Exhibit (d)(1)
AGREEMENT & PLAN OF MERGER
BY AND AMONG
▇▇▇▇▇▇▇ CORPORATION
("Parent")
SALTWATER ACQUISITION CORP.,
("Purchaser")
and
▇▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
(the "Company")
May 15, 2001
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 15,
2001, by and among ▇▇▇▇▇▇▇ Corporation, a Delaware corporation ("Parent"),
Saltwater Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent (the "Purchaser"), and ▇▇▇▇▇▇▇▇▇▇ Industries, Inc., a
Delaware corporation (the "Company"). Unless otherwise expressly set forth, the
term "Company" when used herein shall refer to ▇▇▇▇▇▇▇▇▇▇ Industries, Inc. and
each of its subsidiaries.
WHEREAS, the respective Boards of Directors of Parent, the Company and
Purchaser, have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, pursuant to and subject to the terms and conditions of this
Agreement the Purchaser has agreed to commence a tender offer (the "Offer") to
purchase all of the Company's common stock, par value $0.001 per share (the
"Common Shares" or "Shares") that are issued and outstanding at a price per
Common Share of $22.80 net to the seller in cash (such amount or any greater
amount per Common Share paid pursuant to the Offer being hereinafter referred to
as the "Offer Price"); and
WHEREAS, the Board of Directors of the Company (the "Company Board")
has, on the terms and subject to the conditions set forth herein, unanimously
(i) approved the Offer and the Merger and adopted this Agreement in accordance
with the GCL, and (ii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares pursuant to the Offer and approve
the Merger (if such approval is required by applicable Law); and
WHEREAS, the Board of Directors of Purchaser, and Fluke Electronics
Corporation as the sole stockholder of the Purchaser, have approved the merger
of the Purchaser with and into the Company with the Company as the surviving
corporation, as set forth below (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL"), and upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, as a condition to and inducement to Parent's and the
Purchaser's willingness to enter into this Agreement, simultaneously with the
execution of this Agreement, certain stockholders of the Company are entering
into a stockholders' agreement with Parent and the Purchaser (the "Stockholders'
Agreement"); and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Parent, the Purchaser and the Company agree as follows:
ARTICLE ONE
THE OFFER
SECTION 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article Eight hereof and none of the events set forth in Annex I
hereto (the "Tender Offer Conditions") shall have occurred, as promptly as
reasonably practicable following the execution of this Agreement, Parent shall
cause the Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (including the rules and regulations
promulgated thereunder, the "Exchange Act")) the Offer, shall, upon commencement
of the Offer but after affording the Company and its counsel a reasonable
opportunity to review and comment thereon, file Schedule TO and all other
necessary documents with the Securities and Exchange Commission (the "SEC") and
make all deliveries, mailings and telephonic notices required by Rule 14d-3
under the Exchange Act, in each case in connection with the Offer (the "Offer
Documents") and shall use its reasonable efforts to consummate the Offer,
subject to the terms and conditions thereof. The obligation of the Purchaser to
accept for payment or pay for any Shares tendered pursuant to the Offer will be
subject only to the satisfaction, or waiver by Purchaser, of the Tender Offer
Conditions.
(b) Without the prior written consent of the Company, the Purchaser
shall not decrease the Offer Price or change the form of consideration payable
in the Offer, decrease the number of Shares sought to be purchased in the Offer,
impose additional conditions to the Offer or amend any other term of the Offer
in any manner adverse to the holders of Shares. The Offer shall remain open
until the date that is 20 business days (as such term is defined in Rule 14d-
1(g)(3) under the Exchange Act) after the commencement of the Offer (the
"Expiration Date"), unless the Purchaser shall have extended the period of time
for which the Offer is open pursuant to, and in accordance with, the two
succeeding sentences or as may be required by applicable Law, in which event the
term "Expiration Date" shall mean the latest time and date as the Offer, as so
extended, may expire; provided, however, that the Purchaser may provide a
subsequent offering period after the Expiration Date, in accordance with and
subject to the requirements of Rule 14d-11 under the Exchange Act. If at any
Expiration Date, any of the Tender Offer Conditions are not satisfied or waived
by the Purchaser, the Purchaser may extend the Offer from time to time. Subject
to the terms of the Offer and this Agreement and the satisfaction of all the
Tender Offer Conditions as of any Expiration Date, the Purchaser will accept for
payment and pay for all Shares validly tendered and not validly withdrawn
pursuant to the Offer as soon as practicable after such Expiration Date of the
Offer; provided that, if all of the Tender Offer Conditions are satisfied but
less than 90% of the outstanding Common Shares have been validly tendered and
not withdrawn in the Offer, the Purchaser shall have the right, in its sole
discretion, to extend the Offer from time to time for up to a maximum of ten
additional business days in the aggregate for all such extensions. Without the
prior written consent of the Company, the Purchaser shall not accept for payment
or pay for any Shares in the Offer if, as a result, Purchaser would acquire less
than the number of Shares necessary to satisfy the Minimum Condition (as defined
in Annex I hereto). Notwithstanding the foregoing and subject to the applicable
rules of the SEC and the terms and conditions of the Offer, Purchaser expressly
reserves the right to delay payment for Shares in order to comply in whole or in
part with applicable Laws. Any such delay shall be effected in compliance with
Rule 14e-1(c)
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under the Exchange Act. The Company agrees that no Common Shares held by the
Company or any of its subsidiaries will be tendered in the Offer. If the payment
for tendered Shares is to be made to a person other than the person in whose
name the surrendered certificate formerly evidencing such Shares is registered
on the stock transfer books of the Company, it shall be a condition of payment
that the certificate so surrendered shall be endorsed properly or otherwise be
in proper form for transfer and that the person requesting such payment shall
have paid all transfer and other taxes required by reason of the payment of the
purchase price therefor to a person other than the registered holder of the
certificate surrendered, or shall have established to the satisfaction of
Purchaser that such taxes either have been paid or are not applicable.
(c) Parent and the Purchaser represent that the Offer Documents will
comply in all material respects with the provisions of applicable federal
securities Laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or the Purchaser with respect to
information supplied by the Company in writing for inclusion in the Offer
Documents. Each of Parent and the Purchaser, on the one hand, and the Company,
on the other hand, agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect and the Purchaser further agrees to take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to stockholders of the Company, in each
case, as and to the extent required by applicable federal securities Laws.
SECTION 1.2. Company Actions.
(a) The Company shall, after affording Parent and its counsel a
reasonable opportunity to review and comment thereon, file with the SEC and mail
to the holders of Shares, on the date of the filing by Parent and the Purchaser
of the Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-
9 (together with any amendments or supplements thereto, the "Schedule 14D-9")
reflecting the recommendation of the Company Board that holders of Shares tender
their Shares pursuant to the Offer and shall disseminate the Schedule 14D-9 as
required by Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9
will set forth, and the Company hereby represents, that the Company Board, at a
meeting duly noticed and called, has unanimously (i) determined that this
Agreement and each of the transactions contemplated hereby, including each of
the Offer and the Merger, is advisable, fair to and in the best interests of the
Company and its stockholders, (ii) approved the Offer and the Merger and adopted
this Agreement in accordance with the GCL, (iii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve the Merger (if such approval is required by applicable
Law), and (iv) taken all other action necessary to render Section 203 of the GCL
inapplicable to the Offer and the Merger; provided, that such recommendation and
approval may be withdrawn, modified or amended only as provided in Section
6.9(a). The Company further represents that, as of the date of this Agreement,
▇▇▇▇▇▇▇▇ Valuation Advisors ("Financial Advisor"), the Company's financial
advisor, has delivered to the Company Board its written opinion that, as of the
date of this Agreement, the consideration to be received by the holders of
Shares (other than Parent or any of its subsidiaries)
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pursuant to the Offer and the Merger is fair to the Company's stockholders from
a financial point of view, a copy of the written opinion of which such advisor
has consented to include in the Schedule 14D-9. The Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Company Board
described in this Section 1.2(a).
(b) The Company represents that the Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities Laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or the Purchaser in writing for inclusion in the Schedule 14D-9. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of them for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of Shares, in each case, as and to the extent
required by applicable federal securities Law.
(c) In connection with the Offer, the Company will promptly (and in
any event within three business days after the date hereof) furnish the
Purchaser with mailing labels, security position listings, any available non-
objecting beneficial owner lists and any available listing or computer list
containing the names and addresses of the record holders of the Shares as of the
most recent practicable date and shall furnish the Purchaser with such
additional available information (including, but not limited to, updated lists
of holders of Shares and their addresses, mailing labels and lists of security
positions and non-objecting beneficial owner lists) and such other assistance as
the Purchaser or its agents may reasonably request in communicating the Offer to
the Company's record and beneficial stockholders. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent, the Purchaser and their subsidiaries, affiliates, associates, agents and
advisors, shall keep such information confidential and use the information
contained in any such labels, listings and files only in connection with the
Offer and the Merger and, should the Offer terminate or if this Agreement shall
be terminated, will deliver to the Company all copies of such information then
in their possession.
SECTION 1.3. Directors.
(a) Subject to compliance with applicable Law, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer representing at least
such number of Shares as shall satisfy the Minimum Condition, and from time to
time thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of the total number of directors on the Company Board (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Common Shares beneficially owned by
Parent or its affiliates bears to the total number of Common Shares then
outstanding, and the Company shall, upon request of Parent, promptly take all
actions necessary to cause Parent's designees to be so elected, including, if
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necessary, increasing the size of the Company Board and/or seeking the
resignations of one or more existing directors, with the first resignations
sought being those of directors whose Common Shares were purchased in the Offer;
provided, however, that prior to the Effective Time (as defined in Section 2.2),
the Company Board shall always have at least two members who are not officers,
directors, employees or designees of the Purchaser or any of its affiliates,
including the Company ("Purchaser Insiders"); provided further, that at least
two members of the Company Board who cannot be Purchaser Insiders shall, to the
extent possible, be comprised of directors who were serving on the Company Board
as of the date of this Agreement. If the number of directors who are not
Purchaser Insiders is reduced below two prior to the Effective Time, the
remaining director who is not a Purchaser Insider shall be entitled to designate
a person to fill such vacancy who is not a Purchaser Insider and who shall be a
director not deemed to be a Purchaser Insider for all purposes of this
Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. Parent will
supply to the Company any information with respect to itself and its officers,
directors and affiliates required by such Section and Rule.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights or conditions to
consummation of the Merger hereunder, in addition to any required approval
thereof by the full Company Board, will require the concurrence of a majority of
the directors of the Company then in office who are not Purchaser Insiders (or
in the case where there are two or fewer directors who are not Purchaser
Insiders, the concurrence of one director who is not a Purchaser Insider) if
such amendment, termination, extension or waiver would be reasonably likely to
have an adverse effect on the minority stockholders of the Company. The Company
Board shall not delegate any matter set forth in this Section 1.4(c) to any
committee of the Company Board.
ARTICLE TWO
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time the Purchaser
shall be merged with and into the Company. Following the Merger, the separate
corporate existence of the Purchaser shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"), and shall continue
its existence under the GCL.
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SECTION 2.2. Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Sections 7.1(a) and
7.1(b), but subject to satisfaction of the conditions set forth in Sections
7.1(c) and 7.1(d), the Merger shall become effective as set forth in the
certificate of merger which shall be filed with the Secretary of State of the
State of Delaware. The parties shall take such other and further actions as may
be required by Law to make the Merger effective. The time the Merger becomes
effective in accordance with applicable Law is referred to herein as the
"Effective Time." Prior to such filing, a closing (the "Closing") shall be held
at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, or such other place as the parties shall agree, for the purpose of
confirming the satisfaction or waiver, as the case may be, of the conditions set
forth in Article Seven. The date on which the Closing occurs is referred to as
the "Closing Date."
SECTION 2.3. Effects of the Merger. At and after the Effective Time the
Merger shall have the effects set forth in Section 259 of the GCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company (including without limitation any
obligations of the Company pursuant to the Confidential Strategic Alliance
Agreement dated as of September 30, 1992 by and between ▇▇▇▇ Scientific, Inc.
and ▇▇▇▇ Instruments, Inc.) and the Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4. Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(a) 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 until thereafter amended, subject to
the provisions of Section 6.6 of this Agreement, in accordance with the
provisions thereof and hereof and applicable Law.
(b) The bylaws of the Purchaser in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until amended, subject to the
provisions of Section 6.6 of this Agreement, in accordance with the provisions
thereof and applicable Law.
SECTION 2.5. Directors. Subject to applicable Law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.6. Officers. Subject to applicable Law, the officers of the
Purchaser immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.7. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each
Common Share issued and outstanding immediately prior to the Effective Time
(other than (i) any Common Shares held by Parent, the Purchaser, any wholly
owned subsidiary of Parent or the Purchaser, in the treasury of the Company or
by any wholly owned subsidiary of the Company, which Common Shares, by virtue
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of the Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto, and (ii) Dissenting Shares (as defined in Section 3.1)), shall
be cancelled and retired and shall be converted into the right to receive the
Offer Price in cash (the "Merger Price"), payable to the holder thereof, without
interest thereon, upon surrender of the certificate formerly representing such
Common Share.
