Exhibit (d)(1)
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EM HOLDINGS, INC.,
A DELAWARE CORPORATION,
EMPIRE ACQUISITION CORP.,
A DELAWARE CORPORATION,
AND
EMACHINES, INC.,
A DELAWARE CORPORATION
As Amended and Restated November 26, 2001.
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS ..................................................... 2
ARTICLE 2. THE TENDER OFFER ................................................ 9
2.1 The Tender Offer .................................................. 9
2.2 Company Actions ................................................... 11
2.3 Directors ......................................................... 13
ARTICLE 3. THE MERGER ...................................................... 14
3.1 The Merger ........................................................ 14
3.2 Merger Consideration And Cancellation Of Shares ................... 15
3.3 Payment of Cash for Shares ........................................ 15
3.4 Dissenting Shares ................................................. 17
3.5 Stock Options ..................................................... 18
3.6 The Closing ....................................................... 18
ARTICLE 4. REPRESENTATIONS AND WARRANTIES CONCERNING PARENT AND BUYER ...... 19
4.1 Entity Status ..................................................... 19
4.2 Power and Authority; Enforceability ............................... 19
4.3 Consents and Approvals; No Defaults ............................... 19
4.4 Ownership of Buyer; Buyer's Operations ............................ 20
4.5 Brokers' Fees ..................................................... 20
4.6 Ability to Consummate the Transactions ............................ 20
4.7 Statements True and Correct ....................................... 21
4.8 Regulatory Approvals .............................................. 21
ARTICLE 5. REPRESENTATIONS AND WARRANTIES CONCERNING THE ACQUIRED ENTITIES . 21
5.1 Corporate Status .................................................. 21
5.2 Power and Authority; Enforceability ............................... 21
5.3 Consents and Approvals; No Defaults ............................... 22
5.4 Brokers' Fees ..................................................... 22
5.5 Capitalization .................................................... 23
5.6 Company Subsidiaries .............................................. 23
5.7 Company Reports and Financial Statement ........................... 23
5.8 Subsequent Events ................................................. 24
5.9 Legal Compliance .................................................. 24
5.10 Tax Matters ....................................................... 25
5.11 Title to Assets ................................................... 25
5.12 Intellectual Property ............................................. 26
5.13 Material Contracts; Defaults ...................................... 27
5.14 Litigation ........................................................ 27
5.15 Labor; Employees .................................................. 27
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5.16 Employee Benefits ................................................. 27
5.17 Statements True and Correct ....................................... 29
5.18 Regulatory Approvals .............................................. 29
5.19 Opinion of Financial Advisor ...................................... 29
ARTICLE 6. COVENANTS ....................................................... 29
6.1 Notices and Consents .............................................. 29
6.2 Operation of Business ............................................. 30
6.3 Access to Information ............................................. 33
6.4 Acquisition Proposal .............................................. 33
6.5 Covenants to Satisfy Conditions ................................... 35
6.6 Disclosure Prior to Closing ....................................... 35
6.7 Indemnification and Directors' and Officer's Insurance ............ 36
6.8 Financing Agreements. ............................................. 37
6.9 Publicity. ........................................................ 37
6.10 Escrow Funding. ................................................... 37
ARTICLE 7. CLOSING CONDITIONS .............................................. 38
7.1 General Conditions ................................................ 38
ARTICLE 8. TERMINATION ..................................................... 39
8.1 Termination of Agreement .......................................... 39
8.2 Manner and Effect of Termination .................................. 40
8.3 Certain Payments Upon Termination ................................. 40
ARTICLE 9. MISCELLANEOUS ................................................... 41
9.1 Entire Agreement; Third Party Beneficiaries ....................... 41
9.2 Successors ........................................................ 41
9.3 Assignments ....................................................... 41
9.4 Notices ........................................................... 41
9.5 Specific Performance .............................................. 42
9.6 Counterparts ...................................................... 43
9.7 Headings .......................................................... 43
9.8 Governing Law ..................................................... 43
9.9 Amendments and Waivers ............................................ 43
9.10 Severability ...................................................... 43
9.11 Expenses .......................................................... 43
9.12 Construction ...................................................... 43
9.13 Non-Survival of Representations and Warranties .................... 44
9.14 Submission to Jurisdiction ........................................ 44
9.15 Buyer Compliance .................................................. 44
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ATTACHMENTS
Exhibit A Buyer Option Agreement
Exhibit B Certificate of Merger
Annex A Offer Conditions
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AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of November 19, 2001, as amended and restated as of November 26, 2001,
by and among EM Holdings, Inc., a Delaware corporation ("Parent"), Empire
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Buyer"), and eMachines, Inc., a Delaware corporation (the "Company,"
and together with its Subsidiaries from time to time (except as the context
herein may otherwise require), the "Acquired Entities"). Capitalized terms used
herein without definition have the meanings set forth in ARTICLE 1 or elsewhere
in this Agreement.
