Exhibit 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
TYCO ACQUISITION CORP. 33
and
XXXXXXX RENTCORP
including
GUARANTEE
of
TYCO INTERNATIONAL LTD.
Dated as of December 20, 2001
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER....................................................................7
SECTION 1.01 The Merger..................................................................7
SECTION 1.02 Effective Time..............................................................7
SECTION 1.03 Effect of the Merger........................................................7
SECTION 1.04 Articles of Incorporation; By-laws..........................................7
SECTION 1.05 Directors and Officers......................................................8
SECTION 1.06 Effect on Securities........................................................8
SECTION 1.07 Exchange of Shares.........................................................13
SECTION 1.08 No Further Ownership Rights in the Company Common Stock....................16
SECTION 1.09 Tax Consequences...........................................................16
SECTION 1.10 Taking of Necessary Action; Further Action.................................16
SECTION 1.11 Dissenters' Rights.........................................................16
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................16
SECTION 2.01 Organization and Qualification; Subsidiaries...............................17
SECTION 2.02 Articles of Incorporation and By-laws......................................17
SECTION 2.03 Capitalization.............................................................17
SECTION 2.04 Authority Relative to this Agreement.......................................18
SECTION 2.05 No Conflict................................................................19
SECTION 2.06 Material Contracts.........................................................19
SECTION 2.07 Governmental Approvals.....................................................20
SECTION 2.08 Compliance; Permits........................................................21
SECTION 2.09 SEC Filings; Financial Statements; Regulatory Filings......................22
SECTION 2.10 Absence of Certain Changes or Events.......................................22
SECTION 2.11 No Undisclosed Liabilities.................................................23
SECTION 2.12 Absence of Litigation......................................................23
SECTION 2.13 Company Employee Plans; Employment Agreements..............................23
SECTION 2.14 Employment and Labor Matters...............................................27
SECTION 2.15 Registration Statement; Proxy Statement/Prospectus.........................27
SECTION 2.16 Restrictions on Business Activities........................................28
SECTION 2.17 Title to Property..........................................................28
SECTION 2.18 Taxes......................................................................29
SECTION 2.19 Environmental Matters......................................................30
SECTION 2.20 Intellectual Property......................................................32
SECTION 2.21 Interested Party Transactions..............................................34
SECTION 2.22 Insurance..................................................................34
SECTION 2.23 Product Liability and Recalls..............................................34
SECTION 2.24 Absence of Questionable Payments...........................................34
SECTION 2.25 Brokers....................................................................35
SECTION 2.26 Opinion of Company Financial Advisor.......................................35
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TABLE OF CONTENTS
(continued)
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR...................................35
SECTION 3.01 Organization and Qualification; Subsidiaries...............................35
SECTION 3.02 Capitalization.............................................................36
SECTION 3.03 Authority Relative to this Agreement.......................................36
SECTION 3.04 No Conflict................................................................37
SECTION 3.05 Governmental Approvals.....................................................37
SECTION 3.06 Compliance.................................................................38
SECTION 3.07 SEC Filings; Financial Statements..........................................38
SECTION 3.08 Absence of Certain Changes or Events.......................................39
SECTION 3.09 Absence of Litigation......................................................39
SECTION 3.10 Registration Statement; Proxy Statement/Prospectus.........................39
SECTION 3.11 Brokers....................................................................40
SECTION 3.12 Ownership of Acquiror; No Prior Activities.................................40
SECTION 3.13 No Undisclosed Liabilities.................................................40
SECTION 3.14 Financing..................................................................40
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.......................................41
SECTION 4.01 Conduct of Business by the Company Pending the Merger......................41
SECTION 4.02 No Solicitation............................................................43
SECTION 4.03 Conduct of Business by Guarantor Pending the Merger........................46
ARTICLE V ADDITIONAL AGREEMENTS........................................................47
SECTION 5.01 Proxy Statement/Prospectus; Registration Statement.........................47
SECTION 5.02 Company Shareholders Meeting...............................................48
SECTION 5.03 Access to Information; Confidentiality.....................................49
SECTION 5.04 Consents; Approvals........................................................49
SECTION 5.05 Agreements with Respect to Affiliates......................................50
SECTION 5.06 Indemnification and Insurance..............................................50
SECTION 5.07 Notification of Certain Matters............................................51
SECTION 5.08 Further Action/Tax Treatment...............................................52
SECTION 5.09 Public Announcements.......................................................52
SECTION 5.10 Guarantor Common Shares....................................................53
SECTION 5.11 Conveyance Taxes; FIRPTA Certificate.......................................53
SECTION 5.12 Stock Incentive Plans; Restricted Shares; Other Programs...................53
SECTION 5.13 Employee Matters...........................................................54
SECTION 5.14 Accountants' Letters.......................................................55
SECTION 5.15 Compliance with State Property Transfer Statutes...........................55
ARTICLE VI CONDITIONS TO THE MERGER.....................................................56
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TABLE OF CONTENTS
(continued)
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SECTION 6.01 Conditions to Obligation of Each Party to Effect the Merger................56
SECTION 6.02 Additional Conditions to Obligations of Acquiror...........................57
SECTION 6.03 Additional Conditions to Obligation of the Company.........................58
SECTION 6.04 Failure to Deliver Tax Opinions............................................58
ARTICLE VII TERMINATION..................................................................59
SECTION 7.01 Termination................................................................59
SECTION 7.02 Effect of Termination......................................................61
SECTION 7.03 Fees and Expenses..........................................................62
ARTICLE VIII GENERAL PROVISIONS...........................................................63
SECTION 8.01 Effectiveness of Representations, Warranties and Agreements................63
SECTION 8.02 Notices....................................................................64
SECTION 8.03 Certain Definitions........................................................65
SECTION 8.04 Amendment..................................................................66
SECTION 8.05 Waiver.....................................................................67
SECTION 8.06 Headings...................................................................67
SECTION 8.07 Severability...............................................................67
SECTION 8.08 Entire Agreement...........................................................67
SECTION 8.09 Assignment.................................................................67
SECTION 8.10 Parties in Interest........................................................67
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative......................68
SECTION 8.12 Governing Law; Jurisdiction................................................68
SECTION 8.13 Counterparts...............................................................68
SECTION 8.14 Waiver of Jury Trial.......................................................68
SECTION 8.15 Performance of Guarantee...................................................68
SECTION 8.16 Enforcement................................................................68
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 20, 2001 (this
"Agreement"), by and between TYCO ACQUISITION CORP. 33 ("Acquiror"), a Nevada
corporation and a direct, wholly-owned subsidiary of TYCO INTERNATIONAL LTD.
("Guarantor"), a Bermuda company, and XXXXXXX RENTCORP, a California corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Acquiror and the
Company and the Executive Committee of Guarantor's Board of Directors have
approved this Agreement, and declared that it is advisable that Acquiror acquire
all of the outstanding shares ("Shares") of common stock, without par value
("Company Common Stock"), of the Company through a merger of the Company with
and into Acquiror (the "Merger") pursuant to and upon the terms and subject to
the conditions of this Agreement and in accordance with the applicable
provisions of the Nevada General Corporation Law (the "NGCL") and the California
General Corporation Law (the "CGCL");
WHEREAS, Acquiror and the Company intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Code"), and that the transactions
contemplated by this Agreement be undertaken pursuant to such plan. For
accounting purposes, the Merger is intended to be accounted for as a "purchase"
under United States generally accepted accounting principles ("GAAP");
WHEREAS, pursuant to the Merger, each Share shall be converted into
the right to receive the Merger Consideration, pursuant to and upon the terms
and subject to the conditions set forth herein;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, Guarantor has agreed fully and unconditionally to guarantee all the
representations, warranties, covenants, agreements and other obligations of
Acquiror in this Agreement (the "Guarantee"); and
WHEREAS, the Company and Acquiror desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
Definitions:
"Acquiror" is defined in the preamble.
"Acquiror Common Stock" is defined in Section 1.06(d).
"Acquiror Tax Opinion" is defined in Section 6.01(f).
"Acquisition Proposal" is defined in Section 4.02(a).
"Adjusted Option" is defined in Section 5.12(a).
"Affiliate Plan" is defined in Section 2.13(a).
"affiliates" is defined in Section 8.03(a).
"Agent's Message" is defined in Section 1.06(a)(vii).
"Agreement" is defined in the preamble.
"Alternative Transaction" is defined in Section 4.02(a).
"Articles of Merger" is defined in Section 1.02.
"ATOP" is defined in Section 1.06(a)(vii).
"Average Share Price" is defined in Section 1.06(a)(i).
"Benefits Continuation Period" is defined in Section 5.13(a).
"business day" is defined in Section 8.03(b).
"Cash Deficiency Ratio" is defined in Section 1.06(a)(i).
"Cash Electing Shares" is defined in Section 1.06(a)(i).
"Cash Proration Factor" is defined in Section 1.06(a)(i).
"Cash Share Number" is defined in Section 1.06(a)(i).
"CERCLA" is defined in Section 2.19(f)(ii).
"Certificate of Merger" is defined in Section 1.02.
"Certificates" is defined in Section 1.06(f).
"CGCL" is defined in the recitals.
"COBRA" is defined in Section 2.13(b).
"Code" is defined in the recitals.
"Company" is defined in the preamble.
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"Company Affiliate Letter" is defined in Section 5.05.
"Company Charter Documents" is defined in Section 2.02.
"Company Common Stock" is defined in the recitals.
"Company Disclosure Schedule" is defined in Section 2.01.
"Company Employee" is defined in Section 5.13(a).
"Company Employee Plans" is defined in Section 2.13(a).
"Company Financial Advisor" is defined in Section 2.25.
"Company Intellectual Property Assets" is defined in Section 2.20(a).
"Company Permits" is defined in Section 2.08(c).
"Company Restricted Shares" is defined in Section 1.06(c).
"Company SEC Documents" is defined in Section 8.03(c).
"Company Shareholders Meeting" is defined in Section 2.04(b).
"Company Stock Option Plans" is defined in Section 1.06(c).
"Company Stock Options" is defined in Section 1.06(c).
"Company Tax Opinion" is defined in Section 6.01(f).
"Confidentiality Agreement" is defined in Section 5.03.
"Contracts and Other Agreements" is defined in Section 2.05.
"control" is defined in Section 8.03(d).
"Covered Persons" is defined in Section 5.06(c).
"D&O Insurance" is defined in Section 5.06(d).
"Daily Share Price" is defined in Section 1.06(a)(i).
"DOL" is defined in Section 2.13(a).
"dollars" is defined in Section 8.03(e).
"DTC" is defined in Section 1.06(a)(vii).
"Effective Time" is defined in Section 1.02.
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"Election" is defined in Section 1.06(a)(vii).
"Election Deadline" is defined in Section 1.06(a)(viii).
"Election Form Record Date" is defined in Section 1.06(a)(vii).
"Environmental Claim" is defined in Section 2.19(f)(i).
"Environmental Laws" is defined in Section 2.19(f)(ii).
"ERISA" is defined in Section 2.13(a).
"Exchange Act" is defined in Section 8.03(f).
"Exchange Agent" is defined in Section 1.07(a).
"Exchange Fund" is defined in Section 1.07(b).
"Exchange Ratio" is defined in Section 1.06(a)(i).
"Expenses" is defined in Section 7.03(b).
"Fee" is defined in Section 7.03(b).
"Form of Election" is defined in Section 1.06(a)(vii).
"GAAP" is defined in the recitals.
"Governmental Entity" is defined in Section 2.07.
"Guarantee" is defined in the recitals.
"Guarantor" is defined in the preamble.
"Guarantor Charter Documents" is defined in Section 3.01(a).
"Guarantor Common Shares" is defined in Section 3.02(a).
"Guarantor Preference Shares" is defined in Section 3.02(a).
"Guarantor SEC Documents" is defined in Section 8.03(g).
"HSR Act" is defined in Section 2.07.
"Indemnified Parties" is defined in Section 5.06(b).
"Intellectual Property Assets" is defined in Section 2.20(a).
"IRS" is defined in Section 2.13(b).
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"ISO" is defined in Section 2.13(c).
"knowledge" is defined in Section 8.03(h).
"Legal Requirements" is defined in Section 2.05
"M&F" is defined in Section 4.02(a).
"Material Adverse Effect" is defined in Section 8.03(i).
"Material Contracts" is defined in Section 2.06(b).
"Materials of Environmental Concern" is defined in Section 2.19(f)(iii).
"Merger" is defined in the recitals.
"Merger Consideration" is defined in Section 1.07(c).
"NASDAQ" means the Nasdaq Stock Market.
"New Acquiror" is defined in Section 6.04.
"New Merger" is defined in Section 6.04.
"NGCL" is defined in the recitals.
"Non-Competition Agreement" is defined in Section 2.13(g).
"Non-Electing Shares" is defined in Section 1.06(a)(i).
"Non-U.S. Monopoly Laws" is defined in Section 2.07.
"NYSE" is defined in Section 8.03(j).
"Orders" is defined in Section 2.12.
"OSHA" is defined in Section 2.19(f)(ii).
"Outstanding Shares" is defined in Section 1.06(a)(i).
"PCBs" is defined in Section 2.19(d).
"Per Share Amount" is defined in Section 1.06(a)(i).
"person" is defined in Section 8.03(k).
"Post-1998 Company SEC Documents" is defined in Section 2.09(a).
"Post-1998 Guarantor SEC Documents" is defined in Section 3.07(a).
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"Proxy Statement/Prospectus" is defined in Section 2.15(a)(ii).
"RCRA" is defined in Section 2.19(f)(ii).
"Registration Statement" is defined in Section 3.10(a)(i).
"Rental Agreements" is defined in Section 2.06(c).
"Rental Property" is defined in Section 2.06(c).
"Rule 145" is defined in Section 5.05.
"SEC" is defined in Section 8.03(l).
"Securities Act" is defined in Section 8.03(m).
"Shares" is defined in the recitals.
"Stock Deficiency Ratio" is defined in Section 1.06(a)(i).
"Stock Electing Shares" is defined in Section 1.06(a)(i).
"Stock Proration Factor" is defined in Section 1.06(a)(i).
"Stock Share Number" is defined in Section 1.06(a)(i).
"subsidiary" or "subsidiaries" is defined in Section 8.03(n).
"Subsidiary Documents" is defined in Section 2.02.
"Superior Proposal" is defined in Section 4.02(a).
"Surviving Corporation" is defined in Section 1.01.
"Tax" is defined in Section 2.18(b).
"Tax Opinion Condition" is defined in Section 6.04.
"Tax Return" is defined in Section 2.18(b).
"Terminating Breach" is defined in Section 7.01(h).
"Terminating Change" is defined in Section 7.01(g).
"Terminating Misrepresentation" is defined in Section 7.01(f).
"Third Party" is defined in Section 4.02(a).
"Third Party Intellectual Property Assets" is defined in Section
2.20(c).
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"TSCA" is defined in Section 2.19(f)(ii).
"2001 Company Balance Sheet" is defined in Section 2.11.
"2001 Guarantor Balance Sheet" is defined in Section 3.13.
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. At the Effective Time, and subject to and
upon the terms and conditions of this Agreement, the NGCL and the CGCL, the
Company shall be merged with and into Acquiror, the separate corporate existence
of the Company shall cease, and Acquiror shall continue as the surviving
corporation (hereinafter sometimes referred to as the "Surviving Corporation").
SECTION 1.02 Effective Time. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.01, as promptly as practicable (and in any event within
two business days) after the satisfaction or waiver of the conditions set forth
in Article VI, the parties hereto shall cause the Merger to be consummated by
(i) filing articles of merger with the Secretary of State of the State of Nevada
in such appropriate form as determined by the parties, as contemplated by the
NGCL (the "Articles of Merger") and (ii) filing an agreement or certificate of
merger with the Secretary of State of the State of California in such
appropriate form as determined by the parties, as contemplated by the CGCL (the
"Certificate of Merger"), each, together with any required related certificates
in such forms as required by, and executed in accordance with, the relevant
provisions of the NGCL and the CGCL, respectively. The Merger shall become
effective at the time of the later to occur of such filings or at such later
time as may be agreed upon in writing by the Company and Acquiror, specified in
the Articles of Merger and the Certificate of Merger (the "Effective Time").
Prior to such filings, a closing shall take place at the offices of Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP, 919 Third Avenue, New York, New York, unless another
time or place is agreed to in writing by the parties hereto, for the purpose of
confirming the satisfaction or waiver, as the case may be, of the conditions set
forth in Article VI.
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement, the Articles of Merger,
the Certificate of Merger and the applicable provisions of the NGCL and the
CGCL. Without limiting the generality of the foregoing, at the Effective Time,
the Surviving Corporation shall possess all the property, rights, privileges,
powers and franchises of Acquiror and the Company, and shall be subject to all
debts, liabilities and duties of Acquiror and the Company.
SECTION 1.04 Articles of Incorporation; By-laws. (a) At the
Effective Time, the Articles of Incorporation of Acquiror, which shall comply
with Section 5.06, as in effect immediately prior to the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the NGCL and such Articles of Incorporation, except
that the name of the Surviving Corporation shall be changed to "XxXxxxx
RentCorp".
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(b) At the Effective Time, the By-laws of Acquiror, which shall
comply with Section 5.06, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended in
accordance with the NGCL and such By-laws.
SECTION 1.05 Directors and Officers. The directors of Acquiror
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06 Effect on Securities. (a) Conversion of the Company
Common Stock.
(i) Definitions. As used in this Agreement, the following terms
shall have the meanings specified below:
"Average Share Price" means the average of the Daily Share Prices
for the five consecutive trading days ending on the fourth trading day prior to
and not including the date of the Company Shareholders Meeting.
"Cash Deficiency Ratio" means a fraction (x) whose numerator is the
positive difference between the Cash Share Number and the number of Cash
Electing Shares and (y) whose denominator is the number of Non-Electing Shares.
"Cash Electing Shares" means the Shares as to which a valid election
has been made to receive cash.
"Cash Proration Factor" means (x) the Cash Share Number divided by
(y) the number of Cash Electing Shares.
"Cash Share Number" is equal to (x) the number of Outstanding Shares
less (y) the Stock Share Number.
"Daily Share Price" for any trading day means the volume-weighted
average of the per share selling prices on the NYSE of the Guarantor Common
Shares for that day, as reported by Bloomberg Financial Markets (or if such
service is unavailable, a service providing similar information selected by
Acquiror and the Company).
"Exchange Ratio" means the Per Share Amount divided by the Average
Share Price, subject to adjustment as provided in Sections 1.06(e) and 7.01(j).
"Non-Electing Shares" means all Outstanding Shares as to which a
valid election to receive either cash or Guarantor Common Shares has not been
made.
"Outstanding Shares" means Shares outstanding at the Effective Time.
"Per Share Amount" means $38.00.
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"Stock Deficiency Ratio" means a fraction (x) whose numerator equals
the positive difference between the Stock Share Number and the number of Stock
Electing Shares and (y) whose denominator is the number of Non-Electing Shares.
"Stock Electing Shares" means the Shares as to which a valid
election has been made to receive Guarantor Common Shares.
"Stock Proration Factor" means (x) the Stock Share Number divided by
(y) the number of Stock Electing Shares.
"Stock Share Number" means (i) if the number of Stock Electing
Shares is less than 50% of the Outstanding Shares, 50% of the Outstanding
Shares; (ii) if the number of Stock Electing Shares is 50% or greater of the
Outstanding Shares but less than or equal to 75% of the Outstanding Shares, the
number of Stock Electing Shares; and (iii) if the number of Stock Electing
Shares is greater than 75% of the Outstanding Shares, 75% of the Outstanding
Shares; provided, however, if as a result of the immediately preceding clauses
(i)-(iii) the Tax Opinion Condition will not be satisfied, then, if the Company
so consents, the Stock Share Number shall be increased to equal the minimum
number of Shares as is necessary so that the Stock Share Number will not prevent
the satisfaction of the Tax Opinion Condition.