SECTION 2.8. Conversion of Purchaser Stock. The Purchaser has outstanding
ten shares of common stock, par value $.001 per share, all of which are entitled
to vote with respect to the approval of this Agreement. At the Effective Time,
each share of common stock of the Purchaser issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one
validly issued, fully paid and non-assessable share of common stock, par value
$.001 per share, of the Surviving Corporation.
SECTION 2.9. Options; Stock Plans. As soon as practicable following the
date of this Agreement, the Board of Directors of the Company shall adopt such
resolutions or take such other actions (if any) as may be required to provide
that:
(a) each stock option and similar right (each, an "Option") (other
than the Investor Option, as defined below) outstanding immediately prior to the
Effective Time and granted pursuant to any stock option or similar plan of the
Company, or any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the Company or
any subsidiary (collectively, the "Stock Plans") shall, as of the Effective
Time, be canceled in exchange for a lump sum cash payment equal to (1) the
product of (x) the number of Common Shares subject to such Option and (y) the
Merger Price, minus (2) the product of (x) the number of Common Shares subject
to such Option and (y) the per share exercise price of such Option, net of any
required tax withholding;
(b) the Investor Option (as defined in that certain Stock Purchase
Agreement dated as of October 18, 1991 by and between the Company and Penn Yards
Associates) shall, as of the Effective Time, be canceled in exchange for a lump
sum cash payment equal to $61,602; and
(c) all Stock Plans shall terminate as of the Effective Time, and all
Options and all other outstanding stock options or similar rights heretofore
granted under any Stock Plan shall be canceled as of the Effective Time, without
any payment therefor except as otherwise provided in this Section 2.9.
The payments described above in this Section 2.9 shall be made promptly
following the Effective Time. The vesting of each Option shall not accelerate as
a result of, or in connection with, the transactions contemplated hereby, except
to the extent required by the existing terms of the option agreement pursuant to
which it was granted. The Company shall take no action, and shall ensure that no
discretion is exercised by its Board of Directors or any committee thereof or
any other body or person so as to cause the vesting of any Option, or to cause
any other option, warrant or right to acquire Common Shares to accelerate. The
Company shall take all necessary
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action to approve the disposition of the Options in connection with the
transactions contemplated by this Agreement to the extent necessary to exempt
such transactions and acquisitions under Rule 16b-3 of the Exchange Act.
SECTION 2.10. Stockholders' Meeting.
(a) If requested by Parent and required by applicable Law or the
applicable rules and regulations of the Nasdaq SmallCap Market in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable Law, the Company's certificate of incorporation and
bylaws and the applicable rules and regulations of the Nasdaq SmallCap Market:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as practicable
following the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy statement
relating to this Agreement, and use its commercially reasonable efforts (x)
to obtain and furnish the information required to be included by the SEC in
the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders;
(iii) subject to Section 1.2(a), include in the Proxy Statement
the recommendation of the Company Board that stockholders of the Company
vote in favor of the approval of this Agreement; and
(iv) include in the Proxy Statement the opinion of Financial
Advisor referred to in Section 1.2(a).
(b) Company shall notify Parent of the receipt of any comments of the
SEC with respect to the Proxy Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information and shall provide
to Parent promptly copies of all correspondence between the Company or any
representative of the Company and the SEC with respect thereto. The Company
shall give Parent and its counsel the opportunity to review the Proxy Statement,
including all amendments and supplements thereto, prior to its being filed with
the SEC and shall give Parent and its counsel the opportunity to review all
responses to, requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC, and shall include in the Proxy
Statement and all such amendments, supplements, responses and requests all
comments reasonably proposed by Parent.
(c) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and of this Agreement.
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(d) If, following expiration of the Offer and satisfaction or waiver
of all of the Tender Offer Conditions, applicable Law or the applicable rules
and regulations of the Nasdaq SmallCap Market require a vote of the stockholders
of the Company in order to consummate the Merger, Parent and Purchaser may, in
their sole discretion, in lieu of having the Company call a special meeting of
the stockholders as contemplated above, elect to approve the Merger by written
consent without a meeting of the stockholders, as permitted by the certificate
of incorporation and bylaws of the Company. If Parent and Purchaser elect to
approve the Merger by written consent, the Company shall take all actions
necessary to permit Parent and the Purchaser to take such action by written
consent, including without limitation making and assisting in such filings with
the SEC, and preparing and mailing an information statement and such other
materials, as may be required under the federal securities laws and the GCL.
SECTION 2.11. Merger Without Meeting of Stockholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the then outstanding Common Shares,
pursuant to the Offer or otherwise, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE THREE
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1. Dissenting Shares. Notwithstanding Section 2.7, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with the GCL ("Dissenting
Shares") shall not be converted into a right to receive the Merger Price, unless
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses his right to appraisal, such Shares shall be treated as if they had
been converted as of the Effective Time into a right to receive the Merger
Price. The Company shall give Parent prompt notice of any demands received by
the Company for appraisal of any Shares, and Parent shall have the right to
participate in and to control all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 3.2. Payment for Shares.
(a) From and after the Effective Time, such bank or trust company as
shall be designated by Parent shall act as paying agent (the "Paying Agent") in
effecting the payment of the Merger Price in respect of certificates (the
"Certificates") that, prior to the Effective Time, represented Common Shares
entitled to payment of the Merger Price pursuant to Section 2.7. Promptly
following the Effective Time, Parent or the Purchaser shall deposit, or cause to
be deposited, with the Paying Agent the aggregate Merger Price to which holders
of Shares shall be
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entitled at the Effective Time pursuant to Section 2.7 (the "Exchange Fund").
The Exchange Fund shall be invested by the Paying Agent as directed by the
Surviving Corporation.
(b) Promptly after the Effective Time, Parent shall cause the Paying
Agent to mail to each record holder of Certificates that immediately prior to
the Effective Time represented Shares (other than Certificates representing
Shares held by Parent, the Purchaser, any wholly owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company, and other than Certificates representing Dissenting Shares) a
form of letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and instructions for
use in surrendering such Certificates and receiving the Merger Price in respect
thereof. Upon the surrender of each such Certificate, the Paying Agent shall
pay the holder of such Certificate the Merger Price, multiplied by the number of
Common Shares formerly represented by such Certificate, in consideration
therefor, and such Certificate shall forthwith be cancelled. Until so
surrendered, each such Certificate (other than Certificates representing Shares
held by Parent, the Purchaser, any wholly owned subsidiary of Parent or the
Purchaser, in the treasury of the Company or by any wholly owned subsidiary of
the Company, and other than Certificates representing Dissenting Shares) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Shares
surrendered therefor is registered, it shall be a condition to such right to
receive such Merger Price that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
surrendering such Shares shall pay to the Paying Agent any transfer or other
similar taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable. If any holder of Shares shall be unable to surrender such
holder's Certificates because such Certificates have been lost, mutilated or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond (if reasonably required by the Surviving Corporation) in form and substance
and with surety reasonably satisfactory to the Surviving Corporation.
(c) Promptly following the date which is 180 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating thereto, without any
interest thereon.
(d) Parent or the Paying Agent will be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Parent (or any affiliate thereof) or the
Paying Agent shall determine in good faith they are required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of federal, state, local
or foreign Tax Law. To the extent that amounts are so withheld by Parent or the
Paying Agent, such
10
withheld amounts will be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of whom such deduction and
withholding were made.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for payment as and to the extent provided in this Article Three.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The term "Material Adverse Effect on the Company," as used in this Agreement,
means any circumstance, condition, change in or effect on or with respect to the
business, assets, liabilities, condition (financial or otherwise) or results of
operations of the Company or any of its subsidiaries that, individually or in
the aggregate with all other circumstances, conditions, changes and effects,
would reasonably be expected to be materially adverse to the Company and its
subsidiaries taken as a whole. The Company has heretofore provided or made
available to Parent and the Purchaser a complete and correct copy of the
certificate of incorporation and the bylaws or comparable organizational
documents, each as amended to the date hereof, of the Company and each of its
subsidiaries. Neither the Company nor any of its subsidiaries is in violation
of or default under any of the provisions of its respective certificate of
incorporation, bylaws or comparable organizational documents. The Company has
made available to Parent and its representatives true and complete copies of the
minutes of all meetings of the stockholders, the Board of Directors and each
committee of the Board of Directors of the Company and of each of its
subsidiaries held since January 1, 1994, and such minutes accurately reflect all
proceedings of the stockholders and Board of Directors (and all committees
thereof) of the Company and of each of its subsidiaries.
SECTION 4.2. Subsidiaries; Capitalization
(a) Section 4.2(a) of the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") lists each subsidiary of the Company and its respective
jurisdiction of incorporation. All the outstanding
11
shares of capital stock and other securities of each such subsidiary have been
validly issued and are fully paid and nonassessable and, except as set forth on
Section 4.2(a) of the Company Disclosure Schedule, are owned by the Company, by
another subsidiary of the Company or by the Company and another such subsidiary,
free and clear of all Liens and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock and securities). Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock, security or other ownership or equity interest in any person. There are
no restrictions of any kind which prevent the payment of dividends by any of the
Company's subsidiaries, and neither the Company nor any of its subsidiaries is
subject to any obligation or requirement to provide funds for or to make any
investment (in the form of a loan or capital contribution) to or in any person.
(b) The authorized capital stock of the Company consists of 1,625,000
Common Shares and 50,000 shares of preferred stock, par value $0.01 per share.
As of the date hereof (1) 1,128,476 Common Shares were issued and outstanding,
(2) no shares of preferred stock were issued or outstanding, and (3) 160,884
Common Shares were reserved for issuance pursuant to outstanding Options.
Except as set forth on Section 4.2(b) to the Company Disclosure Schedule, no
Common Shares are owned by any subsidiary of the Company. Except as set forth
above, at the time of execution of this Agreement, no shares of capital stock or
other equity or voting securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock and other
equity or voting securities of the Company (including all options, warrants and
other convertible securities) are, and all shares which may be issued pursuant
to outstanding options, warrants or other convertible securities will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
(1) to the Company's knowledge, subject to, or (2) issued in violation of, any
preemptive right, purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right. Except for the
Common Shares, there are no outstanding bonds, debentures, notes or other
indebtedness or securities of the Company or any of its subsidiaries, and no
securities or other instruments or obligations of the Company or any of its
subsidiaries, the value of which is in any way based upon or derived from any
capital or voting stock of the Company, having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which any stockholders of the Company or of any of its subsidiaries may vote.
(c) Except as set forth above, there are no outstanding securities,
options, warrants, calls, rights, commitments, stock subscriptions or Contracts
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other equity or voting securities (including options,
warrants and other convertible securities) of the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment or Contract. There are no outstanding rights, commitments or
Contracts of any kind obligating the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or other
equity or voting securities of the Company or any of its subsidiaries or any
securities of the type described in the two immediately preceding sentences.
The Company has delivered or made available to Parent complete and correct
copies of all Company option plans and all forms of Options. Section 4.2(c) of
the Company Disclosure
12
Schedule sets forth a complete and accurate list of all Options outstanding as
of the date hereof and the exercise price of and number of shares underlying
each such outstanding Option. Other than the Options set forth on Section 4.2(c)
of the Company Disclosure Schedules, there are no Options, warrants or other
convertible securities outstanding, and no other Options, warrants or other
convertible securities will be or become outstanding at any time prior to the
Effective Time. Each Option outstanding as of the date hereof is immediately
exercisable and vested as of the date hereof. Except as described in Section
4.2(c) of the Company Disclosure Schedule, as of the date hereof, there are no
stock-appreciation rights, stock-based performance units, "phantom" stock rights
or other Contracts of any character (contingent or otherwise) pursuant to which
any person is or may be entitled to (1) receive any payment or other value based
on the assets, revenues, earnings or financial performance, stock price
performance or other attribute of the Company or any of its subsidiaries or
calculated in accordance therewith (other than ordinary course payments or
commissions to sales representatives of the Company based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby), or (2) cause the Company or any of its subsidiaries to
file a registration statement under the Securities Act, or which otherwise
relate to the registration of any securities of the Company. Except as set forth
in Section 4.2(c) of the Company Disclosure Schedule and except for the
Shareholder Voting Agreement dated as of October 18, 1991 by and between ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and Penn Yards Associates, there are no
voting trusts, proxies, antitakeover plans or other Contracts of any character
to which the Company or any of its subsidiaries is a party or by which any of
them is bound or, to the knowledge of the Company, to which any of the Company's
stockholders is a party or by which any of them is bound, in each case, with
respect to the issuance, holding, acquisition, voting or disposition of any
shares of capital stock of the Company or any of its subsidiaries.