The parties entered into this Agreement on November 19, 2001 and desire
to amend and restate this Agreement in its entirety as set forth herein. For
purposes of this amended and restated Agreement, all references to "as of the
date hereof" means as of November 19, 2001.
RECITALS
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WHEREAS, the Company Board and the respective Board of Directors of
each of Parent and Buyer each has approved and determined that it is fair,
advisable and in the best interests of its respective stockholders (other than,
in the case of the Company, Mr. Lap Xxxx Xxx, Korea Data Systems (USA), Inc.
("KDS USA"), Parent and their respective Affiliates) to effect a merger of Buyer
with and into the Company, with the Company as the surviving corporation,
pursuant to the Certificate of Merger and upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Buyer shall
commence a cash tender offer (the "Offer") to acquire any and all of the
outstanding shares of Company Common Stock at a price of $1.06 per share (such
amount, or any greater amount per share paid pursuant to the Offer, being
hereinafter referred to as the "Offer Price"), net to the seller in cash,
without interest, less any required withholding taxes, in accordance with the
terms and subject to the conditions provided herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Parent and Buyer to
enter into this Agreement, certain Company Stockholders have entered or will
enter into separate Stock Purchase Agreements (the "Stock Purchase Agreements"),
pursuant to which those stockholders have conditionally agreed to sell to Buyer
shares of Common Stock beneficially owned by such stockholders concurrently with
or subsequent to the Buyer's acceptance and purchase of the Shares upon the
closing of the Offer.
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Parent and Buyer to
enter into this Agreement, the Company has granted to Buyer, pursuant to an
agreement in the form attached hereto as Exhibit A (the "Buyer Option
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Agreement"), an option (the "Buyer Option") to acquire from the Company in
certain circumstances a sufficient number of Shares ("Buyer Option Shares"),
when taken together with all other outstanding Shares to be acquired by or
beneficially held by Buyer or its Affiliates at or prior to the date on which
the Shares are accepted and purchased in the Offer (the "Funding Date"), to
permit the Merger to be effected pursuant to Section 253 of the DGCL.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants contained herein and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
"Acquired Entities" is defined in the preamble to this Agreement.
"Acquisition Proposal" is defined in Section 6.4.
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"Action" means any action, appeal, petition, plea, charge, complaint,
claim, suit, litigation, arbitration, mediation, hearing, inquiry, investigation
or similar event, occurrence or proceeding.
"Affiliate" with respect to any specified Person, means a Person that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified Person.
"Affiliated Group" means any affiliated group under Code Section
1504(a) or any similar group defined under provisions of applicable Law.
"Balance Sheet Date" is defined in Section 5.7.
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"Breach" means any breach, inaccuracy, failure to perform, failure to
comply, conflict with, default, violation, acceleration, termination or
cancellation.
"Business Day" means any day other than a day on which the Over the
Counter Bulletin Board is closed for trading.
"Buyer" is defined in the preamble to this Agreement.
"Buyer Option" is defined in the recitals to this Agreement.
"Buyer Option Agreement" is defined in the recitals to this Agreement.
"Buyer Option Shares" is defined in the recitals to this Agreement.
"Cash Amount" is defined in Section 3.5(a)
"Certificate of Merger" is defined in Section 3.1.
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"Changeover Time" means 11:59 PM on the first date on which each of
the following have occurred: (a) the acceptance for payment by Buyer of the
Shares pursuant to the Offer and (b) the Company has taken and caused to be
taken, all actions required to permit the immediate appointment of the number of
directors that Parent is entitled to designate pursuant to Section 2.3 of this
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Agreement.
