Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXX CORPORATION LIMITED,
XXXXX HOLDINGS U.S.A. INC.,
M-W ACQUISITION, INC.
AND
XXXXXXX COMPUTER SERVICES, INC.
Dated as of January 16, 2003
(and as amended and restated
as of April 14, 2003)
TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME; SUBSEQUENT MERGER
1.1. The Merger.................................................. A-1
1.2. Closing..................................................... A-1
1.3. Effective Time.............................................. A-1
1.4. Subsequent Merger........................................... A-1
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION
2.1. The Certificate of Incorporation............................ A-2
2.2. The By-Laws................................................. A-3
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1. Directors................................................... A-3
3.2. Officers.................................................... A-3
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Merger Consideration........................................ A-3
4.2. Rights as Stockholders; Stock Transfers..................... A-5
4.3. Fractional Shares........................................... A-5
4.4. Exchange Procedures......................................... A-5
4.5. Adjustments to Prevent Dilution............................. A-7
4.6. Dissenting Stockholders..................................... A-7
4.7. Right to Withhold Taxes; Real Estate Transfer Taxes......... A-7
4.8. Subscription for Subco Membership Interests................. A-8
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company............... A-8
5.2. Representations and Warranties of Parent and Merger Sub..... A-17
ARTICLE VI
COVENANTS
6.1. Interim Operations.......................................... A-24
6.2. Acquisition Proposals....................................... A-26
6.3. Information Supplied........................................ A-27
6.4. Stockholders Meeting........................................ A-27
6.5. Filings; Other Actions; Notification........................ A-27
6.6. Taxation.................................................... A-29
6.7. Access...................................................... A-29
6.8. Affiliates.................................................. A-29
6.9. Stock Exchange Listing and De-listing....................... A-30
6.10. Publicity; Employee Communications.......................... A-30
6.11. Benefits, etc. ............................................. A-30
6.12. Expenses.................................................... A-31
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TABLE OF CONTENTS -- (CONTINUED)
SECTION PAGE
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6.13. Indemnification; Directors' and Officers' Insurance......... A-31
6.14. Takeover Statute............................................ A-32
6.15. Parent Name................................................. A-32
6.16. Section 16(b)............................................... A-32
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the
Merger...................................................... A-33
(a) Stockholder Approval.................................... A-33
(b) NYSE and TSX Listing.................................... A-33
(c) Regulatory Consents..................................... A-33
(d) Litigation.............................................. A-33
(e) S-4..................................................... A-33
7.2. Conditions to Obligations of Parent and Merger Sub.......... A-33
(a) Representations and Warranties.......................... A-33
(b) Performance of Obligations of the Company............... A-34
(c) Consents Under Agreements............................... A-34
(d) Material Adverse Effect on the Company.................. A-34
(e) Financing............................................... A-34
(f) Accountant Letter(s).................................... A-34
7.3. Conditions to Obligation of the Company..................... A-34
(a) Representations and Warranties.......................... A-34
(b) Performance of Obligations of Parent and Merger Sub..... A-35
(c) Consents Under Agreements............................... A-35
(d) Material Adverse Effect on Parent....................... A-35
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent............................... A-35
8.2. Termination by Either Parent or the Company................. A-35
8.3. Termination by the Company.................................. A-35
8.4. Termination by Parent....................................... A-36
8.5. Effect of Termination and Abandonment....................... A-36
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival.................................................... A-37
9.2. Modification or Amendment................................... A-37
9.3. Waiver of Conditions........................................ A-38
9.4. Counterparts................................................ A-38
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL............... A-38
9.6. Notices..................................................... A-38
9.7. Entire Agreement............................................ A-39
9.8. No Third Party Beneficiaries................................ A-39
9.9. Obligations of Parent and of the Company.................... A-39
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TABLE OF CONTENTS -- (CONTINUED)
SECTION PAGE
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9.10. Definitions................................................. A-39
9.11. Severability................................................ A-39
9.12. Interpretation.............................................. A-40
9.13. Assignment.................................................. A-40
EXHIBIT A -- Form of Company Affiliate Letter.............................. A-42
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INDEX OF DEFINED TERMS
TERM SECTION
---- -------
Acquisition Proposal........................................ 6.2
Adjustment Ratio............................................ 4.1(b)
Affiliates.................................................. 5.1(c)(ii)
Affiliates Letter........................................... 6.8
Aggregate Stock Value....................................... 4.1(b)
Agreement................................................... Preamble
Audit Date.................................................. 5.1(e)
By-Laws..................................................... 2.2
Cash Election Shares........................................ 4.1(b)
Charter..................................................... 2.1
Closing..................................................... 1.2
Closing Date................................................ 1.2
Code........................................................ 1.4(d)
Commitment Letter........................................... 5.2(m)
Company..................................................... Preamble
Company Common Stock........................................ 4.1(a)(1)
Company Disclosure Schedule................................. 5.1
Company Employees........................................... 6.11(b)
Company Intellectual Property Rights........................ 5.1(o)(ii)(B)
Company Material Adverse Effect............................. 5.1(a)(ii)
Company Option.............................................. 5.1(b)
Company Reports............................................. 5.1(e)
Company Requisite Vote...................................... 5.1(c)(i)
Compensation and Benefit Plans.............................. 5.1(h)(i)
Confidentiality Agreement................................... 9.7
Consideration............................................... 4.1(a)(i)(B)
Constituent Corporations.................................... Preamble
Contracts................................................... 5.1(d)(ii)(B)
Conversion Ratio............................................ 6.11(a)
Converted Cash Election Share............................... 4.1(c)(i)(C)
Converted Stock Election Shares............................. 4.1(c)(ii)(B)
Costs....................................................... 6.13(a)
Current Premium............................................. 6.13(b)
Delaware Certificate of Merger.............................. 1.3
DGCL........................................................ 1.1
Dissenters' Shares.......................................... 4.1(a)(i)
D&O Insurance............................................... 6.13(b)
DOL......................................................... 5.1(h)(ii)
Effective Time.............................................. 1.3
EGTRRA...................................................... 5.1(h)(ii)
Election.................................................... 4.1(b)
Election Deadline........................................... 4.4(a)
Election Form............................................... 4.1(b)
Environmental Law........................................... 5.1(k)
Environmental Submissions................................... 6.5(h)
ERISA....................................................... 5.1(h)(ii)
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INDEX OF DEFINED TERMS -- (CONTINUED)
TERM SECTION
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ERISA Affiliate............................................. 5.1(h)(iii)
ERISA Plans................................................. 5.1(h)(ii)
Exchange Act................................................ 5.1(a)
Exchange Agent.............................................. 4.1(b)
Exchange Fund............................................... 4.4(b)
Excluded Shares............................................. 4.1(a)(i)
Expenses.................................................... 8.5(b)
Financing Event............................................. 6.4
GAAP........................................................ 5.1(e)
Governmental Consents....................................... 7.1(c)
Governmental Entity......................................... 5.1(d)(i)
GUST........................................................ 5.1(h)(ii)
Hazardous Substance......................................... 5.1(k)
Holdco...................................................... Preamble
HSR Act..................................................... 5.1(b)
Indemnified Parties......................................... 6.13(a)
IRS......................................................... 5.1(h)(ii)
Laws........................................................ 5.1(i)
Measurement Price........................................... 4.1(a)(i)(A)
Merger...................................................... Recitals
Merger Agreement............................................ Recitals
Merger Sub.................................................. Preamble
Multiemployer Plans......................................... 5.1(h)(ii)
New Certificates............................................ 4.4(b)
No-Election Shares.......................................... 4.1(b)
Non-U.S. Parent Compensation Benefit Plan................... 5.2(i)(viii)
NYSE........................................................ 5.1(d)(i)
Old Certificates............................................ 4.4(a)
Order....................................................... 7.1(d)
Organizational Documents.................................... 5.1(a)
Parent...................................................... Preamble
Parent Audit Date........................................... 5.2(f)
Parent Common Stock......................................... 4.1(a)(i)(A)
Parent Compensation and Benefit Plans....................... 5.2(i)(i)
Parent Disclosure Schedule.................................. 5.2
Parent ERISA Plans.......................................... 5.2(i)(ii)
Parent Intellectual Property Rights......................... 5.2(n)(ii)(B)
Parent Material Adverse Effect.............................. 5.2(b)
Parent Pension Plan......................................... 5.2(i)(ii)
Parent Preference Shares.................................... 5.2(c)
Parent Reports.............................................. 5.2(f)
Parent Stock Plans.......................................... 5.2(c)
Parent Substitute Options................................... 6.11(a)
Parent Third-Party Intellectual Property Rights............. 5.2(n)(ii)(A)
Parent Voting Debt.......................................... 5.2(c)
Pension Plan................................................ 5.1(h)(ii)
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INDEX OF DEFINED TERMS -- (CONTINUED)
TERM SECTION
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Per Share Cash Consideration................................ 4.1(a)(i)(B)
Per Share Stock Consideration............................... 4.1(a)(i)(A)
Person...................................................... 4.4(g)
Preferred Shares............................................ 5.1(b)
Prospectus/Proxy Statement.................................. 6.3
Representatives............................................. 6.7
Rights...................................................... 5.1(b)
Rights Agreement............................................ 5.1(b)
S-4 Registration Statement.................................. 6.3
SEC......................................................... 5.1(e)
Securities Act.............................................. 5.1(d)(i)
Share....................................................... 4.1(a)(i)
Shares...................................................... 4.1(a)(i)
Significant Subsidiaries.................................... 5.1(a)
Stock Election Shares....................................... 4.1(b)
Stockholders Meeting........................................ 6.4
Stock Number................................................ 4.1(b)
Stock Plans................................................. 5.1(b)
Stock-Selected No-Election Share............................ 4.1(c)(i)(B)
Subco....................................................... 1.4(a)
Subsequent Merger........................................... 1.4(a)
Subsidiary.................................................. 5.1(a)(i)
Superior Proposal........................................... 6.2
Surviving Corporation....................................... 1.1
Takeover Statute............................................ 5.1(j)
Tax......................................................... 5.1(l)
Taxable..................................................... 5.1(l)
Taxes....................................................... 5.1(l)
Tax Return.................................................. 5.1(l)
Termination Date............................................ 8.2(a)
Third-Party Intellectual Property Rights.................... 5.1(o)(ii)(A)
Transfer Taxes.............................................. 4.7(b)
TSX......................................................... 5.2(d)(i)
Voting Debt................................................. 5.1(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of January 16, 2003 (and as amended and restated as of April 14, 2003), among
Xxxxxxx Computer Services, Inc., a
Delaware corporation (the "Company"), Xxxxx
Corporation Limited, a corporation continued under the laws of Canada
("Parent"), Xxxxx Holdings U.S.A. Inc., a
Delaware corporation and a direct,
wholly owned subsidiary of Parent ("Holdco") and M-W Acquisition, Inc., a
Delaware corporation and a direct, wholly owned subsidiary of Parent ("Merger
Sub," the Company and Merger Sub sometimes being hereinafter collectively
referred to as the "Constituent Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Company, Parent and Merger Sub are parties to a certain
Agreement and Plan of Merger, dated as of January 16, 2003 (the "Merger
Agreement"), and the parties thereto desire to amend and restate the Merger
Agreement as set forth in this Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME; SUBSEQUENT MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article II. The Merger shall have the
effects specified in the
Delaware General Corporation Law, as amended (the
"DGCL").
1.2. Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 9:00 A.M. on the third business day after which the last to be fulfilled
or waived of the conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3. Effective Time. On the Closing Date, the Company and Parent will
cause a Certificate of Merger (the "
Delaware Certificate of Merger") to be
executed, acknowledged and filed with the Secretary of State of
Delaware as
provided in Section 251 of the DGCL. The Merger shall become effective at the
time when the
Delaware Certificate of Merger has been duly filed with the
Secretary of State of
Delaware, unless such
Delaware Certificate of Merger
specifies a different effective time in which event the Merger shall become
effective at such other specified time (the "Effective Time").
1.4. Subsequent Merger. (a) Immediately after the Effective Time, Parent
and Holdco will cause the Surviving Corporation to merge with and into a newly
organized direct, wholly owned limited liability company subsidiary of Holdco
("Subco") and the separate corporate existence of the Surviving Corporation
shall thereupon cease (the "Subsequent Merger"). Parent and Holdco will have the
right to revise the structure of the Subsequent Merger; provided that any such
revision does not, in the reasonable judgment of
A-1
the Company or its counsel, (i) increase to any extent the risk that the Merger
and Subsequent Merger, taken together, will not be treated for U.S. federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code") or that a conversion of Shares into the
Consideration provided for hereunder (other than solely for the Per Share Cash
Consideration) will not be an exchange governed by Section 354 (and if
applicable Section 356) of the Code to which Section 367(a)(1) of the Code does
not apply or (ii) otherwise adversely affect the Company stockholders.
(b) At the effective time of the Subsequent Merger, (i) Holdco's membership
interest in Subco will be converted into $100 fixed value membership interest of
the surviving company of the Subsequent Merger; and (ii) Parent's share of fixed
value preferred stock of the entity that survives the Merger will be exchanged
for stock of Holdco having a fair market value of $100.
(c) With respect to any time following the Subsequent Merger, references
herein to the Surviving Corporation shall refer to Subco as the surviving
company in the Subsequent Merger.
(d) If the opinions described in paragraph (e) below are received, the
parties hereto intend that this Agreement will constitute a "plan of
reorganization" with respect to the Merger and Subsequent Merger for United
States federal income tax purposes pursuant to which, for such purposes, the
Merger and the Subsequent Merger are to be treated as a "reorganization" under
Section 368(a) of the Code (to which each of Parent, Holdco and the Company are
to be parties under Section 368(b) of the Code) in which the Company is to be
treated as merging directly with and into Holdco, with the Shares converted in
such merger into the right to receive the Consideration provided for hereunder
in a conversion to which Section 367(a)(1) of the Code does not apply.
(e) If, prior to the Effective Time: (i) the Company shall have received
the opinion of Sidley Xxxxxx Xxxxx & Xxxx, special counsel to the Company, dated
as of the Closing Date, to the effect that the Merger and the Subsequent Merger,
taken together, will be treated for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, that each of
Parent, Holdco and the Company will be a party to that reorganization within the
meaning of Section 368(b) of the Code, and that a conversion of Shares into the
Consideration provided for hereunder (other than solely for the Per Share Cash
Consideration) will be an exchange governed by Section 354 (and if applicable
Section 356) of the Code to which Section 367(a)(1) of the Code does not apply
and (ii) Parent shall have received the opinion of Xxxxxxxx & Xxxxxxxx LLP,
special counsel to Parent, dated as of the Closing Date, to the effect that the
Merger and the Subsequent Merger, taken together, will be treated for U.S.
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, that each of Parent, Holdco and the Company will be a party
to that reorganization within the meaning of Section 368(b) of the Code, and
that a conversion of Shares into the Consideration provided for hereunder (other
than solely for the Per Share Cash Consideration) will be an exchange governed
by Section 354 (and if applicable Section 356) of the Code to which Section
367(a)(1) of the Code does not apply, then each of the parties hereto shall, and
shall cause its Affiliates to, treat the Merger, Subsequent Merger and the
conversion of Shares into the Consideration provided hereunder for all Tax
purposes consistent with such opinion. The opinions of counsel referred to above
may be based on customary assumptions and representations, including
representations of the Company and Parent. Each of the Company and Parent shall
request its respective counsel to render opinions to the effect described above.
In the event that either party's counsel is unable to render opinions to the
effect described above, such counsel shall (at the request of the other party)
provide a written explanation of the substantive reason or reasons causing such
counsel to be unable to do so. To the extent that either of such opinions is not
received as set forth above, then each of the parties hereto shall, and shall
cause its Affiliates to, treat the Merger (as to those holders of shares
generally subject to U.S. federal income tax) as a taxable acquisition of the
Shares by Parent in exchange for the consideration provided for hereunder.
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ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. The Certificate of Incorporation. The certificate of incorporation
of the Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable law; provided, however, that
the Charter shall include provisions substantially identical to Section 8 of
Article TENTH of the Restated Certificate of Incorporation of the Company;
provided, further, that in no event shall such provisions be amended after the
Effective Time, in a manner adverse to the rights of beneficiaries of such
provisions prior to the Effective Time, prior to the sixth anniversary of the
Effective Time.