SECTION 4.3. Authority Relative to this Agreement and Related Matters.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and, except for any required approval by the Company's
stockholders in connection with consummation of the Merger, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Company Board and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the affirmative vote of the holders of a majority
of the voting power of the then outstanding Common Shares entitled to vote
thereon, to the extent required by applicable Law and the filing of the
certificate of merger pursuant to the GCL). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
SECTION 4.4. Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under domestic, foreign or
supranational antitrust Laws are made and the waiting periods thereunder have
been terminated or have expired, (ii) the requirements of the Exchange Act and
any applicable state securities, "blue sky" or
13
takeover Law are met, (iii) the filing of the certificate of merger and other
appropriate merger documents, if any, as required by the GCL, is made, and (iv)
with respect to the Merger, approval of this Agreement by the affirmative vote
of the holders of a majority of the voting power of the then outstanding Common
Shares entitled to vote thereon, if required by the GCL, is received, none of
the execution and delivery of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the Company
with any of the provisions hereof will (i) conflict with or violate the
certificate of incorporation or bylaws of the Company or the comparable
organizational documents of any of its subsidiaries, (ii) except as disclosed on
Section 4.4(a) of the Company Disclosure Schedule, result in a breach or
violation of, a default under or the triggering of any payment or other material
obligations pursuant to, any of the Company's existing Employee Benefit
Arrangements (as hereinafter defined) or any grant or award made under any of
the foregoing, (iii) except as disclosed on Section 4.4(a) of the Company
Disclosure Schedule, conflict with or violate in any material respect any
statute, ordinance, rule, regulation, order, judgment, decree, permit or license
applicable to the Company or any of its subsidiaries, or by which any of them or
any of their respective properties or assets may be bound or affected, or (iv)
except as disclosed on Section 4.4(a) of the Company Disclosure Schedule, result
in a violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in any loss of any benefit, or the creation of any Lien on any of the properties
or assets of the Company or any of its subsidiaries (any of the foregoing
referred to in clause (ii), (iii) or this clause (iv) being a "Violation")
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties may be bound or affected,
other than, in the case of clause (iv) above, any such Violations that,
individually or in the aggregate, would not (A) have a Material Adverse Effect
on the Company, (B) impair the ability of the Company to perform its obligations
under this Agreement or (C) prevent or materially delay consummation of the
Offer or the Merger.
(b) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof will require any
consent, waiver, approval, authorization or permit of, or registration or filing
with or notification to (any of the foregoing being a "Consent"), any government
or subdivision thereof, domestic, foreign or supranational or any
administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational (each, a "Governmental
Entity"), except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) the filing of the certificate of merger pursuant to the GCL,
(iii) compliance with the requirements of all domestic, foreign and
supranational antitrust Laws, and (iv) such filings, authorizations, orders and
approvals as to which failure to obtain or make would not (x) have a Material
Adverse Effect on the Company or (y) prevent or materially delay the
consummation of the Offer or the Merger.
SECTION 4.5. SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements, definitive proxy statements and other documents
required to be filed by
14
the Company with the SEC since January 1, 1996 (as they have been amended since
the time of their filing, and including any documents filed as exhibits thereto
and all financial statements or schedules included or incorporated by reference
therein, collectively, the "SEC Reports"). As of their respective dates, the SEC
Reports complied with the requirements of the Exchange Act or the Securities Act
of 1933, as amended (the "Securities Act"), as applicable, and the rules and
regulations of the SEC promulgated thereunder. As of the date they were filed
or, if amended, as of the date of such amendment, none of the SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. None of the Company's subsidiaries is required to file any form,
report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles ("GAAP") (except, in
the case of unaudited quarterly statements, as permitted by Form 10-QSB of the
Exchange Act and subject to normal year-end audit adjustments which are not
individually or in the aggregate material) applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presents, in all material respects, the consolidated
financial position, results of operations and cash flows of the Company and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (except as otherwise noted therein).
(c) The consolidated balance sheets as of July 31, 2000 and 1999 and
the consolidated statements of income, stockholders' equity and cash flows for
each of the three fiscal years in the period ended July 31, 2000 (including the
related notes and schedules thereto) of the Company contained in the Company's
Form 10-KSB for the fiscal year ended July 31, 2000 present fairly the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates and
for the periods presented therein and were prepared in accordance with GAAP
consistently applied during the periods involved except as otherwise noted
therein, including the related notes.
(d) Except as reflected, reserved against or otherwise disclosed in
the consolidated balance sheet of the Company and its consolidated subsidiaries
contained in the Company's Form 10-QSB for the fiscal quarter ended December 31,
2000, neither the Company nor any of its subsidiaries has any liabilities,
indebtedness or obligations (absolute, accrued, fixed, contingent or otherwise)
other than liabilities incurred in the ordinary course of business consistent
with past practice since December 31, 2000 which would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
(e) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Securities Act and the
rules and regulations promulgated thereunder or the Exchange Act and the rules
and regulations promulgated thereunder.
15
(f) The Company is, and has been, in compliance with all listing
requirements required to maintain listing on the Nasdaq SmallCap Market.
SECTION 4.6. Environmental Matters.
Except as may be set forth in Section 4.6 of the Company Disclosure
Schedule:
(a) To the knowledge of the Company, the business and operations of
the Company and its subsidiaries comply with all applicable Environmental Laws;
the Company and its subsidiaries have obtained all Governmental Permits relating
to Environmental Laws necessary for the operation of their businesses; and all
such Governmental Permits are set forth on Section 4.6 of the Company Disclosure
Schedule and are in full force and effect and the Company and its subsidiaries
are in compliance with terms and conditions of such permits except, in the case
of each of the foregoing, for such events as would not have a Material Adverse
Effect on the Company. To the knowledge of the Company, neither the Company nor
any of its subsidiaries is subject to, and no facts exist that would form the
basis for, any investigation by, order from or claim by any person (including
without limitation any Governmental Entity or prior owner or operator of any of
the Company Property) respecting (i) any Environmental Law, (ii) any Remedial
Action or (iii) any claim arising from the Release or threatened Release of a
Contaminant into the environment. Neither the Company nor any of its
subsidiaries is subject to any judicial or administrative proceeding, order,
judgment, decree or settlement alleging or addressing a violation of or
liability under any Environmental Law.
(b) Neither the Company nor any of its subsidiaries has (i) reported
a Release of a hazardous substance pursuant to Section 103(a) of CERCLA, or any
state equivalent; (ii) filed a notice pursuant to Section 103(c) of CERCLA; or
(iii) filed any notice under any applicable Environmental Law reporting a
violation of any applicable Environmental Law. There is not now with respect to
the operations of the Company or any of its subsidiaries, nor to the knowledge
of the Company has there ever been, on or in any Company Property: (A) any
Release, (B) any treatment, recycling, disposal or storage, other than short
term storage prior to removal by a licensed transporter for off-site disposal,
of any hazardous waste, as that term is defined under RCRA or any state
equivalent, or (C) any underground storage tank or surface impoundment or
landfill or waste pile, except, in the case of each of the foregoing, for such
events which would not have a Material Adverse Effect on the Company.
(c) To the knowledge of the Company, there is not now on or in any
Company Property any polychlorinated biphenyls (PCB) used in the Company's
operations in pigments, hydraulic oils, electrical transformers or other
equipment.
(d) To the knowledge of the Company, any asbestos-containing material
or presumed asbestos-containing material which is on or part of any Company
Property presently owned, leased or operated by the Company or any of its
subsidiaries, as currently configured and operated, is in good repair according
to the current standards and practices governing such material, and its presence
or condition does not violate any currently applicable Environmental Law. None
of the products manufactured, distributed or sold by the Company or any of its
subsidiaries contained asbestos or asbestos-containing material.
16
(e) For purposes of this Section:
(i) "Company Property" means any real or personal property,
plant, building, facility, structure, underground storage tank, equipment
or unit, or other asset now or, to the Company's knowledge, previously
owned, leased or operated primarily by the Company or any of its present
or, to the Company's knowledge, past subsidiaries.
(ii) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and any regulations promulgated
thereunder.
(iii) "Contaminant" means any waste, pollutant, hazardous or
toxic substance or waste, petroleum, petroleum-based substance or waste,
special waste, hazardous material or any constituent of any such substance,
waste or material.
(iv) "Environmental Law" means all foreign, federal, state and
local Laws or regulations relating to or addressing the environment, health
or safety, including but not limited to CERCLA, OSHA and RCRA, any
analogous foreign, state or local law, and the common law.
(v) "Governmental Permits" means any permits, licenses,
certificates, orders, Consents, authorizations franchises and other
approvals from, or required by, any Governmental Entity that are used by,
or are necessary to own and to operate, the business of the Company and its
subsidiaries as currently configured and operated, together with any
applications for the issuance, renewal, modification or extension thereof
and all supporting information and analyses.
(vi) "OSHA" means the Occupational Safety and Health Act, as
amended, and any regulations promulgated thereunder.
(vii) "RCRA" means the Resource Conservation and Recovery Act,
as amended, and any regulations promulgated thereunder.
(viii) "Release" means release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of a Contaminant into the environment or into or out of any
Company Property, including the movement of Contaminants through or in the
air, soil, surface water, groundwater or Company Property.
SECTION 4.7. Compliance with Applicable Laws.
(a) The Company and its subsidiaries hold all permits, registrations,
clearances, licenses, variances, exemptions, orders and approvals of all
Governmental Entities material to the Company and each of its subsidiaries or
required for them to own their assets, conduct their business, and perform their
contracts as now owned, conducted and performed and as presently contemplated to
be owned, conducted and performed (the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits. Except as
set forth on Section 4.7 to the Company Disclosure Schedule, the business
operations of the Company and its subsidiaries have been conducted in
compliance, in all respects material to the Company and
17
each of its subsidiaries, with all Laws, ordinances and regulations of any
Governmental Entity. No suspension or cancellation of any of the Company Permits
is pending or, to the knowledge of the Company, threatened. Neither the Company
nor any Subsidiary is in material default, breach or violation of, (a) any Law
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected, or (b) any
note, bond, mortgage, indenture, Contract, agreement, lease, license, Permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries, or
any of their respective properties or assets, is bound. No person other than the
Company or one of its subsidiaries owns or has any proprietary, financial or
other interest in any Company Permit.
(b) The Company and its subsidiaries have not made, directly or
indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to (i) any foreign official (as such term is defined in the
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA") for the purpose
of influencing any official act or decision of such official or inducing him or
her to do or omit to do any act in violation of his or her lawful duty, to
affect any act or decision of such official, or to secure any improper
advantage, or inducing him or her to use his or her influence to affect any act
or decision of a foreign government, or any agency or subdivision thereof or
(ii) any foreign political party or official thereof or candidate for foreign
political office for the purpose of influencing any official act or decision of
such party, official or candidate or inducing him or her to do any act in
violation of his or her lawful duty, or to secure any improper advantage, or
inducing such party, official or candidate to use his, her or its influence to
affect any act or decision of a foreign government or agency or subdivision
thereof, in the case of both clauses (i) and (ii) above in order to assist the
Company or any of its subsidiaries in obtaining or retaining business for or
directing business to the Company or any of its subsidiaries or under
circumstances which would subject the Company or any of its subsidiaries to
liability under the FCPA (or any comparable foreign statute or regulation). The
Company has not made any bribe, kickback or other illegal payment in violation
of any foreign or domestic Law.
SECTION 4.8. Change of Control. The transactions contemplated by this
Agreement will not constitute a "change of control" under, require the Consent
from or the giving of notice to a third party pursuant to, permit a third party
to terminate or accelerate vesting or repurchase rights or create any other
detriment under the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, agreement or other instrument, obligation or Contract
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound. Section 4.8 of the
Company Disclosure Schedule sets forth the Company's best estimates of the
amounts payable to the executives listed therein, as a result of the
transactions contemplated by this Agreement and/or any subsequent employment
termination (including any cash-out or acceleration of options and restricted
stock and any "gross-up" payments with respect to any of the foregoing), based
on compensation data applicable as of the date of such Schedule and the
assumptions stated on that Schedule.
SECTION 4.9. Litigation. Except as set forth on Section 4.9 of the
Company Disclosure Schedule, there is no Litigation pending or, to the knowledge
of the Company, threatened, against the Company or any of its subsidiaries which
would have a Material Adverse Effect on the
18
Company and its subsidiaries or could prevent or materially delay the
consummation of the Offer and the Merger. Except as disclosed in the SEC Reports
filed prior to the date of this Agreement, neither the Company nor any of its
subsidiaries, nor any of their respective rights, properties or assets, is
subject to any outstanding Order which would have a Material Adverse Effect on
the Company or could prevent or materially delay the consummation of the Offer
and the Merger. To the knowledge of the Company, there are no Litigation or
Orders pending or threatened against any person whom the Company or any of its
subsidiaries has agreed to indemnify, concerning such person's conduct as a
director, officer, employee or agent of the Company or any of its subsidiaries.
