of Directors, prior to the
adoption of this Agreement at the Company Stockholders' Meeting, from (A) taking
and disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act or (B) making such disclosure to the Company's
stockholders as, in the good faith judgment of the Board of Directors, after
receiving advice from
-31-
outside counsel regarding the nature of the fiduciary duties of the Board of
Directors under applicable law, is required under applicable law, provided that
the Company may not, except as permitted by Section 5.2(b), withdraw or modify,
or propose to withdraw or modify, its approval or recommendation of this
Agreement or the transactions contemplated hereby, including the Offer or the
Merger, or Parent's acquisition of Shares pursuant to the Stockholders
Agreement, or approve or recommend, or propose to approve or recommend any
Takeover Proposal, or enter into any agreement with respect to any Takeover
Proposal. Upon execution of this Agreement, the Company shall, and it shall
cause the Company Representatives to, immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. Notwithstanding the foregoing, prior to the time of
acceptance of Shares for payment pursuant to the Offer, the Company may furnish
information concerning its business, properties or assets to any Person or group
pursuant to confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement, dated August 10, 2001 (the "Confidentiality
Agreement"), between the Company and Parent (provided that such confidentiality
agreements may not include any provision granting any such Person or group an
exclusive right to negotiate with the Company), and may negotiate and
participate in discussions and negotiations with such Person or group concerning
a Takeover Proposal if: (x) such Person or group has submitted an unsolicited
bona fide written Takeover Proposal which the Board of Directors reasonably
believes will lead to a Superior Proposal; and (y) Board of Directors determines
in good faith, based upon advice of outside counsel regarding the nature of the
fiduciary duties of the Board of Directors under applicable law, that such
action is required to discharge the Board's fiduciary duties to the Company's
stockholders under Delaware law. The Company shall not release any third party
from, or waive any provision of, any such confidentiality agreement or any other
confidentiality or standstill agreement to which the Company is a party.
The Company will promptly notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by the Company after the date
hereof, and the Company will promptly (but in any event within one business day)
communicate to Parent the terms of any proposal, discussion, negotiation or
inquiry which it may receive (and will promptly provide to Parent copies of any
written materials received by the Company in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the Person making such
proposal or inquiry or engaging in such discussion or negotiation. The Company
will promptly provide to Parent any non-public information concerning the
Company provided to any other Person which was not previously provided to
Parent. The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) to any such Takeover Proposal.
As used in this Agreement, the following terms have the meanings set
forth below:
"Superior Proposal" means an unsolicited bona fide written proposal by a
Third Party to acquire, directly or indirectly, for consideration consisting
solely of cash and/or marketable securities, all the Shares then outstanding or
all or substantially all of the assets of the Company, and (i) otherwise on
terms which the Board of Directors determines in good faith to be more favorable
and provide greater value to the Company's stockholders than the Offer and the
Merger (based on advice of the Company's independent financial advisor that the
value of the consideration provided for in such proposal exceeds the value of
the
-32-
consideration provided for in the Offer and the Merger), (ii) for which
financing, to the extent required, is then committed, (iii) which, in the good
faith reasonable judgment of the Board of Directors of the Company, is
reasonably likely to be consummated without undue delay and (iv) which is not
subject to materially more conditions than those set forth in Annex I hereto.
"Takeover Proposal" means any inquiry, proposal or offer, whether in
writing or otherwise, from a Third Party to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or a material portion of
the assets of the Company or any of its Subsidiaries or 15% or more of any class
of equity securities of the Company or any of the Subsidiaries pursuant to a
merger, consolidation or other business combination, sale of shares of capital
stock, sale of assets, tender offer, exchange offer or similar transaction with
respect to either the Company or any of the Subsidiaries, including any single
or multi-step transaction or series of related transactions, which is structured
to permit such Third Party to acquire beneficial ownership of any material
portion of the assets of, or 15% or more of the equity interest in either the
Company or any of the Subsidiaries.