2.2. The By-Laws. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1. Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
3.2. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Merger Consideration. (a) Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, the Merger Sub or any holder of shares of capital
stock of the Company:
(i) Each share of the common stock, par value $1.00 per share, of the
Company ("Company Common Stock"), together with the associated Right (each
share of Company Common Stock together with the associated Right, a "Share"
or, collectively, the "Shares") issued and outstanding immediately prior to
the Effective Time (other than Shares the holders of which shall have
perfected and not withdrawn or lost their appraisal rights in accordance
with Section 262 of the DGCL ("Dissenters' Shares") and Shares owned
directly or indirectly by the Company or any of its direct or indirect
wholly owned Subsidiaries or owned directly or indirectly by Parent or any
of its direct or indirect wholly owned Subsidiaries (and in each case not
held on behalf of third parties), such Shares together with Dissenters'
Shares, "Excluded Shares") will be converted into the right to receive, at
the election of each holder thereof, but subject to the election and
allocation procedures of Sections 4.1(b) and (c), the other provisions of
this Section 4.1 and possible adjustment as set forth in Section 4.5,
either:
(A) that number of common shares of Parent ("Parent Common Stock")
rounded to four decimal places equal to (I) 1.05 plus (II) the quotient
of (x) 14.40 divided by (y) the average of the daily high and low sales
prices per share (the "Measurement Price") of Parent Common Stock on the
NYSE Composite Tape, as reported in The Wall Street Journal (Northeast
edition) or, if not reported therein, in another authoritative source
mutually agreed to by Parent and the Company, on
A-3
the last trading day immediately preceding the Closing Date (the sum of
(I) and (II), the "Per Share Stock Consideration"), or
(B) an amount in cash, without interest, equal to (I) $14.40 plus
(II) the product of (x) 1.05 multiplied by (y) the Measurement Price
(the sum of (I) and (II), the "Per Share Cash Consideration" and,
together with the "Per Share Stock Consideration," the "Consideration").
(ii) Each Share that, immediately prior to the Effective Time, is
owned directly or indirectly by the Company, Parent or any of their
respective direct or indirect wholly owned Subsidiaries (and in each case
not held on behalf of third parties), will be canceled and retired and will
cease to exist, and no exchange or payment will be made therefor.
(iii) At the Effective Time and concurrently with the issuance of
common stock described in Section 4.8, all the shares of common stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one newly issued,
fully-paid and non-assessable share of fixed value preferred stock of the
Surviving Corporation with a redemption amount and fair market value of
$100.
(b) Subject to the allocation procedures set forth in Section 4.1(c), each
record holder of Shares will be entitled (i) to elect to receive shares of
Parent Common Stock for all of the Shares ("Stock Election Shares") held by such
record holder, (ii) to elect to receive cash for all of the Shares ("Cash
Election Shares") held by such record holder or (iii) to indicate that such
holder makes no such election for all of the Shares ("No-Election Shares") held
by such record holder, provided, that notwithstanding anything in this Agreement
to the contrary, the aggregate number of Shares to be converted into the right
to receive the Per Share Stock Consideration in the Merger (the "Stock Number")
will equal as nearly as practicable the product of (x) the Adjustment Ratio
multiplied by (y) the total number of Shares outstanding (excluding Excluded
Shares that are not Dissenters' Shares) immediately prior to the Effective Time.
As used in this Agreement, the term "Adjustment Ratio" means the quotient
rounded to four decimal places of (I) the product rounded to four decimal places
of (A) 1.05 multiplied by (B) the Measurement Price multiplied by (C) the total
number of Shares outstanding immediately prior to the Effective Time (excluding
Excluded Shares that are not Dissenters' Shares) (the product of (A), (B) and
(C), the "Aggregate Stock Value"), divided by (II) the sum of (A) the product
rounded to one decimal place of 14.40 multiplied by the total number of Shares
outstanding immediately prior to the Effective Time (excluding Excluded Shares
that are not Dissenters' Shares) and (B) the Aggregate Stock Value. All such
elections (each, an "Election") shall be made on a form designed for that
purpose by Parent and reasonably acceptable to the Company (an "Election Form").
Any Shares for which the record holder has not, as of the Election Deadline,
properly submitted to the Exchange Agent a properly completed Election Form
(excluding any Dissenters' Shares) will be deemed No-Election Shares. All
Dissenters' Shares will be deemed Cash Election Shares. A record holder acting
in different capacities or acting on behalf of other persons in any way will be
entitled to submit an Election Form for each capacity in which such record
holder so acts with respect to each person for which it so acts; for purposes of
clarity, the trustee of the Xxxxxxx Computer Services, Inc. Benefit Trust will
be entitled to submit Election Form(s), in accordance with directions received
from the Company, as though such trustee were a record holder acting separately
on behalf of each of the plan participants whose awards are payable in Shares
held by such trust. The exchange agent (the "Exchange Agent") will be a bank or
trust company in the United States or Canada selected by Parent and reasonably
acceptable to the Company.
(c) The allocation among the holders of Shares of rights to receive the Per
Share Stock Consideration or the Per Share Cash Consideration in the Merger will
be made as follows:
(i) Number of Stock Elections Less Than Stock Number. If the
aggregate number of Stock Election Shares (on the basis of Election Forms
received as of the Election Deadline) is less than the Stock Number, then
(A) each Stock Election Share will be, as of the Effective Time,
converted into the right to receive the Per Share Stock Consideration,
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(B) the Exchange Agent will allocate from among the No-Election
Shares, pro rata to the holders of No-Election Shares in accordance with
their respective numbers of No-Election Shares, a sufficient number of
No-Election Shares so that the sum of such number and the number of
Stock Election Shares equals as closely as practicable the Stock Number,
and each such allocated No-Election Share (each, a "Stock-Selected
No-Election Share") will be, as of the Effective Time, converted into
the right to receive the Per Share Stock Consideration, provided that if
the sum of all No-Election Shares and Stock Election Shares is equal to
or less than the Stock Number, all No-Election Shares will be
Stock-Selected No-Election Shares,
(C) if the sum of Stock Election Shares and No-Election Shares is
less than the Stock Number, the Exchange Agent will allocate from among
the Cash Election Shares, pro rata to the holders of Cash Election
Shares in accordance with their respective numbers of Cash Election
Shares, a sufficient number of Cash Election Shares so that the sum of
such number, the number of all Stock Election Shares and the number of
all No-Election Shares equals as closely as practicable the Stock
Number, and each such allocated Cash Election Share (each, a "Converted
Cash Election Share") will be, as of the Effective Time, converted into
the right to receive the Per Share Stock Consideration, and
(D) each No-Election Share and Cash Election Share that is not a
Stock-Selected No-Election Share or a Converted Cash Election Share (as
the case may be) will be, as of the Effective Time, converted into the
right to receive the Per Share Cash Consideration; or
(ii) Number of Stock Elections Greater Than Stock Number. If the
aggregate number of Stock Election Shares (on the basis of Election Forms
received by the Election Deadline) is greater than the Stock Number, then
(A) each Cash Election Share and No-Election Share will be, as of
the Effective Time, converted into the right to receive the Per Share
Cash Consideration,
(B) the Exchange Agent will allocate from among the Stock Election
Shares, pro rata to the holders of Stock Election Shares in accordance
with their respective numbers of Stock Election Shares, a sufficient
number of Stock Election Shares ("Converted Stock Election Shares") so
that the difference of (x) the number of Stock Election Shares less (y)
the number of the Converted Stock Election Shares equals as closely as
practicable the Stock Number, and each Converted Stock Election Share
will be, as of the Effective Time, converted into the right to receive
the Per Share Cash Consideration, and
(C) each Stock Election Share that is not a Converted Stock
Election Share will be, as of the Effective Time, converted into the
right to receive the Per Share Stock Consideration.
4.2. Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Shares will cease to be, and will have no rights as, stockholders of
the Company, other than the right to receive (a) any dividend or other
distribution with respect to such Shares with a record date occurring prior to
the Effective Time, (b) the Consideration provided under this Article IV and (c)
any cash in lieu of any fractional share of Parent Common Stock. After the
Effective Time, there will be no transfers on the stock transfer books of the
Company or the Surviving Corporation of Shares.
4.3. Fractional Shares. Notwithstanding any other provision in this
Agreement, no fractional share of Parent Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, Holdco will pay to each holder of Shares who otherwise would be
entitled to a fractional share of Parent Common Stock (after taking into account
all Old Certificates (as defined in Section 4.4(a)) delivered to the Exchange
Agent or held by such holder) an amount in cash (without interest) determined by
multiplying such fraction by the Measurement Price.
4.4. Exchange Procedures. (a) At the time of mailing of the
Prospectus/Proxy Statement to holders of record of Shares entitled to vote at
the Stockholders Meeting, Parent will mail, or cause the Exchange Agent to mail,
therewith an Election Form and a letter of transmittal to each such holder. To
be effective, an
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Election Form must be properly completed, signed and actually received by the
Exchange Agent not later than 5:00 p.m., New York City time, on the business day
that is three trading days prior to the Closing Date (which date shall be
publicly announced by Parent as soon as practicable prior to such date) (the
"Election Deadline") and accompanied by the certificates representing all the
Shares ("Old Certificates") as to which such Election Form is being made, duly
endorsed in blank or otherwise in form acceptable for transfer on the books of
the Company (or accompanied by an appropriate guarantee of delivery by an
eligible organization) in the case of shares that are not held in book entry
form. For shares that are held in book entry form, Parent shall establish
procedures for the delivery of such shares, which procedures shall be reasonably
acceptable to the Company. Parent shall have discretion, which it may delegate
in whole or in part to the Exchange Agent, to determine whether Election Forms
have been properly completed, signed and timely submitted or to disregard
defects in Election Forms. Any such determination of Parent or the Exchange
Agent shall be conclusive and binding. Neither Parent nor the Exchange Agent
shall be under any obligation to notify any person of any defect in an Election
Form submitted to the Exchange Agent. The Exchange Agent shall also make all
computations contemplated by Section 4.1 hereof, and, after consultation with
Parent and the Company, all such computations will be conclusive and binding on
the former holders of Shares absent manifest error. Any Shares for which the
record holder has not, as of the Election Deadline, properly submitted to the
Exchange Agent a properly completed Election Form will be deemed No-Election
Shares. Any Election Form may be revoked, by the stockholder who submitted such
Election Form to the Exchange Agent, only by written notice received by the
Exchange Agent prior to the Election Deadline. In addition, all Election Forms
shall automatically be revoked if the Exchange Agent is notified in writing by
Parent and the Company that the Merger has been abandoned. The Exchange Agent
may, with the mutual agreement of Parent and the Company, make such rules as are
consistent with this Section 4.4 for the implementation of the Elections
provided for herein as shall be necessary or desirable to effect fully such
Elections. Prior to the Effective Time, Parent and Merger Sub will enter into an
exchange agent and nominee agreement with the Exchange Agent, in a form
reasonably acceptable to the Company, setting forth the procedures to be used in
accomplishing the deliveries and other actions contemplated by this Section 4.4,
the provisions of which agreement may vary the provisions of such Sections in
any respect not material and adverse to the stockholders of the Company.
(b) At or promptly after the Effective Time, Holdco will deposit or will
cause to be deposited, with the Exchange Agent certificates representing shares
of Parent Common Stock ("New Certificates") and an amount of cash (such New
Certificates and cash, together with any dividends or distributions with a
record date occurring after the Effective Date with respect thereto (without any
interest on any such cash, dividends or distributions) and any cash in lieu of
any fractional share of Parent Common Stock, being hereinafter referred to as
the "Exchange Fund") sufficient to deliver to the holders of Shares the
aggregate Consideration to which such holders are entitled pursuant to Section
4.1, together with all cash and other property to which such holders may be
entitled pursuant to Sections 4.2 and 4.3 in respect of dividends and
distributions or cash in lieu of fractional share interests. Parent hereby
agrees that, in consideration of payment in the amount of $200 million received
by it from Holdco prior to the Effective Time, and in consideration of the
issuance to Parent of stock of Holdco having a value equal to the value of the
Parent Common Stock as of the Effective Time less $200 million, which
consideration Holdco hereby agrees to pay to and issue to Parent, Parent will
issue and deposit with the Exchange Agent, at or promptly after the Effective
Time, the Parent Common Stock. At the time of the foregoing deposits, Parent,
Holdco and the Surviving Corporation will irrevocably instruct the Exchange
Agent to deliver such Consideration to the holders of Shares after the Effective
Time in accordance with the procedures of the Exchange Agent referred to in
Section 4.4(a).
(c) The Surviving Corporation will cause the New Certificates into which
Shares are converted into the right to receive at the Effective Time and/or any
cash in respect of any Per Share Cash Consideration, cash in lieu of fractional
share interests or dividends or distributions which such person is entitled to
receive to be delivered to such stockholder upon delivery (if not previously
delivered) to the Exchange Agent of Old Certificates representing such Shares
owned by such stockholder (or, if any of such Old Certificates are lost, stolen
or destroyed, the procedures of Section 4.4(g) are followed). No interest will
be paid on any Consideration, or any cash in respect of fractional share
interests or dividends or distributions, that any such
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person is entitled to receive pursuant to this Article IV upon such delivery to
the Exchange Agent of Old Certificates.
(d) Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto will be liable to any former holder of Shares for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(e) No dividends or other distributions on shares of Parent Common Stock
with a record date occurring after the Effective Time will be paid to the holder
of any unsurrendered Old Certificate representing Shares converted in the Merger
into the right to receive such shares of Parent Common Stock until the holder
thereof is entitled to receive New Certificates in exchange therefor in
accordance with this Article IV, and no such Shares will be eligible to be voted
at any meeting of holders of shares of Parent Common Stock until the holder of
the related Old Certificates is entitled to receive New Certificates in
accordance with this Article IV. After becoming so entitled in accordance with
this Article IV, the record holder will be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Parent Common Stock
such holder had the right to receive upon surrender of such Old Certificates.
(f) Any portion of the Exchange Fund that remains unclaimed by the holders
of Old Certificates for six months after the Effective Time will be returned to
or to the direction of Parent. Any stockholders of the Company who have not
theretofore complied with this Article IV thereafter shall look only to Parent
for payment of their claim for Per Share Stock Consideration, Per Share Cash
Consideration, cash in lieu of any fractional shares and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect of each
Share represented by such Old Certificates such stockholder holds as determined
pursuant to this Agreement, in each case without any interest thereon.
(g) In the event any Old Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person (as
defined below) claiming such Old Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond in customary
amount as indemnity against any claim that may be made against it with respect
to such Old Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Old Certificate the shares of Parent Common Stock and
any cash payable and any unpaid dividends or other distributions in respect
thereof pursuant to this Article IV upon due surrender of and deliverable in
respect of the Shares represented by such Old Certificate pursuant to this
Agreement.
For the purposes of this Agreement, the term "Person" or "person" shall
mean any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(h) Affiliates. Notwithstanding anything herein to the contrary, Old
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.8) of the Company shall not be exchanged until Parent has received
a written agreement from such Person as provided in Section 6.8 hereof.
4.5. Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, or Parent changes the number of shares of Parent Common
Stock or securities convertible or exchangeable into or exercisable for shares
of Parent Common Stock, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), dividend
or distribution, recapitalization, merger, subdivision, combination, issuer
tender or exchange offer, or other similar transaction, the Per Share Cash
Consideration and/or the Per Share Stock Consideration will be adjusted
appropriately to provide to the holders of Shares the same economic effect as
contemplated by this Agreement prior to such reclassification, split, dividend,
distribution, recapitalization, merger, subdivision, combination, tender or
exchange or similar transaction.
4.6. Dissenting Stockholders. Dissenters' Shares will be paid for by or
at the direction of Parent in accordance with Section 262 of the DGCL. The
Company shall give Parent prompt notice of any written demands for fair value
received by the Company, withdrawals of such demands, and any other related
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instruments served pursuant to Section 262 of the DGCL and received by the
Company. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for fair value for
Dissenters' Shares or offer to settle, or settle, or negotiate in respect of any
such demands.