(ii) General. At and as of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any Shares or any
shares of capital stock of Acquiror, except as otherwise provided in this
Section 1.06, each Share issued and outstanding immediately prior to the
Effective Time, other than any Shares to be canceled pursuant to Section 1.06(b)
and other than Shares as to which dissenters' rights are exercised pursuant to
Section 1.11, will be canceled and extinguished and automatically converted
(subject to Sections 1.06(e) and (f)) into the right to receive, without any
interest thereon, upon surrender of the certificate representing such Shares in
the manner provided in Section 1.07 (if not previously surrendered pursuant to
Section 1.06(a)(vii)), a fraction of a Guarantor Common Share, cash or a
combination of a fraction of a Guarantor Common Share and cash as hereinafter
provided.
(iii) Elections. Subject to Sections 1.06(a)(iv), (v) and (vi)
below, each holder of Company Common Stock shall be entitled, with respect to
each Share held by such holder, to elect to receive either:
(1) cash equal to the Per Share Amount; or
(2) a fraction of a Guarantor Common Share equal to the Exchange
Ratio.
Notwithstanding the foregoing, each holder's elections, pursuant
to this Section 1.06, shall be considered at the request of the holder and, to
the extent practicable, based on the aggregate number of Shares beneficially
owned by such holder and its affiliates, not solely on a per share basis. In
furtherance thereof, to the extent practicable, in the event a holder's election
for cash and Guarantor Common Shares cannot be complied with because the Cash
Electing Shares exceeds the Cash Share Number or the Stock Electing Shares
exceeds the Stock Share Number as provided in Sections 1.06(a)(iv) and (v), each
holder that beneficially owns Shares in more than one name or account and/or
whose affiliates own Shares may specify how to
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allocate the cash paid and Guarantor Common Shares delivered to such holder in
the Merger among the various accounts that such holder beneficially owns and,
with the requisite consent of such holder's affiliates, among the accounts
beneficially owned by such holder and its affiliates.
(iv) Excess of Cash Electing Shares. If the number of Cash
Electing Shares exceeds the Cash Share Number:
(1) each Stock Electing Share shall be converted into a fraction
of a Guarantor Common Share equal to the Exchange Ratio;
(2) each Cash Electing Share shall be converted into the right
to receive (I) cash equal to the Per Share Amount multiplied by the Cash
Proration Factor and (II) a fraction of a Guarantor Common Share equal to (x)
the Exchange Ratio multiplied by (y) one minus the Cash Proration Factor; and
(3) each Non-Electing Share shall be converted into the right to
receive a fraction of a Guarantor Common Share equal to the Exchange Ratio.
(v) Excess of Stock Electing Shares. If the number of Stock
Electing Shares exceeds the Stock Share Number:
(1) each Cash Electing Share shall be converted into the right
to receive cash equal to the Per Share Amount;
(2) each Stock Electing Share shall be converted into the right
to receive (I) a fraction of a Guarantor Common Share equal to (x) the Exchange
Ratio multiplied by (y) the Stock Proration Factor and (II) cash equal to (x)
the Per Share Amount multiplied by (y) one minus the Stock Proration Factor; and
(3) each Non-Electing Share shall be converted into the right to
receive cash equal to the Per Share Amount.
(vi) No Excess of Cash Electing or Stock Electing Shares. In the
event that neither Section 1.06(a)(iv) nor 1.06(a)(v) above is applicable:
(1) each Cash Electing Share shall be converted into the right
to receive cash equal to the Per Share Amount;
(2) each Stock Electing Share shall be converted into the right
to receive a fraction of a Guarantor Common Share equal to the Exchange Ratio;
and
(3) each Non-Electing Share shall be converted into the right to
receive (I) cash in the amount of (x) the Per Share Amount multiplied by (y) the
Cash Deficiency Ratio and (II) a fraction of a Guarantor Common Share equal to
(x) the Exchange Ratio multiplied by (y) the Stock Deficiency Ratio.
(vii) Exercise of Election. All elections in accordance with
this Section 1.06 shall be made on a form designed for that purpose and mutually
acceptable to the Company
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and Acquiror (a "Form of Election") and mailed to holders of record of the
Company Common Stock as of the record date for the Company Shareholders Meeting
or such other date as Acquiror and the Company mutually agree (the "Election
Form Record Date") or, in the case of Shares held in book-entry form, through
transmission of an Agent's Message. To the extent practicable, the Form of
Election shall permit each holder that beneficially owns Shares, and/or whose
affiliates beneficially own Shares, in more than one name or account, in the
event that the Cash Electing Shares exceeds the Cash Share Number or the Stock
Electing Shares exceeds the Stock Share Number as provided in Sections
1.06(a)(iv) and (v), to specify how to allocate the cash paid and Guarantor
Common Shares issued in the Merger among the various accounts that such holder
of Shares beneficially owns and, with the requisite consent of such holder's
affiliates, among the accounts beneficially owned by such holder and its
affiliates. Acquiror and the Company shall make available one or more Forms of
Election as may be reasonably requested by all persons who become holders (or
beneficial owners) of the Company Common Stock between the Election Form Record
Date and the close of business on the day prior to the Election Deadline.
Elections shall be made by submitting to the Exchange Agent in accordance with
this Section 1.06(a)(vii) either (A) a properly completed and signed Form of
Election accompanied by the certificates representing the Shares as to which the
valid election is being made (or an appropriate guarantee of delivery by an
Eligible Guarantor Institution, as that term is defined in Rule 17Ad-15
promulgated pursuant to the Exchange Act) or (B) in the case of Shares held in
book-entry form, by the transfer of such shares to an account established by the
Exchange Agent for this purpose at the Depository Trust Company ("DTC") and the
timely receipt by the Exchange Agent of an Agent's Message transmitted through
DTC's Automated Tender Offer Program ("ATOP") (either of (A) or (B), an
"Election"). The term "Agent's Message" means a message transmitted by DTC and
received by the Exchange Agent and forming part of the confirmation of a
book-entry transfer which states that DTC has received an express acknowledgment
from a participant transmitting the Shares, sets forth the election being made
with respect to such shares and states that such participant has agreed to be
bound by the terms of the Form of Election with respect to such Shares. Acquiror
will have the discretion, which it may delegate in whole or in part to the
Exchange Agent, to reasonably determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election, or, in the case of Shares held in book-entry form,
whether an Agent's Message has properly been received or whether any
modifications of the procedures set forth in this Section 1.06 are necessary to
comply with the requirements of DTC. The decision of Acquiror (or the Exchange
Agent) in such matters shall be conclusive and binding on the holders of Shares.
(viii) Election Deadline. An Election must be received by the
Exchange Agent by 5:00 p.m. New York City time on the day of the Effective Time
(such time hereinafter referred to as the "Election Deadline") in order to be
effective. Any holder of Shares who has made an Election may at any time prior
to the Election Deadline change such holder's election by submitting a revised
Form of Election, properly completed and signed, that is received by the
Exchange Agent prior to the Election Deadline or, in the case of Shares held in
book-entry form, by causing there to be transmitted and received by the Exchange
Agent prior to the Election Deadline a properly transmitted Request Message
through ATOP. Any holder of Shares may at any time prior to the Election
Deadline revoke its election and withdraw its certificates representing Shares
deposited with the Exchange Agent by written notice to the Exchange Agent
received prior to the Election Deadline or, in the case of Shares held in
book-entry form,
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withdraw its Shares transferred to the Exchange Agent by a properly transmitted
"Request Message" through ATOP prior to the Election Deadline specifying the
name and number of the account at DTC to be credited.
As soon as practicable after the Election Deadline, the Exchange
Agent shall determine the number of Cash Electing Shares, Stock Electing Shares
and Non-Electing Shares, and shall notify Acquiror of its determination (a copy
of which Acquiror shall promptly provide to the Company). Promptly after such
notification, Acquiror shall cause Guarantor to issue a press release announcing
such determination.
(ix) Deemed Non-Election. For the purposes hereof, Shares with
respect to which a holder does not submit a valid Election prior to the Election
Deadline shall be deemed to be Non-Electing Shares. If Acquiror or the Exchange
Agent shall determine that any purported election was not properly made, such
purported election shall be deemed to be of no force and effect, and the Shares
with respect to which such purported election was made shall, for purposes
hereof, be deemed to be Non-Electing Shares. Neither Acquiror nor the Exchange
Agent shall have any obligation to inform any holder of Shares of any defect in
the making of an election.
(x) Return of Company Common Stock. In the event that this
Agreement is terminated without the Merger having been consummated, Acquiror
shall instruct the Exchange Agent to return all Shares submitted or transferred
to the Exchange Agent pursuant to Section 1.06(a)(vii).
(b) Cancellation of the Company-Owned and Acquiror-Owned Stock. Each
Share held by the Company or any subsidiary of the Company or owned by Guarantor
or Acquiror immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Stock Incentive Plans. At the Effective Time, (i) all options or
rights ("Company Stock Options") to purchase Company Common Stock then
outstanding, whether under (A) the Company's 1987 Incentive Stock Option Plan,
(B) the Company's 1998 Stock Option Plan, or (C) any other stock option plan or
agreement of the Company (collectively, the "Company Stock Option Plans"), and
(ii) all Shares subject to forfeiture granted under the Company's Long-Term
Stock Bonus Plan, the Company's 2000 Long-Term Stock Bonus Plan or any other
plan or agreement of the Company (the "Company Restricted Shares") that are
outstanding, shall be treated in accordance with Section 5.12 of this Agreement.
(d) Capital Stock of Acquiror. Each share of common stock, par value
$0.01 per share, of Acquiror (the "Acquiror Common Stock") issued and
outstanding immediately prior to the Effective Time shall constitute one
validly issued, fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Acquiror Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
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(e) Adjustments to Consideration. If, notwithstanding the provisions
of Section 4.01, during the period between the date of this Agreement and the
Effective Time:
(i) there shall occur any change in the outstanding shares of
capital stock of Guarantor or the Company by reason of any reclassification,
recapitalization, redenomination of capital stock, stock split, reverse stock
split or combination, exchange or readjustment of shares, or any stock dividend
thereon with a record date during such period, the Per Share Amount, the
Exchange Ratio, the Merger Consideration and any other amounts payable or to be
delivered pursuant to the Merger or otherwise pursuant to this Agreement
(including for purposes of Section 7.01(j)) shall be appropriately adjusted; or
(ii) the Company shall pay any cash dividend, non-cash dividend
or other distribution on, or issue any rights with respect to, the Shares (other
than as provided in clause (i) above and except for quarterly cash dividends of
up to $0.16 per Share), then (x) as a condition to the payment by Acquiror of
the Merger Consideration, such dividend, right or distribution shall (1) be
received and held by the holders of Shares for the account of Acquiror and will
be required to be promptly remitted and transferred by each such holder to the
Exchange Agent accompanied by appropriate documentation of transfer, or (2) at
the direction of Acquiror, be exercised for the benefit of Acquiror, in which
case the proceeds of such exercise will promptly be remitted to Acquiror; or
(y) the Merger Consideration and any other amounts payable or to be delivered
pursuant to the Merger or otherwise pursuant to this Agreement (including for
purposes of Section 7.01(j)) shall be appropriately adjusted. Pending the
remittance referred to in clause (x) above, Acquiror, subject to applicable law,
shall be entitled to all rights and privileges as owner of any such cash
dividend, non-cash dividend, distribution or right and may withhold the entire
Merger Consideration or deduct from the amount or value thereof, as determined
by Acquiror in its sole discretion.
(f) Fractional Shares. No certificate or scrip representing
fractional Guarantor Common Shares will be issued in the Merger upon the
surrender for exchange of a certificate which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates"). In lieu of any such
fractional Guarantor Common Shares, each holder of Certificates who would
otherwise have been entitled to a fraction of a Guarantor Common Share in
exchange for such Certificate (after taking into account all Certificates
delivered by such holder) pursuant to this Section shall receive from the
Exchange Agent, as applicable, a cash payment in lieu of such fractional
Guarantor Common Share, determined by multiplying (A) the fractional share
interest to which such holder would otherwise be entitled by (B) the Average
Share Price.
SECTION 1.07 Exchange of Shares. (a) Exchange Agent. Acquiror shall
select a bank or trust company reasonably acceptable to the Company to act as
the exchange agent (the "Exchange Agent") in the Merger.
(b) Exchange Fund. As necessary from time to time following the
Effective Time, Acquiror shall make available to the Exchange Agent for exchange
in accordance with this Article I, (i) certificates evidencing the Guarantor
Common Shares issuable pursuant to Section 1.06(a), (ii) the cash payable
pursuant to Section 1.06(a) and (iii) cash payable in lieu of fractional shares
pursuant to Section 1.06(f) (such certificates for Guarantor Common Shares,
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together with any dividends or distributions with respect thereto, and cash are
hereinafter referred to as the "Exchange Fund").
(c) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Acquiror shall cause the Exchange Agent to mail to each holder
of record of Certificates who has not validly submitted (or has submitted and
withdrawn) such holder's Certificates to the Exchange Agent in accordance with
Section 1.06(a)(vii) (other than Certificates representing Shares as to which
dissenters' rights are exercised pursuant to Section 1.11) (i) a letter of
transmittal in customary form (that shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and shall contain such
other customary provisions as Acquiror may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Guarantor Common Shares and/or cash, as provided in Section 1.06(a), and
cash in lieu of any fractional shares, as provided in Section 1.06(f). A holder
that has validly submitted and not withdrawn Shares as provided in Section
1.06(a)(vii) or that surrenders Certificates for cancellation, together with a
duly executed letter of transmittal and other required documents, to the
Exchange Agent as provided in this Section 1.07(c), shall be entitled to receive
in exchange therefor solely (A) that number of whole Guarantor Common Shares, if
any, into which their Shares were converted at the Effective Time pursuant to
Section 1.06(a), and/or (B) the cash that such holders have the right to receive
pursuant to Section 1.06(a) in respect thereof, together with any cash in
respect of fractional shares as provided in Section 1.06(f) (such Guarantor
Common Shares, and/or cash, as provided in Section 1.06(a), and cash in lieu of
any fractional shares, as provided in Section 1.06(f), being referred to,
collectively, as the "Merger Consideration"). The holder of Shares upon their
exchange, in whole or in part, for Guarantor Common Shares shall also receive
any dividends or other distributions declared or made with a record date after
the Effective Time with respect to such Guarantor Common Shares.
Certificates surrendered pursuant to Section 1.06(a)(vii) shall be
cancelled as of the Effective Time and Certificates surrendered pursuant to this
Section 1.07(c) shall be cancelled forthwith following their surrender. Until so
surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, to evidence only the right to
receive the applicable Merger Consideration with respect to the Shares formerly
represented thereby and any dividends or distributions payable pursuant to
Section 1.07(d). No interest will be paid or accrued on any cash or on any
unpaid dividends or distributions payable to holders of Certificates. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, the applicable Merger Consideration with
respect to the Shares formerly represented thereby may be issued or paid to a
transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid.
Any Guarantor Common Shares comprising Merger Consideration or a
portion thereof may be delivered in uncertificated form pursuant to Guarantor's
direct registration system.
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The exchange of Shares held directly or indirectly, by or through
participants in the DTC shall be made in accordance with the customary
procedures of the DTC and such participants.
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made with respect to the Guarantor Common
Shares with a record date after the Effective Time will be paid to the holders
of any unsurrendered Certificates with respect to the Guarantor Common Shares to
which such holders are entitled until the holders of record of such Certificates
shall surrender such Certificates in accordance with Section 1.07(c). Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
shall deliver, without interest, the Merger Consideration in respect thereof and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to any Guarantor Common Shares
included therein, and, at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender with respect to such
Guarantor Common Shares.
(e) Required Withholding. The Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration payable or otherwise
deliverable pursuant to this Agreement, and from any dividends or distributions
payable pursuant to Section 1.07(d), to any holder or former holder of Shares
such amounts as may be required to be deducted or withheld therefrom under the
Code or under any provision of state, local or foreign tax law or under any
other applicable law. To the extent such amounts are so deducted or withheld,
such amounts shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise have been paid.
(f) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the holder thereof, the Exchange Agent shall issue
and/or pay the Merger Consideration in exchange for such lost, stolen or
destroyed Certificates and any dividends or distributions payable, as provided
in this Section 1.07; provided, however, that Acquiror may, in its discretion
and as a condition precedent to the delivery of such Merger Consideration and
distributions, require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Guarantor, Acquiror, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.07, neither the Exchange Agent, Guarantor, Acquiror, the Surviving
Corporation nor their respective affiliates shall be liable to a holder or
former holder of Shares for any Merger Consideration properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Shares for six months after the
Effective Time shall be delivered to Acquiror, upon demand, and any holders of
Certificates who have not theretofore complied with the provisions of this
Section 1.07 shall thereafter look only to Acquiror for
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payment of the Merger Consideration and any dividends or other distributions
with respect to the Guarantor Common Shares to which they are entitled pursuant
to Section 1.07(d), in each case, without any interest thereon.
SECTION 1.08 No Further Ownership Rights in the Company Common
Stock. The Merger Consideration issued and/or paid upon the surrender of Shares
in accordance with Sections 1.06 and 1.07 shall be deemed to have been issued
and/or paid upon the surrender of Shares in full satisfaction of all rights
pertaining to Shares, and there shall be no further registration of transfers on
the records of the Surviving Corporation of Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
I.
SECTION 1.09 Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code. The parties hereto adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
SECTION 1.10 Taking of Necessary Action; Further Action. Each of
Acquiror and the Company will take, and cause their affiliates to take, all such
reasonable and lawful actions as may be necessary or appropriate in order to
effectuate the Merger and the other transactions contemplated by this Agreement
in accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Acquiror, the officers and directors of the
Company, Acquiror and the Surviving Corporation will take all such lawful and
necessary action in the name of the Company or Acquiror.
SECTION 1.11 Dissenters' Rights. Notwithstanding any other provision
of this Agreement to the contrary, if holders of Shares are entitled under the
CGCL to dissenters' rights with respect to the Merger, Shares outstanding
immediately prior to the Effective Time and held by a holder who has demanded
appraisal for such Shares in accordance with the CGCL shall not be converted
into a right to receive from Acquiror the Merger Consideration unless such
holder fails to perfect or withdraws or otherwise loses his or her right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses his or her right to appraisal, such Shares shall thereupon be deemed to
have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive the Merger Consideration as a holder of
Non-Electing Shares, without any interest thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquiror as follows:
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SECTION 2.01 Organization and Qualification; Subsidiaries. Each of
the Company and its subsidiaries is duly organized, validly existing and, to the
extent the concept of good standing exists in the applicable jurisdiction, in
good standing under the laws of the jurisdiction of its organization and has the
requisite corporate or other power and authority necessary to own, lease and
operate the properties it purports to own, lease or operate and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power or authority
would not reasonably be expected to have a Material Adverse Effect. Each of the
Company and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. A list of the Company's subsidiaries, together with the
jurisdiction of organization of each such subsidiary and the percentage of each
such subsidiary's outstanding capital stock owned by the Company or another
subsidiary of the Company is contained in Section 2.01 of the written disclosure
schedule previously delivered by the Company to Acquiror (the "Company
Disclosure Schedule"). Except as set forth in Section 2.01 of the Company
Disclosure Schedule or the Company SEC Documents, neither the Company nor any of
its subsidiaries directly or indirectly owns any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity (other than its wholly-owned subsidiaries), (i)
with respect to which interest the Company or a subsidiary has invested (and
currently owns) or is required to invest $500,000 or more, or (ii) which is a
publicly-traded entity unless such interest is held for investment by the
Company or its subsidiary and comprises less than five percent of the
outstanding stock of such entity.