"Closing Date" is defined in Section 3.6.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" is defined in the preamble to this Agreement.
"Company Board" means the Board of Directors of the Company.
"Company Common Stock" means the Company's common stock, $.0000125 par
value.
"Company Disclosure Letter" is defined in ARTICLE 5.
"Company Option" is defined in Section 3.5.
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"Company Option Plan" is defined in Section 3.5.
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"Company Reports" is defined in Section 5.7.
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"Company Stockholders" means the stockholders of the Company as they
may be constituted from time-to-time.
"Consent" means any consent, approval, notification, waiver, or other
similar action required pursuant to a Contract.
"Contract" means any Enforceable contract, agreement, arrangement,
commitment, letter of intent, memorandum of understanding, promise, obligation,
right or instrument, whether written or oral.
"Continuing Director" is defined in Section 2.3.
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"Copyrights" means all copyrights in both published works and
unpublished works including any registrations and applications therefor and
whether registered or unregistered.
"Debt Commitment Letter" means the debt commitment letter attached to
the Parent Disclosure Letter and any definitive agreements entered into by the
parties thereto relating to the commitments set forth therein.
"Disclosure Letters" means the Company Disclosure Letter and the Parent
Disclosure Letter.
"Dissenting Shares" is defined in Section 3.4.
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"DGCL" means the Delaware General Corporation Law.
"Effective Time" is defined in Section 3.1(a).
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"Employee Benefit Plans" means all employee benefit plans or
arrangements of any kind, including without limitation, bonus deferred
compensation, incentive compensation, equity compensation, equity purchase,
equity option, equity appreciation rights, restricted equity, severance or
termination pay, fringe benefit, vacation, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, savings,
pension, retirement, or supplemental retirement plan, program, agreement or
arrangement, whether or not a plan described in Section 3(3) of ERISA.
"Employee Pension Benefit Plan" has the meaning ascribed to such term
in Section 3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning ascribed to such term
in Section 3(1) of ERISA.
"Encumbrance" means any mortgage, Security Interest, lien,
hypothecation, pledge, charge or encumbrance of any kind, easement, covenant,
community property interest, equitable interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other general attribute of ownership.
"Enforceable" a Contract is "Enforceable" if it is the legal, valid,
and binding obligation of the applicable Person, enforceable against such Person
in accordance with its terms, except as such enforceability may be subject to
the effects of bankruptcy, insolvency, reorganization, moratorium, or other Laws
relating to or affecting the rights of creditors, and general principles of
equity.
"Equity Commitment" means (a) options, warrants, convertible
securities, exchangeable securities, subscription rights, conversion rights,
exchange rights, or other Contracts that could require a Person to issue any of
its Equity Interests or to sell any Equity Interests it owns in another Person;
(b) any other securities convertible into, exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted
under a Person's Organizational Documents; and (d) stock appreciation rights,
phantom stock, profit participation, or other similar rights with respect to a
Person.
"Equity Commitment Letter" means the equity commitment letter attached
to the Parent Disclosure Letter.
"Equity Interest" means (a) with respect to a corporation, any and all
shares of capital stock and any Equity Commitments with respect thereto, (b)
with respect to a partnership, limited liability company, trust or similar
Person, any and all units, interests or other partnership/limited liability
company interests, and any Equity Commitments with respect thereto, and (c) any
other direct equity ownership or participation in a Person.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with any Acquired Entity within the meaning of Sections 414(b),
(c) or (m) of the Code, or required to be aggregated with any Acquired Entity
under Section 414(o) of the Code, or is under "common control" with any Acquired
Entity, within the meaning of Section 4001(a)(14) of ERISA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" is defined in Section 2.1.
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"Fiduciary" is defined in Section 3(21) of ERISA.
"Financial Advisor" is defined in Section 2.2(a).
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"Financial Statements" is defined in Section 5.7.
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"Financing Agreement" is defined in Section 4.6.
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"Funding Date" is defined in the recitals to this Agreement.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means any legislature, agency, bureau, branch,
department, division, commission, court, tribunal, magistrate, justice,
multi-national organization, quasi-governmental body, or other similar
recognized organization or body of any federal, state, county, municipal, local,
or foreign government or other similar recognized organization or body
exercising similar powers or authority.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Liabilities" is defined in Section 6.7(a).