"Third Party" means any Person or group other than Parent, Purchaser or
any affiliate thereof.
(b) Except as set forth in this Section 5.2(b), neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board of Directors or any such committee of this Agreement
or the transactions contemplated hereby, including the Offer or the Merger, or
Parent's acquisition of Shares pursuant to the Stockholders Agreement, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares pursuant to the Offer, the Board of Directors may withdraw or modify its
approval or recommendation of this Agreement or the transactions contemplated
hereby, including the Offer or the Merger, or Parent's acquisition of Shares
pursuant to the Stockholders Agreement, approve or recommend a Superior
Proposal, or enter into an agreement with respect to a Superior Proposal, in
each case if (A) the Company shall have received a Superior Proposal which is
pending at the time the Company determines to take such action, (B) the Board of
Directors shall have determined in good faith, based upon advice of outside
counsel regarding the nature of the fiduciary duties of the Board of Directors
under applicable law, that such action is required to discharge the Board of
Director's fiduciary duties to the Company's stockholders under Delaware law,
(C) at least three business days shall have passed following Parent's receipt of
written notice from the Company advising Parent that the Board of Directors has
received a Superior Proposal which it intends to accept, specifying the material
terms and conditions of such Superior Proposal, identifying the Person making
such Superior Proposal, but only if the Company shall have caused its financial
and legal advisors to negotiate in good faith with Parent to make such
adjustments to the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such adjusted
terms and (D) the Company shall have terminated this Agreement pursuant to
Section 8.1(c)(i) and paid the Termination Fee as provided in Section 8.2(b).
-33-
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. PROXY STATEMENT. To the extent stockholder approval of this
Agreement is required by law, the Company shall prepare a preliminary Proxy
Statement relating to the Company Stockholders' Meeting and a form of proxy for
use at the Company Stockholders' Meeting relating to the vote of the holders of
the Company Common Stock with respect to the Merger, this Agreement and the
transactions contemplated hereby. The Company shall cause the preliminary Proxy
Statement to be filed with the SEC at the earliest practicable date following
consummation of the Offer. Parent and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company shall promptly
notify Parent of the receipt of any comments of the SEC with respect to the
preliminary Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC. As promptly as practicable after comments are
received from the SEC with respect to the preliminary Proxy Statement, the
Company shall use its commercially reasonable efforts to respond to the comments
of the SEC and, to the extent comments of the SEC relate to Parent or Purchaser,
Parent and Purchaser shall use their commercially reasonable efforts to respond
to the comments of the SEC. The Company shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments of
the SEC prior to their being filed with or sent to the SEC, and Parent and
Purchaser shall provide the Company with such information about them as may be
required to be included in the Proxy Statement or as may be reasonably required
to respond to any comment of the SEC. After all the comments received from the
SEC have been cleared by the SEC staff and all information required to be
contained in the Proxy Statement has been included therein by the Company, the
Company shall file with the SEC the definitive Proxy Statement and the Company
shall use its commercially reasonable efforts to have the Proxy Statement
cleared by the SEC as soon thereafter as practicable. The Company shall cause
the Proxy Statement to be mailed to record holders of the Company Common Stock
as promptly as practicable after clearance by the SEC. The Proxy Statement shall
contain the recommendation of the Board of Directors that the Company's
stockholders approve this Agreement and the Merger.
SECTION 6.2. MEETING OF STOCKHOLDERS OF THE COMPANY. Following the
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with the Delaware Code and the Company Charter and Company By-laws
to convene the Company Stockholders' Meeting, if such meeting is required.