SECTION 4.10. Information. Neither the Schedule 14D-9 nor any of the
information supplied by the Company specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Proxy Statement or (iii) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, at the date any of such Other Filings or any amendment
or supplement thereto is published, sent or given to stockholders, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Proxy Statement shall not, at the date it is first
mailed to stockholders of the Company, at the time of the Stockholders' Meeting
and at the Effective Time, contain any statement which, at the time and in light
of the circumstances under which it was made, is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. The Schedule 14D-9 and the Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, except that no representation is
made by the Company with respect to any statements made therein based on
information supplied by Parent or the Purchaser in writing specifically for
inclusion in the Proxy Statement.
SECTION 4.11. Certain Approvals. The Company has taken all necessary
action to ensure that Section 203 of the GCL does not and shall not apply to or
be triggered by this Agreement or by the Stockholders' Agreement or the
consummation of the transactions contemplated hereby or thereby and such action
is effective as of the date hereof. No state takeover statute or similar
statute or regulation applies or purports to apply to the Offer, the Merger or
the transactions contemplated by this Agreement or the Stockholders' Agreement.
SECTION 4.12. Employee Benefit Plans.
(a) Section 4.12(a) of the Company Disclosure Schedule includes a
complete list of all employee benefit plans, programs, and other arrangements
providing incentive compensation or benefits to any employee or former employee
or beneficiary or dependent thereof, whether or not written, and whether
covering one person or more than one person, sponsored or maintained by the
Company or any of its subsidiaries or to which the Company or any of its
subsidiaries contributes or is obligated to contribute ("Plans"). Without
limiting the
19
generality of the foregoing, the term "Plans" includes all employee welfare
benefit plans within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations thereunder
("ERISA") and all employee pension benefit plans within the meaning of Section
3(2) of ERISA.
(b) With respect to each Plan, the Company has delivered to Parent a
true, correct and complete copy of: (i) each writing constituting a part of such
Plan, including without limitation all plan documents, benefit schedules, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii)
the current summary plan description, if any; (iv) the most recent annual
financial report, if any; (v) the most recent actuarial report, if any; and (vi)
the most recent determination letter from the Internal Revenue Service (the
"IRS"), if any. Except as set forth on Section 4.12(b) of the Company
Disclosure Schedule, there are no amendments to any Plan that have been adopted
or approved nor has the Company or any of its subsidiaries undertaken to make
any such amendments.
(c) Section 4.12(c) of the Company Disclosure Schedule identifies
each Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder (the "Code") ("Qualified Plans"). The IRS has
issued a favorable determination letter with respect to each Qualified Plan that
has not been revoked, and there are no existing circumstances nor any events
that have occurred that could adversely affect the qualified status of any
Qualified Plan or the related trust. The Company does not provide benefits
through a voluntary employee beneficiary association as defined in Code Section
501(c)(9)).
(d) All contributions required to be made to any Plan by applicable
Law or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full or,
to the extent not required to be made or paid on or before the date hereof, have
been fully reflected in the financial statements of the Company included in the
SEC Reports to the extent required under generally accepted accounting
principles.
(e) The Company and each of its subsidiaries has complied, and is now
in compliance, in all material respects with all provisions of ERISA, the Code
and all Laws and regulations applicable to the Plans. There is not now, nor do
any circumstances exist that could give rise to, any requirement for the posting
of security with respect to a Plan or the imposition of any lien on the assets
of the Company or any of its subsidiaries under ERISA or the Code. No
prohibited transaction has occurred with respect to any Plan.
(f) With respect to each Plan that is subject to Title IV or Section
302 of ERISA or Section 412 or 4971 of the Code: (i) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived; (ii) the fair market value of the
assets of such Plan equals or exceeds the actuarial present value of all accrued
benefits under such Plan (whether or not vested), based upon the actuarial
assumptions used in the most recent actuarial report for such Plan; (iii) no
reportable event within the meaning of Section 4043(c) of ERISA for which the
30-day notice requirement
20
has not been waived has occurred, and the consummation of the transactions
contemplated by this agreement will not result in the occurrence of any such
reportable event; (iv) all premiums to the Pension Benefit Guaranty Corporation
(the "PBGC") have been timely paid in full; (v) no liability (other than for
premiums to the PBGC) under Title IV of ERISA has been or is expected to be
incurred by the Company or any of its subsidiaries; and (vi) the PBGC has not
instituted proceedings to terminate any such Plan and, to the Company's
knowledge, no condition exists that presents a risk that such proceedings will
be instituted or which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Plan.
(g) No Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA and which is subject to Title IV of ERISA
(a "Multiple Employer Plan"), nor has the Company or any of its subsidiaries, or
any of their respective ERISA Affiliates (as defined in the next sentence), at
any time since September 2, 1974, contributed to or been obligated to contribute
to any Multiemployer Plan or Multiple Employer Plan. An "ERISA Affiliate" means
any entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the Company or any of its subsidiaries, or that is a member of the same
"controlled group" as the Company or any of its subsidiaries, pursuant to
Section 4001(a)(14) of ERISA.
(h) There does not now exist, nor do any circumstances exist that
could result in, any liability under (i) Title IV of ERISA, (ii) Section 302 of
ERISA, (iii) Sections 412 and 4971 of the Code, (iv) the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, or
(v) corresponding or similar provisions of foreign Laws or regulations, other
than a liability that arises solely out of, or relate solely to, the Plans, that
would be a liability of the Company or any of its subsidiaries following the
Effective Time. Without limiting the generality of the foregoing, none of the
Company, its subsidiaries nor any ERISA Affiliate of the Company or any of its
subsidiaries has engaged in any transaction described in Section 4069 or Section
4204 or 4212 of ERISA.
(i) Neither the Company nor any of its subsidiaries has any liability
for life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no
additional expense to the Company and its subsidiaries.
(j) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted against the
Plans, any fiduciaries thereof with respect to their duties to the Plans or the
assets of any of the trusts under any of the Plans which could reasonably be
expected to result in any material liability of the Company or any of its
subsidiaries to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
21
(k) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting,
funding or delivery of, or increase the amount or value of, any payment or
benefit to any employee, officer or director of the Company or any of its
subsidiaries or result in any limitation on the right of the Company or any of
its subsidiaries to amend, merge, terminate or receive a reversion of assets
from any Plan or related trust. Without limiting the generality of the
foregoing, no amount paid or payable (whether in cash, in property, or in the
form of benefits) by the Company or any of its subsidiaries in connection with
the transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(l) All Plans subject to the Laws of any jurisdiction outside of the
United States: (i) have been maintained in accordance with all applicable
requirements, (ii) if they are intended to qualify for special tax treatment
meet all requirements for such treatment, and (iii) if they are intended to be
funded and/or book-reserved are fully funded and/or book reserved, as
appropriate, based upon reasonable actuarial assumptions.
SECTION 4.13. Intellectual Property.
(a) Set forth on Section 4.13(a) of the Company Disclosure Schedule
is a list of all patents, patent applications, patent disclosures, trademark
registrations and trademark applications, service ▇▇▇▇ registrations and service
▇▇▇▇ applications, certification ▇▇▇▇ registrations and certification ▇▇▇▇
applications, copyright registrations and copyright registration applications,
mask works registrations and mask works registration applications, both domestic
and foreign, which are owned or used by the Company or any of its subsidiaries.
The assets described on Section 4.13(a) of the Company Disclosure Schedule and
all other computer software, trade secrets, trademarks, trade names, service
marks, certification marks, copyrights, know-how, methods, processes,
procedures, apparatus, equipment, industrial property, discoveries, inventions,
designs, drawings, plans, specifications, engineering data, manuals, development
projects, research and development work in progress, technology and other
proprietary rights, confidential information or intellectual property
("Intellectual Property") which are owned or used by the Company or any of its
subsidiaries are referred to as the "Company Intellectual Property." The Company
and its subsidiaries own all right, title and interest in and to the Company
Intellectual Property validly and beneficially, free and clear of all Liens,
with the sole and exclusive right to use the same, subject to those licenses
listed on Section 4.13(b) of the Company Disclosure Schedule. The Company
Intellectual Property constitutes all the Intellectual Property reasonably
necessary or appropriate to conduct the business of the Company and its
subsidiaries as presently conducted and as currently proposed to be conducted.
(b) Set forth on Section 4.13(b) of the Company Disclosure Schedule
is a list of (i) all licenses, assignments and other transfers of Company
Intellectual Property granted or assigned to others by the Company or any of its
subsidiaries, and (ii) all Intellectual Property licensed, granted or assigned
to the Company or any of its subsidiaries by others, except that Section 4.13(b)
of the Company Disclosure Schedule does not include licenses to software legally
in the possession of the Company that has a replacement value of less than
$10,000 per copy and,
22
together with all other such copies, less than $50,000 in the aggregate. Neither
the execution of this Agreement nor the consummation of any of the transactions
contemplated hereby will adversely affect any of the Company's or any of its
subsidiaries' rights with respect to any of the Company Intellectual Property,
and none of the licenses, assignments or other transfers described above is
subject to termination or cancellation or change in its terms or provisions as a
result of this Agreement or the transactions provided for in this Agreement. To
the knowledge of the Company, there is no material unauthorized use,
infringement or misappropriation of any Intellectual Property.
(c) Except as set forth on Section 4.13(c) of the Company Disclosure
Schedule, no material claim with respect to the Intellectual Property has been
asserted or, to the knowledge of the Company, is threatened by any person, nor
does the Company have knowledge of any valid ground for any bona fide claims,
(i) to the effect that the manufacture, sale or use of any product, service or
process as used (currently or in the past) or offered or proposed for use or
sale by the Company infringes on any Intellectual Property of any person, (ii)
against the Company or any subsidiary relating to the use of any Intellectual
Property, or (iii) challenging the ownership, validity or effectiveness of any
Intellectual Property. All granted and issued patents and all registered
trademarks and service marks listed in Section 4.13(a) of the Company Disclosure
Schedule and all copyrights held by the Company are valid, enforceable and
subsisting.
(d) No Intellectual Property is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting in any manner the
licensing, assignment or other transfer, use or enforceability thereof by the
Company. The Company has not entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property, except
indemnities agreed to in the ordinary course of business included as part of the
Company's license agreements. The Company has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Company Intellectual Property.
SECTION 4.14. Taxes.
(a) All Tax Returns (as hereinafter defined) required to be filed by
the Company and each of its subsidiaries has been properly completed and filed
within the time and in the manner prescribed by law. All such Tax Returns were
correct in all respects. All Taxes required to be paid by the Company and each
of its subsidiaries that are due and payable have been paid, whether or not
shown on any Tax Return. The Company has made adequate provision in the
Company's financial statements for payment of all Taxes anticipated to be
payable by the Company and its subsidiaries in respect of all taxable periods or
portions thereof ending on or before the date hereof. Neither the Company nor
any of its subsidiaries is currently the beneficiary of any extension of time
within which to file any Tax Return.
(b) There are no liens for Taxes upon the assets of the Company or
any of its subsidiaries other than liens for current Taxes not yet due and
payable.
(c) The Company and its subsidiaries have withheld or collected and
paid over to the appropriate governmental authorities or are properly holding
for such payment all Taxes required by law to be withheld or collected.
23
(d) There is no claim or dispute concerning any Tax liability of the
Company or its subsidiaries either (i) claimed or raised by any taxing authority
in writing or (ii) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Company and its subsidiaries has knowledge
based on personal contact with any agent of such authority. No issue has been
raised in any examination by any taxing authority with respect to the Company or
any subsidiary which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency or increase in Tax for any other
period not so examined. There is no audit, examination, or similar proceeding
currently in progress or pending with respect to Taxes or Tax Returns of the
Company or any of its subsidiaries.
(e) Section 4.14 of the Company Disclosure Schedule lists the periods
through which the Tax Returns required to be filed by the Company or any of its
subsidiaries have been examined by the IRS or other appropriate taxing
authority, or the period during which any assessments may be made by the IRS or
other appropriate taxing authority has expired. All material deficiencies and
assessments asserted as a result of such examinations or other audits by
federal, state, local or foreign taxing authorities have been paid, fully
settled or adequately provided for in the Company's financial statements, and no
issue or claim has been asserted in writing for Taxes by any taxing authority
for any prior period, other than those heretofore paid or provided for in the
Company's financial statements. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return of the
Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code (or
similar provision of state or local law) by reason of a change in accounting
method.
(g) Neither the Company nor any if its subsidiaries has been a party
to any deferred intercompany transaction pursuant to which it realized but did
not recognize a gain, and no excess loss account exists with respect to the
shares of stock of any member of the federal consolidated income tax group of
which the Company is the common parent.
(h) Neither the Company nor any of its subsidiaries has been a party
to any "closing agreement" as described in section 7121 of the Code (or any
corresponding provision of state or local income Tax law).