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"Indemnified Persons" is defined in Section 6.7(a).
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"Insured Parties" is defined in Section 6.7.
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"Intellectual Property" means any Marks, Patents, Copyrights, Trade
Secrets or rights, licenses, liens, security interests, charges, encumbrances,
equities and other claims that any Person may have to claim ownership,
authorship or invention, to use, to object to or prevent the modification of, to
withdraw from circulation or control the publication or distribution of any
Marks, Patents, Copyrights, or Trade Secrets.
"Knowledge" (i) when used in this Agreement with reference to the
Company, shall be deemed to mean and refer to the actual knowledge of the
Company's executive officers, and (ii)
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when used in this Agreement with reference to Parent or Buyer, shall be deemed
to mean and refer to the actual knowledge of Parent's executive officers.
"Law" means any law (statutory, common, or otherwise), constitution,
treaty, convention, ordinance, code, rule, regulation, executive order, or other
similar authority enacted, adopted, promulgated, or applied by any Governmental
Entity, each as amended and now in effect.
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
"Lender" is defined in Section 2.2(d).
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"Marks" means all fictitious business names, trading names, corporate
names, registered and unregistered trademarks, service marks, designs and
general intangibles of like nature and applications, together with all goodwill
related to the foregoing.
"Material Adverse Change (or Effect)" means any material adverse effect
on (i) the business, financial condition or operations of a Person, which in the
case of the Company or Parent shall be viewed together with its respective
Subsidiaries on a consolidated basis or (ii) the ability of the Company to
consummate the transactions contemplated by this Agreement; provided, however,
that in the case of the Company, (A) conditions, events or circumstances
generally adversely affecting the United States economy, the United States
securities markets, or the retail personal computer industry, or (B) the
announcement or pendency of the offer or the transactions contemplated by this
Agreement, shall not be taken into account in determining whether there has been
or would be a material adverse effect.
"Merger" is defined in Section 3.1.
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"Merger Consideration" means the cash paid to the holders of the Shares
pursuant to ARTICLE 3 hereof.
"Multi-employer Plan" is defined in ERISA Section 3(37).
"NASD" means the National Association of Securities Dealers, Inc.
"Order" means any order, ruling, decision, verdict, decree, writ,
subpoena, mandate, precept, command, directive, consent, approval, award,
judgment, injunction, or other similar determination or finding by, before, or
under the supervision of any Governmental Entity, arbitrator or mediator.
"Offer" is defined in the recitals to this Agreement.
"Offer Conditions" is defined in Section 2.1.
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"Offer Documents" is defined in Section 2.1(g).
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"Offer Price" is defined in the recitals to this Agreement.
"Options" means the options to purchase shares of capital stock of the
Company.
"Ordinary Course of Business" means, with respect to any Person, that
Person's ordinary course of business consistent with past custom and practice
(including with respect to quantity, quality and frequency).
"Organizational Documents" means the articles of incorporation,
certificate of incorporation, charter, bylaws, articles of formation,
regulations, operating agreement, certificate of limited partnership,
partnership agreement, and all other similar documents, instruments or
certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a non-natural Person, including any amendments
thereto.
"Parent" is defined in the preamble to this Agreement
"Parent Disclosure Letter" is defined in ARTICLE 4 below.
"Parent Expenses" is defined in Section 8.3(a).
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"Parties" means Parent, Buyer and the Company.
"Patents" means all (A) patents and patent applications and any
continuations, continuations in part, renewals and applications therefor, and
(B) any inventions and discoveries that may be patentable.
"Paying Agent" is defined in Section 3.3.
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"Permit" means any permit, license, certificate, approval, consent,
notice, waiver, franchise, registration, filing, accreditation, or other similar
authorization required by any Law or Governmental Entity.
"Per Share Amount" is defined in Section 3.2(a)
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"Person" means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, entity, joint venture,
labor organization, unincorporated organization, or Governmental Entity.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Prohibited Transactions" is defined in ERISA Section 406 and Code
Section 4975.
"Schedule 13E-3" is defined in Section 2.1(f).