Parent and Purchaser agree to cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent, Purchaser or any subsidiary of Parent, or with respect to which Parent,
Purchaser or any subsidiary of Parent exercise voting control, to be voted in
favor of the approval and adoption of the Merger and this Agreement. The
stockholder vote required for approval of the Merger will be no greater than
that set forth in the Delaware Code. The Company shall use its best efforts to
solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote of stockholders required by the Delaware Code to
effect the Merger. Notwithstanding the foregoing, if Purchaser or any other
subsidiary of Parent
-34-
shall acquire at least ninety percent (90%) of the outstanding Shares on a fully
diluted basis, and provided that the conditions set forth in Article VII shall
have been satisfied or waived, the Company shall, at the request of Parent, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without the approval of the
stockholders of the Company, in accordance with Section 253 of the Delaware
Code.
SECTION 6.3. COMPLIANCE WITH LAW. Each of the Company, Parent and
Purchaser will comply in all material respects with all applicable laws and with
all applicable rules and regulations of any Governmental Entity in connection
with its execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
SECTION 6.4. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent of (i) the occurrence, or non-occurrence of any event
whose occurrence, or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date hereof to the Effective Time
or (B) any condition set forth in Annex I to be unsatisfied in any material
respect at any time from the date hereof to the date Parent purchases Shares
pursuant to the Offer and (ii) any failure of the Company, or any of its
officers, directors, employees or agents, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available hereunder
to Parent.
SECTION 6.5. ACCESS TO INFORMATION. From the date hereof to the Effective
Time, the Company shall, and shall cause its Subsidiaries, officers, directors,
employees, auditors and agents to, afford the officers, employees and agents of
Parent and Purchaser reasonable access at all reasonable times to its officers,
employees, agents, properties, offices and other facilities and to all books and
records, and shall promptly furnish Parent and Purchaser with (a) all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request and (b) a copy of each
report, schedule and other document filed or received by the Company or any of
the Subsidiaries during such period pursuant to the requirements of applicable
securities laws. Parent, Purchaser and each of their respective representatives
shall use reasonable efforts to conduct any activities pursuant to this Section
6.5 in a manner that does not interfere in any material respect with the
management and conduct of the Company's operations.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. Until the earlier of the termination
of this Agreement or the date of acceptance for payment of and payment for
Shares by Purchaser in the Offer, Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Offer or the Merger and shall not issue, or permit their
affiliates to issue, any such press release or make any such public statement
before such consultation, except as may be required by law.
SECTION 6.7. REASONABLE BEST EFFORTS; COOPERATION. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
-35-
advisable to cause all conditions to the Offer to be satisfied and to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement. The Company will give (or will cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause their
respective Subsidiaries to use, reasonable best efforts to obtain prior to the
Effective Time any consents from third parties necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
SECTION 6.8. AGREEMENT TO DEFEND AND INDEMNIFY.
(a) It is understood and agreed that, subject to the limitations on
indemnification contained in the Delaware Code, the Company shall, to the
fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation shall for a period of six years following the
Effective Time, to the fullest extent permitted under applicable law, indemnify
and hold harmless, each director, officer, employee, fiduciary and agent of the
Company or any of its Subsidiaries including, without limitation, officers and
directors serving as such on the date hereof (collectively, the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any action or omission occurring
at or prior to the Effective Time, including without limitation liabilities
arising under the Securities Act or the Exchange Act in connection with the
Offer or the Merger, and in the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Company or the Surviving Corporation shall pay the reasonable
fees and expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to the Company or the Surviving Corporation,
promptly as statements therefor are received, and (ii) the Company and the
Surviving Corporation will cooperate in the defense of any such matter;
PROVIDED, HOWEVER, that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld); and PROVIDED FURTHER, that neither
the Company nor the Surviving Corporation shall be obliged pursuant to this
Section 6.8 to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action. For six years
after the Effective Time, the Surviving Corporation shall be required to
maintain or obtain officers' and directors' liability insurance covering the
Indemnified Parties who are currently covered by the Company's officers and
directors liability insurance policy (a copy of which policy has been provided
to Parent) on terms not less favorable than those in effect on the date hereof
in terms of coverage and amounts; provided, HOWEVER, that if the aggregate
annual premiums for such insurance at any time during such period exceed the per
annum rate of premium paid by the Company for such insurance as of the date of
this Agreement, then the Surviving Corporation shall provide the maximum
coverage that will then be available at an annual premium equal to 200% of such
per annum rate as of the date of this Agreement. The Surviving Corporation shall
continue in effect the indemnification provisions currently provided by the
Company Charter and Company By-Laws for a period of not less than six years
following the Effective Time. This Section 6.8 shall survive the consummation of
the Merger. Notwithstanding anything in this Section 6.8 to the contrary,
neither the Company nor the Surviving Corporation shall have any obligation
under this Section
-36-
6.8 to indemnify any Indemnified Party against any cost, expense, judgment,
fine, loss, claim, damage, liability or settlement amount found to have resulted
solely from such Indemnified Person's own gross negligence or willful
misconduct. This covenant shall survive any termination of this Agreement
pursuant to Section 8.1 hereof. Notwithstanding Section 9.7 hereof, this Section
6.8 is intended to be for the benefit of and to grant third-party rights to
Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.8.