(i) There has been no "ownership change" as described in Section 382
of the Code in a taxable period ending on or prior to the Closing Date that
would result in any limitation on the Company's ability to offset pre-change
losses against its taxable income.
(j) During the past five years, neither the Company nor any of its
subsidiaries has been party to any transaction, either as a distributing
corporation or controlled corporation, that has been reported to qualify for
tax-free treatment under Section 355 of the Code.
(k) Neither the Company nor any of its subsidiaries has a permanent
establishment in any foreign country.
24
(l) Neither the Company nor any of its subsidiaries has made any
payments, nor is or will become obligated to make any payments, that will be
non-deductible under Section 280G of the Code (or any corresponding provision of
state, local, or foreign income Tax law).
(m) Neither the Company nor any of its subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
any of its subsidiaries.
(n) Neither the Company nor any of its subsidiaries (i) has been a
member of a group filing consolidated returns for federal income Tax purposes
(except for the group of which the Company is the common parent), (ii) has any
liability for the Taxes of any person (other than the Company and its
subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferor or successor, by
contract or otherwise, or (iii) is a party to, bound by, or has any continuing
obligation under any Tax sharing, Tax indemnity, or any other agreement of a
similar nature.
(o) For purposes of this Agreement, the term "Tax" or "Taxes" means
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
SECTION 4.15. Absence of Certain Changes. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement, since July 31, 2000 (i) there
has not been any Material Adverse Effect on the Company; (ii) the businesses of
the Company and each of its subsidiaries have been conducted only in the
ordinary course and in a manner consistent with past practice; (iii) neither the
Company nor any of its subsidiaries has incurred any material liabilities
(direct, contingent or otherwise) or engaged in any material transaction or
entered into any material agreement or commitments outside the ordinary course
of business; and (iv) neither the Company nor any of its subsidiaries has taken
any action referred to in Section 6.1 hereof except as permitted thereby.
SECTION 4.16. Labor Matters.
(a) No employees of the Company or of any of its subsidiaries are
represented by any labor union or any collective bargaining organization. No
labor organization or group of employees of the Company or any of its
subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding pending or threatened to be brought or filed, with the
National Labor Relations Board or any other labor relations tribunal or
authority. To the Company's knowledge no facts or event exists that is likely to
give rise to a violation of Section 4.16(a) on or before the Effective Time.
(b) With respect to employees of and services providers to the
Company:
25
(i) The Company complies and has complied materially with all
employment agreements and all applicable domestic and foreign Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including without limitation any such
employment agreements or such Laws respecting employment discrimination,
workers' compensation, family and medical leave, the Immigration Reform and
Control Act, and occupational safety and health requirements, and no claims
or investigations are pending or, to the Company's knowledge, threatened
with respect to such Laws, either by private individuals or by governmental
agencies; and all employees of the Company and each of the subsidiaries are
at will except as set forth in Section 4.16 of the Company Disclosure
Schedule;
(ii) The Company is not, nor has it ever been, engaged in any unfair
labor practice. There is not now, nor within the past three years has there
been, any unfair labor practice complaint against the Company pending or,
to the Company's knowledge, threatened, before the National Labor Relations
Board or any other comparable foreign or domestic authority or any workers'
council;
(iii) No material grievance or arbitration proceeding arising out of
or under collective bargaining agreements or employment relationships
(involving more than one employee) is pending, and no claims therefor exist
or have, to the Company's knowledge, been threatened; no labor strike,
lock-out, slowdown, or work stoppage is pending or threatened against or
directly affecting the Company; and, to the Company's knowledge as of the
date hereof, no fact or event exists that is likely to give rise to a
violation of Section 4.16(b)(iii) on or before the Effective Time; and
(iv) All persons who are or were performing services for the Company
and are or were classified as independent contractors do or did satisfy and
have satisfied the requirements of Law to be so classified, and the Company
has fully and accurately reported their compensation on IRS Forms 1099 when
required to do so.
SECTION 4.17. Relationships with Customers, Suppliers, Distributors and
Sales Representatives. Neither the Company nor any of its subsidiaries has
received written notice that any current customer, supplier, distributor or
sales representative intends to cancel, terminate or otherwise modify its
relationship with the Company or any subsidiary, which action would have a
Material Adverse Effect on the Company.
SECTION 4.18. Contracts.
(a) Section 4.18(a) of the Company Disclosure Schedule lists all
written or oral Contracts to which the Company or any of its subsidiaries is a
party or by which any of them or any of their respective properties, rights or
assets are bound, and which fall within any of the following categories (all of
the Contracts required to be disclosed on Section 4.18(a) of the Company
Disclosure Schedule are referred to as the "Material Contracts"): (i) Contracts
not entered into in the ordinary course of business including, without
limitation, all contracts in which the Company assumed or retained environmental
liabilities in connection with the sale of companies or properties, (ii) joint
venture, partnership and like agreements, (iii) Contracts
26
containing covenants purporting to limit the freedom of the Company or any of
its affiliates to compete in any line of business in any geographic area or to
hire or solicit any individual or group of individuals (which are set forth in
Section 4.18(a)(iii) of the Company Disclosure Schedule), (iv) Contracts which
after the Effective Time would have the effect of limiting the freedom of Parent
or any of its affiliates (other than the Company and its subsidiaries) to
compete in any line of business in any geographic area or to hire any individual
or group of individuals (which are set forth in Section 4.18(a)(iv) of the
Company Disclosure Schedule), (v) Contracts which contain minimum purchase
conditions or requirements or other terms that restrict or limit the purchasing
relationships of the Company or any of its subsidiaries, (vi) Contracts relating
to any outstanding commitment for capital expenditures in excess of $50,000,
(vii) indentures, mortgages, promissory notes, loan agreements, guarantees of
amounts in excess of $50,000, letters of credit or other agreements or
instruments of the Company or any of its subsidiaries or commitments for the
borrowing or the lending of amounts in excess of $50,000 by the Company or any
of its subsidiaries or providing for the creation of any charge, security
interest, encumbrance or Lien upon any of the assets of the Company or any of
its subsidiaries, (viii) Contracts with or for the benefit of any affiliate of
the Company (other than subsidiaries of the Company), and (ix) all other
Contracts, whether or not made in the ordinary course of business, which are
material to the Company or any of its subsidiaries or to the conduct of their
respective businesses, or the absence of which would prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company from performing its obligations hereunder or would result in a
Material Adverse Effect on the Company.
(b) All of the Material Contracts are valid and binding obligations
of the Company or a subsidiary of the Company and the valid and binding
obligation of each other party thereto, enforceable in each case in accordance
with their respective terms. Neither the Company nor any of its subsidiaries
nor, to the knowledge of the Company and each of its subsidiaries, any other
party thereto, is in violation of or in default in respect of, nor has there
occurred an event or condition which with the passage of time or giving of
notice (or both) could constitute a default under, any such Contract, nor has
the Company or any of its subsidiaries received any notice or claim of any such
default. None of the Material Contracts with any affiliate of the Company are on
terms less favorable to the Company or its subsidiaries than those that would be
obtained from unaffiliated third parties. The Company has provided to Parent
true and complete copies of all written Material Contracts, and true and
complete summaries of all oral Material Contracts, including in each case all
amendments thereto.
SECTION 4.19. Product Recalls. The Company is not aware of any pattern or
series of claims against the Company or any of its subsidiaries which reasonably
could be expected to result in a generalized product recall relating to products
sold by the Company or any of its subsidiaries, regardless of whether such
product recall is formal, informal, voluntary or involuntary.
SECTION 4.20 Interested Party Transactions. Except as disclosed in the
SEC Reports, (i) there are no existing, and since July 31, 2000 there has been
no Contract, transaction, indebtedness or other arrangement, or any related
series thereof, between the Company and any of its subsidiaries, on the one
hand, and any of the current or former directors, officers, stockholders or
other affiliates of the Company or of any of its subsidiaries, or any of their
respective affiliates or family members, on the other hand (except for amounts
due as normal salaries and bonuses and in
27
reimbursement of ordinary expenses), (ii) there are no transactions involving
Company of a nature that would be required to be described under Item 404 of
Regulation S-K promulgated under the Securities Act, and (iii) none of the
officers or directors of the Company or any of its subsidiaries has any material
direct or indirect interest in any material property or assets used in or
pertaining to the business of the Company or that of its subsidiaries, or in any
supplier, distributor or customer of the Company or any of its subsidiaries.
SECTION 4.21 Brokers. Except for the engagement of Financial Advisor,
none of the Company, any of its subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement. The Company has previously
delivered to Parent a copy of the Company's engagement letters with Financial
Advisor.
SECTION 4.22 Opinion of Financial Advisor. The Company Board has received
the written opinion of Financial Advisor to the effect that, as of the date
hereof, the consideration to be received by the holders of Common Shares (other
than Parent or any of its affiliates) pursuant to the Offer and the Merger, is
fair to the Company's stockholders from a financial point of view. The Company
has previously delivered to Parent a copy of such opinion.
SECTION 4.23 Property and Leases.
(a) The Company and its subsidiaries have good, marketable and valid
title to, or a valid leasehold interest in, all of the real and personal
property owned by the Company or any of its subsidiaries or used or held for use
by any of them in connection with, or necessary for, their respective
businesses, free and clear of all Liens, except for Liens referenced on Section
4.23(a) of the Company Disclosure Schedule (collectively, the "Company Assets").
The Company Assets are all of the assets and properties reasonably necessary for
the Company and its subsidiaries to conduct their respective businesses as
presently conducted and as proposed to be conducted. All of the tangible Company
Assets have been maintained in a reasonably prudent manner, are in good
operating condition and repair, and no maintenance with respect thereto has been
deferred or delayed.
(b) Each material parcel of real property owned or leased by the
Company or any of its subsidiaries is neither subject to any decree or order by
any Governmental Entity to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Company, has any such condemnation,
expropriation or taking been proposed. There are no persons other than the
Company and its subsidiaries in possession of any of the real property owned or
leased by the Company or any of its subsidiaries, or any portion thereof, and
there are no Contracts granting to any person or persons other than the Company
and its subsidiaries the right of use or occupancy of any portion of such real
property. None of the Company nor any of its Subsidiaries is obligated under or
bound by any option, right or first refusal, purchase Contract, or other
Contract to sell or otherwise dispose of any such real property or any other
interest in any such real property. There are no contractual or legal
restrictions that preclude or restrict the ability to use any real property
owned or leased by the Company or any of its subsidiaries for the purposes for
which it is
28
currently being used, or material latent defects or material adverse physical
conditions affecting the real property, and improvements thereon, owned or
leased by the Company or any of its subsidiaries.
(c) Each lease and sublease covering any Company Assets is a legal,
valid and binding obligation of the Company and/or such subsidiary, as
applicable, and of each other party thereto and is enforceable, in accordance
with its terms, against the Company and/or such subsidiary, as applicable, and
against each other party thereto, and such lease or sublease will continue to be
valid, binding and enforceable in accordance with its terms and in full force
and effect immediately following the consummation of the transactions
contemplated hereby, with no material alteration or acceleration or increase in
fees or liabilities. There is not under any such lease or sublease any material
default by the Company or any of its subsidiaries or, to the knowledge of the
Company, by any other person, or any condition, event or act which would
constitute such a material default.
SECTION 4.24 Insurance. The Company and its subsidiaries maintain
policies of insurance on terms, and in amounts, that are adequate for the
conduct of their respective businesses, in each case as such business is
currently conducted and consistent with customary practices and standards of
companies engaged in businesses similar to that of the Company and the
subsidiaries, and with insurers reasonably believed by the Company to be
responsible. With respect to each material insurance policy: (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; and (ii) neither the Company nor any of its subsidiaries
is in material breach or default (including any such breach or default with
respect to the payment of premiums or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination or modification, under the policy.
SECTION 4.25 No Rights. Except for rights under the Buy-Out Agreements,
no person, other than holders of Shares by virtue of holding such Shares, has
any right, Contractual or otherwise, to any portion of the revenues, profit,
income or other assets of the Company.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
SECTION 5.1. Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the Laws of Delaware. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. Each of Parent and Purchaser has the
requisite corporate power and authority to own, operate or lease its properties
and to carry on its business as it is now being conducted, and is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction in
which the nature of its
29
business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent," as used in this Agreement, means any change
in or effect on the business, assets, liabilities, condition (financial or
otherwise), prospects or results of operations of Parent or any of its
subsidiaries that, individually or in the aggregate, would be materially adverse
to Parent and its subsidiaries taken as a whole.
SECTION 5.2. Authority Relative to this Agreement. Each of Parent and the
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated hereby
have been duly and validly authorized and approved by the respective Boards of
Directors of Parent and the Purchaser and by Parent as sole stockholder of the
Purchaser and no other corporate proceedings on the part of Parent or the
Purchaser are necessary to authorize or approve this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and the Purchaser and, assuming the due and valid
authorization, execution and delivery by the Company, constitutes a valid and
binding obligation of each of Parent and the Purchaser enforceable against each
of them in accordance with its terms.