"Schedule 14D-9" is defined in Section 2.2(c).
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"Schedule TO" is defined in Section 2.1(g).
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Laws" is defined in Section 5.7
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"Security Interest" means any security interest, deed of trust,
mortgage, pledge, lien, charge, claim, or other similar interest or right except
for (i) liens for taxes, assessments, governmental charges, or claims which are
not yet due and payable or are being duly contested in good faith by appropriate
Actions, (ii) statutory liens of landlords and warehousemen's, carriers',
mechanics', suppliers', materialmen's, repairmen's, or other like liens
(including Contractual landlords' liens) arising in the Ordinary Course of
Business or with respect to amounts not yet delinquent and being contested in
good faith by appropriate Actions; and (iii) liens incurred or deposits made in
the Ordinary Course of Business in connection with workers' compensation,
unemployment insurance and other similar types of social security.
"September 2001 Financial Statement" is defined in Section 5.7.
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"Share" means any share of the Company Common Stock.
"Share Certificates" is defined in Section 3.3.
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"Software" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code; (ii) testing, validation, verification and quality
assurance materials; (iii) databases, conversion, interpreters and compilations,
including any and all data and collections of data, whether machine readable or
otherwise; (iv) descriptions, schematics, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing; (v) software
development processes, practices, methods and policies recorded in permanent
form, relating to any of the foregoing; (vi) performance metrics, sightings, bug
and feature lists, build, release and change control manifests recorded in
permanent form, relating to any of the foregoing; and (vii) all documentation,
including user manuals, web materials, and architectural and design
specifications and training materials, relating to any of the foregoing.
"Stock Purchase Agreement" is defined in the recitals of this
Agreement.
"Subsidiary" means, with respect to any Person: (a) any corporation of
which more than 50% of the total voting power of all classes of the Equity
Interests entitled (without regard to the occurrence of any contingency) to vote
in the election of directors is owned by such Person directly or through one or
more other Subsidiaries of such Person and (b) any Person other than a
corporation of which at least a 50% of the Equity Interest (however designated)
entitled (without regard to the occurrence of any contingency) to vote in the
election of the governing body, partners, managers or others that will control
the management of such entity is owned by such Person directly or through one or
more other Subsidiaries of such Person.
"Surviving Corporation" is defined in Section 3.1.
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"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs, ad valorem, duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to any Taxes required to be filed with
any Governmental Entity, including any schedule or attachment thereto, and
including any amendment thereof.
"Termination Date" is defined in Section 8.1(b)(ii)
"Termination Fee" is defined in Section 8.3(a).
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"Threatened" means a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing), has been asserted,
commenced, or otherwise taken.
"Trade Secrets" means all know-how, trade secrets, confidential
information, customer lists, Software, databases, works of authorship, mask
works, technical information, data, process technology, plans, drawings, blue
prints know-how, proprietary processes, formulae, algorithms, models, user
interfaces, inventions, discoveries, concepts, ideas, techniques, methods,
methodologies and, with respect to all of the foregoing, related confidential
data or information.
"Transaction Documents" means this Agreement, the Stock Purchase
Agreement and the Buyer Option Agreement.
ARTICLE 2.
THE TENDER OFFER
2.1 The Tender Offer
(a) Provided that this Agreement has not been terminated in accordance
with ARTICLE 8 and none of the events referred to in paragraphs (a)-(h) of Annex
A has occurred and is continuing (and shall not have been waived by Parent), as
promptly as practicable, but in no event later than five (5) Business Days from
the date hereof, Buyer shall (and Parent shall cause Buyer to) commence (within
the meaning of Rule 14d-2 under the Exchange Act) the Offer for any and all
Shares at the Offer Price, net to the seller in cash, without interest, less any
required withholding taxes. The Offer initially shall expire at 9:00 a.m.
Eastern time on the twenty-first Business Day following the date of commencement
of the Offer (such date and time, as extended in accordance with the terms
hereof, the "Expiration Date"). The obligation of Parent and Buyer to commence
the Offer shall be subject only to the provisions of this Section 2.1 and the
obligation of Parent and Buyer to accept for payment, purchase, and pay for any
Shares validly tendered and not withdrawn pursuant to the Offer shall be subject
only to the provisions of this Section 2.1 and the conditions set forth in
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Annex A hereto (the "Offer Conditions").