SECTION 6.9. STATE TAKEOVER LAWS. If any state takeover statute or other
similar statute or regulation becomes or is deemed to become applicable to the
Offer, the Merger, this Agreement or the Stockholders Agreement or any of the
transactions contemplated by this Agreement or the Stockholders Agreement, the
Company shall promptly take all reasonable action necessary to render such
statute or regulation inapplicable to all of the foregoing.
SECTION 6.10. EMPLOYEE MATTERS.
(a) Simultaneously with the Merger, the Surviving Corporation shall
assume all employment agreements and termination benefit agreements and
arrangements which are in effect at the Company on the date hereof. The Company
and Parent agree to cooperate and take such reasonable actions as may be
required to effect an orderly transition of benefits coverage under the
Company's 401(k) plan. As of the Effective Time, Parent shall cause the
Surviving Corporation to honor and satisfy all obligations and liabilities with
respect to the Company Employee Benefit Plans. Notwithstanding the foregoing,
the Surviving Corporation shall not be required to continue any particular
Company Employee Benefit Plans after the Effective Time, and any Company
Employee Benefit Plan may be amended or terminated in accordance with its terms
and applicable law. To the extent that any Company Employee Benefit Plan is
amended or terminated after the Effective Time so as to reduce the benefits that
are then being provided with respect to participants thereunder, Parent shall
arrange for each individual who is then a participant in such terminated or
amended plan to participate in a comparable benefit plan maintained by Parent or
any of its affiliates in accordance with the eligibility criteria thereof,
provided, that (i) such participants shall receive full credit for years of
service with the Company or any Subsidiary prior to the Merger for purposes of
eligibility and vesting but excluding benefit accrual or the amount of benefits
and (ii) such participants shall participate in Parent or Parent affiliate
benefit plans on terms no less favorable than those offered by Parent to
similarly situated employees of Parent.
(b) As soon as practicable following the date hereof, but in no event
later than the consummation of the Offer, the Company's Board of Directors will
take action terminating the Company's 401(k) Plan. All required regulatory
filings relating to such termination will be
-37-
made following the Merger and shall not be required prior to the consummation of
the Offer or the Merger.