SECTION 2.02 Articles of Incorporation and By-laws. The Company has
heretofore made available to Acquiror complete and correct copies of its
Articles of Incorporation and By-laws (the "Company Charter Documents"), and the
articles of incorporation (and by-laws or equivalent organizational documents,
if any) of each of the Company's subsidiaries (the "Subsidiary Documents"). All
such Company Charter Documents and Subsidiary Documents are in full force and
effect, except in the case of Subsidiary Documents where the failure to be in
force and effect would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or By-laws or equivalent organizational documents, except for
violations of the documents of subsidiaries which do not and are not reasonably
likely to materially interfere with the operations of such entity.
SECTION 2.03 Capitalization. (a) The authorized share capital of the
Company consists of 40,000,000 shares of Company Common Stock. As of December
17, 2001, (i) 12,334,929 Shares were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and none of which has been issued
in violation of preemptive or similar rights, (ii) no Shares were held by
subsidiaries of the Company, (iii) 1,473,325 Shares were available for future
grants pursuant to the Company Stock Option Plans, and (iv) 628,493 Shares were
subject to outstanding, unexercised options under the Company Stock Option
Plans. The
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Company does not hold any Shares as treasury shares. Except as set forth in
Section 2.03 of the Company Disclosure Schedule, no change in such
capitalization has occurred since December 17, 2001, except for changes
resulting from the exercise or termination of Company Stock Options which were
outstanding and exercisable as of December 17, 2001 (or were outstanding as of
December 17, 2001 and became exercisable in accordance with their terms
thereafter), forfeiture of restricted stock or transactions permitted by Section
4.01. Except as set forth in this Section 2.03 or in Section 2.03 of the Company
Disclosure Schedule or the Company SEC Documents and except for this Agreement,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character binding on the Company relating to the issued or
unissued capital stock of the Company or obligating the Company to issue or sell
any shares of capital stock of, or other equity interests in, the Company. All
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable and will
not be issued in violation of preemptive or similar rights.
(b) Except as set forth in Section 2.03 of the Company Disclosure
Schedule or the Company SEC Documents, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of the Company Common Stock or the capital stock of
any subsidiary. Except as set forth in Section 2.03 of the Company Disclosure
Schedule or the Company SEC Documents, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of obligations of
subsidiaries and intercompany book entry transactions, in either case entered
into in the ordinary course of business. Except as set forth in Sections 2.01 or
2.03 of the Company Disclosure Schedule, (i) all of the outstanding shares of
capital stock (other than directors' qualifying shares) of each of the Company's
subsidiaries are duly authorized, validly issued, fully paid and nonassessable,
and (ii) all such shares (other than directors' qualifying shares and a de
minimis number of shares owned by employees of such subsidiaries) are owned by
the Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations on the Company's voting rights,
charges or other encumbrances of any nature whatsoever. Except as set forth in
this Section 2.03, Section 2.03 of the Company Disclosure Schedule or the
Company SEC Documents and except for this Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character binding on the Company's subsidiaries relating to the issued or
unissued capital stock of the Company's subsidiaries or obligating the Company's
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, the Company's subsidiaries.
SECTION 2.04 Authority Relative to this Agreement. (a) The Company
has all necessary corporate power and authority to execute and deliver this
Agreement and, upon the approval of the principal terms of this Agreement by the
Company's shareholders in accordance with the CGCL and the Company's Charter
Documents, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated, other
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than the requisite approval of the principal terms of this Agreement by the
Company's shareholders. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Guarantor and Acquiror of this Agreement and the Guarantee hereof,
as applicable, constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(b) As of the date hereof, the Board of Directors of the Company has
by unanimous vote (i) determined that it is advisable and in the best interest
of the Company's shareholders for the Company to enter into this Agreement and
to consummate the Merger upon the terms and subject to the conditions of this
Agreement, (ii) approved this Agreement and the transactions contemplated hereby
in accordance with the applicable provisions of the CGCL and the Company Charter
Documents, and (iii) recommended the approval of the principal terms of this
Agreement by the Company's shareholders and directed that the terms of the
Merger and this Agreement be submitted for consideration by the Company's
shareholders at a meeting of the shareholders of the Company called for such
purposes (the "Company Shareholders Meeting").
SECTION 2.05 No Conflict. Neither the execution and delivery of this
Agreement nor the performance of this Agreement by the Company nor the
consummation of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the Company Charter Documents, (ii)
except as set forth in Section 2.05 of the Company Disclosure Schedule, conflict
with or result in any breach of any provision of any Subsidiary Documents or
require any consent, approval or notice under or conflict with or result in a
violation or breach of, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of, or cause any, termination,
amendment, redemption, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on (including a right to purchase) any of the
properties or assets of the Company or any of its subsidiaries pursuant to, any
note, bond, mortgage, indenture, credit facility, contract, agreement, lease,
license, permit, franchise or other instrument or obligation (collectively,
"Contracts and Other Agreements") to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, or (iii)
assuming compliance with the matters referred to in Section 2.07, violate any
order, judgment, writ, injunction, determination, award, decree, law, statute,
rule or regulation (collectively, "Legal Requirements") applicable to the
Company or any of its subsidiaries or any material portion of their properties
or assets, except, in the case of clause (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.06 Material Contracts. (a) Subject to the following
sentence, Section 2.06 of the Company Disclosure Schedule includes, as of the
date hereof, a list of (i) other than intercompany agreements, all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, guaranties, standby letters of credit,
equipment leases or lease purchase agreements, each in an amount equal to or
exceeding $1 million to which the Company or any of its subsidiaries is a party
or by which any of them is
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bound; (ii) all written or oral contracts, agreements, commitments or other
understandings or arrangements to which the Company or any of its subsidiaries
is a party or by which any of them or any of their respective properties or
assets are bound or affected, but excluding contracts, agreements, commitments
or other understandings or arrangements entered into in the ordinary course of
business and involving, in the case of any such contract, agreement, commitment,
or other understanding or arrangement, individual payments or receipts by the
Company or any of its subsidiaries of less than $2 million over the term of such
contract, commitment, agreement, or other understanding or arrangement; (iii)
all partnership or joint venture agreements of the Company and its subsidiaries;
and (iv) all agreements which are required to be filed as "material contracts"
with the SEC pursuant to the requirements of the Exchange Act but which have not
been so filed with the SEC. With regard to agreements for the purchase or sale
of raw materials or inventory or for the provision of services in the ordinary
course of business and licensing or royalty arrangements, the threshold referred
to in clause (ii) of the preceding sentence shall be measured on an annual
basis.
(b) The Company has heretofore made available to Acquiror true,
correct and complete copies of all of the following contracts and agreements
(and all material amendments, modifications and supplements thereto) to which
the Company or any of its subsidiaries is a party or by which any of its
properties or assets are bound as of the date hereof: (i) the contracts and
agreements listed in Section 2.06 of the Company Disclosure Schedule; (ii) any
contracts or agreements listed in Section 2.16 of the Company Disclosure
Schedule; and (iii) commitments and agreements to enter into any of the
foregoing (collectively, the "Material Contracts").
(c) Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect or as set forth in Section 2.06
of the Company Disclosure Schedule in all material respects, (i) the Company
maintains accurate, current and complete records of all agreements in effect and
for the prior three (3) years ("Rental Agreements") pursuant to which the
Company leases or rents modular buildings and accessories and electronic testing
equipment ("Rental Property"); (ii) the Rental Agreements have been made in the
ordinary course of business in accordance with industry practice; (iii) the
Rental Agreements are in writing and are duly executed by the parties, are valid
and adequate to evidence the rights and obligations of the parties, and are
enforceable in accordance with their terms; (iv) the Rental Agreements comply
with all laws and regulations relating thereto; (v) the Company or its
subsidiaries either holds valid title to the Rental Property or a perfected
first priority security interest therein, subject, however, to customary
exceptions for materialmen's, mechanic's or similar liens or liens on property
taxes not yet due, in each case as would not materially interfere with
enforcement of the rights of the Company with respect thereto; and (vi) the
Company's policies and standards for credit review and approval in respect of
the Rental Agreements are in accord with industry practice and have been for the
past three (3) years consistently applied.
SECTION 2.07 Governmental Approvals. Except as set forth in Section
2.07 of the Company Disclosure Schedule, no consent, approval or authorization
of or declaration or filing with or notification to any foreign, federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality (each, a "Governmental Entity") on the part of the Company or
any of its subsidiaries that has not been obtained or made is required in
connection with the execution or delivery by the Company of this Agreement or
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the consummation by the Company of the transactions contemplated hereby, other
than (a) the filing of the Certificate of Merger with the Secretary of State of
the State of California and the Articles of Merger with the Secretary of State
of the State of Nevada, (b) the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (c) filings and consents under any
applicable non-United States laws intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade
("Non-U.S. Monopoly Laws"), (d) any applicable requirements of the Securities
Act, the Exchange Act, any applicable state securities laws and NASDAQ, (e) any
environmental, health and safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (f) where the failure to obtain
such consents, approvals or authorizations, or to make such declarations,
filings or notifications, would not reasonably be expected, individually or in
the aggregate, to prevent or materially delay consummation of the transactions
contemplated hereby, or otherwise prevent or materially delay the Company from
performing its material obligations under this Agreement, or would not otherwise
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 2.08 Compliance; Permits. (a) Except as set forth in Section
2.08(a) of the Company Disclosure Schedule or in the Company SEC Documents,
neither the Company nor any of its subsidiaries is in conflict with, or in
breach, default or violation of, (i) its certificate of incorporation or by-laws
(or analogous organizational documents), (ii) any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, (iii) any
note, bond, debenture, indenture, credit agreement or facility, commercial paper
facility, sale-leaseback arrangement or financing lease pursuant to which the
Company or any of its subsidiaries has or may incur indebtedness for borrowed
money or any security, pledge, mortgage or trust agreement or arrangement in
respect thereof or (iv) any other 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
its or any of their respective properties is bound or affected, except for any
such conflicts, breaches, defaults or violations which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Section 2.08(b) of the Company Disclosure
Schedule, no investigation by any Governmental Entity with respect to the
Company or its subsidiaries is pending or, to the knowledge of the Company,
threatened, except for such investigations which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect or
are disclosed in the Company SEC Documents.
(c) Except as set forth in Section 2.08(c) of the Company Disclosure
Schedule or the Company SEC Documents, the Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from Governmental Entities needed for the operation of the
business of the Company and/or its subsidiaries as it is now being conducted
(collectively, the "Company Permits"), except where the failure to hold such
Company Permits would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. The Company and its subsidiaries
are in
-21-
compliance with the terms of the Company Permits, except as set forth in Section
2.08(c) of the Company Disclosure Schedule and in the Company SEC Documents or
where the failure to so comply would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 2.09 SEC Filings; Financial Statements; Regulatory Filings.
(a) The Company and its subsidiaries have filed all reports, schedules, forms,
statements and other documents (including all exhibits thereto) required to be
filed with the SEC since December 31, 1998 (the "Post-1998 Company SEC
Documents"). Except as set forth in Section 2.09 of the Company Disclosure
Schedule or the Company SEC Documents and taking into account any amendments and
supplements filed prior to the date of this Agreement, such Post-1998 Company
SEC Documents (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light and at the time of the circumstances under
which they were made, not misleading. Except as set forth in Section 2.09 of the
Company Disclosure Schedule, since December 31, 1998, none of the Company's
subsidiaries is or has been required to file periodic reports pursuant to the
Exchange Act with the SEC.
(b) Each of the consolidated financial statements (including in each
case, any related notes thereto) contained in the Post-1998 Company SEC
Documents was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or in the Company SEC Documents), and each fairly presents in all material
respects the consolidated financial position of the Company and its subsidiaries
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements (i) should be read in conjunction with the consolidated
financial statements contained in the applicable immediately preceding year-end
report on Form 10-K, and (ii) were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
SECTION 2.10 Absence of Certain Changes or Events. Except as set
forth in Section 2.10 of the Company Disclosure Schedule or in the Company SEC
Documents, or as a result of a transaction permitted by Section 4.01, since
December 31, 2000 the Company and its subsidiaries have conducted their
respective businesses in the ordinary course, and there has not occurred: (i)
any changes, effects or circumstances constituting, or which would reasonably be
expected to constitute, individually or in the aggregate, a Material Adverse
Effect; (ii) any amendments or changes in the Company Charter Documents; (iii)
any material changes to any Company Employee Plans or other employee benefit
arrangements or agreements, including the establishment of any new such plans,
arrangements or agreements or any amendment that extends the extension of
coverage under any such plans, arrangements or agreements to new groups of
employees or other individuals not previously covered, (iv) any material
restructuring or material reorganization of the Company or any of its
subsidiaries, (v) any damage to, destruction or loss of any asset of the Company
(whether or not covered by insurance) that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (vi) any
material change by the Company in its accounting methods, principles or
practices (other
-22-
than as required by GAAP subsequent to the date hereof); (vii) other than in the
ordinary course of business, any sale of a material amount of assets of the
Company; (viii) any declaration, setting aside or payment of any dividend (other
than the Company's regular quarterly cash dividend) or other distribution with
respect to its capital stock or any redemption, purchase or other acquisition of
any of its capital stock; or (ix) any split, combination or reclassification of
any of its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
its capital stock.
SECTION 2.11 No Undisclosed Liabilities. Except as set forth in
Section 2.11 of the Company Disclosure Schedule or the Company SEC Documents,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (i) in the aggregate
adequately provided for or disclosed in the Company's unaudited balance sheet
(including any related notes thereto) as of September 30, 2001 included in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001
(the "2001 Company Balance Sheet"), (ii) incurred in the ordinary course of
business and not required under GAAP to be reflected on the 2001 Company Balance
Sheet, (iii) incurred since September 30, 2001 in the ordinary course of
business, (iv) incurred in connection with this Agreement or the Merger of the
other transactions contemplated hereby, or (v) which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.12 Absence of Litigation. Except as set forth in Section
2.12 of the Company Disclosure Schedule or the Company SEC Documents or arising
out of the transactions contemplated by this Agreement, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or Governmental Entity, that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Except as
set forth in Section 2.12 of the Company Disclosure Schedule or in the Company
SEC Documents, as of the date hereof, neither the Company nor any of its
subsidiaries is subject to any order, judgment, injunction or decree
(collectively, "Orders") of any court or Governmental Entity.
SECTION 2.13 Company Employee Plans; Employment Agreements. (a)
"Company Employee Plans" shall mean all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA), and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements (including
those which contain change of control provisions or pending change of control
provisions), and any employment, executive compensation or severance agreements
(including those which contain change of control provisions or pending change of
control provisions), as amended, modified or supplemented, that is currently or
was previously maintained or contributed to by the Company or a subsidiary of
the Company for the benefit of any former or current employee, officer, director
or consultant (or any of their beneficiaries) of the Company or a subsidiary of
the Company. The term "Affiliate Plan" shall mean any other such plan, program,
arrangement or agreement with respect to which the Company or any subsidiary of
the Company has or would reasonably be expected to have any liability, either as
a member of a controlled group of corporations or trades or businesses, as
defined under Sections 414(b), (c),
-23-
(m) or (o) of the Code, and comparable provisions of ERISA, or by contractual
arrangement. Section 2.13(a) of the Company Disclosure Schedule lists each
material Company Employee Plan and each material Affiliate Plan. With respect to
each plan included in Section 2.13(a) of the Company Disclosure Schedule, the
Company shall indicate whether such plan includes an explicit change in control
provision. With respect to each Company Employee Plan or Affiliate Plan listed
in Section 2.13(a) of the Company Disclosure Schedule, the Company has provided
or made available to Acquiror: (i) each such written Company Employee Plan (or a
written description in English of (x) any Company Employee Plan which is not
written and (y) any Company Employee Plan that provides equity-based benefits or
that covers 50 or more participants and is written in a language other than
English) and any related trust agreement, insurance and other contract
(including a policy), if any, the most recently prepared summary plan
description, if any, summary of material modifications the substance of which is
not already incorporated in the corresponding summary plan description or
Company Employee Plan document, if any, and written, and, to the knowledge of
the Company after due inquiry, oral, communications distributed to plan
participants that could reasonably be expected to materially modify the terms of
any Company Employee Plan, whether through information actually conveyed in the
communication or a failure to convey information; (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Company Employee Plan required to make such a filing;
(iii) the latest reports, if any, which have been filed with the Department of
Labor ("DOL") to satisfy the alternative method of compliance for pension plans
for certain selected employees pursuant to DOL regulation Section 2520.104-23;
and (iv) the most recent favorable determination letters issued for each Company
Employee Plan and related trust which is intended to be qualified under Section
401(a) of the Code (and, if an application for such determination is pending, a
copy of the application for such determination).
(b) Except as set forth in Section 2.13(b) of the Company Disclosure
Schedule (i) none of the Company Employee Plans or Affiliate Plans promises or
provides medical or other welfare benefits to any director, officer, employee or
consultant (or any of their beneficiaries) after their service with the Company
or its subsidiary or affiliate terminates, other than as required by Section
4980B of the Code or Part 6 of Subtitle B of Title I of ERISA (hereinafter,
"COBRA"), or any similar state laws and no liability for such benefits has been
transferred from a Company Employee Plan or Affiliate Plan to another plan; (ii)
none of the Company Employee Plans or Affiliate Plans is a "multiemployer plan"
as such term is defined in Section 3(37) of ERISA, no Company Employee Plan or
Affiliate Plan has incurred any withdrawal liability that remains unsatisfied
and the Merger is not reasonably likely to result in the assessment of any
withdrawal liability; (iii) neither the Company, any of its subsidiaries, nor,
to the knowledge of the Company, any other party in interest or disqualified
person (as defined in Section 3(14) of ERISA and Section 4975 of the Code) has
engaged in a transaction with respect to any Company Employee Plan or Affiliate
Plan which could reasonably be expected to subject the Company or any
subsidiary, directly or indirectly, to a tax, penalty or other liability for
prohibited transactions under ERISA or Section 4975 of the Code that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; (iv) with respect to the Company Employee Plans and
Affiliate Plans, neither the Company or any of its subsidiaries, nor any
executive of the Company or one of its subsidiaries as fiduciary of the Company
Employee Plans or Affiliate Plans or, to the knowledge of the Company, any other
fiduciary of any Company Employee Plan or Affiliate Plan has breached any of the
responsibilities or
-24-
obligations imposed upon fiduciaries under Title I of ERISA, except for such
breaches as could not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect; (v) all Company Employee Plans and all
Affiliate Plans have been established and maintained in accordance with their
terms and have been operated in compliance with the requirements of applicable
law (including to the extent applicable, the notification and other requirements
of COBRA, the Health Insurance Portability and Accountability Act of 1996, the
Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity
Act of 1996, and the Women's Health and Cancer Rights Act of 1998), except for
such failures as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect and may, by their terms, be amended
and/or terminated at any time; (vi) each Company Employee Plan which is intended
to be qualified under Section 401(a) of the Code is the subject of a favorable
determination letter from the Internal Revenue Service (the "IRS") or is
established using a prototype plan which is itself the subject of a favorable
letter from the IRS, and nothing has occurred which could reasonably be expected
to result in the disqualification of any such plan; (vii) all contributions
required to be made with respect to any Company Employee Plan (whether pursuant
to the terms of such plan, Section 412 of the Code, any collective bargaining
agreement, or otherwise) have been made on or before their due dates (including
any extensions thereof), except to the extent any failures to have made such a
contribution on or before its due date could not reasonably be expected,
individually or in the aggregate, to result in a current or future liability
that could reasonably be expected to have a Material Adverse Effect; (viii) none
among the Company or any subsidiary thereof maintains or has ever maintained, a
Company Employee Plan subject to Title IV or Section 203 of ERISA or Section 412
of the Code, no Affiliate Plan is subject to any of such sections of ERISA and
the Code and no facts exist under which the Company could incur any liability
under Title IV of ERISA; and (ix) other than routine claims for benefits made in
the ordinary course of the operation of the Company Employee Plans or, to the
knowledge of the Company, Affiliate Plans, there are no pending, nor to the
Company's knowledge, any threatened, claims, investigations or causes of action
with respect to any Company Employee Plan or to the knowledge of the Company, an
Affiliate Plan, whether made by a participant or beneficiary of such a plan, a
governmental agency or otherwise, against the Company or any subsidiary of the
Company, any Company director, officer or employee, any Company Employee Plan,
or Affiliate Plan or any fiduciary of a Company Employee Plan or Affiliate Plan
that could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(c) Section 2.13(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, consultant, officer
or director of the Company or any of its subsidiaries who, as of the date
hereof, holds (i) any option to purchase Shares from the Company or commitments
from the Company for future options, together with the number of Shares subject
to such option, the exercise price of such option (to the extent determined as
of the date hereof), whether such option is intended to qualify as an incentive
stock option within the meaning of Section 422(b) of the Code (an "ISO"), and
the expiration date of such option; (ii) any Shares that are unvested or subject
to a repurchase option, risk of forfeiture or other condition providing that
such shares may be forfeited or repurchased by the Company upon any termination
of the shareholder's employment, directorship or other relationship with the
Company or any of its subsidiaries or which shares are subject to
performance-based vesting; and (iii) any other award or right (including share
units or stock appreciation rights), directly or indirectly, to receive Shares
(or any other unit of Company equity) or any amount payable by
-25-
reference to Shares (or any other unit of Company equity), together with the
number of Shares (or any other unit of Company equity) subject to such right.