SECTION 5.3. No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under any domestic, foreign or
supranational antitrust Laws are made and the waiting periods thereunder have
been terminated or have expired, (ii) the requirements of the Exchange Act and
any applicable state securities, "blue sky" or takeover Law are met, and (iii)
the filing of the certificate of merger and other appropriate merger documents,
if any, as required by the GCL, is made, none of the execution and delivery of
this Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the transactions contemplated hereby or compliance by Parent or the
Purchaser with any of the provisions hereof will (i) conflict with or violate
the organizational documents of Parent or the Purchaser, (ii) conflict with or
violate in any material respect any statute, ordinance, rule, regulation, order,
judgment, decree, permit or license applicable to Parent or the Purchaser, or by
which either of them or any of their respective properties or assets may be
bound or affected, or (iii) result in a Violation pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or the Purchaser is a party or by
which Parent or the Purchaser or any of their respective properties or assets
may be bound or affected, which would impair the ability of Parent or the
Purchaser to perform its obligations under this Agreement, or prevent or
materially delay the consummation of the transactions contemplated hereby.
(b) None of the execution and delivery of this Agreement by Parent
and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act and any state securities "blue sky" or takeover Law, (ii) the
filing of a
30
certificate of merger pursuant to the GCL, and (iii) compliance with the
requirements of any domestic, foreign or supranational antitrust Laws.
SECTION 5.4. Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Schedule 14D-9, (ii) the Proxy Statement or (iii) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to stockholders, at the time of the
Special Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 5.5. Financing. Parent has possession of, or has available to it
under existing lines of credit, sufficient funds to consummate the transactions
contemplated by this Agreement, and will cause the Purchaser to have sufficient
funds available to consummate the Offer and the Merger and the transactions
contemplated hereby.
ARTICLE SIX
COVENANTS
SECTION 6.1. Conduct of Business of the Company. Except as required by
this Agreement or otherwise with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and in
compliance with all Laws and Orders, will use its commercially reasonable
efforts, and will cause each of its subsidiaries to use its commercially
reasonable efforts, to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the goodwill of those having
business relationships with it, including, without limitation, maintaining
satisfactory relationships with suppliers, distributors, customers, licensors
and others having business relationships with the Company or any of its
subsidiaries. Without limiting the generality of the foregoing, and except as
otherwise required by this Agreement, the Company will not and will not permit
any of its subsidiaries to, prior to the Effective Time, without the prior
written consent of Parent, directly or indirectly:
(a) adopt any amendment to its certificate of incorporation or bylaws
or comparable organizational documents;
(b) sell, pledge or encumber any stock owned by it in any of its
subsidiaries;
(c) (i) issue, reissue, sell, pledge, dispose of, grant or encumber,
or authorize the issuance, reissuance, sale, pledge, disposal of, grant or
encumbrance of, (A) any shares of capital stock of any class of the Company or
any of its subsidiaries, or securities convertible into any such capital stock,
or any rights, warrants or options to acquire any such convertible securities or
capital stock, or any other ownership interest in the Company or any of its
subsidiaries (provided that the Company may terminate outstanding Options), (B)
any other securities in
31
respect of, in lieu of, or in substitution for, Shares outstanding on the date
hereof, or (C) any assets of the Company or any of its subsidiaries, except in
the ordinary course of business consistent with past practice, (ii) alter or
make any other changes in its capital structure, or (iii) adopt, ratify or
effectuate a stockholders' rights plan or similar agreement;
(d) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock, other than between any of the
Company and any of its wholly owned subsidiaries;
(e) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(f) increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees (whether from the Company or any
of its subsidiaries), or pay or award any benefit not required by any existing
plan or arrangement to any officer, director or employee (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units pursuant to the Stock Plans or otherwise),
or grant any severance or termination pay to any officer, director or other
employee of the Company or any of its subsidiaries (other than as required by
existing agreements or policies described in the Company Disclosure Schedule),
or enter into any employment or severance agreement with, any director, officer
or other employee of the Company or any of its subsidiaries or establish, adopt,
enter into, amend or waive any performance or vesting criteria or accelerate
vesting, exercisability or funding under any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees of
the Company or its subsidiaries (any of the foregoing being an "Employee Benefit
Arrangement"), except, in each case, to the extent required by applicable Law;
(g) acquire, mortgage, encumber, sell, lease, license or dispose of,
or permit the placement of any Lien on, any assets (including Intellectual
Property) or securities, except for the lease, sale or purchase of goods in the
ordinary course of business consistent with past practice, or enter into any
commitment or transaction outside the ordinary course of business consistent
with past practice, other than transactions between a wholly owned subsidiary of
the Company and the Company or another wholly owned subsidiary of the Company;
(h) (i) incur, assume or pre-pay any indebtedness, except that the
Company and its subsidiaries may incur, assume or pre-pay debt in the ordinary
course of business in an amount not to exceed $50,000 in the aggregate and for
purposes consistent with past practice under existing lines of credit, (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
(iii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), except in the ordinary course of
business consistent with past practice and in accordance with their terms, (iv)
make any loans, advances or capital contributions to, or investments in, any
other person, except for loans, advances, capital contributions or investments
32
between any wholly owned subsidiary of the Company and the Company or another
wholly owned subsidiary of the Company, (v) authorize or make capital
expenditures which are in excess of $50,000 individually or $100,000 in the
aggregate, (vi) accelerate or delay collection of notes or accounts receivable
in advance of or beyond their regular due dates or the dates when the same would
have been collected in the ordinary course of business consistent with past
practice, (vii) delay or accelerate payment of any account payable beyond or in
advance of its due date or the date such liability would have been paid in the
ordinary course of business consistent with past practice, (viii) vary its
inventory practices in any material respect from its past practices, (ix) issue
any debt securities, or (x) grant any security interest in any of its assets or
properties, except in the ordinary course of business consistent with past
practice;
(i) settle or compromise any Litigation, suit or claim or threatened
Litigation, suit or claim where the amount involved is greater than $50,000;
(j) other than in the ordinary course of business consistent with
past practice, (i) modify, amend or terminate any Contract (unless the amount
involved is less than $50,000), (ii) waive, release, relinquish or assign any
Contract (or any of its rights thereunder), right or claim, or (iii) cancel or
forgive any indebtedness owed to the Company or any of its subsidiaries;
provided, however, that neither the Company nor any of its subsidiaries may
under any circumstance waive or release any rights under any confidentiality
agreement to which it is a party;
(k) make any tax election that is not required by Law or settle or
compromise any tax liability;
(l) permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated, except in the ordinary course of
business consistent with past practice;
(m) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, partnership, business organization, division or
any other person or, except in the ordinary course of business consistent with
past practice, any assets;
(n) enter into any Contract other than in the ordinary course of
business consistent with past practice (and in any case, only if the amount or
value involved is less than $50,000);
(o) except as may be required as a result of a change in Law or in
GAAP, make any change in its methods of accounting, including tax accounting
policies and procedures, or revalue in any material respect any assets or
properties of the Company or any of its subsidiaries;
(p) fail to comply with any Law or the rules of any self-regulatory
authority, including without limitation any failure to make in a timely manner
any filings with the SEC required under the Securities Act or Exchange Act or
the rules and regulations promulgated thereunder;
(q) not enforce any standstill or confidentiality provisions of any
agreements with a third party;
33
(r) incur or become liable for fees, expenses, liabilities and other
costs directly or indirectly related to the transactions contemplated hereby in
an aggregate amount (for the Company and all of its subsidiaries as a whole)
that exceeds US$3,202,000 (the "Expense Threshold")(which fees, expenses,
liabilities and other costs shall include, without limitation, (i) legal and
accounting fees, expenses and costs, (ii) fees, expenses and costs relating to
business advisors and other advisors, (iii) fees, expenses and costs relating to
any fairness opinion or opinions, (iv) retention bonuses, director bonuses,
employee incentives and other employee-related costs and expenses, and (v)
amounts paid or liabilities incurred in connection with change-in-control or
similar provisions or in connection with buy-out arrangements or agreements
relating to stock options, employment agreements or any other agreements,
including without limitation all amounts to be paid pursuant to Items 2, 4 and 5
on Schedule 6.1(r) attached hereto (the arrangements and agreements referenced
on Schedule 6.1(r) are referred to as the "Buy-Out Agreements"); or
(s) agree in writing or otherwise to take any of the foregoing
actions prohibited under this Section 6.1, or take or agree to take any action
which would cause any representation or warranty in this Agreement to be or
become untrue or incorrect.
SECTION 6.2. Access to Information. From the date of this Agreement
until the Effective Time, the Company will, and will cause its subsidiaries, and
each of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives (collectively, the "Parent Representatives") full access,
during normal business hours, to the assets, properties, offices and other
facilities and to the books and records of the Company and its subsidiaries and
will cause the Company Representatives and the Company's subsidiaries to furnish
Parent, the Purchaser and the Parent Representatives with such financial and
operating data and such other information with respect to the business and
operations of the Company and its subsidiaries as Parent and the Purchaser may
from time to time reasonably request. The Company shall furnish promptly to
Parent and the Purchaser a copy of each report, schedule, registration statement
and other document filed by it or any of its subsidiaries during such period
pursuant to the requirements of federal or state securities Laws. Parent and
the Purchaser agree that any information furnished pursuant to this Section 6.2
will be subject to the provisions of the letter agreement dated February 27,
2001 between the Parent and the Company (the "Confidentiality Agreement").
SECTION 6.3. Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and the Purchaser shall, and the Company shall cause each of its
subsidiaries to, cooperate and use all reasonable efforts to make, or cause to
be made, all filings necessary or proper under applicable Laws and regulations,
and to take all other actions necessary or advisable to consummate and make
effective the transactions contemplated by this Agreement, including but not
limited to cooperation in the preparation and filing of the Offer Documents, the
Schedule 14D-9 and any actions or filings related thereto, the Proxy Statement,
or other foreign filings and any amendments to any thereof, and cooperation in
obtaining approvals necessary from Government Entities to continue fully
existing operations. In addition, if at any time prior to the Effective
34
Time any event or circumstance relating to either the Company or Parent or the
Purchaser or any of their respective subsidiaries should be discovered by the
Company or Parent, as the case may be, which should be set forth in an amendment
to the Offer Documents or Schedule 14D-9, the discovering party will promptly
inform the other party of such event or circumstance. If at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, including the execution of additional instruments,
the proper officers and directors of each party to this Agreement shall take all
such necessary action.
(b) Each of the parties will use its commercially reasonable efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the transactions contemplated by the Offer
and this Agreement, provided, however, that, notwithstanding any other provision
of this Agreement, the Company shall not, without Parent's prior written
consent, and Parent shall not be obligated to, agree to divest, hold separate or
otherwise materially restrict the use or operation of any business or assets of
Parent, Purchaser or the Company, which divestiture, agreement to hold separate,
or other restriction would, in the good faith judgment of Parent, have a
Material Adverse Effect on Parent or a Material Adverse Effect on the Company,
as the case may be.
(c) The Company shall give Parent the opportunity to participate in
the defense of any Litigation against the Company, any of its subsidiaries
and/or any of the Company's directors relating to any of the transactions
contemplated by this Agreement. In the event that a claim is asserted against
any of the parties hereto or any of their respective affiliates, relating to,
based in whole or in part on events or conditions occurring or existing in
connection with, or arising out of, any of the transactions contemplated by this
Agreement, each of the parties hereto agrees to fully cooperate with the other
parties hereto in the defense of any such claim at the expense of the party
against whom such claim is asserted.
SECTION 6.4. Public Announcements. During the term of this Agreement,
the parties hereto shall use their commercially reasonable efforts to (1)
develop a joint communications plan with respect to this Agreement and the
transactions contemplated hereby, (2) ensure that all press releases and other
public statements with respect to this Agreement and/or any of the transactions
contemplated hereby shall be consistent with such joint communication plan, and
(3) consult promptly with each other prior to issuing any press release or
otherwise making any public statement with respect to the Offer, the Merger and
the other transactions contemplated hereby, provide to the other party for
review a copy of any such press release or statement, and not issue any such
press release or make any such public statement prior to such consultation and
review, unless required by applicable Law or any listing agreement with a
securities exchange.
SECTION 6.5. [Reserved]
SECTION 6.6. Indemnification.
(a) The certificate of incorporation and the bylaws of the Surviving
Corporation shall contain provisions with respect to indemnification and
exculpation from liability that are no less favorable than those provisions set
forth in the Company's certificate of
35
incorporation and bylaws on the date of this Agreement, and these provisions in
the certificate of incorporation and bylaws of the Surviving Corporation shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who on or prior to the Effective Time were directors,
officers, employees or agents of the Company, unless such amendment, repeal or
modification is required by Law.