SECTION 6.11. PARENT UNDERTAKING. Prior to the Effective Time, Parent
shall be responsible for and shall cause Purchaser to perform all of its
obligations under this Agreement in a timely manner.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1. CONDITIONS FOR EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Effective Time of the following
conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and shall
have purchased, or caused to be purchased, the Shares tendered pursuant to the
Offer;
(b) The Merger and this Agreement shall have been approved and adopted by
the requisite vote of the stockholders of the Company, if required by the
Delaware Code or the Company Charter; and
(c) No statute, rule, regulation, judgment, writ, decree, order or
injunction shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken, by any Governmental Entity that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
SECTION 7.2. CONDITIONS FOR OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser to effect the Merger shall be further
subject to the satisfaction on or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of the Company set forth in this
Agreement (without giving effect to any materiality or Material Adverse Effect
qualifications contained therein) shall be accurate, except where such
inaccuracies (considered collectively) would not be reasonably likely to have a
Material Adverse Effect, in each case as if such representations and warranties
were made at the Effective Time (except to the extent expressly made as of an
earlier date, in which case as of such date);
(b) The Company shall have performed in all material respects all
obligations and complied in all material respects with all agreements and
covenants of the Company to be performed or complied with by it under this
Agreement at or prior to the Effective Time;
(c) All governmental consents, orders and approvals required for the
consummation of the Merger (including, without limitation, all such consents,
orders and approvals as are necessary to prevent any Authorization from being
revoked, suspended or otherwise adversely affected, and to prevent any penalty
from being imposed) shall have been obtained and shall be in effect.
-38-
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) By the mutual written consent of Parent and the Company; or
(b) By either of Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree or ruling or other action each party hereto shall use its reasonable best
efforts to have vacated or reversed), 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; or
(c) By the Company:
(i) if the Company has approved a Superior Proposal in accordance
with Section 5.2(b), provided the Company has complied in all material
respects with the provisions thereof, including the notice provisions
therein, and that it makes simultaneous payment of the Termination Fee
(as defined below); or
(ii) if the Offer shall have expired or have been withdrawn or
terminated without Parent or Purchaser, as the case may be, purchasing
any shares pursuant thereto; provided that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(ii) if the Company is in
material breach of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to 15 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
8.1(c)(iii) if the Company is in material breach of this Agreement; or
(iv) if (A) any of the representations and warranties of Parent
and Purchaser set forth herein (without giving effect to any materiality
or material adverse effect qualifications contained therein) shall fail
to be accurate, except where such inaccuracies (considered collectively)
would not be reasonably likely to have a material adverse effect on the
ability of Parent and Purchaser to consummate the transactions
contemplated by this Agreement, in each case as of a given date as though
made on and as of such date (except for representations and warranties
made as of a specified date, which shall fail to be true and correct as
of such date), or (B) Parent or Purchaser shall have failed to perform or
comply in all material respects with its obligations, agreements or
covenants contained in this Agreement, which failure, in the case of (A)
or (B), is not curable or, if
-39-
curable, is not cured by the earlier of (x) ten business days following
written notice thereof to Parent from the Company and (y) the scheduled
expiration of the Offer; or
(d) By Parent or Purchaser:
(i) if prior to the purchase of the Shares pursuant to the Offer,
the Board of Directors shall have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser its approval or recommendation of
the Offer, this Agreement or the Merger or shall have approved a Takeover
Proposal; or
(ii) if Parent or Purchaser shall have terminated the Offer
without Parent or Purchaser purchasing any Shares thereunder, provided
that Parent or Purchaser may not terminate this Agreement pursuant to
this Section 8.1(d)(ii) if Parent or Purchaser is in material breach of
this Agreement; or
(iii) if, other than as a result of a breach by either Parent or
Purchaser of its obligations hereunder, Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to 15
business days following the date of the initial public announcement of
the Offer; or
(iv) if any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent, Purchaser or their affiliates or
any group of which any of them is a member shall have acquired (with the
consent of the Board of Directors) beneficial ownership (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of 15% or more
of the Shares; or
(v) if the Company receives a Takeover Proposal from any Person
(other than Parent or Purchaser) that is publicly disclosed and the Board
of Directors takes a neutral position or makes no recommendation with
respect to such Takeover Proposal after a reasonable amount of time (and
in no event more than ten business days following such receipt) has
elapsed for the Board of Directors to review and make a recommendation
with respect to such Takeover Proposal; or
(vi) if the Company, or any of the Company Representatives, shall
take any of the actions described in clauses (i) or (ii) of Section
5.2(a) hereof, regardless of whether such action is permitted by this
Agreement; or
(vii) if (A) any of the representations and warranties of the
Company set forth herein (without giving effect to any materiality or
Material Adverse Effect qualifications contained therein) shall fail to
be accurate, except where such inaccuracies (considered collectively)
would not be reasonably likely to have a Material Adverse Effect, in each
case as of a given date as though made on and as of such date (except for
representations and warranties made as of a specified date, which shall
fail to be true and correct as of such date), or (B) the Company shall
have failed to perform or comply in all material respects with its
obligations, agreements or covenants contained in this Agreement, which
failure, in the case
-40-
of (A) or (B), is not curable or, if curable, is not cured by the earlier
of (x) ten business days following written notice thereof to the Company
from Parent and (y) the scheduled expiration of the Offer.