(d) To the extent not already included and appropriately labeled in
Section 2.13(a) of the Company Disclosure Schedule, Section 2.13(d) of the
Company Disclosure Schedule sets forth a true and complete (i) list of all
material outstanding agreements with any individual consultants who provide
services to the Company or any of its subsidiaries; (ii) list of all outstanding
material agreements with respect to the services of individual independent
contractors or individual leased employees who provide services to the Company
or any of its subsidiaries; (iii) list of all material outstanding agreements
with companies or organizations that employ individuals who provide on-site
consulting, contracting or leased services to the Company or any of its
subsidiaries; and (iv) description of any situation in which a material portion
of the workforce of a component of the Company or its subsidiaries, whether such
component is a subsidiary, unit, work location, line of business or otherwise,
is composed of non common law employees, whether consultants, independent
contractors or otherwise, which description shall include, if applicable,
representative samples of agreements with such non-common law employees.
(e) Except as set forth in Section 2.13(e) of the Company Disclosure
Schedule and except as provided in this Agreement, the consummation of the
Merger will not, either alone or in combination with another event, (i) result
in any payment (including severance payments, bonus payments or otherwise)
becoming due pursuant to any Company Employee Plan to any current or former
director, officer, employee or consultant of the Company, (ii) result in any
increase in the amount of compensation or benefits payable pursuant to any
Company Employee Plan in respect of any director, officer, employee or
consultant of the Company, or (iii) accelerate the vesting or timing of payment
of any benefits or compensation payable pursuant to any Company Employee Plan in
respect of any director, officer, employee or consultant of the Company.
(f) There are no complaints, charges or claims filed against the
Company or any of its subsidiaries or, to the knowledge of the Company,
threatened to be brought by or filed with any Governmental Entity based on,
arising out of, in connection with or otherwise relating to the classification
of any individual by the Company as an independent contractor or "leased
employee" (within the meaning of Section 414(n) of the Code) rather than as an
employee, and no conditions exist under which the Company or any of its
subsidiaries is reasonably likely to incur any such liability that, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(g) The Company shall indicate on Section 2.13(g) of the Company
Disclosure Schedule: (i) with respect to each of the Company's executive
officers, whether such employee has entered into an agreement or a provision of
an agreement prohibiting or restricting such employee from accepting employment
or otherwise engaging in activity that is in competition with the business of
the Company or its subsidiaries (other than with respect to the use of
confidential information or trade secrets) after the termination of such
individual's employment with the Company (a "Non-Competition Agreement"); and
(ii) a description of those classes of employees that are required to execute a
Non-Competition Agreement. No
-26-
employee is entitled to any benefits that include a gross-up with respect to
excise taxes pursuant to Section 4999 of the Code.
(h) No Company Employee Plan is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code.
(i) No Company Employee Plan covers any persons who are neither U.S.
citizens nor U.S. residents.
SECTION 2.14 Employment and Labor Matters. Except as set forth in
Section 2.14 of the Company Disclosure Schedule or the Company SEC Documents:
(a) Each of the Company and its subsidiaries is in compliance, and
has not failed to be in compliance as a result of which it would reasonably be
expected now or in the future to have liability, with all applicable U.S. and
non-U.S. laws, agreements and contracts relating to employment practices, terms
and conditions of employment, and the employment of former, current, and
prospective employees, independent contractors and "leased employees" (within
the meaning of Section 414(n) of the Code) of the Company or any of its
subsidiaries including all such U.S. and non-U.S. laws, agreements and contracts
relating to wages, hours, collective bargaining, employment discrimination,
immigration, disability, civil rights, human rights, fair labor standards,
occupational safety and health, workers' compensation, pay equity, wrongful
discharge and violation of the potential rights of such former, current, and
prospective employees, independent contractors and leased employees, and has
timely prepared and filed all appropriate forms (including Immigration and
Naturalization Service Form I-9) required by any relevant Governmental Entity,
except where the failure to be or have been in compliance would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Neither the Company nor any of its subsidiaries is a party to
any U.S. or non-U.S. collective bargaining agreement or other labor union
contract applicable to persons employed by the Company or its subsidiaries, nor,
to the knowledge of the Company, are there any activities or proceedings of any
labor union to organize any employees of the Company or any of its subsidiaries.
(c) Neither the Company nor any of its subsidiaries is in breach of
any collective bargaining agreement or labor union contract, nor are there any
strikes, slowdowns, work stoppages, lockouts, or, to the knowledge of the
Company, threats thereof, by or with respect to any employees of the Company or
any of its subsidiaries which breach, strike, slowdown, work stoppage, lockout
or threat would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 2.15 Registration Statement; Proxy Statement/Prospectus. (a)
Subject to the accuracy of the representations of Acquiror in Section 3.10:
(i) the information supplied by the Company in writing
specifically for inclusion in the Registration Statement shall not at the time
the Registration Statement (including any amendments or supplements thereto) is
filed with the SEC or is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact
-27-
required to be stated therein or necessary in order to make the statements
therein not misleading; and
(ii) the information supplied by the Company for inclusion in
the proxy statement/prospectus to be sent to the shareholders of the Company in
connection with the Shareholders Meeting (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") will not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first filed with the SEC or
mailed to shareholders or at the time of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
included therein not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Shareholders Meeting which has become false or misleading.
(b) If at any time prior to the vote of shareholders at the Company
Shareholders Meeting any event or circumstance relating to the Company, any of
its affiliates, officers or directors is discovered by the Company which is
required to be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, the Company will promptly inform
Acquiror.
(c) The Proxy Statement/Prospectus shall comply in all material
respects with the requirements of all applicable laws, including the Securities
Act and the Exchange Act.
(d) Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Guarantor
or Acquiror or any of their respective affiliates which is included or
incorporated by reference in, or furnished in connection with the preparation
of, the Registration Statement or the Proxy Statement/Prospectus.
SECTION 2.16 Restrictions on Business Activities. Except for this
Agreement or as set forth in Section 2.16 of the Company Disclosure Schedule,
there is no agreement, judgment, injunction, order or decree binding upon the
Company or any of its subsidiaries which has or would reasonably be expected to
have the effect of prohibiting or impairing the conduct of business by the
Company or any of its subsidiaries as currently conducted by the Company or such
subsidiary (or as it would be conducted absent such prohibition or impairment),
or restricting any transactions (including payment of dividends and
distributions) between the Company and its subsidiaries, except for any
prohibition or impairment as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
SECTION 2.17 Title to Property. (a) The Company has made available
all existing title reports in its possession, if any, with respect to all of its
owned real property to Acquiror. Except as set forth in Sections 2.17 and
2.20(b) of the Company Disclosure Schedule or the Company SEC Documents, each of
the Company and its subsidiaries has good title to all of its owned real
properties and other owned assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially interfere with the
present use of the property affected thereby or which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
and except for liens which secure indebtedness reflected in the
-28-
2001 Company Balance Sheet; and, to the knowledge of the Company, all leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and to the knowledge of the
Company, there is not, under any of such leases, any default or event of default
(or event which with notice or lapse of time, or both, would constitute a
material default or event of default), except where the lack of such good
standing, validity and effectiveness or the existence of such default or event
of default would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
(b) Except as set forth in Sections 2.17(b) of the Company
Disclosure Schedule, all tangible assets owned or used by the Company and its
subsidiaries in the operation of their respective businesses are in good
operating condition and in a good state of maintenance and repair (excluding
ordinary wear and tear) and are adequate for such businesses as currently
conducted, except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.18 Taxes. Except as set forth in Section 2.18 of the
Company Disclosure Schedule:
(a) The Company and each of its subsidiaries has timely and
accurately filed, or caused to be timely and accurately filed, all Tax Returns
required to be filed by it, and has timely paid, collected or withheld, or
caused to be timely paid, collected or withheld, all amounts of Taxes required
to be paid, collected or withheld, other than such Taxes for which adequate
reserves in the 2001 Company Balance Sheet have been established or which are
being contested in good faith. There are no claims or assessments pending
against the Company or any of its subsidiaries for any alleged deficiency in any
Tax. There are no pending or, to the knowledge of the Company, threatened audits
or investigations for or relating to any liability in respect of any Taxes, and
the Company has not been notified in writing of any proposed Tax claims or
assessments against the Company or any of its subsidiaries. To the knowledge of
the Company, no claim has ever been made by any Governmental Entity in a
jurisdiction where any of the Company and its subsidiaries do not file Tax
Returns that it is or may be subject to taxation by that jurisdiction which has
not been resolved. Neither the Company nor any of its subsidiaries has executed
any waivers or extensions (in each case, that are still in effect) of any
applicable statute of limitations to assess any amount of Taxes. There are no
outstanding requests by the Company or any of its subsidiaries for any extension
of time within which to file any Tax Return or within which to pay any amounts
of Taxes shown to be due on any Tax Return. There are no outstanding rulings of,
or requests for rulings with, any Governmental Entity addressed to the Company
or any of its subsidiaries that are, or if issued, would be, binding on the
Company or any of its subsidiaries with respect to any Tax. There are no
material elections regarding Taxes affecting the Company or any of its
subsidiaries. To the best knowledge of the Company, there are no liens for
amounts of Taxes on the assets of the Company or any of its subsidiaries except
for statutory liens for current Taxes not yet due and payable. There are no
outstanding powers of attorney enabling any party to represent the Company or
any of its subsidiaries with respect to Taxes. Other than with respect to
liability as between the Company and its subsidiaries, neither the Company nor
any of its subsidiaries is liable for Taxes of any other Person, or is currently
under any contractual obligation to indemnify any person with respect to any
amounts of Taxes (except for customary agreements to indemnify lenders or
security holders in respect of Taxes
-29-
and except for provisions in agreements for the divestiture of subsidiaries,
assets or business lines of the Company or its subsidiaries that require the
Company or its subsidiaries (as applicable) to indemnify a purchaser or
purchaser group for amounts of Taxes of the Company or its subsidiaries (as
applicable) in the nature of sales or similar Taxes incurred as a consequence of
any such divestiture transactions), or is a party to any tax sharing agreement
or any other agreement providing for payments by the Company or any of its
subsidiaries with respect to any amounts of Taxes. The Company is not, and has
not been, a United States real property holding company within the meaning of
Section 897(c) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Neither the Company nor any of its subsidiaries
has participated in an international boycott as defined in Section 999 of the
Code.
(b) For purposes of this Agreement, the term "Tax" shall mean any
United States federal, national, state, provincial, local or other
jurisdictional income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, estimated, alternative, or add-on minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge imposed by any Governmental Entity,
together with any interest or penalty imposed thereon. The term "Tax Return"
shall mean a report, return or other information (including any attached
schedules or any amendments to such report, return or other information)
required to be supplied to or filed with a Governmental Entity with respect to
any Tax, including an information return, claim for refund, amended return or
declaration or estimated Tax.
SECTION 2.19 Environmental Matters. (a) Except as set forth in
Section 2.19(a) of the Company Disclosure Schedule or in the Company SEC
Documents or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, the operations and properties of
the Company and its subsidiaries are and at all times have been in compliance
with the Environmental Laws.
(b) Except as set forth in Section 2.19(b) of the Company Disclosure
Schedule or in the Company SEC Documents or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, there are
no Environmental Claims, including claims based on "arranger liability," pending
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries.
(c) Except as set forth in Section 2.19(c) of the Company Disclosure
Schedule or in the Company SEC Documents, there are no past or present actions,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, that
are reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries, except for such Environmental Claims that
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(d) Except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect, (i) there are no off-site
locations where the Company or any of its subsidiaries has stored, disposed or
arranged for the disposal of Materials of Environmental Concern which have been
listed on the National Priority List, CERCLIS, or
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state Superfund site list, and the Company and its subsidiaries have not been
notified that any of them is a potentially responsible party at any such
location; (ii) there are no underground storage tanks located on property owned
or leased by the Company or any of its subsidiaries; (iii) there is no friable
asbestos containing material contained in or forming part of any building,
building component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries; and (iv) there are no polychlorinated
biphenyls ("PCBs") or PCB-containing items contained in or forming part of any
building, building component, structure or office space owned, leased or
operated by the Company or any of its subsidiaries.
(e) Except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect or as set forth in Section
2.19(e) of the Company Disclosure Schedule or in the Company SEC Documents, all
Company Permits that the Company and each of its subsidiaries is required to
have obtained under Environmental Laws have been obtained and are maintained by
the Company, were duly issued by the appropriate Governmental Entity, are in
full force and effect and are not subject to appeal. The Company has not
received notice, or otherwise has no knowledge, that any Company Permit has been
or will be, rescinded, terminated, limited, or amended, which rescission,
termination, limitation or amendment would reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect. No additional
capital expenditures will be required by the Company for purposes of compliance
with the terms or conditions of any Company Permits or Company Permit renewals,
except as would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
require the assignment or transfer of any Company Permit, except for (i) Company
Permits, the non-assignability or non-transferability of which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect and (ii) those Company Permits that may be assigned or
transferred on or prior to the Effective Time without causing any such Company
Permit to be rescinded, terminated or limited in any material respect.
(f) For purposes of this Section 2.19:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or notice (in each case in writing or, if not
in writing, to the knowledge of the Company) by any person or entity
alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from the presence,
or release or threat of release into the environment, of any
Material of Environmental Concern at any location, whether or not
owned or operated by the Company or any of its subsidiaries.
(ii) "Environmental Laws" means, as they exist on the date
hereof, all applicable United States federal, state, local and
non-U.S. laws, regulations, codes and ordinances, relating to
pollution or protection of human health (as relating to the
environment or the workplace) and the environment (including ambient
air, surface water, ground water, land surface or sub-surface
strata), including laws and regulations relating to emissions,
discharges, releases
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or threatened releases of Materials of Environmental Concern, or
otherwise relating to the use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern,
including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et
seq., Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601
et seq., Occupational Safety and Health Act ("OSHA"), 29 U.S.C.
Section 651 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et
seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., each as
may have been amended or supplemented, and any applicable
environmental transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances
and hazardous wastes, medical waste, toxic substances, petroleum and
petroleum products and by-products, asbestos-containing materials,
PCBs, and any other chemicals, pollutants, substances or wastes, in
each case regulated under any Environmental Law.
(iv) "subsidiary" includes, in addition to current
subsidiaries of the Company, any person or entity whose liability
for any Environmental Claim the Company or any of its current
subsidiaries has retained or assumed or for which liability is
imposed on the Company or any current subsidiary under any
Environmental Law, but only to the extent and in respect of such
retained, assumed or imposed liability.
SECTION 2.20 Intellectual Property. (a) As used herein, the term
"Intellectual Property Assets" means all worldwide intellectual property rights,
including patents, trademarks, service marks, copyrights, and registrations and
applications therefor, licenses, trade names, Internet domain names, know-how,
trade secrets, computer software programs and development tools and proprietary
information, technologies and processes, and all documentation and media
describing or relating to the above, in any format, whether hard copy or
machine-readable only. As used herein, "Company Intellectual Property Assets"
means the Intellectual Property Assets used or owned by the Company or any of
its subsidiaries.
(b) Except as set forth in Section 2.20(b) of the Company Disclosure
Schedule, the Company and/or each of its subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all the Company
Intellectual Property Assets that are used in and are material to the business
of the Company and its subsidiaries as currently conducted, without infringing
or violating the rights of others, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(c) Except as set forth in Section 2.20(c) of the Company Disclosure
Schedule or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, no claims (i) are currently
pending or, to the Company's knowledge, are threatened against the Company by
any person with respect to the Company Intellectual Property Assets, or (ii)
are currently pending or, to the Company's knowledge, threatened against the
Company by any person with respect to the Intellectual Property Assets of a
third party (
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"Third Party Intellectual Property Assets") to the extent arising out of any
use, reproduction or distribution of, or of products or methods covered by, such
Third Party Intellectual Property Assets by or through the Company or any of its
subsidiaries.
(d) Except as set forth in Section 2.20(d) of the Company Disclosure
Schedule, there are no valid grounds for any bona fide claim to the effect that
the manufacture, offer for sale, sale, licensing or use of any product, system
or method either (i) now used, offered for sale, sold or licensed or, (ii) to
the Company's knowledge, as of the date hereof, scheduled for commercialization
prior to the first anniversary of the date hereof, in each case by or for the
Company or any of its subsidiaries, infringes on any Third Party Intellectual
Property Assets, except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(e) Section 2.20(e) of the Company Disclosure Schedule sets forth a
list of (i) all patents and patent applications owned by the Company and/or each
of its subsidiaries worldwide; (ii) all material trademark and service xxxx
registrations and all trademark and service xxxx applications; (iii) all
material common law trademarks, material trade dress and material slogans; (iv)
all material trade names owned or used by the Company and/or each of its
subsidiaries worldwide; (v) all material copyright registrations and copyright
applications owned or filed by the Company and/or each of its subsidiaries
worldwide; (vi) all Internet domain name registrations owned by the Company
and/or its subsidiaries worldwide; and (vii) all licenses owned by the Company
and/or each of its subsidiaries in which the Company and/or each of its
subsidiaries is (A) a licensor with respect to any of the patents, trademarks,
service marks, trade names, Internet domain names, or copyrights listed in
Section 2.20(e) of the Company Disclosure Schedule or (B) a licensee of any
other person's patents, trade names, trademarks, service marks or copyrights
material to the Company, except for any licenses of software programs that are
commercially available "off the shelf". Section 2.20(e) of the Company
Disclosure Schedule includes but is not necessarily limited to each Company
Intellectual Property Asset where the failure to own or license such Company
Intellectual Property Asset would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Except as set forth in Section
2.20(e) of the Company Disclosure Schedule, the Company and/or each of its
subsidiaries has made all necessary filings and recordations to protect and
maintain its interest in the patents, patent applications, trademark and service
xxxx registrations, trademark and service xxxx applications, Internet domain
names, copyright registrations and copyright applications and licenses set forth
in Section 2.20(e) of the Company Disclosure Schedule, except where the failure
to so protect or maintain would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(f) Except as set forth in Section 2.20(f) of the Company Disclosure
Schedule or in the Company SEC Documents, in all material respects, to the
Company's knowledge: (i) each patent, trademark or service xxxx registration and
copyright registration listed in Section 2.20(e) of the Company Disclosure
Schedule is valid and subsisting and (ii) each license of the Company
Intellectual Property Assets listed in Section 2.20(e) of the Company Disclosure
Schedule is valid, subsisting and enforceable.