(b) Parent and the Surviving Corporation shall not, for a period of
two years immediately following the Effective Time, cancel the Company's
existing directors' and officers' liability insurance policy, a copy of which
has heretofore been delivered to Parent.
(c) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 6.6.
(d) This Section 6.6 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent and the Surviving
Corporation, and shall be binding on all successors and assigns of the Company,
Parent and the Surviving Corporation.
SECTION 6.7. Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) any circumstance or the occurrence or
non-occurrence of any fact or event which would be reasonably likely (i) to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied, or (iii) to result in a Material
Adverse Effect on the Company, (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; and (c) any other
material development relating to the business, prospects, financial condition or
results of operations of the Company or any of its subsidiaries; provided,
however, that no such notification shall affect the representations or
warranties of any party, the conditions to the obligations of any party
hereunder, or the remedies of any party whether under applicable Law or
hereunder. Each of the Company, Parent and the Purchaser shall give prompt
notice to the other parties hereof of any notice or other communication from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
SECTION 6.8. State Takeover Laws. Without limiting the foregoing, the
Company and its Board of Directors shall (i) take all actions necessary to
ensure that no "fair price," "control share acquisition," "moratorium" or other
anti-takeover statute, or similar Law, is or becomes applicable to this
Agreement or any of the transactions contemplated hereby, and (ii) if any such
statute or Law is or becomes applicable to this Agreement or any of the
transactions contemplated hereby, take all actions necessary to ensure that the
transactions contemplated hereby may be
36
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or Law on the transactions
contemplated hereby.
SECTION 6.9. No Solicitation.
(a) The Company shall, and shall direct its subsidiaries and other
affiliates and their respective officers, directors, employees, representatives
and agents to, immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Acquisition
Transaction (as hereinafter defined). The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate or
encourage, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its subsidiaries or acquisition of 10% or more of any capital stock
or any material portion of the assets of the Company or its subsidiaries, or any
combination of the foregoing (other than the Offer and the Merger) (an
"Acquisition Transaction"), or negotiate, explore or otherwise engage in
substantive discussions with any person (other than the Purchaser, Parent or
their respective directors, officers, employees, agents and representatives)
with respect to any Acquisition Transaction or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated by this Agreement;
provided that the Company may, prior to the purchase of Shares pursuant to the
Offer, furnish information to, and negotiate or otherwise engage in substantive
discussions with, any person who delivers a bona fide, written proposal for an
Acquisition Transaction if the Company Board determines in good faith by a
majority vote, after consultation with its outside legal counsel and Financial
Advisor or another nationally recognized investment banking firm, that (1) such
a transaction is reasonably likely to result in a transaction that is superior
in comparison to the Offer and the Merger and the terms of this Agreement to the
Company's stockholders from a financial point of view and to the Company, taking
into account the terms and conditions thereof, the likelihood of consummation
and the time required to complete such transaction (a "Superior Proposal"), and
(2) failing to take such action would result in a breach of the fiduciary duties
of the Company Board under applicable Law, and prior to furnishing non-public
information to any such party, the Company (i) shall have entered into a
confidentiality agreement containing terms at least as favorable to the Company
as those of the Confidentiality Agreement and (ii) shall provide Parent or
Purchaser copies of all proposed written agreements, arrangements, or
understandings, including the forms of any agreements supplied by third parties,
and all applicable financial statements and evidence of any planned financing
with respect to such Superior Proposal (and a description of all material oral
agreements with respect thereto).
(b) From and after the execution of this Agreement, the Company
shall immediately advise the Purchaser in writing of the receipt, directly or
indirectly, of any inquiry or proposal with respect to an Acquisition
Transaction, and of any discussions, negotiations or proposals relating to an
Acquisition Transaction, identify the offeror and furnish to the Purchaser a
copy of any such proposal, if it is in writing, or a written summary of any such
proposal relating to an Acquisition Transaction if it is not in writing. The
Company shall promptly advise Parent of all
37
developments relating to such proposal, including the results of any discussions
or negotiations with respect thereto.
SECTION 6.10 FIRPTA Certificate. Prior to the Expiration Date, the
------------------
Company shall provide to Parent and Purchaser (i) a properly executed
certificate for purposes of satisfying the obligations of Parent and Purchaser
under Treasury Regulation Section 1.1445-2(c)(3), and (ii) a form of notice to
the Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2), along with written authorization for Parent to
deliver such notice form to the Internal Revenue Service on behalf of the
Company.
SECTION 6.11 Repayment of Loan. At or prior to the Closing Date, the
-----------------
Company shall (1) repay or cause to be repaid all amounts owed pursuant to the
Business Loan Agreement dated January 25, 2001 by and between ▇▇▇▇ Scientific,
Incorporated and KeyBank National Association, as amended, and the related
promissory note, and under the Loan Agreement dated as of November 3, 1999 by
and between Calorimetry Sciences Corporation and KeyBank National Association,
as amended, and related promissory note, and (2) cause all Liens with respect to
any capital stock of ▇▇▇▇ Scientific or any other subsidiary of the Company to
be released.
ARTICLE SEVEN
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. Conditions Applicable to All Parties. The respective
obligations of Parent, the Purchaser and the Company to consummate the Merger
are subject to the satisfaction, at or before the Effective Time, of each of the
following conditions:
(a) Stockholder Approval. The stockholders of the Company shall have
duly approved the transactions contemplated by this Agreement in accordance with
the procedures set forth in the Company's certificate of incorporation and
bylaws, if required by applicable Law or by the rules and regulations of the
Nasdaq SmallCap Market.
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares in an amount sufficient to meet the Minimum
Condition and otherwise pursuant to the Offer in accordance with the terms
hereof.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger, materially impairs the benefits thereto
to Parent, or has the effect of making the acquisition of Shares in the Merger
illegal.
(d) Regulatory Approval. Any waiting period (and any extension
thereof) under any material applicable domestic or foreign statutes or
regulations applicable to the Merger shall have expired or terminated.
38
ARTICLE EIGHT
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company (with
any termination by Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) by Parent or the Company if Purchaser shall not have accepted
for payment and paid for the Shares pursuant to the Offer in accordance with the
terms hereof and thereof on or prior to September 30, 2001; provided, however,
that a party may not terminate this Agreement pursuant to this Section 8.1(b) if
such failure to accept for payment and pay for the Shares is due to such party's
material breach of this Agreement;
(c) by Parent or the Company if (1) the Offer is terminated or
withdrawn pursuant to its terms and the terms of this Agreement without any
Shares being purchased thereunder, or (2) the Merger shall not have been
consummated on or before November 30, 2001; provided, however, that a party may
not terminate this Agreement pursuant to this Section 8.1(c) if such party shall
have materially breached this Agreement;
(d) by Parent or the Company if any court of competent jurisdiction
or other Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant to
the Offer or the Merger and such order, decree or ruling or other action shall
have become final and nonappealable, provided that the party seeking to
terminate this Agreement shall have used its commercially reasonable efforts to
remove or lift such order, decree or ruling;
(e) by the Company or Parent if, prior to the purchase of Shares
pursuant to the Offer, the Company Board shall have determined to recommend, a
Superior Proposal to its stockholders and/or to enter into a Contract concerning
such Superior Proposal after making the determination required by Section
6.9(a); provided that the Company may not exercise its right to terminate under
this Section 8.1(e) (and may not enter into a Contract with respect to any
Superior Proposal) unless and until (i) the Company shall have provided the
Purchaser and Parent written notice at least five business days prior to such
termination that the Company Board has authorized and intends to effect the
termination of this Agreement pursuant to this Section 8.1(e), including copies
of all proposed Contracts, including the forms of any agreements supplied by
third parties, and all applicable financial statements and evidence of any
planned financing with respect to such Superior Proposal (and a description of
all material oral agreements with respect thereto), (ii) the Company Board shall
have determined, in good faith and after consultation with its outside legal
counsel and the Financial Advisor or another nationally recognized investment
banking firm, that, at the time of its determination to terminate this Agreement
and at the end of the 5-business day period referred to in clause (i) above, (1)
the foregoing Acquisition Transaction constitutes a
39
Superior Proposal, and (2) failing to take such action would result in a breach
of the fiduciary duties of the Company Board under applicable Law, (iii) the
Company shall otherwise be in compliance with its obligations under this
Agreement, and (iv) (A) within one business day of termination by Parent, or (B)
prior to such termination in the case of termination by the Company, the Company
shall have paid to Parent the Termination Fee and the Expense Fee described in
Section 8.3(b);
(f) by Parent prior to the purchase of Shares pursuant to the Offer,
if the Company Board (or, with respect to (iii) below, the Company) (i) shall
have withheld, withdrawn or modified (including by amendment of the Schedule
14D-9) in any manner adverse to the Purchaser or Parent its approval or
recommendation of the Offer, this Agreement or the Merger, (ii) shall have
approved or recommended an Acquisition Transaction, (iii) shall have breached
Section 6.9(a), (iv) shall have failed to confirm its approval or recommendation
of the Offer, this Agreement or the Merger to its shareholders within two
business days of the receipt of a request from Parent to do so, or (v) shall
have resolved to effect any of the foregoing;
(g) by Parent prior to the purchase of Shares pursuant to the Offer
if the Minimum Condition (as defined in Annex I) shall not have been satisfied
by the then current Expiration Date of the Offer and on or prior to such
Expiration Date an Acquisition Transaction shall have been publicly announced or
disclosed;
(h) by the Company, if Purchaser fails to (1) commence the Offer in
the manner provided in Section 1.1(a) hereof, (2) keep the Offer open for a
specified period of time, to the extent Purchaser is otherwise required to keep
the Offer open for such specified period of time pursuant to the terms and
conditions set forth herein, or (3) purchase Shares validly tendered in the
Offer, to the extent Purchaser is otherwise required to purchase such Shares
pursuant to the terms and conditions set forth herein;
(i) by the Company, upon a material breach by Parent or Purchaser of
any material covenant or agreement set forth in this Agreement, or upon the
failure of any representation or warranty of Parent or Purchaser set forth in
this Agreement to be true and correct as if such representation or warranty were
made at the time of such determination (except as to any such representation or
warranty which speaks as of a specific date, which must be untrue or incorrect
as of such specific date); provided that to the extent that the representation
or warranty is not qualified by Material Adverse Effect or any other materiality
qualifier, no failure shall be deemed to have occurred so long as such failure,
taken together with all other such failures, does not have a Material Adverse
Effect on Parent, and; provided further, that no breach or failure shall be
deemed to have occurred so long as such breach or failure is satisfied or cured
within 20 days after the Company notifies Parent of such breach or failure; or
(j) by Parent, upon a material breach by the Company of any material
covenant or agreement set forth in this Agreement, or upon the failure of any
representation or warranty of the Company set forth in this Agreement to be true
and correct as if such representation or warranty were made at the time of such
determination (except as to any such representation or warranty which speaks as
of a specific date, which must be untrue or incorrect as of such specific date);
provided that to the extent that the representation or warranty is not qualified
by Material
40
Adverse Effect or any other materiality qualifier, no failure shall be deemed to
have occurred so long as such failure, taken together with all other such
failures, does not have a Material Adverse Effect on the Company, and; provided
further, that no breach or failure shall be deemed to have occurred so long as
such breach or failure is satisfied or cured within 20 days after Parent or
Purchaser notifies the Company of such breach or failure.
SECTION 8.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of the last
sentence of Section 6.2 and the provisions of this Section 8.2 and Section 8.3,
which shall survive any such termination; provided, that nothing contained in
this Section 8.2 shall relieve any party from liability for any breach of or
misrepresentation under this Agreement.
SECTION 8.3. Fees and Expenses.
(a) Whether or not the Merger is consummated, except as otherwise
specifically provided herein, all costs and expenses incurred in connection with
the Offer, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such costs and expenses.
(b) In the event that this Agreement is terminated pursuant to
Section 8.1(e) or Section 8.1(f), or is terminated pursuant to Section 8.1(b) or
8.1(c) at a time when Parent could terminate pursuant to Section 8.1(f), then
the Company shall promptly (and in any event within one business day after such
termination or, in the case of any such termination by the Company, prior to
such termination) pay Parent an amount equal to (i) a termination fee of One
Million United States Dollars (US$1,000,000) (the "Termination Fee"), provided
that in no event shall more than one Termination Fee be payable by the Company,
plus (ii) Parent's aggregate Expenses not exceeding Four Hundred Thousand United
States Dollars (US$400,000) (the "Expense Fee"). Parent's "Expenses" shall mean
all documented out-of-pocket fees and expenses incurred or paid by or on behalf
of Parent or Purchaser in connection with or in contemplation of the Merger or
the consummation of any of the transactions contemplated by this Agreement,
including all fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to Parent and/or Purchaser.