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(b) Buyer specifically reserves the right to increase the Offer Price and
to make any other changes in the terms and conditions of the Offer; provided
that, unless previously approved by the Company in writing, no change may be
made that: (i) decreases the Offer Price; (ii) changes the form of consideration
to be paid in the Offer; (iii) reduces the number of Shares to be purchased in
the Offer; (iv) imposes conditions to the Offer in addition to the Offer
Conditions; (v) amends any other term of the Offer in any manner materially
adverse to the holders of the Shares (vi) amends the Minimum Condition such that
the number of Shares required to be tendered to satisfy such condition (when
added to the number of Shares held by Mr. Lap Xxxx Xxx, KDS USA, Parent and
their respective affiliates and the number of Shares purchasable by Buyer
pursuant to the Stock Purchase Agreements) is less than eighty percent (80%) of
the outstanding Shares or waives the Minimum Condition, or (vii) waives or
amends clause (iv) of Annex A.
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(c) Subject to the provisions of ARTICLE 8 and Section 2.1(d) hereof, if on
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the initial Expiration Date of the Offer, all of the Offer Conditions are not
then satisfied or waived, Buyer may, from time to time, in its sole discretion,
extend the Expiration Date. Without limiting the generality of the foregoing,
Buyer may, without the consent of the Company, extend any then scheduled
Expiration Date of the Offer for any period required by applicable rules,
regulations, interpretations or positions of the SEC or the staff thereof
applicable to the Offer or for any period required by applicable law. Buyer may
provide for a "subsequent offering periods" (as contemplated by Rule 14d-11 of
the Exchange Act) of not less than three nor more than twenty Business Days
following its acceptance of, and payment for, the Shares in the Offer.
(d) Notwithstanding the foregoing, Buyer shall be obligated to extend the
Offer from time to time until the Termination Date if, at the Expiration Date as
initially scheduled, or any extension thereof, the Offer Conditions have not
been satisfied or waived, provided, however, that Buyer shall not be required to
extend the Offer as provided in this sentence unless, in Parent's reasonable
judgment, each such Offer Condition is reasonably capable of being satisfied;
provided further, that the foregoing proviso shall not apply (A) if the failure
of Parent or Buyer to fulfill any obligation under the Agreement resulted in the
failure of any such Offer Condition or (B) if the Offer Condition that has not
been satisfied or waived is the Offer Condition set forth in clause (ii) or
clause (iv) of Annex A.
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(e) Subject to Section 2.1(b) hereof, the Parties agree that the Offer
Conditions are for the sole benefit of Buyer and may be asserted by Buyer
regardless of the circumstances giving rise to any such Offer Condition or may
be waived by Buyer, in whole or in part, at any time and from time to time, in
its sole discretion. The failure by Buyer at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to other facts or circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
(f) Subject to the terms and conditions of the Offer and this Agreement,
Buyer shall (and Parent shall cause Buyer to) accept for payment, and pay for,
all Shares validly tendered and not withdrawn pursuant to the Offer that Buyer
becomes obligated to accept for payment and pay for pursuant to the Offer, as
promptly as practicable after the Expiration Date.