SECTION 8.2. EFFECT OF TERMINATION. (A) In the event of termination of
this Agreement by either the Company or Parent or Purchaser as provided in
Section 8.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Purchaser or the
Company, other than the provisions of this Article VIII and as provided in
Section 9.1 and except that nothing herein shall relieve any party for breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
(b) If (x) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(d)(i), 8.1(d)(iv) or 8.1(d)(v) or (y) the Company terminates this
Agreement pursuant to Section 8.1(c)(i), then in each case, the Company shall
pay, or cause to be paid to Parent, at the time of termination, an amount equal
to $2,000,000 (the "Termination Fee"). In addition, (i) if this Agreement is
terminated by Parent or Purchaser pursuant to Section 8.1(d)(ii) or 8.1(d)(vi)
or by the Company pursuant to Section 8.1(c)(ii) and at the time of such
termination, Parent is not in material breach of this Agreement and the Minimum
Condition has not been satisfied and (ii) if the Company shall thereafter,
within 18 months after such termination, enter into an agreement with respect to
a Takeover Proposal (and provided further, as to a termination pursuant to
Section 8.1(d)(vi) only, that such Takeover Proposal is being made by the Person
(or an affiliate thereof) with whom the Company participated in discussions in
connection with such termination), then the Company shall pay the Termination
Fee concurrently with entering into any such agreement.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or the termination of this Agreement pursuant to Section
8.1, as the case may be, except as provided in Section 8.2 and except that the
agreements set forth in Article II and Section 6.8 shall survive the Effective
Time indefinitely and those set forth in Article VIII and Article IX shall
survive termination indefinitely.
SECTION 9.2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, confirmation received, and (ii) on the third
business day after deposit in the U.S. mail, if mailed by registered or
certified mail (postage prepaid, return receipt requested), in each case to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, except that notices of changes of address
shall be effective upon receipt):
-41-
(a) if to Parent or Purchaser
Information Holdings Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to the Company:
Liquent, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxxxxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Facsimile: (000) 000-0000
SECTION 9.3. EXPENSES. Except as expressly set forth in Section 8.2(b),
all fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs and expenses.
SECTION 9.4. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliate" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person;
(b) "business day" means any day other than a day on which banks in New
York, New York are required or authorized to be closed;
-42-
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "knowledge" means the knowledge of those persons listed on Schedule
9.4; and
(e) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
entity.
SECTION 9.5. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.6. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 9.7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement constitute the entire agreement and
supersede any and all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof. Except as otherwise expressly provided herein, this Agreement is not
intended to confer upon any other Person any rights or remedies hereunder, other
than Section 6.8 which are intended to be for the benefit of and shall be
enforceable by the current and former employees, officers and directors of the
Company and its Subsidiaries and their heirs and representatives.
SECTION 9.8. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Purchaser may assign all
or any of their rights hereunder to any affiliate of Parent provided that no
such assignment shall relieve the assigning party of its obligations hereunder.
SECTION 9.9. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State.