4.7. Right to Withhold Taxes; Real Estate Transfer Taxes. (a) Parent
shall be entitled to deduct or withhold any Taxes required to be deducted or
withheld from the Per Share Cash Consideration under Law. Any such amount
deducted or withheld shall be treated as if paid to the stockholder.
(b) Parent shall pay or cause to be paid all state or local real property
transfer, gains or similar Taxes, if any (collectively, the "Transfer Taxes"),
attributable to the transfer of the beneficial ownership of the Company's and
its Subsidiaries' real properties, any penalties or interest with respect
thereto, payable in connection with the consummation of the Merger and/or the
Subsequent Merger. The Company shall cooperate with Parent in the filing of any
returns with respect to the Transfer Taxes, including supplying in a timely
manner a complete list of all real property interests held by the Company and
its Subsidiaries and any information with respect to such properties that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real properties of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion. The shareholders of the
Company shall be deemed to have agreed to be bound by the allocation established
pursuant to this Section 4.7(b) in the preparation of any return with respect to
Transfer Taxes.
4.8. Subscription for Subco Membership Interests. At the effective time
of the Subsequent Merger, in consideration for Holdco arranging for the issuance
by Parent of Parent Common Stock and the payment by Holdco of cash to the
holders of Shares in accordance with this Article IV, Subco shall issue to
Holdco a fully participating membership interest in Subco.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. Except as set forth
in the corresponding sections or subsections of the disclosure schedule
delivered to Parent by the Company prior to entering into this Agreement (the
"Company Disclosure Schedule"), the Company hereby represents and warrants to
Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction
of organization and has all requisite corporate or similar power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its assets or properties or conduct of its
business requires such qualification, except where the failure to be so
organized, qualified or in good standing, or to have such power or
authority when taken together with all other such failures, is not
reasonably likely to have a Company Material Adverse Effect (as defined
below). The Company has made available to Parent a complete and correct
copy of the certificates of incorporation and by-laws or equivalent
organizational documents ("Organizational Documents") of the Company and
its "Significant Subsidiaries" (as defined in Rule 1.02(w) of Regulation
S-X promulgated pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), each as amended to date. The Organizational
Documents so made available are in full force and effect. Section 5.1(a) of
the Company Disclosure Schedule contains a correct and complete list of
each jurisdiction where the Company and each of its Subsidiaries (other
than any Subsidiaries that have no operations and have no employees) is
organized and qualified to do business.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any
entity, whether incorporated or unincorporated, of which at least a
majority of the securities or ownership interests having by their terms
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions is directly or indirectly
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owned or controlled by such party or by one or more of its respective
Subsidiaries or by such party and any one or more of its respective
Subsidiaries and (ii) "Company Material Adverse Effect" means an effect or
change that, individually or in the aggregate with other such effects or
changes, is both material and adverse with respect to the financial
condition, business, operations, results of operations, properties, assets,
or liabilities of the Company and its Subsidiaries taken as a whole;
provided, however, that (i) to the extent any effect or change is caused by
or results from conditions affecting the United States economy generally,
it shall not be taken into account in determining whether there has been
(or whether there is reasonably likely to be) a "Company Material Adverse
Effect," and (ii) to the extent any effect or change is caused by or
results from conditions generally affecting the industries (including the
form and label and commercial print industries) in which the Company
conducts its business, it shall not be taken into account in determining
whether there has been (or whether there is reasonably likely to be) a
"Company Material Adverse Effect" and (iii) to the extent any effect or
change is caused by or results from the announcement or pendency of this
Agreement, it shall not be taken into account in determining whether there
has been (or whether there is reasonably likely to be) a "Company Material
Adverse Effect."
(b) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 500,000 shares
of preferred stock, par value $50.00 per share ("Preferred Shares"). As of
the close of business on January 10, 2003 42,065,499 shares of Company
Common Stock were outstanding, no Preferred Shares were issued or
outstanding and 3,698,022 shares of Company Common Stock were held in the
treasury or by Subsidiaries of the Company. All of the outstanding shares
of Company Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. The Company has no shares reserved for
issuance, except that, as of January 12, 2003, (x) there were (i) 3,824,436
shares of Company Common Stock reserved for issuance pursuant to
outstanding options granted under the Company's 2001 Stock Incentive Plan,
1997 Stock Incentive Plan and 1989 Stock Option Plan and 1,417,593 shares
reserved for issuance pursuant to future grants or options under such plans
and the Company's Stock Deferral Plan, (ii) 1,405,859 shares of Company
Common Stock reserved for future issuance pursuant to the Company's
Employee Stock Purchase Plan, (iii) 62,089 shares of Company Common Stock
reserved for future issuance pursuant to the Company's Director Retainer
Fee Plan and (iv) shares of Company Common Stock to be delivered in respect
of dividends on shares of Company Common Stock deferred pursuant to the
Company's Amended and Restated Executive Incentive Plan, under which
165,425.2 shares of Company Common Stock were deferred under such plan as
of January 15, 2003 (the "Stock Plans"), and (y) there were 3,437,088
Preferred Shares reserved for issuance pursuant to the rights (the
"Rights") under the Stockholder Rights Agreement, dated as of March 14,
2000, between the Company and Xxxxxx Trust and Savings Bank, as Rights
Agent (the "Rights Agreement"). The Company Disclosure Schedule contains a
correct and complete list of each outstanding option to purchase Shares
under the Stock Plans other than pursuant to the Company's Employee Stock
Purchase Plan (each a "Company Option"), including the holder, date of
grant, exercise price and number of Shares subject thereto. Each of the
outstanding shares of capital stock or other securities of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by a direct or indirect wholly owned Subsidiary of
the Company, free and clear of any lien, pledge, security interest, claim
or other encumbrance. There are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements, calls, commitments or
rights of any kind that obligate the Company or any of its Subsidiaries to
issue or sell any shares of capital stock or other securities of the
Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of
its Subsidiaries, and no securities or obligations evidencing such rights
are authorized, issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company
on any matter ("Voting Debt"). The Company does not own, directly or
indirectly, any voting
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interest in any Person that may require a filing by Parent under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
(c) Corporate Authority; Approval and Fairness. (i) The Company has
all requisite corporate power and authority and has taken all corporate
action necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate, subject only to approval of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the "Company Requisite Vote"), the Merger. This Agreement is
a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms.
(ii) The Board of Directors of the Company (A) has unanimously
approved this Agreement and the Merger and the other transactions
contemplated hereby and (B) has received the opinion of its financial
advisor, Dresdner Kleinwort Xxxxxxxxxxx, Inc., to the effect that the
Consideration is fair from a financial point of view to holders of Shares
(other than Parent and its "Affiliates" (as defined in Rule 12b-2 under the
Exchange Act)), a copy of which opinion has been delivered to Parent. It is
agreed and understood that such opinion is for the benefit of the Company's
Board of Directors and may not be relied on by Parent or Merger Sub.
(d) Governmental Filings; No Violations; Certain Contracts. (i) Other
than the filings, notices and/or approvals (A) pursuant to Section 1.3, (B)
under the HSR Act, (C) under the Exchange Act and the Securities Act of
1933, as amended (the "Securities Act"), (D) to comply with state
securities or "blue-sky" laws, (E) required to be made with the New York
Stock Exchange, Inc. ("NYSE") and (F) required and customary filings
pursuant to any state environmental transfer statutes including, without
limitation, the New Jersey Industrial Site Recovery Act N.J.S.A. 13:1K-6 et
seq. and the Connecticut Transfer Act, C.G.S. 22a-134a et seq., no notices,
reports or other filings are required to be made by the Company with, nor
are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, agency, commission, body or other governmental entity
("Governmental Entity"), in connection with the execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated hereby, except those that
the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to
consummate transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby will not, constitute or result in
(A) a breach or violation of, or a default under, the Organizational
Documents of the Company or any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or
the creation of a lien, pledge, security interest or other encumbrance on
the assets of the Company or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any agreement, lease, license,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon the Company or any of its Subsidiaries or any
Law (as defined in Section 5.1(i)) or governmental or non-governmental
permit or license to which the Company or any of its Subsidiaries is
subject or (C) any change in the rights or obligations of any party under
any of the Contracts, except, in the case of clause (B) or (C) above, for
any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Section 5.1(d) of the Company Disclosure
Schedule sets forth a correct and complete list of (i) any of the top fifty
customer Contracts of the Company based upon five months revenues prior to
January 1, 2002 and (ii) any real property leases of the Company and its
Subsidiaries for more than 20,000 square feet of space, in each case,
pursuant to which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement (whether or
not subject to the exception set forth with respect to clauses (B) and (C)
above).
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(e) Company Reports; Financial Statements. The Company has delivered
to the Parent each registration statement, report, proxy statement or
information statement prepared by it since July 31, 2002 (the "Audit
Date"), including the Company's Annual Report on Form 10-K for the year
ended July 31, 2002 and Quarterly Report on Form 10-Q for the period ended
October 31, 2002 (including exhibits, annexes and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any other reports filed with the SEC subsequent to
the date hereof and as amended, the "Company Reports"). As of their
respective dates (or, if amended prior to the date hereof, as of the date
of such amendment), the Company Reports did not, and any Company Reports
filed with the SEC subsequent to the date hereof will not, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related
notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of the Company and its subsidiaries as of
its date and each of the consolidated statements of income and of changes
in financial position included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly
presents, or will fairly present, the results of operations, retained
earnings and changes in financial position, as the case may be, of the
Company and its subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with U.S. generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein. The Company has no cash obligations or liabilities with respect to
any restructuring plan, including with respect to the Company's 2000 and
2002 restructuring plans.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date the Company
and its Subsidiaries have conducted their respective businesses only in,
and have not engaged in any material transaction other than according to,
the ordinary and usual course of such businesses and there has not been (i)
any change in the financial condition, business, operations, results of
operations, properties, assets or liabilities of the Company and its
Subsidiaries or any development or combination of developments of which
management of the Company has knowledge that, individually or in the
aggregate, has had or could reasonably be expected to have a Company
Material Adverse Effect or prevent, materially delay or materially impair
the ability of the Company to consummate the transactions contemplated by
this Agreement; (ii) any material damage, destruction or other casualty
loss with respect to any material asset or property owned, leased or
otherwise used by the Company or any of its Subsidiaries, whether or not
covered by insurance; (iii) any declaration, setting aside or payment of
any dividend or other distribution in cash, stock or property in respect of
the capital stock of the Company, except for dividends or other
distributions on its capital stock publicly announced prior to the date
hereof and except as expressly permitted hereby; or (iv) any change by the
Company in accounting principles or any material accounting practices or
methods. Since the Audit Date, except as provided for herein or as
disclosed in the Company Reports filed prior to the date hereof, there has
not been any increase in the compensation payable or that could become
payable by the Company or any of its Subsidiaries to officers or key
employees or any amendment of any of the Compensation and Benefit Plans
other than increases or amendments in the ordinary course.
(g) Litigation and Liabilities. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its Affiliates or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required
to be disclosed, including those relating to Environmental Law (as defined
in Section 5.1(k)) or any other facts or circumstances of which the Company
has knowledge that could result in any claims against, or obligations or
liabilities of, the Company or any of its Affiliates, except for those that
are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
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(h) Employee Benefits. (i) A copy of each written, and a description
of each unwritten, bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy
or arrangement that covers employees, directors, former employees or former
directors of the Company and its Subsidiaries (the "Compensation and
Benefit Plans") and any trust agreement or insurance contract forming a
part of such Compensation and Benefit Plan has been made available to
Parent prior to the date hereof. The Compensation and Benefit Plans are
listed in Section 5.1(h)(i) of the Company Disclosure Schedule and any
Compensation and Benefit Plan that is the subject of a favorable opinion
letter from the Internal Revenue Service National Office, including any
master or prototype plan, has been separately identified in such Section
5.1(h)(i).
(ii) To the knowledge of the Company, except as set forth in Section
5.1(h)(ii) of the Company Disclosure Schedule, all Compensation and Benefit
Plans that are subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), other than "Multiemployer Plans" (as within the
meaning of Section 3(37) of ERISA), (the "ERISA Plans") are in material
compliance with all applicable law, including the Code and ERISA. Each
ERISA Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and that is intended to be
qualified under Section 401(a) of the Code is the subject of a favorable
determination letter from the Internal Revenue Service (the "IRS") covering
all tax law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"), is the subject of a request to the
IRS for such favorable determination letter submitted within the applicable
remedial amendment period under Section 401(b) of the Code, or is entitled
to rely upon the favorable opinion letters described above, and the Company
is not aware of any circumstances likely to result in revocation of any
such favorable opinion or determination letter. Except as set forth in
Section 5.1(h)(ii) of the Company Disclosure Schedule, each "employee
pension benefit plan" set forth in Section 5.1(h)(ii) of the Company
Disclosure Schedule which was merged into an ERISA Plan and that is
intended to be qualified under Section 401(a) of the Code is the subject of
a favorable determination letter from the IRS covering all tax law changes
between 1994 and 2000 (collectively, "GUST"), was entitled to rely upon a
favorable GUST opinion letter as described above or was merged into an
ERISA Plan prior to the expiration of the GUST remedial amendment period
under Section 401(b) of the Code. There is no pending or, to the knowledge
of the Company, threatened material litigation relating to the ERISA Plans.
To the knowledge of the Company, neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any ERISA Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, would subject the Company or any of its Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA. Neither the Company nor any of its Subsidiaries has
filed, or is considering filing, an application under the IRS Employee
Plans Compliance Resolution System or the Department of Labor's (the "DOL")
Voluntary Fiduciary Correction program with respect to any ERISA Plan.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company or
any Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered a single employer together with the
Company pursuant to Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). The Company and its Subsidiaries have not incurred and
do not expect to incur any material withdrawal liability with respect to a
Multiemployer Plan (regardless of whether based on contributions of an
ERISA Affiliate). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived or extended, other than pursuant to PBGC Reg. Section 4043.66,
has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by
this Agreement.
(iv) All contributions or premiums required to be made under the terms
of any Compensation and Benefit Plan or by law as of the date hereof have
been timely made or have been reflected on the most
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recent consolidated balance sheet filed or incorporated by reference in the
Company Reports prior to the date hereof. Neither any Pension Plan nor any
"single-employer plan," as defined above, of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither the Company nor its Subsidiaries
has provided, or is required to provide, security to any Pension Plan or to
any "single-employer plan," as defined above, of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Pension Plan's most recent
actuarial valuation), did not exceed the then current value of the assets
of such Pension Plan, and there has been no material change in the
financial condition of such Pension Plan since the last day of the most
recent plan year. The withdrawal liability of the Company and its
Subsidiaries under each Multiemployer Plan to which the Company, any of its
Subsidiaries or an ERISA Affiliate has contributed during the preceding 12
months, determined as if a "complete withdrawal" within the meaning of
Section 4203 of ERISA, had occurred as of the date hereof, does not exceed
$5,000,000.
(vi) Neither the Company nor its Subsidiaries have any obligations for
retiree health and life benefits under any ERISA Plan, except as set forth
in Section 5.1(h)(vi) of the Company Disclosure Schedule. Each such plan
contains provisions that allow the Company or its Subsidiaries to amend or
terminate such plan at any time.
(vii) There has been no amendment to, announcement by the Company or
any of its Subsidiaries relating to, or change in employee participation or
coverage under, any Compensation and Benefit Plan which would increase
materially the expense of maintaining such Compensation and Benefit Plan
above the level of the expense incurred therefore for the most recent
fiscal year. Except as disclosed in Section 5.1(h)(vii) of the Company
Disclosure Schedule, the execution of this Agreement, shareholder approval
of this Agreement, or consummation of the Merger and the other transactions
contemplated by this Agreement will not (u) entitle any employees of the
Company or its Subsidiaries to severance pay, (v) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any of the Compensation and Benefit Plans, (w) result in any
breach or violation of, or a default under, any of the Compensation and
Benefit Plans, (x) limit or restrict the right of the Company or, after the
consummation of the transactions contemplated hereby, Parent to merge,
amend or terminate any of the Compensation and Benefit Plans, (y) cause the
Company or any of its Subsidiaries or, after the consummation of the
transactions contemplated hereby, Parent to record additional compensation
expense on its income statement with respect to any outstanding stock
option or other equity-based award or (z) result in payments under any of
the Compensation and Benefit Plans that are not deductible pursuant to
Section 162(m) or Section 280G of the Code.