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(g) As soon as practicable on the date of commencement of the Offer,
Parent and Buyer shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule TO") and a Statement on
Schedule 13E-3 which shall be filed as part of the Schedule TO (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 13E-3"). The Schedule TO shall contain or shall incorporate by
reference the offer to purchase, related letter of transmittal, summary
advertisement and other ancillary offer documents and instruments pursuant to
which the Offer will be made (such Schedule TO, including the Schedule 13E-3 and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents") with
respect to the Offer. Parent and Buyer will take all steps necessary to amend or
supplement the Offer Documents to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and Buyer agree that the Offer
Documents shall comply as to form in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Offer Documents, on
the date filed with the SEC and on the date first published, sent or given to
the Company Stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation or
warranty is made by Parent or Buyer with respect to information supplied by the
Company or any of its stockholders specifically for inclusion or incorporation
by reference in the Offer Documents and not subsequently corrected prior to
filing. Each of Parent, Buyer and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect. Parent and Buyer each further agrees to take all steps necessary to
amend or supplement the Offer Documents or the Schedule 13E-3 to be filed with
the SEC and disseminated to the Company Stockholders, in each case as and to the
extent required by applicable Law. The Company and its counsel shall be given an
opportunity to review and comment upon the Offer Documents (and shall provide
any comments thereon as soon as practicable to counsel for Buyer) prior to their
filing with the SEC or dissemination to the Company Stockholders. Parent and
Buyer each agrees to provide the Company and its counsel any comments Parent,
Buyer or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
2.2 Company Actions
(a) The Company hereby represents and warrants that the Company Board,
at a meeting duly called and held (i) determined that this Agreement and the
transactions contemplated herein are fair to, advisable and in the best
interests of, the Company and the Company Stockholders (other than Mr. Lap Xxxx
Xxx, KDS USA, Parent and their respective Affiliates); (ii) resolved subject to
Section 6.4, hereof, to recommend that the Company Stockholders accept the
-----------
Offer, tender their Shares pursuant to the Offer and approve the Merger; (iii)
approved and adopted this Agreement and the Buyer Option Agreement and the
transactions contemplated hereby such approval constituting approval of the
foregoing for purposes of Section 203 of the DGCL and (iv) approve the Stock
Purchase Agreement, the transactions contemplated by the Stock Purchase
Agreements and the execution of the Stock Purchase
11
Agreements solely for the purposes of Section 203 of the DGCL. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
and approval of the Company Board described in this Section 2.2(a) (subject to
--------------
the right of the Company Board to modify or withdraw such recommendations in
accordance with Section 6.4).
-----------
(b) The Company also represents and warrants that the Company Board has
received the written opinion of Credit Suisse First Boston Corporation (the
"Financial Advisor") referred to in Section 5.19. The Company further represents
and warrants that it has been authorized by the Financial Advisor to permit,
subject to prior review and consent by the Financial Advisor (such consent not
to be unreasonably withheld), and the Company hereby consents to, the inclusion
of such fairness opinion (or a reference thereto) in the Offer Documents and in
the Schedule 14D-9 referred to below.
(c) The Company shall file with the SEC concurrently with the commencement
of the Offer, or as promptly thereafter as practicable, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
schedules, amendments and supplements thereto, the "Schedule 14D-9") containing
the recommendations of the Company Board in favor of the Offer and the Merger
(subject to the right of the Company Board to modify or withdraw such
recommendation in accordance with Section 6.4) and the opinion of the Financial
-----------
Advisor referred to in Section 5.19 (subject to the their approval as described
------------
in Section 2.2(b)). The Schedule 14D-9 shall comply as to form in all material
--------------
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Company shall cause the Schedule 14D-9 to be mailed
to the Company Stockholders promptly after commencement of the Offer and at the
same time the Offer Documents are first mailed to the Company Stockholders. On
the date filed with the SEC and on the date first published, sent or given to
the Company Stockholders, the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Buyer specifically for inclusion or incorporation by
reference in the Schedule 14D-9. Each of the Company, Parent and Buyer agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company Stockholders, in each case as and to the extent required by
applicable Law. Parent, Buyer and their counsel shall be given an opportunity to
review and comment upon the Schedule 14D-9 (and shall provide any comments
thereon as soon as practicable to counsel for the Company) prior to its filing
with the SEC or dissemination to Company Stockholders. The Company agrees to
provide Parent, Buyer and their counsel any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(d) In connection with the Offer and the Merger, the Company shall promptly
furnish or cause its transfer agent to promptly furnish Buyer with mailing
labels containing the names and addresses of the record holders of Shares as of
the most recent practicable date and of
12
those Persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Parent such information
and assistance (including updated mailing labels, lists of stockholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer and the Merger to the Company Stockholders. Subject
to the requirements of applicable Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Buyer and their agents shall hold in
confidence the information contained in any such labels, listings and files
pursuant to the Confidentiality Agreement dated November 12, 2001 by and among
Parent, the Company and Mr. Lap Xxxx Xxx (the "Confidentiality Agreement"), and
will use such information only in connection with the Offer and the Merger. In
connection with the Offer, the Company will furnish Parent with such information
(which will be treaded as confidential and held in confidence by Parent) and
assistance as Parent or its officers, employees, accountants, counsel and other
representatives may reasonably request in connection with the preparation of the
Offer and communicating the Offer to the record and beneficial holders of shares
of Common Stock. If this Agreement is terminated, Parent and Buyer will upon the
written request of the Company, promptly deliver or cause to be delivered to the
Company all copies of any such information provided under this paragraph then in
its possession or in the possession of its agents or representatives.