(g) Except as set forth in Section 2.20(g) of the Company Disclosure
Schedule, to the Company's knowledge, there is no unauthorized use, infringement
or
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misappropriation of any of the material Company's Intellectual Property Assets
by any third party, including any employee, former employee, independent
contractor or consultant of the Company or any of its subsidiaries.
SECTION 2.21 Interested Party Transactions. Except as set forth in
Section 2.21 of the Company Disclosure Schedule or the Company SEC Documents or
for events as to which the amounts involved do not, in the aggregate, exceed
$250,000, since the Company's proxy statement dated April 26, 2001, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 2.22 Insurance. Except as set forth in Section 2.22 of the
Company Disclosure Schedule or the Company SEC Documents, all material fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by the Company are with
reputable insurance carriers, and the Company reasonably believes such
insurances provide adequate coverage for all normal risks incident to the
business of the Company and its subsidiaries and their respective properties and
assets and are in character and amount appropriate for the businesses currently
conducted by the Company, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.23 Product Liability and Recalls. (a) Except as set forth
in Section 2.23(a) of the Company Disclosure Schedule or the Company SEC
Documents, there is no claim pending, or to the Company's knowledge, threatened
against the Company or any of its subsidiaries for injury to person or property
of employees or any third parties suffered as a result of the sale of any
product or performance of any service by the Company or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its products
or services, which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Except as set forth in Section 2.23(b) of the Company Disclosure
Schedule or the Company SEC Documents, there is no pending or, to the knowledge
of the Company, threatened recall or investigation of any product sold by the
Company, which recall or investigation would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.24 Absence of Questionable Payments. Neither the Company
nor any of its subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or other person acting on behalf of the Company or any
of its subsidiaries, has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in material violation
of Section 30A of the Exchange Act. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries, has accepted or received any unlawful contributions, payments,
gifts, or expenditures.
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SECTION 2.25 Brokers. Except for Deutsche Banc Alex. Xxxxx Inc. (the
"Company Financial Advisor"), the Company has not retained any investment
banker, financial advisor, broker or finder in connection with the transactions
contemplated hereby, or incurred any liability, nor has any officer or director
of the Company incurred any liability for which the Company is liable, for any
investment banking, business consultancy, financial advisory, brokerage or
finders' fees or commissions in connection with the transactions contemplated
hereby. The Company has heretofore made available to Acquiror a complete and
correct copy of all agreements between the Company and the Company Financial
Advisor pursuant to which such firm would be entitled to any payment relating to
the transactions contemplated hereby.
SECTION 2.26 Opinion of Company Financial Advisor. The Board of
Directors of the Company has been advised by the Company Financial Advisor to
the effect that in its opinion, as of the date thereof, the consideration to be
received by the Company's shareholders in the Merger is fair from a financial
point of view to such holders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company as follows:
SECTION 3.01 Organization and Qualification; Subsidiaries. (a) Each
of Guarantor and Acquiror is duly incorporated, validly existing and, to the
extent the concept of good standing exists in the applicable jurisdiction, in
good standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power and authority necessary to own, lease and operate the
properties it purports to own, lease and operate and to carry on its business as
now conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have a Material Adverse Effect. Each of Guarantor and Acquiror is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities make such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Acquiror
has heretofore made available to the Company true and complete copies of
Guarantor's Memorandum of Association and Bye-Laws, as amended to date (the
"Guarantor Charter Documents").
(b) Each subsidiary of Guarantor is an entity duly organized,
validly existing and in good standing (to the extent the concept of good
standing exists in the applicable jurisdiction) under the laws of its
jurisdiction of organization, has the requisite corporate or other power and
authority necessary to own, lease and operate the properties it purports to own,
lease and operate and to carry on its business as now conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Each subsidiary of Guarantor is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
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jurisdictions where failure to be so qualified or in good standing would not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.02 Capitalization. (a) The authorized capital stock of
Guarantor consists of 2,500,000,000 common shares, par value $0.20 per share
("Guarantor Common Shares") and 125,000,000 Preference Shares, par value
$1.00 per share ("Guarantor Preference Shares"). As of December 11, 2001 (i)
1,979,729,748 Guarantor Common Shares were issued and outstanding, all of which
are duly authorized, validly issued, fully paid and non-assessable, and none of
which have been issued in violation of preemptive or similar rights, (ii) one
Guarantor Preference Share has been designated as a Super Voting Preference
Share and is validly issued, fully paid and non-assessable and not issued in
violation of preemptive or similar rights, and (iii) no more than 25,000,000
Guarantor Common Shares and no Guarantor Preference Shares were held by
subsidiaries of Guarantor. As of December 11, 2001, no more than 240,000,000
Guarantor Common Shares were reserved for issuance upon exercise of stock
options issued under Guarantor's stock option plans.
(b) Except (i) as set forth in Section 3.02(a), (ii) for changes
since December 11, 2001 resulting from the exercise of stock options, (iii) for
securities of Guarantor or its subsidiaries convertible into or exchangeable for
shares of capital stock or voting securities of Guarantor set forth in the
Guarantor SEC Documents and the conversion or exchange thereof, (iv) for other
rights to acquire immaterial (individually and in the aggregate) amounts of the
Guarantor Common Shares and changes resulting from the exercise thereof, (v) for
changes resulting from the grant of stock based compensation to directors or
employees or (vi) for changes resulting from the issuance of stock or other
securities in connection with a merger or other acquisition or business
combination, an underwritten public offering or an offering pursuant to Rule
144A under the Securities Act approved by Guarantor's Board of Directors and not
undertaken in violation of Section 4.03(b), and securities issuable on
conversion thereof or in exchange therefor, there are no outstanding (x) shares
of capital stock or voting securities of Guarantor, (y) securities of Guarantor
convertible into or exchangeable for shares of capital stock or voting
securities of Guarantor or (z) options or other rights to acquire from Guarantor
or other obligations of Guarantor to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of Guarantor. Except as set forth in the Guarantor SEC Documents,
there are no outstanding obligations of Guarantor or any of its subsidiaries to
repurchase, redeem or otherwise acquire any of its equity securities other than
in accordance with their terms.
(c) The Guarantor Common Shares to be delivered as Merger
Consideration have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and nonassessable, and the issuance thereof is not subject to
any preemptive or other similar right.
SECTION 3.03 Authority Relative to this Agreement. (a) The
execution, delivery and performance by Acquiror of this Agreement, the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Acquiror and Guarantor of the transactions contemplated hereby
and thereby, as applicable, are within the respective corporate powers of
Guarantor and Acquiror and have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered
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by Acquiror and, assuming the due authorization, execution and delivery by the
Company, constitutes a valid and binding agreement of Acquiror, enforceable
against Acquiror in accordance with its terms. The Guarantee has been duly and
validly executed and delivered by Guarantor and constitutes a valid and binding
agreement of Guarantor enforceable against it in accordance with its terms.
(b) At a meeting duly called and held, or by written consent in lieu
of meeting, the Board of Directors of Acquiror has (i) determined that this
Agreement, the Merger and the other transactions contemplated hereby are fair to
and in the best interests of Acquiror, and (ii) approved this Agreement and the
transactions contemplated hereby. At a meeting duly called and held, the
Executive Committee of Guarantor's Board of Directors has approved the Guarantee
and the transactions contemplated thereby and the issuance of the Guarantor
Common Shares to be delivered to the Company shareholders in connection with the
Merger.
SECTION 3.04 No Conflict. The execution and delivery by Acquiror of
this Agreement and the execution and delivery by Guarantor of the Guarantee, the
performance of this Agreement and the Guarantee by Acquiror and Guarantor and
the consummation by Acquiror and Guarantor of the Merger and other transactions
contemplated hereby and thereby, as applicable, will not (i) conflict with or
result in any breach of any provision of the Guarantor Charter Documents, (ii)
conflict with or result in any breach of any provision of the articles of
incorporation or by-laws of Acquiror or require any consent, approval or notice
under or conflict with or result in a violation or breach of, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or impair Guarantor's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others any
rights of, or cause any, termination, amendment, redemption, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on
(including a right to purchase) any of the properties or assets of Guarantor or
any of its subsidiaries pursuant to any Contracts and Other Agreements to which
Guarantor or any of its subsidiaries is a party or by which Guarantor or any of
its subsidiaries or its or any of their respective properties is bound or
affected or (iii) assuming compliance with the matters referred to in Section
3.05, violate any Legal Requirements applicable to Guarantor or any of its
subsidiaries or any material portion of their properties or assets, except, in
the case of clause (ii) or (iii) for any such conflicts, violations, breaches,
defaults or other occurrences that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.05 Governmental Approvals. No consent, approval or
authorization of or declaration or filing with or notification to any
Governmental Entity on the part of Guarantor or any of its subsidiaries that has
not been obtained or made, is required in connection with the execution or
delivery by Acquiror of this Agreement, the execution or delivery by Guarantor
of the Guarantee or the consummation by Guarantor and Acquiror of the Merger and
the other transactions contemplated hereby and thereby, as applicable, other
than (i) the filing of a Certificate of Merger with respect to the Merger with
the Secretary of State of the State of California and the Articles of Merger
with the Secretary of State of the State of Nevada, (ii) compliance with any
applicable requirements of the HSR Act and applicable Non-U.S. Monopoly Laws,
(iii) compliance with any applicable requirements of the Securities Act, the
Exchange Act, any applicable state securities laws, NASDAQ, the NYSE, the London
Stock Exchange and the Bermuda Stock Exchange, (iv) compliance with any
environmental, health and
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safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated by this
Agreement, or (v) where the failure to obtain such consents, approvals or
authorizations, or to make such filings or notifications would not be reasonably
expected, individually or in the aggregate, to have a Material Adverse Effect or
materially impair the ability of Acquiror to consummate the Merger and the other
transactions contemplated by this Agreement or the ability of Guarantor to
fulfill its obligations under the Guarantee.
SECTION 3.06 Compliance. (a) Except as set forth in the Guarantor
SEC Documents, neither Guarantor nor any of its subsidiaries is in conflict
with, or in breach, default or violation of, (i) its Memorandum of Association
or Bye-laws (or analogous organizational documents), (ii) any law, rule,
regulation, order, judgment or decree applicable to Guarantor or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, (iii) any note, bond, debenture, indenture, credit agreement or
facility, commercial paper facility, sale-leaseback arrangement or financing
lease pursuant to which Guarantor or any of its subsidiaries has or may incur
indebtedness for borrowed money or any security, pledge, mortgage or trust
agreement or arrangement in respect thereof or (iv) any other contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Guarantor or any of its subsidiaries is a party or by which Guarantor
or any of its subsidiaries or its or any of their respective properties is bound
or affected, except for any such conflicts, defaults or violations which would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
(b) No investigation by any Governmental Entity with respect to
Guarantor or its subsidiaries is pending or, to the knowledge of Guarantor,
threatened, except as disclosed in the Guarantor SEC Documents and except for
such investigations which would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) Guarantor has
filed with the SEC all reports, schedules, forms, statements and other documents
(including all exhibits thereto) required to be filed with the SEC since
September 30, 1998 (the "Post-1998 Guarantor SEC Documents"). Except as set
forth in the Guarantor SEC Documents and taking into account any amendments and
supplements filed prior to the date of this Agreement, such Post-1998 Guarantor
SEC Documents, (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of and at the time of the circumstances under
which they were made, not misleading. Except for Tyco Capital Corporation and
Tycom Ltd., none of Guarantor's subsidiaries is required to file with the SEC
periodic reports pursuant to the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Post-1998 Guarantor SEC
Documents were prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as
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may be indicated in the notes thereto or in the Post-1998 Guarantor SEC
Documents), and each fairly presents in all material respects, the consolidated
financial position of Guarantor and its consolidated subsidiaries at the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated, except that for purposes of the foregoing
representation, the unaudited interim financial statements (i) should be read in
conjunction with the Guarantor's consolidated financial statements contained in
the applicable immediately preceding year-end report on Form 10-K, and (ii) were
or are subject to normal and recurring year end adjustments which were not or
are not expected to be material in amount.
SECTION 3.08 Absence of Certain Changes or Events. Except as set
forth in the Guarantor SEC Documents, since September 30, 2000, the business of
Guarantor and its subsidiaries has been conducted in the ordinary course and
there has not occurred: (i) any changes, effects or circumstances, including any
damage to, destruction or loss of any asset of Guarantor (whether or not covered
by insurance) constituting, or which would reasonably be expected to constitute,
individually or in the aggregate, a Material Adverse Effect (without regard to
such insurance); (ii) any amendments or changes in the Guarantor Charter
Documents, except as necessary to designate Guarantor's Super Voting Preference
Share; or (iii) any material change by Guarantor in its accounting methods,
principles or practices (other than as required by GAAP).
SECTION 3.09 Absence of Litigation. Except as set forth in the
Guarantor SEC Documents or arising out of the transactions contemplated by this
Agreement, there are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Guarantor, threatened against Guarantor or any
of its subsidiaries, or any properties or rights of Guarantor or any of its
subsidiaries, before any court, arbitrator or Governmental Entity, that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 3.10 Registration Statement; Proxy Statement/Prospectus. (a)
Subject to the accuracy of the representations of the Company in Section 2.15:
(i) the registration statement on Form S-4 (or on such other
form as shall be appropriate) (as it may be amended, the "Registration
Statement"), pursuant to which the Guarantor Common Shares to be delivered to
the shareholders of the Company by Acquiror in connection with the Merger will
be registered with the SEC, shall not, at the respective times the Registration
Statement (including any amendments or supplements thereto) is filed with the
SEC or is declared effective by the SEC, 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 included therein not misleading;
and
(ii) the information supplied by Guarantor or Acquiror in
writing specifically for inclusion in the Proxy Statement/Prospectus will not,
on the date the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is filed with the SEC or first mailed to shareholders or, at
the time of the Company Shareholder Meeting, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein not false or misleading, or necessary to correct any
statement in any earlier communication with respect to
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the solicitation of proxies for the Company Shareholders Meeting which has
become false or misleading.
(b) If at any time prior to the vote of shareholders at the Company
Shareholders Meeting any event or circumstance relating to Acquiror or any of
its affiliates, officers or directors is discovered by Acquiror or any of
its affiliates which is required to be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus,
Acquiror will promptly inform the Company.
(c) The Registration Statement and the Proxy Statement/Prospectus
shall comply as to form in all material respects with the requirements of all
applicable laws, including the Securities Act and the Exchange Act.
(d) Notwithstanding the foregoing, Acquiror makes no representation
or warranty with respect to any information supplied by the Company which is
included or incorporated by reference in, or furnished in connection with the
preparation of, the Registration Statement or the Proxy Statement/Prospectus.
SECTION 3.11 Brokers. No investment banker, broker, finder or other
intermediary has been retained by or is authorized to act on behalf of Acquiror
or Guarantor who might be entitled to any fee or commission from Acquiror,
Guarantor or any of their respective affiliates in connection with the
transactions contemplated by this Agreement.
SECTION 3.12 Ownership of Acquiror; No Prior Activities. (a)
Acquiror was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. Guarantor owns directly all of the outstanding
capital stock of Acquiror.
(b) Except for obligations or liabilities incurred by Acquiror in
connection with its incorporation or organization, this Agreement and any other
agreements, arrangements or transactions contemplated by this Agreement,
Acquiror has not incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person.
SECTION 3.13 No Undisclosed Liabilities. Except as set forth in the
Guarantor SEC Documents, neither Guarantor nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in Guarantor's unaudited balance sheet
(including any related notes thereto) as of June 30, 2001 included in
Guarantor's Quarterly Report on Form 10-Q for the fiscal period ended June 30,
2001 (the "2001 Guarantor Balance Sheet"), (b) incurred in the ordinary course
of business and not required under GAAP to be reflected on the 2001 Guarantor
Balance Sheet, (c) incurred since June 30, 2001 in the ordinary course of
business, (d) incurred in connection with this Agreement or the Merger or the
other transactions contemplated hereby, or (e) which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 3.14 Financing. Acquiror and Guarantor have, and prior to
the Effective Time will have, available to them all cash and Guarantor Common
Shares necessary to purchase and/or exchange all of the Shares in accordance
with the terms of the Merger.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Acquiror shall otherwise agree in writing, and
except as set forth in Section 4.01 of the Company Disclosure Schedule, the
Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do (other than in
internal management deliberations and deliberations with its advisors or
representatives of Acquiror or Guarantor), any of the following without the
prior written consent of Acquiror, which, in the case of clauses (c), (d)(iv),
(e)(iv), (f), (h), (i) or (j) will not be unreasonably withheld or delayed:
(a) amend or otherwise change the Company Charter Documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including any phantom interest) in the Company, any of its
subsidiaries or affiliates (except for the issuance of Shares issuable pursuant
to Company Stock Options outstanding on the date hereof or pursuant to the
existing contractual obligations under Company's Long-Term Stock Bonus Plan and
the Company's 2000 Long-Term Stock Bonus Plan);
(c) sell, pledge, dispose of or encumber any assets of the Company
or any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $2 million in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly-owned subsidiary of
the Company may declare and pay a dividend to its parent that is not a
cross-border dividend and except that the Company may declare and pay prior to
the Effective Time quarterly cash dividends of up to $0.16 per Share, consistent
with past practice, (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of
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its capital stock, (iii) except (A) as required by the terms of any security or
agreement as in effect on the date hereof and set forth in Sections 2.13(c) or
4.01 of the Company Disclosure Schedule, (B) to the extent necessary to effect
withholding to meet minimum tax withholding obligations in connection with the
exercise of any Company Stock Option, or (C) as contemplated by this Agreement,
amend the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any subsidiary to amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including Shares, or any option, warrant or right, directly or indirectly, to
acquire any such securities, or propose to do (other than in internal management
deliberations and deliberations with its advisors or representatives of Acquiror
or Guarantor) any of the foregoing, (iv) settle, pay or discharge any claim,
suit or other action brought or threatened against the Company with respect to
or arising out of a shareholder equity interest in the Company, or (v) make any
cross-border capital contributions to a subsidiary.