(viii) None of the Compensation and Benefit Plans is subject to the
Laws of any jurisdiction outside of the United States of America.
(ix) Section 5.1(h)(ix) of the Company Disclosure Schedule sets forth
the amount of bonuses accrued as of December 31, 2002 with respect to all
employees of the Company and its Subsidiaries and the amount of bonuses
targeted to be accrued for the remainder of fiscal year 2003.
(i) Compliance with Laws; Permits. Except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any federal, state, local or foreign law, statute, ordinance,
rule, regulation, judgment, order, injunction, decree, arbitration award,
agency requirement, license or permit of any Governmental Entity
(collectively, "Laws"), except for any violation that is not material.
Except as set forth in the Company Reports filed prior to the date hereof
and except as to matters that individually and in the aggregate are
immaterial, no investigation or review by any Governmental Entity with
respect to
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the Company or any of its Subsidiaries is pending or, to the knowledge of
the Company, threatened, nor has any Governmental Entity indicated an
intention to conduct the same. To the knowledge of the Company, no material
change is required in the Company's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws, and the Company
has not received any notice or communication of any material noncompliance
with any such Laws that has not been cured as of the date hereof. The
Company and its Subsidiaries each has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business in all material
respects as presently conducted.
(j) Takeover Statutes. The Board of Directors of the Company has
taken all action so that Parent will not be prohibited from entering into a
"business combination" with the Company as an "interested stockholder" (in
each case as such term is used in Section 203 of the DGCL) as a result of
the execution of this Agreement or the consummation of the transactions
contemplated hereby. The Board of Directors of the Company has taken all
action necessary to exempt the Merger from Article NINTH of the Restated
Certificate of Incorporation of the Company. To the knowledge of the
Company, no "fair price," "moratorium," "control share acquisition" or
other similar anti-takeover statute or regulation (each a "Takeover
Statute") or any anti-takeover provision in the Company's Organizational
Documents is, or at the Effective Time will be, applicable to the Company,
the Shares, the Merger or the other transactions contemplated by this
Agreement.
(k) Environmental Matters. Except as disclosed in the Company Reports
prior to the date hereof and except for matters that are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse
Effect or prevent, materially burden or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement:
(i) the Company and its Subsidiaries have complied at all times with all
applicable Environmental Laws; (ii) no property currently owned or operated
by the Company or any of its Subsidiaries (including soils, groundwater,
surface water, buildings or other structures) is contaminated with any
Hazardous Substance which could reasonably be expected to require
remediation pursuant to any Environmental Law; (iii) no property formerly
owned or operated by the Company or any of its Subsidiaries was
contaminated with any Hazardous Substance during or prior to such period of
ownership or operation which contamination could reasonably be expected to
require remediation pursuant to any Environmental Law; (iv) neither the
Company nor any of its Subsidiaries is liable for any Hazardous Substance
disposal or contamination on any third party property; (v) neither the
Company nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that the Company or any
of its Subsidiaries may be in violation of or subject to liability under
any Environmental Law; (vi) neither the Company nor any of its Subsidiaries
is subject to any order, decree, injunction, indemnity or other agreement
with any Governmental Entity or any third party relating to liability under
any Environmental Law or relating to Hazardous Substances; (vii) there are
no other circumstances or conditions involving the Company or any of its
Subsidiaries that could reasonably be expected to result in any claim,
liability, investigation, cost or restriction on the ownership, use, or
transfer of any property pursuant to any Environmental Law; and (viii) the
Company has made available to Parent copies of all material environmental
reports, studies, assessments, sampling data and other environmental
documents in its possession relating to Company or its Subsidiaries or
their respective current and former properties or operations.
As used herein, the term "Environmental Law" means any federal, state,
local or foreign statute, law, regulation, order, decree, permit,
authorization, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health,
safety, or natural resources, (B) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance or (C) noise,
odor, indoor air, employee exposure, wetlands, pollution, contamination or
any injury or threat of injury to persons or property relating to any
Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental
Law; (B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or
A-14
radon; and (C) any other substance which is the subject of regulatory
action by any Government Entity in connection with any Environmental Law.
(l) Taxes. The Company and each of its Subsidiaries (i) have prepared
in good faith and duly and timely filed (taking into account any extension
of time within which to file) all Tax Returns (as defined below) required
to be filed by any of them, except where failures to so prepare or file Tax
Returns are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect; (ii) all such filed Tax Returns are
complete and accurate in all respects, except where failure to be complete
and accurate are not, individually or in the aggregate, reasonably likely
to have a Company Material Adverse Effect, (iii) have duly and timely paid
all Taxes (as defined below) that are required to be paid or that the
Company or any of its Subsidiaries are obligated to withhold from amounts
owing to any employee, creditor or third party, except with respect to
matters contested in good faith in appropriate proceedings and reserved for
in accordance with GAAP and except where failures to so pay are not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect; and (iv) have not waived any statute of
limitations with respect to any material Taxes or, to the extent related to
such Taxes, agreed to any extension of time with respect to a Tax
assessment or deficiency, in each case to the extent such waiver or
agreement is currently in effect. The Tax Returns referred to in clause (i)
of the previous sentence, to the extent related to income, sales or use
Taxes, have been examined by the IRS or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired. As
of July 31, 2002, there were no material audits, examinations,
investigations or other proceedings pending or threatened in writing in
respect of Taxes or Tax matters. The Company has made available to
Purchaser true and correct copies of the United States federal, state,
local and foreign income Tax Returns filed by the Company and its
Subsidiaries for taxable years ended after December 31, 1995 and before the
date hereof. The Company and each of its Subsidiaries have complied with
all United States federal information reporting requirements and has
retained all necessary information in its files to permit continued
compliance with informational reporting requirements, except where failures
to so comply or retain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect. There are no
material liens on any of the assets of the Company or any of its
Subsidiaries, except for liens relating to current taxes not yet due and
payable. No closing or similar agreements have been entered into by any
taxing authority with the Company or any of its Subsidiaries, except
closing and similar agreements that are not reasonably expected to have a
Company Material Adverse Effect. Neither the Company nor any predecessor to
the Company has made with respect to the Company, or any predecessor of the
Company any consent under Section 341 of the Code. Neither the Company nor
any of its Subsidiaries is or has been a member of an affiliated group
(within the meaning of Section 1504(a) of the Code) filing consolidated
United States federal income Tax Returns (other than such a group the
common parent of which is or was the Company). None of the Company or any
of its Subsidiaries has been a party to any distribution occurring during
the last 3 years in which the parties to such distribution treated the
distribution as one to which Section 355 of the Code (or any similar
provision of state, local or foreign law) applied. No tax is required to be
withheld pursuant to Section 1445 of the Code as a result of the transfer
contemplated by this agreement.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes," and "Taxable") includes all United
States federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severances, stamp,
document, transfer, payroll, sales, employment, unemployment, social
security, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties
and additions, and (ii) the term "Tax Return" includes all returns and
reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax
authority relating to Taxes.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor
A-15
union or labor organization, nor is the Company or any of its Subsidiaries
the subject of any proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of the Company, threatened, nor has there been
for the past five years, any labor strike, dispute, walk-out, work
stoppage, slow-down or lockout involving the Company or any of its
Subsidiaries.
(n) Insurance. The Company and its Subsidiaries maintain fire and
casualty, general liability, business interruption, product liability, and
sprinkler and water damage and other insurance policies, as applicable,
that are consistent with that of other companies of substantially similar
size and scope of operations in the same or substantially similar
businesses.
(o) Intellectual Property. (i) The Company and/or each of its
Subsidiaries owns, is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, domain
names, copyrights, and any applications therefor, technology, trade
secrets, know-how, computer software and tangible or intangible proprietary
information or materials that are used in the business of the Company and
its Subsidiaries as currently conducted, and to the knowledge of the
Company all patents, trademarks, trade names, service marks, domain names
and copyrights owned by the Company and/or its Subsidiaries are valid and
subsisting.
(ii) Except as disclosed in Company Reports filed prior to the date
hereof:
(A) neither the Company nor any of its Subsidiaries is, or will the
Company or any of its Subsidiaries be as a result of the execution and
delivery of this Agreement or the performance of the Company's
obligations hereunder, in violation of any material licenses,
sublicenses or other agreements as to which the Company or any of its
Subsidiaries is a party and pursuant to which the Company or any of its
Subsidiaries is authorized to use any third-party patents, trademarks,
service marks, domain names, copyrights, technology, trade secrets,
know-how, computer software or tangible or intangible proprietary
information or materials (collectively, "Third-Party Intellectual
Property Rights");
(B) no claims with respect to (I) the patents, registered and
material unregistered trademarks and service marks, domain names,
registered and material unregistered copyrights, trade names, and any
applications therefor, technology, trade secrets, know-how, computer
software or tangible or intangible proprietary information or materials
owned by the Company or any of its Subsidiaries (collectively, the
"Company Intellectual Property Rights"); or (II) Third-Party
Intellectual Property Rights are currently pending or, to the knowledge
of the Company, are threatened by any Person, except for immaterial
claims;
(C) to the knowledge of the Company, there are no valid grounds for
any bona fide claims (I) to the effect that the manufacture, sale,
licensing or use of any product or service as now used, sold or licensed
by the Company or any of its Subsidiaries, infringes, misappropriates or
violates any copyright, patent, trademark, service xxxx, domain name,
trade secret or other proprietary right of any Person; (II) against the
use by the Company or any of its Subsidiaries, of any Company
Intellectual Property Right or Third-Party Intellectual Property Right
used in the business of the Company or any of its Subsidiaries as
currently conducted; (III) challenging the ownership, validity or
enforceability of any of the Company Intellectual Property Rights; or
(IV) challenging the license or legally enforceable right to use the
Third-Party Intellectual Rights by the Company or any of its
Subsidiaries; and
(D) to the knowledge of the Company, there is no unauthorized use,
infringement, misappropriation or violation of any of the Company
Intellectual Property Rights by any third party, including any employee
or former employee of the Company or any of its Subsidiaries.
(p) Rights Plan. The Company has amended the Rights Agreement to
provide that Parent shall not be deemed an "Acquiring Person" and that the
Rights will not separate from the Shares, as a result of entering into this
Agreement or consummating the Merger and/or the other transactions
contemplated hereby.
A-16
(q) Canadian Operations. The aggregate gross book value of the assets
in Canada of the Company and its "affiliates" (within the meaning of
Section (2) of the Competition Act (Canada)) and the gross revenues from
sales in or from Canada generated from those assets determined in each case
as prescribed in Part IX of the Competition Act (Canada) and the
Regulations thereunder do not exceed C$35 million. The Company is not a
reporting issuer or equivalent for the purposes of any Canadian securities
laws. The Company has not made a prospectus offering in the Province of
Quebec or a distribution exempt from section 43, 47, 48 or 63 of the
Securities Act (Quebec).
(r) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in
connection with the Merger or the other transactions contemplated in this
Agreement except that the Company has employed Dresdner Kleinwort
Xxxxxxxxxxx, Inc. as its financial advisor, the arrangements with which
have been disclosed to Parent prior to the date hereof.
5.2. Representations and Warranties of Parent and Merger Sub. Except as
set forth in the corresponding sections or subsections of the disclosure
schedule delivered to the Company by Parent prior to entering into this
Agreement (the "Parent Disclosure Schedule"), Parent and Merger Sub each hereby
represent and warrant to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 1,000 shares of common stock, par value $0.01 per
share, of which one share of common stock is validly issued and
outstanding. All of the issued and outstanding capital stock of Merger Sub
is, and at the Effective Time will be, owned by Parent, and there are (i)
no other shares of capital stock or voting securities of Merger Sub, (ii)
no securities of Merger Sub convertible into or exchangeable for shares of
capital stock or voting securities of Merger Sub and (iii) except as
contemplated by Section 4.8 of this Agreement, no options or other rights
to acquire from Merger Sub, and no obligations of Merger Sub to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Merger Sub. Merger
Sub has not conducted any business prior to the date hereof and has no, and
prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent and
its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation
of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, qualified or in
such good standing, or to have such power or authority when taken together
with all other such failures, is not reasonably likely to have a Parent
Material Adverse Effect (as defined below). Parent has made available to
the Company a complete and correct copy of Parent's and its Significant
Subsidiaries' Organizational Documents, each as amended to the date hereof.
Parent's and its Significant Subsidiaries' Organizational Documents so made
available are in full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
means an effect or change that, individually or in the aggregate with other
such effects or changes, is both material and adverse with respect to the
financial condition, business, operations, results of operations,
properties, assets or liabilities of Parent and its Subsidiaries taken as a
whole; provided, however, that (i) to the extent any effect or change is
caused by or results from conditions affecting the United States economy
generally, it shall not be taken into account in determining whether there
has been (or whether there is reasonably likely to be) a "Parent Material
Adverse Effect," and (ii) to the extent any effect or change is caused by
or results from conditions generally affecting the industries (including
the form and label and commercial print industries) in which Parent
conducts its business, it shall not be taken into account in determining
whether there has been (or whether there is reasonably likely to be) a
"Parent Material Adverse Effect"
A-17
and (iii) to the extent any effect or change is caused by or results from
the announcement or pendency of this Agreement, it shall not be taken into
account in determining whether there has been (or whether there is
reasonably likely to be) a "Parent Material Adverse Effect."
(c) Capital Structure. The authorized capital stock of Parent
consists of an unlimited number of shares of Parent Common Stock, of which
approximately 111,842,348 shares were outstanding as of the close of
business on January 14, 2003, and an unlimited number of Preference Shares,
issuable in series, and an unlimited number of Series 1 Preference Shares
(collectively, the "Parent Preference Shares"). No Parent Preference Shares
were outstanding as of the close of business on January 14, 2003. All of
the outstanding shares of Parent Common Stock have been duly authorized and
are validly issued, fully paid and nonassessable. Parent has no shares of
Parent Common Stock or Parent Preference Shares reserved for issuance,
except that, as of January 15, 2003, there were 5,666,913 shares of Parent
Common Stock reserved for issuance pursuant to the 1985, 1994, 1999 and
2001 Long Term Incentive Plans (the "Parent Stock Plans") and the Option
Agreements dated as of April 18, 2002. Each of the outstanding shares of
capital stock of each of Parent's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and, except for directors' qualifying
shares, owned by a direct or indirect wholly owned subsidiary of Parent,
free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above and as provided in Section 4.8,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, commitments or rights of any kind
that obligate the Company or any of its Subsidiaries to issue or to sell
any shares of capital stock or other securities of Parent or any of its
Subsidiaries or any securities or obligations convertible or exchangeable
into or exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of the Company or any of its Significant
Subsidiaries, and no securities or obligation evidencing such rights are
authorized, issued or outstanding. Parent does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of Parent on any matter ("Parent
Voting Debt").
(d) Corporate Authority. (i) Except as may be required by The Toronto
Stock Exchange ("TSX"), no vote of holders of capital stock of Parent is
necessary to approve this Agreement and the Merger and the other
transactions contemplated hereby. Each of the Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under
this Agreement and to consummate the Merger. This Agreement is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms.
(ii) Prior to the Effective Time, Parent will have taken all necessary
action to permit it to issue the number of shares of Parent Common Stock
required to be issued pursuant to Article IV. The Parent Common Stock, when
issued, will be validly issued, fully paid and nonassessable, and no
stockholder of Parent will have any preemptive right of subscription or
purchase in respect thereof. The Parent Common Stock, when issued, will be
registered under the Securities Act and Exchange Act and registered or
exempt from registration under any applicable state securities or "blue
sky" laws.