(c) In the event that this Agreement is terminated pursuant to
Section 8.1(g) hereof and within 12 months of the date of termination of this
Agreement a transaction constituting an Acquisition Transaction is consummated,
the Company shall, prior to or simultaneously with the consummation of such
transaction, pay Parent the Termination Fee and the Expense Fee; provided,
however, that in no event shall the Company be obligated to pay more than one
Termination Fee with respect to all such occurrences.
(d) The prevailing party in any legal action undertaken to enforce
this Agreement or any provision hereof shall be entitled to recover from the
other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.4. Amendment. Subject to Section 1.3(c), this Agreement may be
amended by the Company, Parent and the Purchaser at any time before or after any
approval of this
41
Agreement by the stockholders of the Company but, after any such approval, no
amendment shall be made which decreases the Merger Price or which adversely
affects the rights of the Company's stockholders hereunder, in each case without
the approval of such stockholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of all the parties.
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any time
prior to the Effective Time, Parent and the Purchaser, on the one hand, and the
Company, on the other hand, may (i) extend the time for the performance of any
of the obligations or other acts of the other, (ii) waive any inaccuracies in
the representations and warranties contained herein of the other or in any
document, certificate or writing delivered pursuant hereto by the other or (iii)
waive compliance by the other with any of the agreements or conditions. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.1. Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of each party hereto will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party hereto, any person controlling any such
party or any of their officers, directors, representatives or agents whether
prior to or after the execution of this Agreement. The representations and
warranties in this Agreement will terminate at the Effective Time; provided,
however, that nothing herein shall limit or affect any covenant or agreement
that by its terms contemplates performance in part or in whole after the
Effective Time.
SECTION 9.2. Entire Agreement; Assignment.
(a) This Agreement (including without limitation the Confidentiality
Agreement and the other documents and the instruments referred to herein)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party (except that Parent may assign its rights and the Purchaser may assign its
rights, interest and obligations to any direct or indirect subsidiary of Parent
without the consent of the Company). Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
SECTION 9.3. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
42
SECTION 9.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
▇▇▇▇▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jones, Waldo, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, A Professional Corporation
1500 ▇▇▇▇▇ Fargo Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
SECTION 9.5. Governing Law; Jurisdiction. This Agreement and the rights
and duties of the parties hereunder shall be governed by, and construed in
accordance with, the Law of the State of Delaware. Each of the parties hereto,
(a) consents to submit itself to the personal jurisdiction of any Delaware State
Court or any Federal court of the United States
43
of America sitting in Delaware, and any appellate court from any thereof, in the
event any dispute arises out of this Agreement or any transaction contemplated
hereby, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated hereby in any court other than a Delaware State Court
or Federal court of the United States of America sitting in Delaware, or an
appellate court from any thereof, and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement or any
transaction contemplated hereby.
SECTION 9.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.8. Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings; or, in the
case of determining a date when any payment is due, any day other than a
Saturday, Sunday or Federal holiday.
(c) the term "Contract" means any contract, plan, undertaking,
arrangement, understanding, agreement, agreement in principle, franchise,
permit, instrument, license, lease, note, mortgage or other binding commitment,
whether written or oral.
(d) the term "Court" means any court or arbitration tribunal of the
United States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
(e) the term "Fully Diluted Basis" means, as of any given time, the
number of Common Shares then outstanding, plus all Common Shares issuable upon
the conversion of all then outstanding convertible securities or upon the
exercise of all then outstanding options, warrants (including, without
limitation, the Options described on Section 4.2(c) of the Company Disclosure
Schedule) and rights.
44
(f) "indebtedness" shall mean, with respect to any person, without
duplication, (a) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind to such person, (b) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such person upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (f) all capitalized lease obligations of such person,
(g) all obligations of others secured by any Lien on property or assets owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (h) all obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof), (i) all letters of
credit issued for the account of such person, (j) all obligations of such person
to purchase securities (or other property) which arises out of or in connection
with the sale of the same or substantially similar securities or property, and
(k) all guarantees and arrangements having the economic effect of a guarantee by
such person of any indebtedness of any other person.
(g) the term "knowledge" means (a) in the case an individual,
knowledge of a particular fact or other matter if (i) such individual is
actually aware of such fact or other matter, or (ii) a prudent individual could
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonable investigation concerning the existence
of such fact or other matter, and (b) in the case of a person (as defined
herein, other than an individual) such person will be deemed to have "knowledge"
of a particular fact or other matter if any individual who is serving, or has at
any time served, as a director, officer, partner, member, manager, executor, or
trustee of such person (or in any similar capacity) has, or at any time had,
knowledge (as contemplated by clause (i) above) of such fact or other matter.
(h) the term "Law" means all laws, orders, judgments, rules, codes,
requirements, variances, decrees, ordinances and regulations of any Governmental
Entity, including all decisions of Courts having the effect of law in each such
jurisdiction.
(i) the term "Lien" means any mortgage, deed of trust, security
interest, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or otherwise), or other security agreement, option, warrant,
attachment, right of first refusal, preemptive, put, call or other claim or
right, restriction on transfer (other than restrictions imposed by federal and
state securities Laws) or preferential arrangement of any kind or nature
whatsoever (including any restriction on the transfer of any assets, any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction).
(j) the term "Litigation" means any claim, suit, action,
arbitration, cause of action, claim, complaint, criminal prosecution,
investigation, demand letter, or proceeding, whether at law or at equity, before
or by any Court or Governmental Entity, any arbitrator or other tribunal.
45
(k) the term "Order" means any judgment, order, writ, injunction,
ruling or decree of, or any settlement under the jurisdiction of, any Court or
Governmental Entity.
(l) the term "person" means an individual (or such individual's
estate), corporation, limited liability company, partnership, association, joint
venture, trust, Governmental Entity or any other organization, entity or group
(as defined in Section 13(d)(3) of the Exchange Act);
(m) the term "subsidiary" or "subsidiaries" means, with respect to
Parent, the Company or any other person, any corporation, partnership, joint
venture or other legal entity of which Parent, the Company or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, stock or other equity interests the
holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 9.10 Interpretation. The defined terms used herein shall apply
equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Articles, Sections and
Exhibits shall be deemed to be references to Articles and Sections of, and
Exhibits to, this Agreement unless the context shall otherwise require. All
Disclosure Schedules, Exhibits and Annexes attached hereto shall be deemed
incorporated herein as if set forth in full herein and, unless otherwise defined
therein, all terms used in any Exhibit or Annex shall have the meaning ascribed
to such term in this Agreement. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." All
accounting terms not defined in this Agreement shall have the meanings
determined by GAAP. Whenever any payment hereunder is to be paid in "cash,"
payment shall be made in the legal tender of the United States and the method
for payment shall be by wire transfer of immediately available funds. The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
Contract, instrument or statute defined or referred to herein or in any Contract
or instrument that is referred to herein means such Contract, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of Contracts or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. This Agreement shall
be deemed to have been drafted by each party hereto and this Agreement shall not
be construed against any party as a principal draftsperson. Unless otherwise
expressly provided, wherever the consent of any person is required or permitted
herein, such consent may withheld in such person's sole discretion.
46
SECTION 9.11 Disclosure Schedules. The Company Disclosure Schedule and the
Parent Disclosure Schedule each shall be divided into sections corresponding to
the sections and subsections of this Agreement. Because a particular section of
the Company Disclosure Schedule may apply to multiple sections of the Agreement,
all information disclosed therein shall be deemed disclosed under and
incorporated into any section of Article Four where the nature and content of
the disclosure reasonably indicate that such disclosure applies. Nothing in the
Company Disclosure Schedule constitutes an admission of any liability or
obligation of the Company to any third party (other than the parties hereto and
their affiliates), nor an admission to any third party (other than the parties
hereto and their affiliates) against the Company's interests.
47
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SALTWATER ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Secretary
▇▇▇▇▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
48
ANNEX I
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act, pay for any tendered Shares and may
terminate or, subject to the terms of the Merger Agreement, amend the Offer
and/or delay the acceptance of Shares for payment, if (i) there shall not be
validly tendered and not properly withdrawn prior to the Expiration Date for the
Offer that number of Shares which represents at least a majority of the total
number of Common Shares on a Fully Diluted Basis on the date of purchase (the
"Minimum Condition"), (ii) any applicable waiting period or approval under any
applicable domestic or foreign statutes or regulations shall not have expired or
been terminated or obtained prior to the Expiration Date, (iii) any Consents
from third parties shall not have been obtained (except for those the failure of
which to be obtained would not have a Material Adverse Effect on the Company),
or (iv) at any time on or after the date of the Merger Agreement and prior to
the time of acceptance for payment or payment for any Shares, any of the
following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, enforced, promulgated, amended, issued or deemed applicable to the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that, in the reasonable judgment of Parent, would be expected to,
directly or indirectly: (i) make illegal or otherwise prohibit or
materially delay consummation of the Offer, the Merger or the acceptance
for payment of some or all of the Shares, or seek to obtain material
damages or make materially more costly the making of the Offer, (ii)
prohibit or materially limit the ownership or operation by Parent or the
Purchaser of all or any material portion of the business or assets of the
Company or any of its subsidiaries taken as a whole or compel Parent or the
Purchaser to dispose of or hold separately all or any material portion of
the business or assets of Parent or the Purchaser or the Company or any of
its subsidiaries taken as a whole, or seek to impose any material
limitation on the ability of Parent or the Purchaser to conduct its
business or own such assets, in any such case under this clause (ii), which
would have a Material Adverse Effect on Parent or the Company, as the case
may be, (iii) impose material limitations on the ability of Parent or the
Purchaser effectively to acquire, hold or exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
acquired or owned by the Purchaser or Parent on all matters properly
presented to the Company's stockholders, or (iv) require divestiture by
Parent or the Purchaser of any Shares; or
(b) there shall be instituted or pending any action or proceeding by
any Governmental Entity seeking, or that would reasonably be expected to
result in, any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above or by any third party for which there is a
substantial likelihood of resulting in any of the consequences referred to
in clauses (i) through (iv) of paragraph (a) above; or
(c) any event or change shall have occurred (or any development shall
have occurred involving prospective damages) in the business, assets,
liabilities, condition
49
(financial or otherwise), prospects or results of operations of the Company
or any of its subsidiaries that has, or could reasonably be expected to
have, a Material Adverse Effect on the Company; or
(d) (i) the Company Board or any committee thereof shall have
withheld, withdrawn, failed to reaffirm at the request of Parent or shall
have modified or amended in a manner adverse to Parent or the Purchaser,
the approval, adoption or recommendation, as the case may be, of the Offer,
the Merger or the Merger Agreement, or shall have approved or recommended
any Acquisition Transaction, (ii) a Person shall have entered into a
Contract with the Company with respect to an Acquisition Transaction, or
(iii) the Company Board or any committee thereof shall have resolved to do
or enter into any of the foregoing; or
(e) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement, when read without any exception or
qualification as to materiality or Material Adverse Effect on the Company,
shall not be true and correct, as if such representations and warranties
were made at the time of such determination (except as to any such
representation or warranty which speaks as of a specific date, which must
be untrue or incorrect as of such specific date) except where the failure
to be so true and correct would not, individually or in the aggregate,
reasonably be expected to (i) have a Material Adverse Effect on the
Company, (ii) prevent or materially delay the consummation of the Offer,
(iii) materially increase the cost of the Offer to the Purchaser, or (iv)
have a material adverse effect on the benefits to Parent of the
transactions contemplated by this Agreement; or
(g) the Company shall have failed to perform in any material respect
or to comply in any material respect with any of its material obligations,
covenants or agreements under the Merger Agreement; provided that any
---
breach of Section 6.1(r) shall constitute such a material failure to
perform by the Company; or
(h) there shall have occurred, and continue to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or on the over-the-counter stock market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), (ii) any decline of at least 20% in either
the Dow ▇▇▇▇▇ Average of Industrial Stocks or the Standard & Poor's 500
Index from the close of business on the last trading day immediately
preceding the date of the Merger Agreement through the applicable
Expiration Date, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, or (iv) a
commencement of a war, armed hostilities or other national or international
crisis involving the United States or a material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by banks
or other lending institutions; or
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(i) (1) any of the Buy-Out Agreements described on Schedule 6.1(r) to
the Merger Agreement shall not have been executed by the applicable officer
or director of the Company or one of its subsidiaries, or shall no longer
be in full force and effect, (2) any of such officers or directors (except
for ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇) shall not have executed a release
in the respective form attached as Exhibit A to such person's Buy-Out
Agreement, (3) any of the directors of the Company, and, to the extent
requested by Purchaser, any or all of the Company's subsidiaries, shall not
have submitted a letter of resignation effective as of the Effective Time,
or (4) any holder of any outstanding Options shall have failed to execute a
Stock Option Termination Agreement in the form attached as Exhibit B
hereto.
The foregoing conditions (including those set forth in clauses (i),
(ii) and (iii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
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