SECTION 9.10. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by Parent and Purchaser, and by action taken by the Board
of Directors of the Company at any time before the Effective Time; PROVIDED,
HOWEVER, that, after approval of the Merger by the stockholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration into which each Share will be converted
-43-
upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 9.11. WAIVER. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto and (c) waive compliance by the other
parties hereto with any of their agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only as against such party and only if set forth in an instrument in
writing signed by such party. The failure of any party hereto to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
SECTION 9.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which shall
constitute one and the same agreement.
-44-
IN WITNESS WHEREOF, the Company, Parent and Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
LIQUENT, INC.
By: /s/ R. Xxxxxxx Xxxx
------------------------------------
Name: R. Xxxxxxx Xxxx
Title: Chief Executive Officer
INFORMATION HOLDINGS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
FLUID ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
-45-
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Parent's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in this Agreement) amend
or terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company Common Stock which, when taken together with
the Shares, if any, beneficially owned by Parent and its subsidiaries,
represents at least a majority of the number of shares of Company Common Stock
outstanding on a fully diluted basis (the "Minimum Condition") or (ii) at any
time after the date of this Agreement and before the time of payment for any
such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following events shall
occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree, judgment
or ruling issued or threatened by a Governmental Entity of competent
jurisdiction or a statute, rule, regulation, executive order or other
action shall have been enacted, promulgated, taken or threatened by a
Governmental Entity of competent jurisdiction which in any such case (i)
restrains or prohibits or seeks to restrain or prohibit the making or
consummation of the Offer or the consummation of the Merger or the
performance of the other transactions contemplated by this Agreement or
the Stockholders Agreement, (ii) prohibits or restricts or seeks to
prohibit or restrict the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of its or the Company's
business or assets which is material to the business of all such entities
taken as a whole, or compels Parent (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of its or the
Company's or any of its Subsidiary's business or assets which is material
to the business of all such entities taken as a whole, (iii) imposes or
seeks to impose material limitations on the ability of Parent effectively
to acquire or to hold or to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares
purchased by Parent on all matters properly presented to the stockholders
of the Company, (iv) imposes or seeks to impose any material limitations
on the ability of Parent or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company and its Subsidiaries or (v) seeks to obtain
from the Company, Parent or Purchaser material damages as a result of
this Agreement or the Stockholders Agreement; or
(b) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably
likely to have a Material Adverse Effect; or
(d) any of the representations and warranties of the Company set
forth in this Agreement (without giving effect to any materiality or
Material Adverse Effect qualifications contained therein) shall not be
accurate, except where such inaccuracies (considered collectively) would
not be reasonably likely to have a Material Adverse Effect, in each case
as if such representations and warranties were made at the time of such
determination;
(e) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or
complied with by it under this Agreement; or
(f) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market, (ii) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any limitation (whether or not mandatory) by an
government or Governmental Entity, on the extension of credit by banks or
other lending institutions, (iv) a commencement of a war or armed
hostilities or other national calamity directly involving the United
States and Parent shall have determined that there is a reasonable
likelihood that such event would have a material adverse significance to
Parent and its subsidiaries, taken as a whole, or (v) in the case of any
of the foregoing existing at the time of the execution of this Agreement,
a material acceleration or worsening thereof; or
(g) the Board of Directors (i) shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser (including by
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement or the transactions contemplated hereby, including the Offer,
the Merger and Parent's acquisition of Shares pursuant to the
Stockholders Agreement, (ii) recommended a Takeover Proposal, (iii) shall
have adopted any resolution to effect any of the foregoing, or (iv) upon
request of Purchaser, shall fail to reaffirm its approval or
recommendation of the Offer, this Agreement or the Merger; or
(h) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent, Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired or announced
its intention to acquire beneficial ownership (as determined pursuant to
Rule 13d-3 promulgated under the Exchange Act) of 15% or more of the
Shares;
which, in the reasonable judgment of Parent with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
conditions and may be waived by Purchaser in whole or in part at any time and
from time to time, in each case, in the exercise of the good faith judgment of
Purchaser and subject to the terms of this Agreement. The failure
-2-
by Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
-3-