(e) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof other than those listed on Section 4.01 of the Company
Disclosure Schedule; (ii) incur any indebtedness for borrowed money, except for
(A) after providing Acquiror with prior notice of any such borrowing or
reborrowing, borrowings and reborrowings under the Company's or any of its
subsidiaries' existing committed or uncommitted credit facilities listed in the
Company SEC Documents or on Section 4.01 of the Company Disclosure Schedule in
an amount not to exceed the maximum amount available under such credit
facilities on the date hereof and (B) other borrowings not in excess of $1
million in the aggregate; (iii) issue any debt securities or assume, guarantee
(other than guarantees of the Company's subsidiaries entered into in the
ordinary course of business and except as required by any agreement in effect on
the date hereof and identified in Section 4.01 of the Company Disclosure
Schedule) or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances, except in the
ordinary course of business consistent with past practice (but not loans or
advances to employees of the Company to fund the exercise price of Company Stock
Options or otherwise to purchase Shares, except pursuant to rights of employees
to receive such loans or advances as such rights exist on the date hereof); (iv)
authorize any capital expenditures or purchases of fixed assets which are, in
the aggregate, in excess of $35 million over the next 12-month period; or (v)
enter into or materially amend any contract, agreement, commitment or
arrangement to effect any of the matters prohibited by this Section 4.01(e);
(f) except as set forth in Section 4.01 of the Company Disclosure
Schedule, as required by law or as provided in an existing obligation of the
Company, (i) increase the compensation or severance payable or to become payable
to its directors, officers, employees or consultants, except for increases in
salary, wages or bonuses of employees of the Company or its subsidiaries,
including in connection with promotions, in accordance with past practices; (ii)
grant any severance or termination pay to (except to make payments required to
be made under obligations existing on the date hereof in accordance with the
terms of such obligations or in accordance with past practice), or enter into or
amend any employment or severance agreement with, any current or prospective
employee of the Company or any of its subsidiaries, except for new hire
employees and promotions in the ordinary course of business whose annual salary
does not exceed $100,000 and whose severance benefits do not exceed one times
annual salary; or (iii) establish, adopt, enter into or amend any collective
bargaining agreement, Company Employee
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Plan, including any plan that provides for the payment of bonuses or incentive
compensation, trust, fund, policy or arrangement for the benefit of any current
or former directors, officers, employees or consultants or any of their
beneficiaries, except, in each case, as may be required by law or existing
agreement or as would not result in a material increase in the cost of
maintaining such collective bargaining agreement, Company Employee Plan, trust,
fund, policy or arrangement, except that notwithstanding anything herein to the
contrary the Company may adopt a severance plan in a form attached to Section
4.01(f) of the Company Disclosure Schedule;
(g) take any action to change accounting policies or procedures
(including procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable), except as required by a change
in GAAP occurring after the date hereof;
(h) make any Tax election or settle or compromise any United States
federal, state, local or non-U.S. Tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $2 million in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company SEC Documents or incurred in the ordinary
course of business and consistent with past practice or incurred in connection
with this Agreement and the transactions contemplated hereby;
(j) enter into, modify or renew any contract, agreement or
arrangement, whether or not in writing, for the licensing of its technology; or
(k) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (j) above, or any action which
would reasonably be expected to make any of the representations or warranties of
the Company contained in this Agreement untrue or incorrect or prevent the
Company from performing or cause the Company not to perform its covenants
hereunder.
Additionally, the Company shall use its commercially reasonable
efforts to obtain any and all written consents of customers which, pursuant to
the terms of any contracts, agreements or arrangements with such customers, are
required to prevent the termination of such contracts, agreements or
arrangements in connection with, or as a result of, the transactions
contemplated by this Agreement, except if and insofar as the failure to obtain
such consents would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 4.02 No Solicitation. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its subsidiaries, solicit or knowingly encourage the
initiation of (including by way of furnishing information) any inquiries or
proposals regarding any merger, sale of assets, sale of shares of capital stock
(including, by way of a tender offer) or similar transactions involving the
Company or any subsidiaries of the Company that if consummated would constitute
an
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Alternative Transaction (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"). Nothing contained in this
Agreement shall prevent the Board of Directors of the Company from (i)
furnishing information to a third party which has made a bona fide Acquisition
Proposal that the Board of Directors of the Company concludes in good faith
after consulting with a nationally recognized investment banking firm would, if
consummated, reasonably be expected to constitute a Superior Proposal not
solicited in violation of this Agreement, provided that such third party has
executed an agreement with confidentiality provisions substantially similar to
those then in effect between the Company and a subsidiary of Guarantor or (ii)
subject to compliance with the other terms of this Section 4.02, including
Sections 4.02(c) and (d), considering and negotiating a bona fide Acquisition
Proposal that the Board of Directors of the Company concludes in good faith
after consulting with a nationally recognized investment banking firm would, if
consummated, constitute a Superior Proposal not solicited in violation of this
Agreement; provided, however, that, as to each of clauses (i) and (ii), the
Board of Directors of the Company reasonably determines in good faith (after due
consultation with independent counsel, which may be Xxxxxxxx & Xxxxxxxx LLP
("M&F")) that it is or is reasonably likely to be required to do so in order to
discharge properly its fiduciary duties.
For purposes of this Agreement, "Alternative Transaction" means any
of (i) a transaction pursuant to which any person (or group of persons) other
than Acquiror or its affiliates (a "Third Party") acquires or would acquire more
than 25% of the outstanding shares of any class of equity securities of the
Company, whether from the Company or pursuant to a tender offer or exchange
offer or otherwise, (ii) a merger or other business combination involving the
Company pursuant to which any Third Party acquires or would acquire more than
25% of the outstanding equity securities of the Company or the entity surviving
such merger or business combination, (iii) any transaction pursuant to which any
Third Party acquires or would acquire control of assets (including for this
purpose the outstanding equity securities of subsidiaries of the Company and
securities of the entity surviving any merger or business combination including
any of the Company's subsidiaries) of the Company, or any of its subsidiaries
having a fair market value (as determined by the Board of Directors of the
Company in good faith) equal to more than 25% of the fair market value of all
the assets of the Company and its subsidiaries, taken as a whole, immediately
prior to such transaction, or (iv) any other consolidation, business
combination, recapitalization or similar transaction involving the Company,
other than the transactions contemplated by this Agreement; provided, however,
that the term Alternative Transaction shall not include any acquisition of
securities by a broker dealer in connection with a bona fide public offering of
such securities.
For purposes of this Agreement, a "Superior Proposal" means any
proposal made by a Third Party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the equity securities
of the Company entitled to vote generally in the election of directors or all or
substantially all of the assets of the Company (other than any assets that are
not material to the Company and its subsidiaries, taken as a whole), on terms
which the Board of Directors of the Company reasonably believes (after
consultation with a financial advisor of nationally recognized reputation, which
may be the Company Financial Advisor) to be more favorable from a financial
point of view to its shareholders than the Merger and the transactions
contemplated by this Agreement taking into account at the time of determination
any changes to the financial terms of this Agreement then proposed to the
Company by Acquiror; provided,
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however, that a Superior Proposal may be subject to a due diligence review of
confidential information and to other customary conditions.
(b) The Company shall notify Acquiror promptly (but in no event
later than 24 hours) after receipt of any Acquisition Proposal, or any
modification of or amendment to any Acquisition Proposal, or any request for
nonpublic information relating to the Company or any of its subsidiaries in
connection with an Acquisition Proposal or for access to the properties, books
or records of the Company or any subsidiary by any person or entity that informs
the Board of Directors of the Company or any subsidiary that it is considering
making, or has made, an Acquisition Proposal. Such notice to Acquiror shall be
made orally and in writing, and shall indicate the identity of the person making
the Acquisition Proposal or intending to make an Acquisition Proposal or
requesting non-public information or access to the books and records of the
Company or any subsidiary, the terms of any such Acquisition Proposal or
modification or amendment to an Acquisition Proposal, and whether the Company is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company as provided in Section 4.02(a). The
Company shall keep Acquiror fully informed, on a current basis, of any material
changes in the status and any material changes or modifications in the material
terms of any such Acquisition Proposal, indication or request. The Company shall
also promptly notify Acquiror, orally and in writing, if it enters into
negotiations concerning any Acquisition Proposal.
(c) (i) Notwithstanding anything contained herein to the contrary,
to the extent the Board of Directors of the Company reasonably determines in
good faith (after due consultation with independent counsel, which may be M&F)
that it is or is reasonably likely to be required to do so in order to discharge
properly its fiduciary duties (and, with respect to the approval, recommendation
or entering into of any Acquisition Proposal, it may take such contrary action
only after the second full business day following Acquiror's receipt of written
notice of the Board of Directors' intention to do so), the Company and the Board
of Directors of the Company shall be entitled to withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Acquiror or any other manner, the
approval by such Board of Directors of this Agreement or the Merger.
(d) The Company and the Board of Directors of the Company shall not
enter into any agreement (other than a confidentiality agreement entered into
not in violation of Section 4.02(a)) with respect to, or otherwise approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or
Alternative Transaction, unless this Agreement has been terminated in accordance
with its terms.
(e) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its shareholders a position required by
Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act or from making
any disclosure to its shareholders required by applicable law, rule or
regulation or by NASDAQ.
(f) The Company shall immediately cease and cause to be terminated
any existing discussions or negotiations with any persons (other than Acquiror)
conducted heretofore with respect to any of the foregoing. The Company agrees
not to release any third party from the confidentiality and standstill
provisions of any agreement to which the Company is a party,
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except for a release from standstill provisions in connection with the making of
a Superior Proposal that does not violate the provisions of this Section 4.02.
(g) The Company shall ensure that the officers and directors of the
Company and the Company's subsidiaries and any investment banker or other
advisor or representative retained by the Company are aware of the restrictions
described in this Section 4.02. It is understood that any violation of the
restrictions set forth in this Section 4.02 by any officer or director of the
Company or the Company subsidiaries, by any investment banker, attorney or other
advisor or representative of the Company retained in connection with this
Agreement and the transactions contemplated hereby or by any other advisor or
representative of the Company at the direction or with the consent of the
Company shall be deemed to be a breach of this Section 4.02 by the Company.
SECTION 4.03 Conduct of Business by Guarantor Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Acquiror
covenants and agrees that, unless the Company shall otherwise agree in writing,
Acquiror shall take all action necessary so that (i) Guarantor shall conduct its
business, and cause the businesses of its subsidiaries to be conducted, in the
ordinary course of business and consistent with past practice, including actions
taken by Guarantor or its subsidiaries in contemplation of consummation of the
Merger or other business acquisitions or dispositions otherwise in compliance
with this Agreement, and (ii) Guarantor shall not directly or indirectly do, or
propose to do, any of the following without the prior written consent of the
Company:
(a) amend or otherwise change the Guarantor Charter Documents;
(b) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other person, or dispose of any assets, which, in any
such case, would materially delay or prevent the consummation of the Merger and
the other transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
Guarantor may declare and pay a dividend to its parent, and except that
Guarantor may declare and pay quarterly cash dividends on the Guarantor Common
Shares of $0.0125 per share consistent with past practice;
(d) take any action to change its accounting policies or procedures
(including procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable), except as required by a change
in GAAP occurring after the date hereof; or
(e) take or agree in writing or otherwise to take any of the actions
described in Sections 4.03(a) through (d) above or any action which would
reasonably be expected to make any of the representations or warranties of
Acquiror contained in this Agreement untrue or
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incorrect or prevent Acquiror from performing or cause Acquiror not to perform
its covenants hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Proxy Statement/Prospectus; Registration Statement. (a)
As promptly as reasonably practicable after the execution of this Agreement, the
Company shall, and Acquiror shall cause Guarantor to prepare and file with the
SEC, preliminary proxy materials which shall constitute the Proxy
Statement/Prospectus and, if the parties so agree at the time, the Registration
Statement. As promptly as practicable after comments are received from the SEC
thereon and after the furnishing by the Company and Guarantor of all information
required to be contained therein, the Company shall, and Acquiror shall cause
Guarantor to, file with the SEC the definitive Proxy Statement/Prospectus and
the Registration Statement (or, if the Registration Statement has been
previously filed, an amendment thereto) relating to approval of the principal
terms of this Agreement by the Company's shareholders, and to the delivery of
the Guarantor Common Shares to the Company's shareholders pursuant to this
Agreement, and shall use all reasonable efforts to cause the Registration
Statement to become effective, and the Company shall mail the Proxy
Statement/Prospectus to its shareholders, as soon thereafter as reasonably
practicable. Acquiror shall also cause Guarantor to take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under the applicable state securities laws in connection with the delivery
of Guarantor Common Shares to the Company's shareholders in connection with the
Merger, and the Company shall furnish to Guarantor all information concerning
the Company and the holders of capital stock of the Company as may be reasonably
requested in connection with any such action and the preparation, filing and
distribution of the Proxy Statement/Prospectus.
The Company shall, and Acquiror shall cause Guarantor to, (i) notify
the other promptly upon the receipt of any comments from the SEC or its staff or
any other government officials in connection with any filing made pursuant
hereto and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Registration Statement, the Proxy
Statement/Prospectus or any other filings or for additional information and (ii)
supply the other with copies of all correspondence between such party or
any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement/Prospectus, the Merger or any other filing.
Neither Guarantor nor the Company will file any amendment or supplement to, or
any correspondence to the SEC or its staff with respect to, the Registration
Statement or the Proxy Statement/Prospectus, without providing the other party a
reasonable opportunity to review and comment thereon.
Acquiror will advise the Company, promptly after Guarantor receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of the Guarantor Common Shares to be
delivered in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Registration
Statement or
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comments thereon and responses thereto or requests by the SEC for additional
information. The Company will advise Acquiror, promptly after it receives notice
thereof, of any request by the SEC for the amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information.
If at any time prior to the vote of shareholders at the Company
Shareholders Meeting any information relating to the Company or Acquiror, or any
of their respective affiliates, officers or directors, should be discovered by
the Company or Acquiror which should be set forth in an amendment or supplement
to either the Registration Statement or the Proxy Statement/Prospectus so that
any of such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other party hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the shareholders of the Company. Whenever any event occurs which is required to
be set forth in an amendment or supplement to the Registration Statement, the
Proxy Statement/Prospectus or any other filing, the Company will, or Acquiror
will cause Guarantor to, as the case may be, promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials and/or mailing to shareholders of Company, such amendment
or supplement.
(b) Acquiror shall cause Guarantor to include as an exhibit to the
Registration Statement tax opinions of PricewaterhouseCoopers LLP delivered to
Acquiror and M&F delivered to the Company, in form and substance reasonably
satisfactory to Acquiror and to the Company, on the basis of customary facts,
representations, warranties and covenants of Guarantor, Acquiror and the Company
and assumptions set forth in such opinions to the effect that the Merger will be
treated for United States federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code that is not subject to Section
367(a)(1) of the Code pursuant to Treasury Regulation Section 1.367(a)-3(c)
(other than with respect to Company shareholders who are or will be
"five-percent transferee shareholders" within the meaning of Treasury Regulation
Section 1.367(a)-3(c)(5)(ii) and do not enter into five-year gain recognition
agreements in the form provided in Treasury Regulation Section 1.367(a)-8), and
that each of Guarantor, Acquiror and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code.
(c) The Proxy Statement/Prospectus shall include the recommendation
of the Board of Directors of the Company in favor of approval of the principal
terms of this Agreement by the Company's shareholders. Notwithstanding anything
to the contrary set forth in this Section 5.01 or Section 5.02, the Company
shall not be obligated to take the action set forth in the preceding sentence of
this Section 5.01(c) or to take the actions set forth in Section 5.02(a) to the
extent that the Board of Directors of the Company determines (after due
consultation with independent counsel, which may be M&F) that such action is, or
is reasonably likely to be, inconsistent with the proper discharge of its
fiduciary duties.
SECTION 5.02 Company Shareholders Meeting. (a) The Company shall
establish a record date for, duly call, give notice of, convene and hold the
Company Shareholders Meeting as promptly as practicable for the purpose of
voting upon the approval of the principal terms of
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of this Agreement, and the Company shall use all reasonable efforts to cause the
Proxy Statement/Prospectus to be mailed to the Company's shareholders and to
hold the Company Shareholders Meeting as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. The
Company shall solicit from its shareholders proxies in favor of approval of the
principal terms of this Agreement and shall take all other reasonable action
necessary or advisable to secure the vote or consent of shareholders in favor of
such approval.
(b) Acquiror agrees to vote and to cause Guarantor to vote all
Shares beneficially owned by Acquiror, Guarantor or any of their subsidiaries in
favor of approval of the principal terms of this Agreement and to take such
other actions to effectuate as promptly as practicable the Merger in accordance
with Section 92A.190 of the NGCL and Section 1201 of the CGCL, on the terms and
subject to the conditions set forth in this Agreement.
SECTION 5.03 Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements (from
which such party shall use reasonable efforts to be released), the Company shall
(and shall cause its subsidiaries to) and Acquiror shall cause Guarantor and its
subsidiaries to (i) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access during reasonable hours,
during the period after the execution and delivery of this Agreement and prior
to the Effective Time, to the properties, books, contracts, commitments and
records of the Company or Guarantor, as applicable, and, (ii) during such
period, furnish promptly to the other all information concerning the business,
properties and personnel of the Company or Guarantor, as applicable, as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the Company's or Guarantor's, as applicable,
business, properties and personnel as either Acquiror or the Company may
reasonably request. Such information shall be kept confidential in accordance
with the terms of the confidentiality agreement, dated October 5, 2001 (the
"Confidentiality Agreement"), between a subsidiary of Guarantor and the Company.
Acquiror shall, and shall cause Guarantor to, comply with the Confidentiality
Agreement as if it were the subsidiary of Guarantor party thereto, and the
Company shall comply with the Confidentiality Agreement, mutatis mutandis, as if
such Confidentiality Agreement were executed by the Company in favor of
Guarantor.
SECTION 5.04 Consents; Approvals. The Company and Acquiror shall
each use its reasonable best efforts (and Acquiror shall cause Guarantor to use
its reasonable best efforts) to obtain and to cooperate with each other in order
to obtain as promptly as practicable all consents, waivers, approvals,
authorizations or orders (including all United States and non-U.S. governmental
and regulatory rulings and approvals), and the Company and Acquiror shall make
(and Acquiror shall cause Guarantor to make) as promptly as practicable all
filings (including all filings with United States and non-U.S. governmental or
regulatory agencies) required in connection with the authorization, execution
and delivery of this Agreement by the Company and Acquiror and the consummation
by them of the transactions contemplated hereby. The Company and Acquiror shall
promptly furnish (and Acquiror shall cause Guarantor to furnish) all information
required to be included in the Proxy Statement/Prospectus and the Registration
Statement, or for any application or other filing to be made pursuant to the
rules and regulations
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of any United States or non-U.S. governmental body in connection with the
transactions contemplated by this Agreement. The Company shall, and Acquiror
shall cause Guarantor to, cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under Section 5.01 and this Section
5.04 to comply in all material respects with all applicable requirements of law
and the rules and regulations promulgated thereunder.
SECTION 5.05 Agreements with Respect to Affiliates. The Company
shall deliver to Acquiror, prior to the date the Registration Statement becomes
effective under the Securities Act, a letter (the "Company Affiliate Letter")
identifying all persons who are anticipated to be "affiliates" of the Company at
the time of the Company Shareholders Meeting for purposes of Rule 145 under the
Securities Act ("Rule 145"). The Company shall use its reasonable best efforts
to cause each person who is identified as an "affiliate" in the Company
Affiliate Letter to deliver to Acquiror, prior to the Effective Time, a written
agreement restricting the sales of Guarantor securities by such affiliates in
accordance with the restrictions on affiliates under Rule 145, in a form
mutually agreeable to the Company and Acquiror.
SECTION 5.06 Indemnification and Insurance. (a) The Articles of
Incorporation and By-laws of the Surviving Corporation shall contain all the
provisions with respect to indemnification set forth in the Company Charter
Documents on the date hereof, which provisions shall not be amended, modified or
otherwise repealed for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder as of the Effective
Time of individuals who at or prior to the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required after the Effective Time by law and then only to the minimum extent
required by such law.
(b) The Surviving Corporation shall, to the fullest extent permitted
under applicable law or under the Surviving Corporation's Articles of
Incorporation or By-laws, indemnify and hold harmless each present and former
director, officer or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company Charter Documents or any applicable contract or agreement as in
effect on the date hereof, in each case for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time) and subject
to the specific terms of any indemnification contract, (i) any counsel retained
by the Indemnified Parties for any period after the Effective Time shall be
reasonably satisfactory to the Surviving Corporation, (ii) after the Effective
Time, the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received; provided that the
Indemnified Parties shall be required to reimburse the Surviving Corporation for
such payments in the circumstances and to the extent required by the Company
Charter Documents, any applicable contract or agreement or applicable law; and
(iii) the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided, further, that, in the
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event that any claim or claims for indemnification are asserted or made within
such six-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Party with respect to whom such a conflict exists
(or group of such Indemnified Parties who among them have no such conflict) may
retain one separate law firm in each applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
and employment agreements (the employee parties under such agreements being
referred to as the "Covered Persons") with the Company's directors and officers
existing at or before the Effective Time and not executed in violation of the
terms of this Agreement.