(e) Governmental Filings; No Violations. (i) Other than the filings,
notices and/or approvals (A) pursuant to Section 1.3, (B) under the HSR
Act, (C) under the Securities Act and the Exchange Act, (D) to comply with
state securities or "blue sky" laws, (E) as may be required by the NYSE and
the TSX in respect of the shares of Parent Common Stock to be issued in the
Merger and the listing of the Parent Common Stock on such stock exchanges
and (F) as are required to be made or obtained under the Canada Business
Corporations Act and Canadian securities laws, no notices, reports or other
filings are required to be made by Parent or Merger Sub with, nor are any
consents, registrations, approvals, permits or authorizations required to
be obtained by Parent or Merger Sub from, any Governmental Entity, in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub and the consummation by Parent and Merger Sub of the Merger and
the other transactions contemplated hereby, except those that the failure
to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect or prevent, materially
delay or
A-18
materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under,
the Organizational Documents or, if applicable, the resolutions of
stockholders, of Parent and Merger Sub, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the assets of
Parent or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon Parent or any of its
Subsidiaries or any Law or governmental or non-governmental permit or
license to which Parent or any of its Subsidiaries is subject or (C) any
change in the rights or obligations of any party under any of the
Contracts, except, in the case of clause (B) or (C) above, for breach,
violation, default, acceleration, creation or change that, individually or
in the aggregate, is not reasonably likely to have a Parent Material
Adverse Effect or prevent, materially delay or materially impair the
ability of Parent or Merger Sub to consummate the transactions contemplated
by this Agreement. Section 5.2(e) of the Parent Disclosure Schedule sets
forth a correct and complete list of Contracts of Parent and its
Subsidiaries (other than Contracts terminable upon sixty or fewer days'
notice) pursuant to which consents or waivers are or may be required prior
to consummation of the transactions contemplated by this Agreement (whether
or not subject to the exception set forth with respect to clauses (B) and
(C) above).
(f) Parent Reports; Financial Statements. Parent has delivered to the
Company each registration statement, report, proxy statement or information
statement prepared by it since December 31, 2001 (the "Parent Audit Date"),
including (i) Parent's Annual Report on Form 10-K for the year ended
December 31, 2001 and (ii) Parent's Quarterly Reports on Form 10-Q for the
periods ended March 31, 2002, June 30, 2002 and September 30, 2002, each in
the form (including exhibits, annexes and any amendments thereto) filed
with the SEC (collectively, including any such reports filed subsequent to
the date hereof, the "Parent Reports"). As of their respective dates, the
Parent Reports did not, and any Parent Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Parent Reports (including the related notes and schedules) fairly
presents, or will fairly present, the consolidated financial position of
Parent and its Subsidiaries as of its date and each of the consolidated
statements of income and of changes in financial position included in or
incorporated by reference into the Parent Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results
of operations, retained earnings and changes in financial position, as the
case may be, of Parent and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect),
in each case in accordance with Canadian generally accepted accounting
principles consistently applied during the periods involved, except as may
be noted therein.
(g) Absence of Certain Changes. Except as disclosed in the Parent
Reports filed prior to the date hereof, since the Parent Audit Date Parent
and its Subsidiaries have conducted their respective businesses only in,
and have not engaged in any material transaction other than according to,
the ordinary and usual course of such businesses and there has not been (i)
any change in the financial condition, business, operations, results of
operations, properties, assets or liabilities of Parent and its
Subsidiaries or any development or combination of developments of which
management of Parent has knowledge that, individually or in the aggregate,
has had or could reasonably be expected to have a Parent Material Adverse
Effect or prevent, materially delay or materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement; (ii)
any material damage, destruction or other casualty loss with respect to any
material asset or property owned, leased or otherwise used by Parent or any
of its Subsidiaries, whether or not covered by insurance; (iii) any
declaration, setting aside or payment of any dividend or other distribution
in cash, stock or property in respect of the capital stock of Parent,
except as
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expressly permitted hereby; or (iv) any change by Parent in accounting
principles, practices or methods. Since the Parent Audit Date, except as
provided for herein or as disclosed in the Parent Reports filed prior to
the date hereof, there has not been any increase in the compensation
payable or that could become payable by the Parent or any of its
Subsidiaries to officers or key employees or any amendment of any of the
Parent Compensation and Benefit Plans other than increases or amendments in
the ordinary course.
(h) Litigation and Liabilities. Except as disclosed in the Parent
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of Parent, threatened against
Parent or any of its Affiliates or (ii) obligations or liabilities, whether
or not accrued, contingent or otherwise and whether or not required to be
disclosed, including those relating to matters involving any Environmental
Law, or any other facts or circumstances of which the Parent has knowledge
that could result in any claims against, or obligations or liabilities of,
Parent or any of its Affiliates, except for those that are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect or prevent or materially burden or materially
impair the ability of Parent or Merger Sub to consummate the transactions
contemplated by this Agreement.
(i) Employee Benefits. (i) A copy of each written, and a description
of each unwritten, bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health or other plan, agreement, policy
or arrangement that covers employees, directors, former employees or former
directors of Parent and its Subsidiaries (the "Parent Compensation and
Benefit Plans") and any trust agreement or insurance contract forming a
part of such Parent Compensation and Benefit Plan has been made available
to the Company prior to the date hereof. The Parent Compensation and
Benefit Plans are listed in Section 5.2(i)(i) of the Parent Disclosure
Schedule and any Parent Compensation and Benefit Plan that is the subject
of a favorable opinion letter from the Internal Revenue Service National
Office, including any master or prototype plan, has been separately
identified in such Section 5.2(i)(i).
(ii) To the knowledge of Parent, except as set forth in Section
5.2(i)(ii) of the Parent Disclosure Schedule, all Compensation and Benefit
Plans that are subject to ERISA, other than Multiemployer Plans, (the
"Parent ERISA Plans") are in material compliance with all applicable law,
including the Code and ERISA. Each Parent ERISA Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"Parent Pension Plan") and that is intended to be qualified under Section
401(a) of the Code is the subject of a favorable determination letter from
the IRS covering all tax law changes prior to the EGTRRA, is the subject of
a request to the IRS for such favorable determination letter submitted
within the applicable remedial amendment period under Section 401(b) of the
Code, or is entitled to rely upon the favorable opinion letters described
above and Parent is not aware of any circumstances likely to result in
revocation of any such favorable opinion or determination letter. There is
no pending or, to the knowledge of Parent, threatened material litigation
relating to the Parent ERISA Plans. To the knowledge of Parent, neither
Parent nor any of its Subsidiaries has engaged in a transaction with
respect to any Parent ERISA Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject Parent or any of
its Subsidiaries to a material tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA. Neither Parent nor any of its
Subsidiaries has filed, or is considering filing, an application under the
IRS Employee Plans Compliance Resolution System or the DOL's Voluntary
Fiduciary Correction program with respect to any Parent ERISA Plan.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by Parent or any
Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered an ERISA Affiliate of Parent. Parent
and its Subsidiaries have not incurred and do not expect to incur any
material withdrawal liability with respect to a Multiemployer Plan
(regardless of whether based on contributions
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of an ERISA Affiliate of Parent). No notice of a "reportable event," within
the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived or extended, other than pursuant to PBGC
Reg. Section 4043.66, has been required to be filed for any Parent Pension
Plan or by any ERISA Affiliate of Parent within the 12-month period ending
on the date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement.
(iv) All contributions and premiums required to be made under the
terms of any Parent Compensation and Benefit Plan as of the date hereof
have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Parent
Reports prior to the date hereof. Neither any Parent Pension Plan nor any
"single-employer plan," as defined above, of an ERISA Affiliate of Parent
has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate of Parent has an outstanding funding waiver. Neither Parent nor
its Subsidiaries has provided, or is required to provide, security to any
Parent Pension Plan or to any "single-employer plan" of an ERISA Affiliate
of Parent pursuant to Section 401(a)(29) of the Code.
(v) Under each Parent Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
Parent Pension Plan's most recent actuarial valuation), did not exceed the
then current value of the assets of such Parent Pension Plan, and there has
been no material change in the financial condition of such Parent Pension
Plan since the last day of the most recent plan year. The withdrawal
liability of Parent and its Subsidiaries under each Multiemployer Plan to
which Parent, any of its Subsidiaries or an ERISA Affiliate has contributed
during the preceding 12 months, determined as if a "complete withdrawal"
within the meaning of Section 4203 of ERISA, had occurred as of the date
hereof, does not exceed $5,000,000.
(iv) Neither Parent nor its Subsidiaries have any material obligations
for retiree health and life benefits under any Parent ERISA Plan, except as
set forth in the Parent Disclosure Schedule. Each such plan contains
provisions that allow Parent or its Subsidiaries to amend or terminate such
plan at any time.
(vii) There has been no amendment to, announcement by Parent or any of
its Subsidiaries relating to, or change in employee participation or
coverage under, any Parent Compensation and Benefit Plan which would
increase materially the expense of maintaining such Parent Compensation and
Benefit Plan above the level of the expense incurred therefore for the most
recent fiscal year. Parent confirms that, as of the date hereof, Parent
does not intend to make any material change to the Parent Compensation and
Benefit Plans. The execution of this Agreement, shareholder approval of
this Agreement, or consummation of the Merger and the other transactions
contemplated by this Agreement will not (u) entitle any employees of Parent
or its Subsidiaries to severance pay, (v) accelerate the time of payment or
vesting or trigger any payment of compensation or benefits under, increase
the amount payable or trigger any other material obligation pursuant to,
any of the Parent Compensation and Benefit Plans, (w) result in any breach
or violation of, or default under, any of the Parent Compensation and
Benefit Plans, (x) limit or restrict the right of Parent to merge, amend or
terminate any of the Parent Compensation and Benefit Plans, (y) cause
Parent or any of its Subsidiaries to record additional compensation expense
on its income statement with respect to any outstanding stock option or
other equity-based award or (z) result in payments under any of Parent
Compensation and Benefit Plans that are not deductible pursuant to Section
162(m) or Section 280G of the Code or pursuant to the Income Tax Act
(Canada) to the extent such payments were so deductible prior to said
events.
(viii) All Parent Compensation and Benefit Plans covering current or
former non-U.S. employees or former employees of Parent and its
Subsidiaries ("Non-U.S. Parent Compensation and Benefit Plans") are and
have been registered, qualified, invested and administered in all material
respects in accordance with applicable local law and the terms of such
Non-U.S. Parent Compensation and Benefit Plans. Parent and its Subsidiaries
have complied with all material obligations under such Non-U.S. Parent
Compensation and Benefit Plans and there is no proceeding, action,
complaint, investigation or claim in respect of
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any Non-U.S. Parent Compensation and Benefit Plan initiated by any
regulatory authority or any other person (other than routine inquiries and
claims for benefits). Each Non-U.S. Parent Compensation and Benefit Plan
which is a funded plan is fully funded as of the last actuarial valuation
date on both a going concern and a solvency basis pursuant to the actuarial
assumptions and methodology utilized in the most recent actuarial valuation
therefore as filed with applicable regulatory authorities. None of the
Non-U.S. Parent Compensation and Benefit Plan (other than pension plan)
provide benefits to retired employees or to the beneficiaries or dependants
of retired employees.
(j) Compliance with Laws; Permits. Except as set forth in the Parent
Reports filed prior to the date hereof, the businesses of each of Parent
and its Subsidiaries have not been, and are not being, conducted in
violation in any material respect of any Laws, except for any violation
that is not material. Except as set forth in the Parent Reports filed prior
to the date hereof and except as to matters that individually and in the
aggregate are immaterial, no investigation or review by any Governmental
Entity with respect to Parent or any of its Subsidiaries is pending or, to
the knowledge of Parent, threatened, nor has any Governmental Entity
indicated an intention to conduct the same. To the knowledge of Parent, no
material change is required in Parent's or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and
Parent has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date
hereof. Parent and its Subsidiaries each has all permits, licenses,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business in
all material respects as presently conducted.
(k) Takeover Statutes. No Takeover Statute or any anti-takeover
provision in the Parent's Organizational Documents is, or at the Effective
Time will be, applicable to Parent, the Parent Common Stock, the Merger or
the other transactions contemplated by this Agreement.
(l) Environmental Matters. Except as disclosed in the Parent Reports
prior to the date hereof and except for matters that are not, individually
or in the aggregate, reasonably likely to have a Parent Material Adverse
Effect or prevent, materially burden or materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement: (i)
the Parent and its Subsidiaries have complied at all times with all
applicable Environmental Laws; (ii) no property currently owned or operated
by Parent or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) is contaminated with any Hazardous
Substance which could reasonably be expected to require remediation
pursuant to any Environmental Law; (iii) no property formerly owned or
operated by Parent or any of its Subsidiaries was contaminated with any
Hazardous Substance during or prior to such period of ownership or
operation which contamination could reasonably be expected to require
remediation pursuant to any Environmental Law; (iv) neither Parent nor any
of its Subsidiaries is liable for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Parent nor any of
its Subsidiaries has received any notice, demand, letter, claim or request
for information alleging that Parent or any of its Subsidiaries may be in
violation of or subject to liability under any Environmental Law; (vii)
neither Parent nor any of its Subsidiaries is subject to any order, decree,
injunction indemnity or other agreement with any Governmental Entity or
third party relating to liability under any Environmental Law or relating
to Hazardous Substances; (viii) there are no other circumstances or
conditions involving Parent or any of its Subsidiaries that could
reasonably be expected to result in any claim, liability, investigation,
cost or restriction on the ownership, use, or transfer of any property
pursuant to any Environmental Law; and (ix) Parent has made available to
the Company copies of all material environmental reports, studies,
assessments, sampling data and other environmental documents in its
possession relating to Parent or its Subsidiaries or their respective
current and former properties or operations.
(m) Financing Commitment Letter; Ownership of Shares. (i) Parent has
delivered to the Company a complete and correct copy of the commitment
letter, dated the date hereof, pursuant to which the lenders have
committed, upon the terms and subject to the conditions set forth therein,
to provide financing to Parent in respect of the transactions contemplated
by this Agreement (the "Commitment Letter").
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(ii) Neither Parent nor any of its Subsidiaries "Beneficially Owns" or
is the "Beneficial Owner" of (as such terms are defined in the Rights
Agreement, as amended) any Shares.
(n) Intellectual Property. (i) Parent and/or each of its Subsidiaries
owns, is licensed or otherwise possesses legally enforceable rights to use
all patents, trademarks, trade names, service marks, domain names,
copyrights, and any applications therefor, technology, trade secrets,
know-how, computer software and tangible or intangible proprietary
information or materials that are used in the business of Parent and its
Subsidiaries as currently conducted, and to the knowledge of Parent, all
patents, trademarks, trade names, service marks, domain names and
copyrights owned by Parent and/or its Subsidiaries are valid and
subsisting.
(ii) Except as disclosed in Parent Reports filed prior to the date
hereof:
(A) neither Parent or any of its Subsidiaries is, nor will Parent
or any of its Subsidiaries be as a result of the execution and delivery
of this Agreement or the performance of Parent's obligations hereunder,
in violation of any material licenses, sublicenses or other agreements
as to which Parent or any of its Subsidiaries is a party and pursuant to
which Parent or any of its Subsidiaries is authorized to use any
third-party patents, trademarks, service marks, domain names,
copyrights, technology, trade secrets, know-how, computer software or
tangible or intangible proprietary information or materials
(collectively, "Parent Third-Party Intellectual Property Rights");
(B) no claims with respect to (I) the patents, registered and
material unregistered trademarks and service marks, domain names,
registered and material unregistered copyrights, trade names, and any
applications therefor, technology, trade secrets, know-how, computer
software or tangible or intangible proprietary information or materials
owned by Parent or any of its Subsidiaries (collectively, the "Parent
Intellectual Property Rights"); or (II) Parent Third-Party Intellectual
Property Rights are currently pending or, to the knowledge of Parent,
are threatened by any Person, except for immaterial claims;
(C) to the knowledge of Parent, there are no valid grounds for any
bona fide claims (I) to the effect that the manufacture, sale, licensing
or use of any product or service as now used, sold or licensed by Parent
or any of its Subsidiaries, infringes, misappropriates or violates any
copyright, patent, trademark, service xxxx, domain name, trade secret or
other proprietary right of any Person; (II) against the use by Parent or
any of its Subsidiaries, of any Parent Intellectual Property Rights or
Parent Third-Party Intellectual Property Rights used in the business of
Parent or any of its Subsidiaries as currently conducted; (III)
challenging the ownership, validity or enforceability of any of the
Parent Intellectual Property Rights; or (IV) challenging the license or
legally enforceable right to use of the Parent Third-Party Intellectual
Rights by Parent or any of its Subsidiaries; and
(D) to the knowledge of Parent, there is no unauthorized use,
infringement or misappropriation or violation of any of the Parent
Intellectual Property Rights by any third party, including any employee
or former employee of Parent or any of its Subsidiaries.