(d) In addition, the Surviving Corporation shall provide, for a
period of not less than six years after the Effective Time, the Company's
current directors and officers with an insurance and indemnification policy that
provides coverage for events occurring at or prior to the Effective Time (the
"D&O Insurance") that is no less favorable than the existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of 250% of the
annual premium currently paid by the Company for such insurance, but in such
case shall purchase as much such coverage as possible for such amount.
(e) This Section 5.06 shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation, the Indemnified Parties and the Covered Persons, shall be binding
on all successors and assigns of the Surviving Corporation and shall be
enforceable by the Indemnified Parties and the Covered Persons.
(f) Nothing contained in this Section 5.06 is intended to limit in
any manner and at any time rights that any Indemnified Party may have under and
in accordance with all provisions of the Company Charter Documents, including,
but not limited to, rights under the respective article of the Company's
Articles of Incorporation and the respective article of the Company's By-laws in
each case dealing with indemnification, or any contract or agreement in effect
on the date hereof or whose execution following the date hereof is permitted by
the terms of this Agreement, which rights shall survive the Effective Time and
shall be binding on the Surviving Corporation and all successors and assigns of
the Surviving Corporation, in accordance with their respective terms.
SECTION 5.07 Notification of Certain Matters. The Company shall give
prompt notice to Acquiror, and Acquiror shall give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty made by it in this Agreement to be materially untrue or inaccurate,
or (ii) any failure of the Company or Acquiror, as the case may be, materially
to comply with or satisfy any covenant, condition or agreement to be complied
with or
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satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice; and provided further
that failure to give such notice shall not be treated as a breach of covenant
for purposes of Sections 6.02(b), 6.03(b) or 7.01(h) unless the failure to give
such notice results in material prejudice to the other party.
SECTION 5.08 Further Action/Tax Treatment. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. The foregoing covenant shall not include, (i) the
obligation by the Company to, or (ii) the obligation by Guarantor to, and/or to
permit the Company to, agree to divest, abandon, license, hold separate or take
similar action with respect to any assets (tangible or intangible) which are, in
the aggregate, material to the Company or to the Equipment Rental and Finance
Group of Guarantor, as applicable.
(b) Notwithstanding anything herein to the contrary, subject to
Section 6.04, each of Acquiror and the Company shall, and Acquiror shall cause
Guarantor to, use its reasonable best efforts to cause the Merger to qualify,
and will not (either before or after the Merger) take any actions, or fail to
take any action, which could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under the provisions of Section 368(a) of the
Code that is not subject to Section 367(a)(1) of the Code pursuant to Treasury
Regulation Section 1.367(a)-3(c) (other than with respect to Company
shareholders who are or will be "five-percent transferee shareholders" within
the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter
into five-year gain recognition agreements in the form provided in Treasury
Regulation Section 1.367(a)-8). Acquiror shall, and shall cause Guarantor to,
report, to the extent required by the Code or the regulations thereunder, the
Merger for United States federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code. Each of Acquiror and the Company
shall make, and shall cause their affiliates (including Guarantor) to make, such
representations, warranties and covenants as shall be requested reasonably in
the circumstances by PricewaterhouseCoopers LLP and M&F in order for such firms
to render their opinions referred to in Sections 5.01(b) and 6.01(f).
(c) Without limiting any of the foregoing, the Company shall take
all action necessary so that the requisite tax clearance certificate of the
State of California Franchise Tax Board, if required, shall be filed on a timely
basis prior to the filing of the Certificate of Merger as contemplated by this
Agreement, and in connection therewith Acquiror agrees to execute appropriate
certificates with respect to the assumption or payment of the Company's taxes
after the Effective Time. At or prior to the Effective Time, Acquiror shall
qualify to do business in the State of California.
SECTION 5.09 Public Announcements. Acquiror and the Company shall
consult with each other before issuing any press release or making any written
public statement with respect to the Merger or this Agreement and the
transactions contemplated hereby and shall not
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issue any such press release or make any such public statement without the prior
consent of the other party, which shall not be unreasonably withheld; provided,
however, that either party may, without the prior consent of the other, issue
such press release or make such public statement as may upon the advice of
counsel be required by law (including Rules 165 and 425 under the Securities Act
and Rule 14a-12 under the Exchange Act) or the rules and regulations of the NYSE
or NASDAQ, if it has used all reasonable efforts to consult with the other
party.
SECTION 5.10 Guarantor Common Shares. (a) Acquiror shall take all
action necessary so that Guarantor shall transfer to Acquiror the Guarantor
Common Shares to be delivered by Acquiror to the holders of Company Common Stock
in the Merger.
(b) Acquiror will take all action necessary so that Guarantor will
use its best efforts to cause the Guarantor Common Shares to be delivered by
Acquiror to the holders of Company Common Stock in the Merger to be listed, upon
official notice of issuance, on the NYSE prior to the Effective Time.
SECTION 5.11 Conveyance Taxes; FIRPTA Certificate. Acquiror and the
Company shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time, and the Company shall be responsible for the payment of all such taxes and
fees. Prior to the Effective Time, the Company shall deliver to Acquiror a
certificate, in the form and manner prescribed by Treasury Regulations Section
1.897-2(h) and 1.1445-2(c)(3), that the Shares are not U.S. real property
interests within the meaning of such regulations.
SECTION 5.12 Stock Incentive Plans; Restricted Shares; Other
Programs. (a) At the Effective Time, Acquiror shall, and shall cause its
affiliates to, take all necessary action to provide that each outstanding
Company Stock Option shall continue to have, and be subject to, the same terms
and conditions set forth in the relevant Company Stock Option Plan and
applicable award agreement immediately prior to the Effective Time; except that,
(i) each Company Stock Option will be exercisable for that number of whole
Guarantor Common Shares equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such the Company Stock Option,
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded to the nearest whole number of Guarantor Common Shares, and (ii) the per
share exercise price for the Guarantor Common Shares issuable upon exercise of
such Company Stock Option will be equal to the quotient determined by dividing
the exercise price per share of the Company Common Stock at which such Company
Stock option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, rounded to the nearest whole cent (each such Company Stock
Option, as modified, an "Adjusted Option"); provided, however, that to the
extent that any Company Stock Option qualified as an ISO pursuant to Section 422
of the Code immediately prior to the Effective Time, the provisions of this
Section 5.12 shall be applied in good faith to comply with Sections 422 and
424(a) of the Code. As soon as practicable after the Effective Time, Acquiror
shall deliver to each holder of an outstanding Company Stock Option an
appropriate notice setting forth such holder's rights pursuant thereto.
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(b) At the Effective Time, each Company Restricted Share issued and
outstanding immediately prior to the Effective Time will be converted into the
right to receive a fraction of a Guarantor Common Share, cash or a combination
of a fraction of a Guarantor Common Share and cash as provided in Section 1.06
hereof. All cash and Guarantor Common Shares issued in exchange for Company
Restricted Shares shall be subject to the same restrictions, terms and
conditions, and, in the case of Guarantor Common Shares, may bear a legend
setting forth such restrictions, as such Company Restricted Shares.
(c) Acquiror will cause Guarantor to take all corporate action
necessary to (i) reserve for issuance as of or as soon as administratively
practicable after the Effective Time a sufficient number of Guarantor Common
Shares for delivery upon exercise of the Adjusted Options, or upon the exchange
of Company Restricted Shares, and (ii) to deliver to holders of Adjusted Options
upon the exercise of such options, and to holders of Company Restricted Shares,
Guarantor Common Shares registered pursuant to the Securities Act and listed on
the NYSE.
(d) Any Company Employee Plan that provides for benefits that are
measured by the value of the Company Common Stock but do not entail the granting
of Shares shall be amended as of the Effective Time to provide a different
measure of such benefits thereunder providing substantially similar opportunity
for appreciation.
SECTION 5.13 Employee Matters. (a) From the Effective Time through
June 30, 2002 (the "Benefits Continuation Period"), the Surviving Corporation
shall provide each person who, as of the Effective Time, is an employee of the
Company or any subsidiary of the Company (a "Company Employee") with salary and
employee benefits that are comparable in the aggregate to those provided to such
Company Employee immediately prior to the Effective Time, provided, however,
subject to applicable law, contractual restrictions and the last sentence of
this Section 5.13(a), that the Surviving Corporation shall have the right to
amend any Company Employee Plans, including any retiree welfare benefit plans or
pension benefit plans, in effect as of the Effective Time. During the Benefits
Continuation Period, Acquiror shall cause the Surviving Corporation to maintain
the severance plan referenced in Section 4.01(f) herein without amendment or
modification adverse to any Company Employee.
(b) After the Benefits Continuation Period, the Surviving
Corporation shall provide the Company Employees with employee benefits that are
comparable in the aggregate to those provided to similarly situated employees of
subsidiaries of Guarantor. For the avoidance of doubt, it is understood that the
Surviving Corporation shall have no obligation to provide Company Employees with
post-termination welfare or pension benefits, except to the extent required by
applicable law or contractual agreement.
(c) With respect to the benefits provided pursuant to this Section
5.13, (i) service accrued by Company Employees during employment with the
Company and its subsidiaries (including any predecessor entity) prior to the
Effective Time shall be recognized for all purposes, except for benefit accruals
with respect to defined benefit pension plans, (ii) any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under the applicable Company Employee Plan) under any
group health plan shall be waived with respect to such Company Employees and
their eligible dependents, and (iii)
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Company Employees shall be given credit for amounts paid under a Company
Employee Plan during the applicable period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the employee welfare plans in which
any Company Employee becomes entitled to participate.
(d) From and after the Effective Time, the Surviving Corporation
shall honor in accordance with their terms all benefits and obligations under
the Company Employee Plans, including each employment, retirement, severance and
change in control agreement, plan or arrangement, each as in effect on the date
of this Agreement (or as amended as contemplated hereby or with the prior
written consent of Acquiror); provided, however, that except as otherwise
expressly provided herein, nothing herein shall prevent the Surviving
Corporation or any other subsidiary of Guarantor from amending or modifying any
employee benefit plan, program or arrangement in any respect in accordance with
its terms or, subject to the terms of the Company Employee Plans (as so amended
or modified, if applicable), terminating or modifying the terms and conditions
of employment or other service of any particular employee or any other person,
except in any such case as precluded by law or the terms of a Company Employee
Plan.
(e) It is expressly agreed that the provisions of this Section 5.13
are not intended to be for the benefit of or otherwise enforceable by any third
party, including any Company Employees.
(f) The Company shall amend its 401(k) savings plan and any other
Company Employee Plan which permits participants to elect to invest in stock of
the Company, where necessary, to preclude any additional purchases of stock of
the Company, as of a date no later than two (2) days prior to the Effective
Time, and the Company shall communicate this amendment to the participants in
such plans.
SECTION 5.14 Accountants' Letters. Upon reasonable notice from the
other, the Company shall use its best efforts to cause Xxxxxx Xxxxxxxx LLP to
deliver to Acquiror, and Acquiror shall use its best efforts to cause
PricewaterhouseCoopers to deliver to the Company, a letter covering such matters
as are reasonably requested by Acquiror or the Company, as the case may be, and
as are customarily addressed in accountants' "comfort letters."
SECTION 5.15 Compliance with State Property Transfer Statutes. The
Company agrees that it shall use its reasonable commercial efforts to comply
promptly with all requirements of applicable state property transfer laws as may
be required by the relevant state agency and shall take all action necessary to
cause the transactions contemplated hereby to be effected in compliance with
applicable state property transfer laws. The Company, after consultation with
Acquiror, shall determine which actions must be taken prior to or after the
Effective Time to comply with applicable state property transfer laws. The
Company agrees to provide Acquiror with any documents required to be submitted
to the relevant state agency prior to submission, and the Company shall not take
any action to comply with applicable state property transfer laws without
Acquiror's prior consent, which consent shall not be unreasonably withheld or
delayed. Acquiror shall provide, and shall take all action necessary such that
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Guarantor shall provide, to the Company any assistance reasonably requested by
the Company with respect to such compliance.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The SEC shall have
declared the Registration Statement effective under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose and no similar proceeding
in respect of the Proxy Statement/Prospectus shall have been initiated or
threatened by the SEC;
(b) Shareholder Approval. The principal terms of this Agreement
shall have been approved by the requisite vote of the shareholders of the
Company;
(c) Antitrust. All waiting periods applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and all
clearances and approvals required to be obtained in respect of the Merger prior
to the Effective Time under any Non-U.S. Monopoly Laws shall have been obtained,
except where the failure to have obtained any such clearances or approvals with
respect to any Non-U.S. Monopoly Laws would not reasonably be expected to have a
Material Adverse Effect on the Company, Guarantor or Guarantor's Equipment
Rental and Finance Group;
(d) Governmental Actions. There shall not be (i) in effect an
injunction or other order, decree, judgment or ruling by a Governmental Entity
of competent jurisdiction which (A) restrains or prohibits the consummation of
the Merger, (B) (1) prohibits or restricts the ownership or operation by
Acquiror (or any of its affiliates or subsidiaries) of any material portion of
the Company's business or assets, or (2) prohibits or restricts the ownership or
operation by Guarantor (or any of its affiliates or subsidiaries) of any
material portion of Guarantor's Equipment Rental and Finance Group, or
substantially deprives Acquiror and/or its affiliates or subsidiaries of the
benefit of ownership of the Company's business or assets, or compels Acquiror
(or any of its affiliates or subsidiaries) to dispose of or hold separate any
material portion of the Company's business or assets, or any material portion of
Guarantor's Equipment Rental and Finance Group, or which would substantially
deprive Acquiror and/or its affiliates or subsidiaries of the benefit of
ownership of the Company's business or assets, (C) imposes material limitations
on the ability of Acquiror effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, pursuant to the Merger, (D) imposes any
material limitations on the ability of Acquiror and/or its affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company, (E) as a result of the Merger would materially
restrict any future business activity by
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Guarantor (or any of its affiliates) relating to the Equipment Rental and
Finance Group, including by requiring the prior consent of any person or entity
(including any Governmental Entity) to future transactions by Guarantor (or any
of its affiliates), or (F) imposes any liability as a result of the Merger or
the other transactions contemplated by this Agreement which, if borne by the
Company, would have a Material Adverse Effect on the Company, other than in the
case of clauses (B) through (F), arising by reason of a breach by Acquiror of
Section 4.03(b), or (ii) instituted, pending or threatened an action by a
Governmental Entity seeking to restrain or prohibit the consummation of the
Merger or to impose any other restriction, prohibition, obligation or limitation
referred to in the foregoing clause (i);
(e) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; and
(f) Tax Opinions. The Company shall have received a written opinion
of M&F (the "Company Tax Opinion"), and Acquiror shall have received a written
opinion of PricewaterhouseCoopers LLP (the "Acquiror Tax Opinion"), in form and
substance reasonably satisfactory to each of them, delivered as of the date of
the Effective Time and on the basis of customary representations, warranties and
covenants of Guarantor, Acquiror and the Company and assumptions set forth in
such opinions, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code that is not subject to Section
367(a)(1) of the Code (other than with respect to Company shareholders who are
or will be "five-percent transferee shareholders" within the meaning of Treasury
Regulation Section 1.367(a)-3(c)(5)(ii) and do not enter into five-year gain
recognition agreements in the form provided in Treasury Regulation Section
1.367(a)-8)), and that each of Guarantor, Acquiror and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the Code.
SECTION 6.02 Additional Conditions to Obligations of Acquiror. The
obligations of Acquiror to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. Applying the principles of
clauses (w), (x) and (y) of the final paragraph of Section 7.01, the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the Effective Time, with the same force and
effect as if made on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, and (ii) those representations and warranties
which address matters only as of a particular date (which shall have been true
and correct as of such date), and Acquiror shall have received a certificate of
the Company to such effect signed by the Chief Executive Officer, President or
Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Acquiror shall have received a certificate to such effect
signed by the Chief Executive Officer, President or Chief Financial Officer of
the Company; and
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the
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Company for the authorization, execution and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby shall have been
obtained and made by the Company, except where the failure to receive such
consents, waivers, approvals, authorizations or orders or to make such filings
would not reasonably be expected, individually or in the aggregate with all
other such failures, to have a Material Adverse Effect on the Company, Acquiror
or Guarantor.
SECTION 6.03 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Applying the principles of
clauses (w), (x) and (y) of the final paragraph of Section 7.01, the
representations and warranties of Acquiror contained in this Agreement shall be
true and correct on and as of the Effective Time, with the same force and effect
as if made on and as of the Effective Time, except for (i) changes contemplated
by this Agreement, and (ii) those representations and warranties which address
matters only as of a particular date (which shall have been true and correct as
of such date), and the Company shall have received a certificate to such effect
signed by the President, a Vice President or Chief Financial Officer of
Acquiror;
(b) Agreements and Covenants. Acquiror shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Effective Time, and the Company shall have received a certificate of Acquiror to
such effect signed by the President, a Vice President or Chief Financial Officer
of Acquiror;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Acquiror or Guarantor for the authorization, execution and delivery of
this Agreement and the Guarantee, as applicable, and the consummation by them of
the transactions contemplated hereby and thereby shall have been obtained and
made by Acquiror or Guarantor, except where the failure to receive such
consents, waivers, approvals, authorizations or orders or to make such filings
would not reasonably be expected, individually or in the aggregate with all
other such failures, to have a Material Adverse Effect on the Company, Acquiror
or Guarantor; and
(d) Listing. The Guarantor Common Shares to be delivered by Acquiror
in connection with the Merger shall have been authorized for listing on the NYSE
upon official notice of issuance.
SECTION 6.04 Failure to Deliver Tax Opinions. In the event that
PricewaterhouseCoopers LLP notifies Acquiror in writing that it cannot render
the Acquiror Tax Opinion (as reasonably determined by PricewaterhouseCoopers LLP
and concurred in by M&F), or M&F notifies the Company in writing that it cannot
render the Company Tax Opinion (as reasonably determined by M&F and concurred in
by PricewaterhouseCoopers LLP), the Company, within three business days of
receipt of such notice from M&F or a copy of such PricewaterhouseCoopers LLP
notice, may provide Acquiror with written notice that it elects to proceed to
consummate this Agreement notwithstanding the failure to satisfy the condition
set forth in Section 6.01(f) (the "Tax Opinion Condition"). In such event, and
any other provision of
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this Agreement notwithstanding, the Tax Opinion Condition shall be deemed waived
by the parties to this Agreement, and Acquiror and the Company shall take all
steps necessary to effectuate a merger (the "New Merger") of a wholly-owned
direct or indirect subsidiary of Guarantor ("New Acquiror") with and into the
Company, with the Company being the Surviving Corporation, in accordance with
the provisions of the CGCL and any other applicable jurisdiction. Except as may
be necessary to reflect the change in the transaction structure to the New
Merger and the jurisdiction of New Acquiror, the terms of this Agreement,
including the provisions of Section 1.06, shall govern the New Merger, and the
references in this Agreement to Acquiror, the Surviving Corporation and the
Merger shall be deemed references, mutatis mutandis, to New Acquiror, the
Company and the New Merger, respectively. The waiver of the Tax Opinion
Condition, in accordance with and in the circumstances contemplated by this
Section, shall not constitute a waiver of any other condition to the Merger or
any other provisions of this Agreement.