(o) Taxes. Parent and each of its Subsidiaries (i) have prepared in
good faith and duly and timely filed (taking into account any extension of
time within which to file) all Tax Returns required to be filed by any of
them, except where failures to so prepare or file Tax Returns are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect; (ii) all such filed Tax Returns are complete and
accurate in all respects, except where failure to be complete and accurate
are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect, (iii) have duly and timely paid all Taxes
(as defined below) that are required to be paid or that Parent or any of
its Subsidiaries are obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested
in good faith in appropriate proceedings and reserved for in accordance
with Canadian GAAP and except where failures to so pay are not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect; and (iv) have not waived any statute of
limitations with respect to any material Taxes or, to the extent related to
such Taxes, agreed to any extension of time with respect to a Tax
assessment or deficiency, in each case to the extent such
A-23
waiver or agreement is currently in effect. The Tax Returns referred to in
clause (i) of the previous sentence, to the extent related to income, sales
or use Taxes, have been examined by the IRS or the appropriate state, local
or foreign taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired. As
of December 31, 2001, there were no material audits, examinations,
investigations or other proceedings pending or threatened in writing in
respect of Taxes or Tax matters. Parent has made available to the Company
true and correct copies of the United States federal, state, local and
foreign income Tax Returns filed by Parent and its Subsidiaries for taxable
years ended after December 31, 1995 and before the date hereof. Parent and
each of its Subsidiaries have complied with all United States federal
information reporting requirements and has retained all necessary
information in its files to permit continued compliance with informational
reporting requirements, except where failures to so comply or retain are
not, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect. There are no material liens on any of the assets
of Parent or any of its Subsidiaries, except for liens relating to current
taxes not yet due and payable. No closing or similar agreements have been
entered into by any taxing authority with the Parent or any of its
Subsidiaries, except closing and similar agreements that are not reasonably
expected to have a Parent Material Adverse Effect on Parent and its
Subsidiaries. Neither Parent, any of its Subsidiaries, nor any predecessor
to Parent or any of its Subsidiaries has made with respect to Parent, any
of its Subsidiaries, or any predecessor of Parent or any of its
Subsidiaries any consent under Section 341 of the Code. Neither Xxxxx
Holdings USA, Inc. nor any of its Subsidiaries is or has been a member of
an affiliated group (within the meaning of Section 1504(a) of the Code)
filing consolidated United States federal income Tax Returns (other than
such a group the common parent of which is or was Xxxxx Holdings USA,
Inc.). Neither Parent nor any of the Subsidiaries of Parent has been a
party to any distribution during the last 3 years in which the parties to
such distribution treated the distribution as one to which Section 355 of
the Code (or any similar provision of state, local or foreign law) applied.
(p) Brokers and Finders. Neither Parent nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in
connection with the Merger or the other transactions contemplated by this
Agreement, except that Parent has employed Xxxxxx Xxxxxxx & Co.
Incorporated as its financial advisor, the arrangements with which have
been disclosed to the Company prior to the date hereof.
(q) Insurance. Parent and its Subsidiaries maintain fire and
casualty, general liability, business interruption, product liability, and
sprinkler and water damage and other insurance policies, as applicable,
that are consistent with that of other companies of substantially similar
size and scope of operations in the same or substantially similar
businesses.
ARTICLE VI
COVENANTS
6.1. Interim Operations. (a) The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise consent in writing (which
consent shall not be unreasonably withheld or delayed) and except as
otherwise expressly set forth in this Agreement):
(i) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective commercially reasonable efforts
to preserve its business organization intact and maintain its existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
(ii) it shall not (A) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (B) amend its
Organizational Documents or amend, modify or terminate the Rights
Agreement; (C) other than in the case of any direct or indirect wholly
owned Subsidiary, split, combine or reclassify its outstanding shares of
capital stock; (D) declare, set aside or pay any dividend payable in cash,
stock or property in respect of any capital stock other than dividends from
its direct or indirect
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wholly owned Subsidiaries and other than regular quarterly cash dividends
not in excess of $0.165 per Share; (E) repurchase, redeem or otherwise
acquire, except in connection with the Stock Plans, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock;
(iii) neither it nor any of its Subsidiaries shall (A) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital
stock of any class or any Voting Debt or any other property or assets
(other than Shares issuable under the Stock Plans) except as set forth in
Section 6.1(a)(iii) of the Company Disclosure Schedule; (B) other than as
set forth on Section 6.1(a)(iii)(B) of the Company Disclosure Schedule,
products sold to customers in the ordinary and usual course of business
(without limitation as to dollar amount) or otherwise in the ordinary and
usual course of business and not in an aggregate amount of more than
$5,000,000, transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any other property or assets (including capital
stock of any of its Subsidiaries); (C) incur or modify any indebtedness
other than tax-exempt indebtedness, indebtedness existing solely between
the Company and its wholly owned Subsidiaries or between such wholly owned
Subsidiaries or indebtedness in an aggregate amount less than $2,000,000;
provided that prior to incurring any indebtedness, if practicable, the
Company shall provide Parent with a reasonable right of consultation prior
to incurring any such indebtedness; provided, further, that the foregoing
right of consultation shall not apply in the case of indebtedness in
respect of letters of credit, guarantees or performance bonds or
indebtedness existing solely between the Company and its wholly owned
Subsidiaries or between such wholly owned Subsidiaries; (D) make or
authorize or commit for any capital expenditures other than as set forth on
Schedule 6.1(a)(iii) of the Company Disclosure Schedule or which,
individually, is in excess of $1,000,000 or, in the aggregate, are in
excess of $5,000,000; provided that prior to making any expenditure not set
forth on Schedule 6.1(a)(iii) of the Company Disclosure Schedule, if
practicable, the Company shall provide Parent with a reasonable right of
consultation prior to making any such expenditure; and (E) by any means,
make any acquisition of, or investment in (i) stock of or other interest
in, any other Person or (ii) except in the ordinary and usual course of
business consistent with past practice, assets of any other Person;
(iv) except as set forth in Section 6.1(a)(iv) of the Company
Disclosure Schedule, or as required by the terms of this Agreement, neither
it nor any of its Subsidiaries shall (A) terminate, establish, adopt, enter
into, make any new grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plans except as required by law, (B) other than in
the ordinary and usual course of business consistent with past practice and
the Company's compensation budget with respect to employees at a
compensation level of less than $80,000 a year, increase the compensation
of any employee, (C) hire any employee at a compensation level expected to
be more than $100,000 a year;
(v) neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or, except in the ordinary and usual
course of business modify, amend or terminate any of its material Contracts
or waive, release or assign any material rights or claims;
(vi) neither it nor any of its Subsidiaries shall make any material
Tax election or file any material income Tax Refund or implement or adopt
any change in its accounting principles or material accounting practices,
in all cases other than as may be required by applicable Laws or by GAAP;
(vii) neither it nor any of its Subsidiaries shall take any action or
omit to take any action that it reasonably expects would cause any of its
representations and warranties herein to become untrue in any material
respect; and
(viii) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
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(b) Parent covenants and agrees as to itself and its Subsidiaries
that, after the date hereof and prior to the Effective Time (unless the
Company shall otherwise consent in writing (which consent shall not be
unreasonably withheld or delayed) and except as otherwise expressly set
forth in this Agreement):
(i) the business of it and its Subsidiaries shall be conducted in the
ordinary course and, to the extent consistent therewith, it and its
Subsidiaries shall use their respective commercially reasonable efforts to
preserve its business organization intact and maintain its existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
(ii) it shall not (A) split, combine or reclassify its outstanding
shares of capital stock; or (B) declare, set aside or pay any dividend
payable in cash, stock or property in respect of any capital stock other
than dividends from its direct or indirect wholly owned Subsidiaries;
(iii) it shall not (A) enter into any transaction, other than as
contemplated pursuant to this Agreement, to the extent any such transaction
would require approval of the stockholders of Parent under applicable law
or stock exchange rules; or (B) enter into an agreement relating to any
acquisition, merger, consolidation or purchase that would reasonably be
expected to (I) impose any material delay in the obtaining of, or
significantly increase the risk of not obtaining, any authorizations,
consents, orders, declarations or approvals of any Governmental Entity
necessary to consummate the Merger or the expiration or termination of any
applicable waiting period, (II) significantly increase the risk of any
Governmental Entity entering an order prohibiting the consummation of the
Merger, or (III) significantly increase the risk of not being able to
remove any such order on appeal or otherwise;
(iv) amend Parent's or Merger Sub's Organizational Documents;
(v) neither it nor any of its Subsidiaries shall take any action or
omit to take any action that it reasonably expects would cause any of its
representations and warranties herein to become untrue in any material
respect; and
(vi) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.2. Acquisition Proposals. The Company agrees that neither it nor any of
its Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its reasonable best efforts to cause its
and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
otherwise knowingly facilitate any inquiries or the making by any third party of
any proposal or offer with respect to a purchase, merger, reorganization, share
exchange, consolidation or similar transaction involving any material portion of
the consolidated assets of the Company or fifteen (15%) or more of any equity
securities of the Company (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"). The Company further agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its reasonable best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal, or otherwise
knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from (A) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; (B)
at any time prior, but not after, the Stockholders Meeting (as defined in
Section 6.4) is convened, providing information in response to a request
therefor by a Person who has made an unsolicited bona fide written Acquisition
Proposal if the Board of Directors receives from the Person so requesting such
information an executed confidentiality agreement on terms substantially similar
to those contained in the Confidentiality Agreement (as defined in Section 9.7);
(C) engaging in any negotiations or discussions with any Person who has made an
unsolicited bona fide written Acquisition Proposal; or (D) recommending such an
Acquisition Proposal to the stockholders of the Company, if and only to the
extent that, (i) in each such case referred to in clause (B), (C) or (D) above,
the Board of Directors of
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the Company determines in good faith after consultation with outside legal
counsel that failure to do so would be inconsistent with their respective
fiduciary duties under applicable law and (ii) in the case referred to in clause
(C) or (D) above, the Board of Directors of the Company determines in good faith
(after consultation with its financial advisor) that such Acquisition Proposal,
if accepted, is reasonably likely to be consummated, taking into account all
legal, financial and regulatory aspects of the proposal and the Person making
the proposal and could, in the case of (C), and would, in the case of (D), if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.2 and in the
Confidentiality Agreement (as defined in Section 9.7). The Company agrees that
it will notify Parent promptly if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any of its Subsidiaries to return or destroy
all confidential information heretofore furnished to such Person by or on behalf
of it or any of its Subsidiaries.
6.3. Information Supplied. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the Registration Statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of shares of Parent Common Stock in the Merger
(including the proxy statement and prospectus (the "Prospectus/Proxy Statement")
constituting a part thereof) (the "S-4 Registration Statement") will, at the
time the S-4 Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the Prospectus/Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to stockholders of the Company and at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company and Parent will cause the Form S-4
to comply as to form in all material respects with the applicable provisions of
the Securities Act and the rules and regulations thereunder.
6.4. Stockholders Meeting. The Company will take, in accordance with
applicable law and its Organizational Documents, all action necessary to convene
a meeting of holders of Shares (the "Stockholders Meeting") as promptly as
practicable after the S-4 Registration Statement is declared effective to
consider and vote upon the approval of this Agreement; provided, however, that
the Company may postpone or adjourn the Stockholders Meeting to a date promptly
after Parent has entered into definitive financing agreements or provided other
evidence reasonably satisfactory to the Company that Parent has the ability to
borrow at the Closing funds sufficient to pay the aggregate Per Share Cash
Consideration, transaction expenses, refinance indebtedness of Parent, the
Company and their respective Subsidiaries and otherwise consummate the
transactions contemplated under this Agreement and the Commitment Letter
(entering into such definitive financing agreements or providing such evidence
being the "Financing Event"). Subject to fiduciary obligations under applicable
law, the Company's Board of Directors shall recommend and not withdraw such
approval and shall take all lawful action to solicit such approval.
6.5. Filings; Other Actions; Notification. (a) Parent and the Company
shall promptly prepare and file with the SEC the Prospectus/Proxy Statement, and
Parent shall prepare and file with the SEC the S-4 Registration Statement as
promptly as practicable. Parent and the Company each shall use commercially
reasonable efforts to have the S-4 Registration Statement declared effective
under the Securities Act as
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promptly as practicable after such filing, including procuring any opinions
necessary for such declaration and promptly thereafter mail the Prospectus/Proxy
Statement to the stockholders of the Company. Parent shall also use commercially
reasonable efforts to obtain prior to the effective date of the S-4 Registration
Statement any necessary state securities law or "blue sky" permits and approvals
required in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) The Company and Parent each shall use commercially reasonable efforts
to cause to be delivered a letter of its independent auditors, dated (i) the
date on which the S-4 Registration Statement shall become effective and (ii) the
Closing Date, and addressed to the other party and its directors, in form and
substance customary for "comfort" letters delivered by independent public
accountants in connection with registration statements similar to the S-4
Registration Statement, except that the "comfort" letter delivered by the
independent auditors of the Company need only cover the fiscal year ended July
31, 2002 and any periods reviewed by such independent auditors subsequent to
such period.
(c) The Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) commercially reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger, the financing for
the Merger and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings and to
obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement; provided, however, that
nothing in this Section 6.5 shall require, or be construed to require, Parent to
proffer to, or agree to, sell or hold separate and agree to sell, before or
after the Effective Time, any assets, businesses, or interest in any assets or
businesses of Parent, the Company or any of their respective Affiliates (or to
consent to any sale, or agreement to sell, by the Company of any of its assets
or businesses) or to agree to any material changes or restriction in the
operations of any such assets or businesses. Subject to applicable laws relating
to the exchange of information, Parent and the Company shall have the right to
review in advance, and to the extent practicable each will consult the other on,
all the information relating to Parent or the Company, as the case may be, and
any of their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Prospectus/Proxy Statement, the S-4
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.
(e) The Company and Parent each shall use commercially reasonable efforts
to obtain all necessary rulings or orders of Canadian securities regulatory
authorities to exempt the distribution by Parent of the Parent Common Stock
issued pursuant to this Agreement from the registration and prospectus
requirements of applicable Canadian securities law and ensure that the first
trade in the shares of Parent Common Stock so distributed shall not be
considered to be a distribution, provided that the conditions set out in
subsection (3) or (4) of section 2.6 of the Multilateral Instrument 45-102 and
equivalent provisions in the province of Quebec are satisfied.
(f) The Company and Parent each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other
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transactions contemplated by this Agreement. The Company and Parent each shall
give prompt notice to the other of any change that is reasonably likely to
result in a Company Material Adverse Effect or Parent Material Adverse Effect,
respectively. Neither the Company nor Parent shall permit any of its officers or
any other representatives or agents to participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry
unless it consults with the other party in advance and, to the extent permitted
by such Governmental Entity, gives the other party the opportunity to attend and
participate thereat.
(g) Notwithstanding any other provision of this Section 6.5, Parent shall
use its reasonable best efforts to satisfy the conditions contained in Section
7.2(e) of this Agreement.
(h) The Company and Parent shall promptly make all filings, notifications,
applications, permit transfers and other submissions relating to the Offer and
Merger required or customary pursuant to any Environmental Laws including
without limitation those relating to the ownership, operation or transfer of
real property such as the New Jersey Industrial Site Recovery Act N.J.S.A.
13:1K-6 et seq. and the Connecticut Transfer Act, C.G.S. 22a-134a et seq.
("Environmental Submissions"). The Company and the Parent shall provide each
other with copies of all Environmental Submissions at the time of filing and the
parties shall cooperate with each other in the preparation and execution of all
Environmental Submissions.
6.6. Taxation. None of Parent, Holdco, the Company or Subco shall
knowingly take or cause to be taken any action, whether before or after the
Effective Time that would disqualify the Merger and the Subsequent Merger, taken
together, as a "reorganization" within the meaning of Section 368(a) of the
Code, if they would otherwise so qualify.
6.7. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, each of the Company and Parent shall (and shall
cause each of its Subsidiaries to) afford the officers, employees, counsel,
accountants and other authorized representatives of the other party
("Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to its properties, books, contracts,
records and personnel and, during such period, each of the Company and Parent
shall (and shall cause each of its Subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as may
reasonably be requested, provided that no investigation pursuant to this Section
6.7 shall affect or be deemed to modify any representation or warranty made by
any party hereto and provided, further, that nothing in this Section 6.7 shall
require any party hereto to permit any inspection, or to disclose any
information, that in the reasonable judgment of such party would result in (a)
the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if such party shall have used
commercially reasonable efforts to obtain the consent of such third party to
such inspection or disclosure or (b) any violation of laws relating to the
sharing of information between competitors, it being understood that the parties
will provide extracts, or summaries, or aggregations or other information to the
greatest extent practicable in a manner that does not result in any such
violation or improper disclosure. The parties agree that requests for access to
the properties and records of the Company and its Subsidiaries by environmental
consultants and testing firms upon reasonable notice and during normal business
hours shall be reasonably requested. In connection with and subject to the
foregoing, the Company agrees to make available to Parent and its
Representatives, promptly after they are available, monthly summary profit and
loss statements for the Company consolidated and for each division and a summary
month end consolidated balance sheet for the Company. The Company also agrees to
give Representatives of Parent, upon reasonable notice and accompanied by the
Chief Executive Officer or the Chief Operating Officer of the Company or another
executive designated by one of them, an opportunity to meet periodically with
sales and operations (including plant comptrollers) management of the Company to
discuss integration plans and issues. All requests for information made pursuant
to this Section 6.7 shall be directed to an executive officer of the Company or
Parent, as the case may be, or such Person as may be designated by such party.
All such information shall be governed by the terms of the Confidentiality
Agreement.
6.8. Affiliates. Prior to the date of the Stockholders Meeting, the
Company shall deliver to Parent a list of names and addresses of those Persons
who are, in the opinion of the Company, as of the time of the Stockholders
Meeting, "affiliates" of the Company within the meaning of Rule 145 under the
Securities Act.
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The Company shall provide to Parent such information and documents as Parent
shall reasonably request for purposes of reviewing such list. There shall be
added to such list the names and addresses of any other Person subsequently
identified by either Parent or the Company as a Person who may be deemed to be
such an affiliate of the Company; provided, however, that no such Person
identified by Parent shall be added to the list of affiliates of the Company if
Parent shall receive from the Company, on or before the date of the Stockholders
Meeting, an opinion of counsel reasonably satisfactory to Parent to the effect
that such Person is not such an affiliate. The Company shall exercise its
commercially reasonable efforts to deliver or cause to be delivered to Parent,
prior to the Closing Date, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit A (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the S-4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Parent Common Stock by such
affiliates received in the Merger and the certificates representing Parent
Common Stock received by such affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section 6.8.
6.9. Stock Exchange Listing and De-listing. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger to be approved for issuance and listing on the TSX and the NYSE
subject to official notice of issuance, prior to the Closing Date. The Surviving
Corporation shall use its reasonable best efforts to cause the Shares to be
de-listed from the NYSE and de-registered under the Exchange Act as soon as
practicable following the Effective Time.
6.10. Publicity; Employee Communications. (a) The initial press release
shall be a joint press release and thereafter the Company and Parent each shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities
exchange) with respect thereto, except as may be required by law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange.
(b) Except to the extent such notice is not practicable, at least two
business days prior to making or issuing any formal communication or
correspondence to its or its Subsidiaries' employees concerning the transactions
contemplated by this Agreement or the effects thereof, the Company shall provide
Parent with a copy of such proposed communication or correspondence and give
Parent the opportunity to comment on such communication or correspondence and
shall not unreasonably reject any comments Parent shall make. Parent has
commented on and approved the materials provided to it prior to the date hereof
regarding the transactions contemplated by this Agreement.
6.11. Benefits, etc. (a) Stock Options. Prior to the Effective Time,
each outstanding Company Option, whether or not then exercisable, shall be
cancelled and only entitle the holder thereof, as soon as reasonably practicable
after surrender thereof, to receive from the Company an amount in cash equal to
the product of (x) the total number of Shares subject to the Company Option and
(y) the excess of the Per Share Cash Consideration over the exercise price per
Share under such Company Option, less applicable Taxes required to be withheld
in respect of such Company Option. Prior to the Effective Time, Parent and the
Company shall cooperate in taking all commercially reasonable efforts necessary
or advisable to effect the foregoing.
(b) Employee Stock Purchase Plan. The Company shall terminate its Employee
Stock Purchase Plan effective immediately following the last day of the offering
period ending after the date of this Agreement, with the effect of such
termination being that no Offering, within the meaning of such plan, shall
commence after the date of this Agreement.
(c) Employee Benefits. (i) Parent agrees that, as promptly as reasonably
practicable following the Effective Time, Parent shall arrange for the employees
of the Company and its Subsidiaries to participate in the employee benefit plans
of Parent, including but not limited to Parent Compensation and Benefit Plans,
on substantially the same terms and conditions of similarly situated employees
of Parent. In the interim, Parent shall not reduce the aggregate level of
benefits provided to the employees of the Company and its Subsidiaries under the
Compensation and Benefit Plans (other than Stock Plans pursuant to which no new
awards will be
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granted). Parent shall cause its employee benefit plans (including but not
limited to vacation, severance and disability plans) to take into account for
purposes of eligibility, benefits (excluding accruals under a defined benefit
plan) and vesting thereunder service by employees of the Company and its
Subsidiaries as if such service were with Parent to the same extent that such
service was credited under a comparable plan of the Company. For purposes of
each Parent employee benefit plan providing medical, dental, prescription drug,
vision, life insurance or disability benefits to any employee of the Company or
its Subsidiaries, Parent shall cause its employee benefit plans to (a) waive all
pre-existing condition exclusions of its employee benefit plans with respect to
such employees and their dependents to the same extent such exclusions were
waived under a comparable plan of the Company and (b) take into account any
eligible expenses incurred by such employees and their dependents for purposes
of satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employees and their covered dependents under the applicable
employee benefit plan of Parent. Parent shall, and shall cause the Surviving
Corporation to, honor all employee benefit obligations to current and former
employees under the Compensation and Benefit Plans and, to the extent set forth
in the Company Disclosure Schedule, all employee severance plans (or policies)
in existence on the date hereof and set forth in the Company Disclosure Schedule
and all employment or severance agreements entered into by the Company or
adopted by the Board of Directors of the Company prior to the date hereof.
(ii) The Company agrees that, prior to the Effective Time, neither the
Company, the Board of Directors of the Company nor any committee thereof will
(x) take any action or omit to take any action which would cause a "Material
Change" to occur under the terms of any applicable Compensation and Benefit Plan
or (y) deposit any cash, marketable securities or other property or funds into
the Company's Benefit Trust dated December 8, 1995, as thereafter amended.
(iii) The Company, the Board of Directors of the Company or any duly
authorized committee thereof may implement a retention plan for the benefit of
those classes of key employees identified, including reasonably numerous classes
and the minimum numbers of participants in each such class, by the Company to
Parent which classes and allocation of benefit among classes are approved in
writing by Parent (such approval not to be unreasonably withheld or delayed)
after the date hereof; provided, that the implementation of such a retention
plan shall not have an aggregate cost in excess of $3,000,000, $1,500,000 of
which shall be payable on the Closing Date and $1,500,000 of which shall be
payable on the date that is six months after the Closing Date (or if earlier,
upon termination, with respect to any employee who is terminated by the Company
after the Closing).
(iv) Prior to the Effective Time, Parent and the Company shall take such
actions as are necessary to cause the right of any nonemployee director to
receive a deferred Share pursuant to the Company's Director Retainer Fee Plan or
any employee to receive a deferred Share pursuant to the Company's Executive
Incentive Plan, as such plans have been or are to be amended in accordance with
this Agreement (the "Share Deferral Plans"), to be converted as of the Effective
Time into either a right to receive from Parent the Per Share Cash Consideration
or a right to receive from Parent the Per Share Stock Consideration, as elected
by such nonemployee director or employee in the same manner as that set forth in
Section 4.1 of this Agreement with respect to an issued and outstanding Share
held by such nonemployee director or employee immediately prior to the Effective
Time. The payment of cash or shares of Parent Common Stock pursuant to this
Section 6.11(c)(iv) shall be made at the same time, and in the same manner, as
provided under the terms of the applicable Share Deferral Plan; provided,
however, that a right to receive a cash payment shall be credited with interest
from the Effective Time until such payment, compounded quarterly, at the rate
equivalent to the average Moody's Long-Term Corporate Bond Yield for the
preceding calendar quarter as determined from the Xxxxx'x Investor Service, Inc.
(or any successor thereto).
(d) Election to Parent's Board of Directors. At its annual meeting in
2003, Parent shall cause to be nominated, and use its reasonable best efforts to
cause to be elected as directors of Parent, for a term commencing upon the
completion of the Merger, the following three members of the Board of Directors
of the Company: Xxxxxx X. XxXxxxx, Xx., Xxxx X. Xxxx and Xxxxxxx X. Xxxxxxx.
6.12. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse
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the Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 8.5(b), whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration Statement shall be shared
equally by Parent and the Company.
6.13. Indemnification; Directors' and Officers' Insurance. (a) Parent
shall cause the Surviving Corporation to honor, and shall itself honor as if it
were the Surviving Corporation, in each case, to the fullest extent permitted by
applicable law, for a period of not less than six years from the Effective Time
(or, in the case of matters occurring at or prior to the Effective Time that
have not been resolved prior to the sixth anniversary of the Effective Time,
until such matters are finally resolved), all rights to indemnification or
exculpation existing in favor of a director, officer, employee, agent or
employee benefit plan fiduciary (an "Indemnified Party") of the Company or any
of its Subsidiaries (including, without limitation, rights relating to
advancement of expenses and indemnification rights to which such persons are
entitled because they are serving as a director, officer, agent or employee of
another entity at the request of the Company or any of its Subsidiaries), as
provided in the Organizational Documents of the Company or any indemnification
agreement, in each case, as in effect on the date of this Agreement, and
relating to actions or events through the Effective Time; provided, however,
that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the
DGCL, the Organizational Documents of the Company or any such agreement, as the
case may be, shall be made by independent legal counsel jointly selected by such
Indemnified Party and Parent; and provided, further, that nothing in this
Section 6.13 shall impair any rights of any Indemnified Party. Without limiting
the generality of the preceding sentence, in the event that any Indemnified
Party becomes involved in any actual or threatened action, suit, claim,
proceeding or investigation covered by this Section 6.13 after the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, to the fullest
extent permitted by law, promptly advance to such Indemnified Party his or her
legal or other expenses (including the cost of any investigation and preparation
incurred in connection therewith), subject to the providing by such Indemnified
Party of an undertaking to reimburse all amounts so advanced in the event of a
non-appealable determination of a court of competent jurisdiction that such
Indemnified Party is not entitled thereto.
(b) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for a period of
six years after the Effective Time so long as the annual premium therefor is not
in excess of 300% of the last annual premium paid prior to the date hereof (the
"Current Premium"); provided, however, that if the existing D&O Insurance
expires, is terminated or cancelled during such six-year period or is at an
annual premium in excess of 300% of the Current Premium, the Surviving
Corporation will use its commercially reasonable efforts to obtain as much D&O
Insurance as can be obtained for the remainder of such period for a premium not
in excess of 300% (on an annualized basis) of the Current Premium.
(c) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section 6.13.
(d) The provisions of this Section 6.13 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
6.14. Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its Board of Directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
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6.15. Parent Name. After the Effective Time, Parent will take all
commercially reasonable efforts to amend its Organizational Documents to change
its name to "Xxxxx Xxxxxxx Incorporated".
6.16. Section 16(b). The Board of Directors of the Company and Parent
shall, prior to the Effective Time, take all such actions as may be necessary or
appropriate pursuant to Rule 16b-3(d) and Rule 16b-3(e) to exempt (i) the
conversion of Shares into cash or Parent Common Stock, (ii) the conversion of
rights to receive deferred Shares into rights to receive cash or Parent Common
Stock and (iii) the acquisition of Parent Common Stock and the right to receive
Parent Common Stock pursuant to the terms of this Agreement by officers and
directors of the Company subject to the reporting requirements of Section 16(a)
of the Exchange Act or by employees or directors of the Company who may become
an officer or director of Parent subject to the reporting requirements of
Section 16(a) of the Exchange Act. Parent and the Company shall provide to
counsel to the other party copies of the resolutions to be adopted by the
respective Boards of Directors to implement the foregoing.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by holders of shares of Company Common Stock constituting the
Company Requisite Vote in accordance with applicable law and the
Organizational Documents of the Company.
(b) NYSE and TSX Listing. The issue of shares of Parent Common Stock
issuable to the Company stockholders pursuant to this Agreement shall have
been approved by the TSX and the conditions to such approval shall have
been satisfied, and such shares shall have been approved for listing on the
NYSE and the TSX subject only to official notice of issuance and other
customary conditions.
(c) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have (i) expired or been
terminated, (ii) the rulings or orders referred to in Section 6.5(e), if
any, shall have been obtained on terms and conditions to the reasonable
satisfaction of each of the Company and Parent and shall not have been
subsequently rescinded or revoked and (iii) other than the filing provided
for in Section 1.3, all notices, reports and other filings required to be
made prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries with, and all consents, registrations, approvals,
permits and authorizations required to be obtained prior to the Effective
Time by the Company or Parent or any of their respective Subsidiaries from,
any Governmental Entity (collectively, "Governmental Consents") in
connection with the execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby
by the Company, Parent and Merger Sub shall have been made or obtained (as
the case may be), other than any immaterial Governmental Consents the
failure of which to make or obtain would not subject any person or entity
to any risk of criminal liability.
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, law, ordinance, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) that is in
effect and restrains, enjoins or otherwise prohibits consummation of the
Merger or the other transactions contemplated by this Agreement
(collectively, an "Order"), and (i) no federal or state Governmental Entity
shall have instituted any proceeding that is pending seeking any such Order
and (ii) no other Person shall have instituted any proceeding that is
pending and that has a reasonable possibility of resulting in a Parent
Material Adverse Effect or a Company Material Adverse Effect or preventing
or materially burdening or impairing the economic integration of the
businesses of the Company and Parent.
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(e) S-4. The S-4 Registration Statement shall have become effective
under the Securities Act. No stop order suspending the effectiveness of the
S-4 Registration Statement shall have been issued, and no proceedings for
that purpose shall have been initiated or be threatened, by the SEC.
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in Sections 5.1(a) (Organization, Good
Standing and Qualification), 5.1(b) (Capital Structure), 5.1(c) (Corporate
Authority; Approval and Fairness), 5.1(p) (Rights Plan), 5.1(r) (Brokers
and Finders), the last sentence of Section 5.1(e) (Company Reports;
Financial Statements) and clause (i) of Section 5.1(f) (Absence of Certain
Changes) shall be true and correct with respect to those matters that are
qualified by Company Material Adverse Effect or materiality and shall be
true and correct in all material respects with respect to those matters
that are not so qualified, in each case as of the Closing Date as though
made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date). The
representations and warranties of the Company set forth in this Agreement
other than those listed in the preceding sentence, shall be true and
correct, without giving effect to any "material adverse effect" or other
materiality qualifiers within such representations and warranties, as of
the Closing Date as though made on the Closing Date (except to the extent
any such representation and warranty expressly speaks as of an earlier
date), except where the failure of such representations and warranties to
be so true and correct, individually or in the aggregate, has not had, and
could not reasonably be expected to have, a Company Material Adverse Effect
or to prevent or to materially burden or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement.
Parent shall have received a signed certificate of a senior executive
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer of the Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be
required under any Contract to which the Company or any of its Subsidiaries
is a party, except those for which the failure to obtain such consent or
approval, individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect or is not reasonably likely to
prevent or to materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
(d) Material Adverse Effect on the Company. Since the date hereof,
there shall not have been any effect, change or development that,
individually or in the aggregate with other such effects, changes or
developments, has had, or could reasonably be expected to have, a Company
Material Adverse Effect.