ARTICLE VII
TERMINATION
SECTION 7.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Acquiror and the Company; or
(b) by either Acquiror or the Company if the Merger shall not have
been consummated on or prior to June 30, 2002 (other than for the reasons set
forth in clause (d) below); provided, however, that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to be consummated on or prior to such
date; or
(c) by either Acquiror or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(d) by either Acquiror or the Company (i) if the requisite vote of
the shareholders of the Company shall not have been obtained on or prior to June
30, 2002, or (ii) if the shareholders of the Company shall not have approved the
principal terms of this Agreement at the Company Shareholders Meeting; provided,
however, that the Company may not terminate pursuant to this Section 7.01(d) if
the Company has not complied with its obligations under Section 5.02; or
(e) by Acquiror, if, whether or not permitted to do so by this
Agreement, the Board of Directors of the Company or the Company shall (x) (i)
withdraw, modify or change its approval or recommendation of this Agreement or
the terms of the Merger in a manner adverse
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to Acquiror, (ii) approve or recommend to the shareholders of the Company an
Acquisition Proposal or Alternative Transaction, (iii) approve or recommend that
the shareholders of the Company tender their shares in any tender or exchange
offer that is an Alternative Transaction, or (iv) fail to include the
recommendation of the Board of Directors of the Company in favor of approval of
the terms of the Merger pursuant to Section 5.01(c) or fail to take the action
required by the second sentence of Section 5.02(a); or (y) take any position or
make any disclosures to the Company's shareholders permitted pursuant to Section
4.02(e) which has the effect of any of the foregoing; or
(f) by Acquiror or the Company, if any representation or warranty of
the Company or Acquiror, respectively, set forth in this Agreement shall be
untrue when made, such that the conditions set forth in Sections 6.02(a) or
6.03(a), as the case may be, would not be satisfied (a "Terminating
Misrepresentation"); provided that, if such Terminating Misrepresentation is
curable prior to June 30, 2002 by the Company or Acquiror, as the case may be,
through the exercise of its reasonable best efforts and for so long as the
Company or Acquiror, as the case may be, continues to exercise such reasonable
best efforts, neither Acquiror nor the Company, respectively, may terminate this
Agreement under this Section 7.01(f); or
(g) by Acquiror, if any representation or warranty of the Company
shall have become untrue such that the condition set forth in Section 6.02(a)
would not be satisfied, or by the Company, if any representation or warranty of
Acquiror shall have become untrue such that the condition set forth in Section
6.03(a) would not be satisfied (in either case, a "Terminating Change"), in
either case other than by reason of a Terminating Breach (as hereinafter
defined); provided that if any such Terminating Change is curable prior to June
30, 2002 by the Company or Acquiror, as the case may be, through the exercise of
its reasonable best efforts, and for so long as the Company or Acquiror, as the
case may be, continues to exercise such reasonable best efforts, neither
Acquiror nor the Company, respectively, may terminate this Agreement under this
Section 7.01(g); or
(h) by Acquiror or the Company, upon a breach of any covenant or
agreement on the part of the Company or Acquiror, respectively, set forth in
this Agreement such that the conditions set forth in Sections 6.02(b) or
6.03(b), as the case may be, would not be satisfied (a "Terminating Breach");
provided that, except for any breach of the Company's obligations under Section
4.02, if such Terminating Breach is curable prior to June 30, 2002 by the
Company or Acquiror, as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Acquiror, as the case may be,
continues to exercise such reasonable best efforts, neither Acquiror nor the
Company, respectively, may terminate this Agreement under this Section 7.01(h);
or
(i) by the Company, if (w) the Board of Directors of the Company
shall have authorized the Company, subject to complying with the terms of this
Agreement, including Section 4.02, to enter into a definitive agreement with
respect to a Superior Proposal and the Company shall have notified Acquiror in
writing that it intends to enter into such an agreement, attaching such
agreement or a summary of the material terms thereof, (x) Acquiror shall not
have made, within two full business days (disregarding any partial business
days) of receipt of the Company's written notification of its intention to enter
into a definitive agreement with respect to a Superior Proposal, an offer that
the Board of Directors of the Company determines, in good
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faith after consultation with its financial advisors, is at least as favorable,
from a financial point of view, to the shareholders of the Company as the
Superior Proposal, (y) the Company prior to such termination pursuant to this
clause (i) shall have paid to Acquiror in immediately available funds the Fee
and the Expenses required to be paid pursuant to Section 7.03(b), and (z) the
principal terms of this Agreement shall not theretofore have been approved by
the Company Shareholders Meeting; or
(j) by Acquiror, if the Average Share Price is less than $45.00,
provided that (i) Acquiror shall have given the Company notice of its intention
to terminate pursuant to this Section 7.01(j) prior to 5:00 p.m. New York City
time on the third trading day immediately preceding and not including the date
of the Company Shareholders Meeting and (ii) the Company shall not, by 5:00 p.m.
New York City time on the second trading day immediately preceding and not
including the date of the Company Shareholders Meeting, have delivered a notice
to Acquiror agreeing that the Exchange Ratio shall equal 0.8444; provided
further that if the Company shall deliver the notice referred to in the
preceding clause (ii), this Agreement shall not be terminated under this Section
7.01(j) and the Exchange Ratio for all purposes of this Agreement shall equal
0.8444 or, if the parties shall so agree in their respective sole and absolute
discretion, a higher number.
For purposes of Section 7.01(f) and 7.01(g) and Sections 6.02(a) and
6.03(a):
(w) all representations and warranties shall be interpreted without
giving effect to the words "materially" or "material" or to any qualification
based on such terms or based on the defined term "Material Adverse Effect";
(x) any representation and warranty (other than those contained in
Sections 2.03, 2.04, 2.15, 2.25, 2.26, 3.02, 3.03, 3.10, 3.11, 3.12 and 3.14)
shall be deemed untrue only if such representation and warranty shall fail to be
true and correct in all respects except (A) as a result of acts or omissions
required or permitted under this Agreement or (B) where the failure of such
representations and warranties to be true and correct would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Company or Guarantor, as the case may be; and
(y) any representation and warranty contained in Section 2.03, 2.04,
2.15, 2.25, 2.26, 3.02, 3.03, 3.10, 3.11, 3.12 and 3.14 shall be deemed untrue
only if such representation and warranty shall fail to be true and correct in
all material respects.
SECTION 7.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or shareholders except that the
Company or Acquiror may have liability or obligations as set forth in Section
7.03 and as set forth in or contemplated by Section 8.01 hereof. Notwithstanding
the foregoing, nothing herein shall relieve the Company or Acquiror from
liability for any willful breach hereof or willful misrepresentation herein (it
being understood that (x) the provisions of Section 7.03 do not constitute a
sole or exclusive remedy for such willful breach or misrepresentation and (y)
the mere existence of a Material Adverse Effect, by itself, shall not constitute
such a willful breach).
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SECTION 7.03 Fees and Expenses. (a) Except as set forth in this
Section 7.03, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided, however, that
if the Merger is not consummated, Acquiror and the Company shall share equally
(i) all SEC filing fees and printing expenses incurred in connection with the
printing and filing of the Proxy Statement/Prospectus (including financial
statements and exhibits and any preliminary materials related thereto) and any
amendments or supplements thereto and (ii) conveyance and similar taxes required
to be paid by the Company prior to the Effective Time pursuant to Section 5.11.
(b) The Company shall pay Guarantor a fee of $17.5 million (the
"Fee"), and shall pay Acquiror's and Guarantor's respective actual, documented
and reasonable out-of-pocket expenses, relating to the transactions contemplated
by this Agreement (including, reasonable fees and expenses of counsel and
accountants and out-of-pocket expenses (but not fees) of financial advisors)
("Expenses," as applicable to Acquiror, Guarantor or the Company), such payment
of Expenses not to exceed $1 million, upon the first to occur of any of the
following events:
(i) the termination of this Agreement by Acquiror or the Company
pursuant to Section 7.01(d)(ii); provided that (i) there shall not have been a
Terminating Misrepresentation, Terminating Change or Terminating Breach on the
part of Acquiror and (ii) (A) prior to such termination, (1) there shall be
outstanding a bona fide Acquisition Proposal which has been made directly to the
shareholders of the Company or has otherwise become publicly known or (2) there
shall be outstanding an announcement by any credible third party of a bona fide
intention to make an Acquisition Proposal (in each case whether or not
conditional and whether or not such proposal shall have been rejected by the
Board of Directors of the Company) or (B) an Alternative Transaction shall be
publicly announced by the Company or any third party within nine (9) months
following the date of termination of this Agreement, and such transaction, in
the case of clause (A) or (B), shall at any time thereafter be consummated on
substantially the terms theretofore announced (or on terms that are more
favorable to the shareholders of the Company).
(ii) the termination of this Agreement by Acquiror pursuant to
Section 7.01(e); or
(iii) the termination of this Agreement by the Company pursuant
to Section 7.01(i).
(c) Upon a termination of this Agreement by Acquiror or the Company,
as the case may be, pursuant to Section 7.01(h), the Company shall pay to
Guarantor and Acquiror or Guarantor or Acquiror shall pay the Company, as the
case may be, their respective Expenses relating to the transactions contemplated
by this Agreement, but in no event more than $1 million. In addition, if
termination is by Acquiror, the Company shall pay Guarantor the Fee if the
Terminating Breach is willful and either (A) prior to such termination, (1)
there shall be outstanding a bona fide Acquisition Proposal which has been made
directly to the shareholders of the Company or has otherwise become publicly
known or (2) there shall be outstanding an announcement by any credible third
party of a bona fide intention to make an Acquisition
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Proposal (in each case whether or not conditional and whether or not such
proposal shall have been rejected by the Board of Directors of the Company) or
(B) an Alternative Transaction shall be publicly announced by the Company or any
third party within nine (9) months following the date of termination of this
Agreement, and such transaction, in the case of clause (A) or (B), shall at any
time thereafter be consummated on substantially the terms theretofore announced
(or on terms that are more favorable to the shareholders of the Company).
(d) Upon a termination of this Agreement by Acquiror pursuant to
Section 7.01(f), the Company shall pay to Guarantor and Acquiror their
respective Expenses relating to the transactions contemplated by this Agreement,
but in no event more than $1 million. Upon a termination of this Agreement by
the Company pursuant to Section 7.01(f), Acquiror shall pay to the Company its
Expenses relating to the transactions contemplated by this Agreement, but in no
event more than $1 million.
(e) The Fee and/or Expenses payable pursuant to Section 7.03(b),
7.03(c) or 7.03(d) shall be paid within one business day after a demand for
payment following the first to occur of any of the events described in Section
7.03(b), 7.03(c) or 7.03(d) as applicable; provided that in no event shall the
Company or Acquiror, as the case may be, be required to pay such Fee and/or
Expenses to the entities entitled thereto if, immediately prior to the
termination of this Agreement, the other entity entitled to receive such Fee
and/or Expenses was in material breach of its obligations under this Agreement.
(f) For purposes of this Section 7.03, the definition of Alternative
Transaction set forth in Section 4.02(a) shall be modified to replace "25%," as
it appears in such definition, with "40%".
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 Effectiveness of Representations, Warranties and
Agreements. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall 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 or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, except that the agreements in this Agreement which
contemplate performance after the Effective Time shall survive the Effective
Time indefinitely and those set forth in Sections 7.02 and 7.03 and this Article
VIII shall survive termination indefinitely. The Confidentiality Agreement and
the last two sentences of Section 5.03 shall survive termination of this
Agreement in accordance with the terms of the Confidentiality Agreement.
(b) Any disclosure made with reference to one or more Sections of
the Company Disclosure Schedule shall be deemed disclosed with respect to each
other section therein as to which such disclosure is relevant; provided that
such relevance is reasonably
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apparent. Disclosure of any matter in the Company Disclosure Schedule shall not
be deemed an admission that such matter is material or is required to be
disclosed.
SECTION 8.02 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
If to Acquiror:
Tyco Acquisition Corp. 33
c/o Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy (which shall not constitute notice) to:
Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
and
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
If to the Company:
XxXxxxx RentCorp
0000 Xxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
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With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
SECTION 8.03 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliates", with respect to any person, means a person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which banks in
New York City are required or authorized to be closed;
(c) "Company SEC Documents" means the reports, schedules, forms,
statements and other documents filed by the Company with the SEC since December
31, 2000 and prior to the date of this Agreement pursuant to Section 13(a),
14(a), 14(c) or 15(d) of the Exchange Act;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "dollars" or "$" means United States dollars;
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the SEC's rules and regulations promulgated thereunder;
(g) "Guarantor SEC Documents" means the reports, schedules, forms,
statements and other documents filed by Guarantor with the SEC since September
30, 2000 and prior to the date of this Agreement pursuant to Section 13(a),
14(a) 14(c) or 15(d) of the Exchange Act;
(h) "knowledge" means, with respect to any matter in question, that
the executive officers, or any employee having primary or substantial oversight
responsibility for the matter of the Company, Acquiror or Guarantor, as the case
may be, have or at any time had actual knowledge of such matter;
(i) "Material Adverse Effect," when used in connection with the
Company or any of its subsidiaries or Guarantor or any of its subsidiaries, as
the case may be, means any change, effect or circumstance that (i) is materially
adverse to the business, assets (including
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intangible assets), financial condition or results of operations of the Company
and its subsidiaries or Guarantor and its subsidiaries, as the case may be, in
each case taken as a whole, excluding the effects of changes to the extent
arising from or related to (A) the United States or global economy or capital
markets generally, (B) general changes in conditions in the industries in which
the Company or Guarantor, as the case may be, conducts business (including as a
result of acts of war or terrorism or other hostilities or threat of war or
terrorism) or (C) this Agreement, the transactions contemplated hereby or the
announcement hereof or thereof, including any effects on personnel, customers
and suppliers or (ii) materially adversely affects the ability of the Company or
Acquiror and Guarantor, as the case may be, timely to perform the obligations or
consummate the transactions contemplated by this Agreement and, in the case of
Guarantor, the Guarantee;
(j) "NYSE" means the New York Stock Exchange;
(k) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other entity
or group (as defined in Section 13(d)(3) of the Exchange Act);
(l) "SEC" means the Securities and Exchange Commission;
(m) "Securities Act" means the Securities Act of 1933, as amended,
and the SEC's rules and regulations promulgated thereunder; and
(n) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Acquiror, Guarantor or any other person means any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the Company, the Surviving Corporation, Acquiror, Guarantor or such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
When reference is made in this Agreement to the Company, Acquiror or
Guarantor, such reference shall include their respective subsidiaries, as and to
the extent the context so requires, whether or not explicitly stated in this
Agreement.
In this Agreement (i) words denoting the singular include the plural
and vice versa, (ii) "it" or "its" or words denoting any gender include all
genders, (iii) the word "including" shall mean "including without limitation"
and (iv) any reference herein to a Section, Article or Schedule refers to a
Section or Article of or a Schedule to this Agreement, unless otherwise stated.
Any representation or warranty as to the enforceability of any
agreement or commitment is subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity (regardless
of whether considered in a proceeding in equity or at law).
SECTION 8.04 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to
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the Effective Time; provided, however, that, after approval of the principal
terms of this Agreement by the shareholders of the Company, no amendment may be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended, except by an instrument in
writing signed by the parties hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 8.06 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07 Severability. (a) If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
(b) The Company and Acquiror agree that the Fee provided in Section
7.03(b) is fair and reasonable in the circumstances. If a court of competent
jurisdiction shall nonetheless, by a final, nonappealable judgment, determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
SECTION 8.08 Entire Agreement. This Agreement and Guarantor's
guarantee hereof constitute the entire agreement and supersede all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matters hereof and thereof, except as otherwise expressly provided herein or
therein.
SECTION 8.09 Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that all or any of the rights of Acquiror
hereunder may be assigned to Guarantor or any direct or indirect wholly-owned
subsidiary of Guarantor, provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
SECTION 8.10 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 or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including by way of subrogation, other
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than Section 5.06 (which is intended to be for the benefit of the Indemnified
Parties and Covered Persons and may be enforced by such Indemnified Parties and
Covered Persons) and Section 7.03 (which contains provisions intended to be for
the benefit of Guarantor and may be enforced by Guarantor) and other than the
right of the shareholders of the Company to receive the Merger Consideration if,
but only if, the Merger is consummated and not otherwise (regardless of the
reason for the Merger not being consummated).
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.12 Governing Law; Jurisdiction. (a) This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of New York applicable to contracts executed and fully performed within the
State of New York, except to the extent that the CGCL applies and, to that
extent, by the internal laws of the State of California or to the extent the
NGCL applies and, to the extent, by the internal laws of the State of Nevada.
(b) Each of the parties hereto submits to the jurisdiction of the
courts of the State of New York and the federal courts of the United States
located in the City of New York, Borough of Manhattan, with respect to any claim
or cause of action arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.13 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts
(by facsimile or original signature), each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 8.14 Waiver of Jury Trial. EACH OF ACQUIROR AND THE COMPANY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.15 Performance of Guarantee. Unless otherwise previously
performed, Acquiror shall cause Guarantor to perform all of its obligations
under the Guarantee.
SECTION 8.16 Enforcement. The parties 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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IN WITNESS WHEREOF, Acquiror and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TYCO ACQUISITION CORP. 33
By: /s/ Xxxx X. Xxxxx
_______________________
Name: Xxxx X. Xxxxx
Title:
XXXXXXX RENTCORP
By: /s/ Xxxxxx X. XxXxxxx
_______________________
Name: Xxxxxx X. XxXxxxx
Title:
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GUARANTEE
Tyco International Ltd. ("Guarantor") irrevocably guarantees each and
every representation, warranty, covenant, agreement and other obligation of
Acquiror and/or any of its permitted assigns (and where any such representation
or warranty is made to the knowledge of Acquiror, such representation or
warranty shall be deemed made to the knowledge of Guarantor), and the full and
timely performance of their respective obligations under the provisions of the
foregoing Agreement between Tyco Acquisition Corp. 33 and XxXxxxx RentCorp. This
is a guarantee of payment and performance, and not of collection, and Guarantor
acknowledges and agrees that this guarantee is full and unconditional, and no
release or extinguishment of Acquiror's obligations or liabilities (other than
in accordance with the terms of the Agreement), whether by decree in any
bankruptcy proceeding or otherwise, shall affect the continuing validity and
enforceability of this guarantee, as well as any provision requiring or
contemplating performance by Guarantor.
Guarantor hereby waives, for the benefit of the Company, (i) any right
to require the Company, as a condition of payment or performance by Guarantor,
to proceed against Acquiror or pursue any other remedy whatsoever and (ii) to
the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, except to the extent that any such defense is available
to Acquiror.
Without limiting in any way the foregoing guarantee, Guarantor covenants
and agrees to take all actions to enable Acquiror to adhere to each provision of
the Agreement which requires an act or omission on the part of Guarantor or any
of its subsidiaries to enable Acquiror to comply with its obligations under the
Agreement.
The provisions of Article VIII of the Agreement are incorporated herein,
mutatis mutandis, except that notices and other communications hereunder to
Guarantor shall be delivered to Tyco International Ltd., The Zurich Centre,
Second Floor, 90 Xxxxx Bay Road, Pembroke HM 08, Bermuda, Attn: Chief Corporate
Counsel and Chief Financial Officer, Telecopy No. (000) 000-0000, Confirm No.
(000) 000-0000 (with a copy as provided therefor in Section 8.02).
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
We understand that the Company is relying on this guarantee in entering
into the Agreement and may enforce this guarantee as if Guarantor were a party
thereto.
TYCO INTERNATIONAL LTD.
By:/s/ Xxxx Xxxxxx
-------------------------
Name: Xxxx Xxxxxx
Title: Chief Financial Officer
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