(e) Financing. Parent shall have entered into definitive financing
agreements and shall have received funds thereunder which are sufficient to
pay the aggregate Per Share Cash Consideration, transaction expenses,
refinance indebtedness of Parent, the Company and their respective
Subsidiaries and otherwise consummate the transactions contemplated under
this Agreement and the Commitment Letter.
(f) Accountant Letter(s). Parent shall have received, in form and
substance reasonably satisfactory to Parent, from Deloitte & Touche the
"comfort" letter(s) described in Section 6.5(b).
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7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in Sections 5.2(a) (Capitalization of Merger
Sub), 5.2(b) (Organization, Good Standing and Qualification), 5.2(c)
(Capital Structure), 5.2(d) (Corporate Authority), 5.2(p) (Brokers and
Finders) and clause (i) of Section 5.1(g) (Absence of Certain Changes)
shall be true and correct with respect to those matters that are qualified
by Parent Material Adverse Effect or materiality and shall be true and
correct in all material respects with respect to those matters that are not
so qualified, in each case as of the Closing Date as though made on and as
of the Closing Date (except to the extent any such representation and
warranty expressly speaks as of an earlier date). The representations and
warranties of Parent set forth in this Agreement other than those listed in
the preceding sentence shall be true and correct, without giving effect to
any "material adverse effect" or other materiality qualifiers within such
representations and warranties, as of the Closing Date as though made on
the Closing Date (except to the extent any such representation and warranty
expressly speaks as of an earlier date), except where the failure of such
representations and warranties to be so true and correct, individually or
in the aggregate, has not had, and could not reasonably be expected to
have, a Parent Material Adverse Effect or to prevent or to materially
burden or materially impair the ability of Parent to consummate the
transactions contemplated by this Agreement. The Company shall have
received a signed certificate of a senior executive officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate
signed by a senior executive officer of Parent to such effect.
(c) Consents Under Agreements. Parent shall have obtained the consent
or approval of each Person whose consent or approval shall be required in
order to consummate the transactions contemplated by this Agreement under
any Contract to which Parent or any of its Subsidiaries is a party, except
those for which failure to obtain such consents or approvals, individually
or in the aggregate, is not reasonably likely to have a Parent Material
Adverse Effect or is not reasonably likely to prevent or to materially
burden or materially impair the ability of Parent to consummate the
transactions contemplated by this Agreement.
(d) Material Adverse Effect on Parent. Since the date hereof, there
shall not have been any effect, change or development that, individually or
in the aggregate with other such effects, changes or developments, has had,
or could reasonably be expected to have, a Parent Material Adverse Effect.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if (a)
the Merger shall not have been consummated by August 31, 2003 whether such date
is before or after the date of approval by the stockholders of the Company (the
"Termination Date"), (b) the Company's stockholders vote upon this Agreement at
a meeting duly convened therefor or at any adjournment or postponement thereof
and the vote of approval required by Section 7.1(a) shall not have been obtained
thereat or (c) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or after the approval by the stockholders
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of the Company); provided, that the right to terminate this Agreement pursuant
to clause (a) above shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure of the Merger to
be consummated.
8.3. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval by stockholders of the Company referred to in Section
7.1(a), by action of the Board of Directors of the Company:
(a) if (i) the Board of Directors of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter
into a binding written agreement concerning a transaction that constitutes
a Superior Proposal and the Company notifies Parent in writing that it
intends to enter into such an agreement, attaching the most current version
of such agreement to such notice, (ii) Parent does not make, within five
days of receipt of the Company's written notification of its intention to
enter into a binding agreement for a Superior Proposal, a written offer
that the Board of Directors of the Company determines, in good faith after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of the Company as the Superior
Proposal and (iii) the Company prior to such termination pays to Parent in
immediately available funds any fees required to be paid pursuant to
Section 8.5. The Company agrees (x) that it will not enter into a binding
agreement referred to in clause (i) above until at least the sixth day
after it has provided the notice to Parent required thereby and (y) to
notify Parent promptly if its intention to enter into a written agreement
referred to in its notification shall change at any time after giving such
notification.
(b) if there has been a breach of any representation, warranty,
covenant or agreement made by Parent or Merger Sub in this Agreement, or
any such representation and warranty shall have become untrue after the
date of this Agreement, such that Section 7.3(a) or 7.3(b) would not be
satisfied and such breach or condition is not curable or, if curable, is
not cured within 30 days after written notice thereof is given by the
Company to Parent.
(c) (i) if the Financing Event shall not have occurred by August 29,
2003 and a reason for the Financing Event not having occurred is not the
existence of a Company Material Adverse Effect or (ii) at any time on five
business days notice given any time after the tenth business day following
satisfaction of all of the conditions set forth in Section 7.1, 7.2 (other
than Section 7.2(e)) and 7.3, excluding in each case ministerial matters
capable of being provided or satisfied at Closing.
8.4. Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
Board of Directors of Parent if (a) the Board of Directors of the Company shall
have withdrawn or adversely modified its approval or recommendation of this
Agreement or failed to reconfirm its recommendation of this Agreement after a
written request by Parent to do so prior to the fifth business day prior to the
date of the Stockholders Meeting, (b) there has been a breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement, or any such representation and warranty shall have become untrue
after the date of this Agreement, such that Section 7.2(a) or 7.2(b) would not
be satisfied and such breach or condition is not curable or, if curable, is not
cured within 30 days after written notice thereof is given by Parent to the
Company.
8.5. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability or damages resulting from any willful or intentional breach of this
Agreement.
(b) In the event that after the date hereof a bona fide Acquisition
Proposal shall have been publicly announced or any Person shall have publicly
announced that, subject to the Merger being disapproved by the Company's
stockholders or otherwise rejected, it will make a bona fide Acquisition
Proposal with respect to the Company and thereafter this Agreement is terminated
by either Parent or the Company pursuant to
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Section 8.2(b), then the Company shall, upon the date of such termination, pay
all of the charges and expenses incurred by Parent or Merger Sub in connection
with this Agreement and the transactions contemplated by this Agreement up to a
maximum amount of $5,000,000 and pay Parent a cash fee of $5,000,000, and if
concurrently with such termination or within twelve months after such
termination the Company shall agree to an Acquisition Proposal or an Acquisition
Proposal shall be consummated, the Company shall pay Parent a cash fee of
$17,500,000. All payments shall be made by wire transfer of same day funds.
(c) In the event that after the date hereof a bona fide Acquisition
Proposal shall have been publicly announced or any Person shall have announced
that, subject to the Merger being disapproved by the Company's stockholders or
otherwise rejected, it will make a bona fide Acquisition Proposal with respect
to the Company and thereafter this Agreement is terminated by either Parent or
the Company pursuant to Section 8.2(a), then the Company shall, upon the date of
such termination, pay all of the charges and expenses incurred by Parent or
Merger Sub in connection with this Agreement and the transactions contemplated
by this Agreement up to a maximum amount of $5,000,000 and if concurrently with
such termination or within twelve months after such termination the Company
shall agree to an Acquisition Proposal or an Acquisition Proposal shall be
consummated, the Company shall pay Parent a cash fee of $22,500,000. All
payments shall be made by wire transfer of same day funds.
(d) In the event that this Agreement is terminated by the Company pursuant
to Section 8.3(a), then the Company shall, upon the date of such termination,
pay all of the charges and expenses incurred by Parent or Merger Sub in
connection with this Agreement and the transactions contemplated by this
Agreement up to a maximum amount of $5,000,000 and pay Parent a cash fee of
$22,500,000. All payments shall be made by wire transfer of same day funds.
(e) (i) In the event that after the date hereof a bona fide Acquisition
Proposal shall have been publicly announced or any Person shall have publicly
announced that, subject to the Merger being disapproved by the Company's
stockholders or otherwise rejected, it will make a bona fide Acquisition
Proposal with respect to the Company and thereafter this Agreement is terminated
by Parent pursuant to Section 8.4(a), or (ii) in the event that this Agreement
is terminated by Parent pursuant to Section 8.4(a), and a fee has not been paid
in respect of clause (i) above, and concurrently with such termination or within
twelve months after such termination the Company shall agree to an Acquisition
Proposal or an Acquisition Proposal shall be consummated, then the Company
shall, in the case of clause (i) on the date of such termination and in the case
of clause (ii) upon the earlier of agreeing to an Acquisition Proposal or
consummating an Acquisition Proposal, pay all of the charges and expenses
incurred by Parent or Merger Sub in connection with this Agreement and the
transactions contemplated by this Agreement up to a maximum amount of $5,000,000
and pay Parent a cash fee of $22,500,000. All payments shall be made by wire
transfer of same day funds.
(f) In the event that this Agreement is terminated by the Company pursuant
to Section 8.3(c), then Parent shall, upon the date of such termination, pay all
of the charges and expenses, incurred by the Company in connection with this
Agreement and the transactions contemplated by this Agreement up to a maximum
amount of $5,000,000 and pay the Company a cash fee of $22,500,000. All payments
shall be made by wire transfer of same day funds. The payment by Parent to the
Company pursuant to this Section 8.5(f) of the fee and expenses contemplated by
this Section 8.5(f) shall constitute liquidated damages for any breach by Parent
or Merger Sub of this Agreement relating to the failure to satisfy the condition
in Section 7.2(e) and neither Parent nor Merger Sub shall have any further
liability in respect of any such breach.
(g) The Company and Parent acknowledge that the agreements contained in
Sections 8.5(b) through (f) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, each of the
parties hereto would not enter into this Agreement; accordingly, if any party
fails to promptly pay the amount due pursuant to these Sections 8.5(b) through
(f), and, in order to obtain such payment, the other party commences a suit
which results in a judgment against such party for any of the cash fees set
forth in these Sections 8.5(b) through (f), such party shall pay to the other
party its costs and expenses (including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
A-37
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of the Company, Parent,
Holdco and Merger Sub contained in Section 1.4 (Subsequent Merger), Section 6.6
(actions related to Subsequent Merger), Sections 6.11 (Benefits, etc.), 6.12
(Expenses) and 6.13 (Indemnification; Directors' and Officers' Insurance) shall
survive the consummation of the Merger. This Article IX, the agreements of the
Company, Parent, Holdco and Merger Sub contained in Section 6.12 (Expenses),
Section 8.5 (Effect of Termination and Abandonment) and the Confidentiality
Agreement shall survive the termination of this Agreement. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part but only in writing and to the
extent permitted by applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of
Delaware and the Federal courts of the United States of America located in the
State of Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 9.6 or in such other
manner as may be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO
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THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent, Holdco or Merger Sub
Xxxxx Corporation Limed
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
fax: (000) 000-0000
with copies to:
Xxxxx Corporation Limed
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Senior Vice President,
Mergers & Acquisitions
fax: (000) 000-0000
and
Xxxxxxxx & Xxxxxxxx LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.,
fax: (000) 000-0000
if to the Company
Xxxxxxx Computer Services, Inc.
0000 Xxxxx Xxxxx
Xxxxx, XX 00000-0000
Attention: Chief Executive Officer
fax: (000) 000-0000
with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx,
00 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement. This Agreement (including any exhibits hereto),
the Company Disclosure Schedule, the Parent Disclosure Schedule and the
Confidentiality Agreement, dated September 13, 2002, between Parent and the
Company, as amended by the letter agreement, dated as of October 16, 2002 (as
amended, the "Confidentiality Agreement") constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof.
9.8. No Third Party Beneficiaries. This Agreement (except Section 6.13
(Indemnification; Directors' and Officers' Insurance)), is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
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9.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. Definitions. Each of the terms set forth in Annex A is defined in
the Section of this Agreement set forth opposite such term.
9.11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Unless otherwise indicated, references in this Agreement to dollars
or "$" are to United States currency.
9.13. Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent or Holdco may designate, by
written notice to the Company, another wholly owned direct or indirect
subsidiary to be a Constituent Corporation in lieu of Merger Sub or (so long as
such designated subsidiary is a direct, wholly owned limited liability company
subsidiary of Holdco) Subco, respectively, in which event all references herein
to Merger Sub or Subco, respectively shall be deemed references to such other
subsidiary, except that all representations and warranties made herein with
respect to Merger Sub or Subco, respectively, as of the date of this Agreement
shall be deemed representations and warranties made with respect to such other
subsidiary as of the date of such designation.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
XXXXXXX COMPUTER SERVICES, INC.
By /s/ M. XXXXX XXXXX
------------------------------------
Name: M. Xxxxx Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
XXXXX CORPORATION LIMITED
By /s/ XXXX X. XXXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
XXXXX HOLDINGS U.S.A. INC.
By /s/ XXXX X. XXXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
M-W ACQUISITION, INC.
By /s/ XXXX X. XXXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
A-41
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
, 2003
[Parent]
[Address]
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of Xxxxxxx Computer Services, Inc., a Delaware corporation (the
"Company"), as such term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act").
Pursuant to the terms of the
Agreement and Plan of Merger, dated as of
January 16, 2003 (as it may be amended, supplemented or modified from time to
time, the "Merger Agreement"), among the Company, Xxxxx Corporation Limited
("Parent"), Xxxxx Holdings U.S.A. Inc., a Delaware corporation and wholly owned
subsidiary of Parent, and M-W Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub"), Merger Sub will be merged with
and into the Company (the "Merger"). Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
I have been advised that the issuance of the Parent Common Stock pursuant
to the Merger will be registered with the Securities and Exchange Commission
under the Securities Act on a Registration Statement on Form S-4. I have also
been advised, however, that since I may be deemed to be an affiliate of the
Company at the time the Merger Agreement is submitted to a vote of the
stockholders of the Company, my ability to sell, assign or transfer any Parent
Common Stock that I receive in exchange for any shares of common stock, without
par value, of the Company ("Company Common Stock") pursuant to the Merger may be
restricted unless such sale, assignment or transfer is registered under the
Securities Act or an exemption from such registration is available. I understand
that such exemptions are limited and I have obtained advice of counsel as to the
nature and conditions of such exemptions, including information with respect to
the applicability to the sale of such Securities of Rules 144 and 145(d)
promulgated under the Securities Act.
I hereby represent and warrant to and covenant with Parent that I will not
sell, assign or transfer any shares of Parent Common Stock except (i) pursuant
to an effective registration statement under the Securities Act, (ii) by a sale
made in conformity with the volume and other limitations of Rule 145 (and
otherwise in accordance with Rule 144 under the Securities Act, if I am an
affiliate of Parent and if so required at the time) or (iii) in a transaction
which, in the opinion of independent counsel reasonably satisfactory to Parent
or as described in a "no-action" or interpretive letter from the Staff of the
Securities and Exchange Commission reasonably satisfactory to Parent, is not
required to be registered under the Securities Act. In the event of a sale of
shares of Parent Common Stock pursuant to Rule 145, I will supply Parent with
evidence of compliance with such Rule, in the form of customary seller's and
broker's Rule 145 representation letters or as Parent may otherwise reasonably
request.
I understand that Parent is under no obligation to register the sale,
assignment, transfer or other disposition of the shares of Parent Common Stock
by me or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such registration
available solely as a result of the Merger.
I acknowledge and agree that appropriate legends will be placed on
certificates representing shares of Parent Common Stock delivered to me or held
by a transferee thereof, which legends will be removed if
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(i) one year shall have elapsed from the date I acquired the Parent Common Stock
received in the Merger and the provisions of Rule 145(d)(2) are then available
to me, (ii) two years shall have elapsed from the date I acquired the Parent
Common Stock received in the Merger and the provisions of Rule 145(d)(3) are
then applicable to me, or (iii) Parent has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to Parent,
or a "no action" letter obtained by me from the staff of the Securities and
Exchange Commission, to the effect that the restrictions imposed by Rule 145
under the Securities Act no longer apply to me.
I further understand and agree that Parent may instruct the registrar for
the Parent Common Stock not to register the transfer of any Parent Common Stock
held by me unless any such transfer is made in accordance with this letter
agreement.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
This letter agreement constitutes the complete understanding between Parent
and me concerning the subject matter hereof. This letter agreement shall be
governed by and construed and interpreted in accordance with the laws of the
State of Delaware applicable to contracts to be performed wholly in the State of
Delaware.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time this
letter shall become a binding agreement between us.
Very truly yours,
--------------------------------------
Name:
Accepted this day
of , 2003.
XXXXX CORPORATION LIMITED
By:
--------------------------------------------------------
Name:
Title:
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