2.3 Directors
Effective upon the acceptance for payment by Buyer of the Shares pursuant
to the Offer on the Funding Date, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of: (i) the total number of directors on the Company
Board (giving effect to the election of any additional directors pursuant to
this Section 1.3); and (ii) the percentage that the number of Shares owned by
-----------
Parent and Buyer (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all action reasonably
necessary to cause Parent's designees to be elected or appointed to the Company
Board, including, without limitation, at the option of Parent, increasing the
number of directors, or seeking and accepting resignations of incumbent
directors, or both; provided, however, that prior to the Effective Time, the
Company Board shall always have at least two members who were directors of the
Company prior to consummation of the Offer and who are not affiliated with
Parent or Buyer (each, a "Continuing Director"). If the number of Continuing
Directors is reduced to fewer than two for any reason prior to the Effective
Time, the remaining and departing Continuing Directors shall be entitled to
designate a person to fill the vacancy. Notwithstanding anything in this
Agreement to the contrary, if Parent's designees are elected to the Company
Board prior to the Effective Time, the affirmative vote of a majority of the
Continuing Directors shall be required for the Company to: (a) amend or
terminate this Agreement or agree or consent to any amendment or termination of
this Agreement; (b) waive any of the Company's rights, benefits or remedies
hereunder; (c) extend the time for performance of Parent's and Buyer's
respective obligations hereunder; or (d) approve any other action by the Company
which is reasonably likely to adversely affect the interests of the Company
Stockholders (other than Parent, Buyer and their Affiliates (other than
13
the Company and its Subsidiaries)) with respect to the transactions contemplated
by this Agreement.
ARTICLE 3.
THE MERGER
3.1 The Merger
Subject to the terms and conditions hereof, and in accordance with the
DGCL, Buyer shall be merged with and into the Company at the Effective Time (the
"Merger"). Upon consummation of the Merger, the separate existence of Buyer
shall cease and the Company shall be the surviving corporation (the "Surviving
Corporation") and a wholly-owned subsidiary of Parent.
(a) As soon as practicable after satisfaction of (or, to the extent
permitted hereunder, waiver of) all conditions to the Merger, the Company and
Buyer will file a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in accordance with the DGCL (in the
form attached hereto as Exhibit B) and make all other filings or recordings
---------
required by applicable Law in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is filed with the
Secretary of State of the State of Delaware or at such later time as is
specified in the Certificate of Merger (the "Effective Time").
(b) At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Buyer
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and Buyer shall become the debts, liabilities and duties of the
Surviving Corporation.
(c) Notwithstanding the foregoing, in the event that Buyer acquires
at least 90% of the outstanding Shares, whether pursuant to the Offer or
pursuant to the Stock Purchase Agreements, the Buyer Option Agreement or
otherwise, the parties hereto agree, subject to Article 7, to take all necessary
---------
and appropriate action to cause the Merger to become effective, in accordance
with Section 253 of the DGCL, as soon as reasonably practicable on or after the
Funding Date.
(d) The Certificate of Incorporation of the Surviving Corporation
shall be amended and restated to read the same as the Certificate of
Incorporation of Buyer in effect at the Effective Time until amended in
accordance with applicable Law, provided, however, that Section I of the amended
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and restated Certificate of Incorporation of the Company as the Surviving
Corporation, instead of reading the same as Section I of the Certificate of
Incorporation of Buyer, shall read as follows: "The name of the corporation is
eMachines, Inc." The bylaws of the Surviving Corporation shall be amended and
restated to read the same as the bylaws of Buyer in effect at the Effective Time
until amended in accordance with applicable Law, except that all references in
such bylaws to Buyer shall be changed to refer to eMachines, Inc.
14
(e) The directors of Buyer at the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and bylaws of the Surviving Corporation until
such director's successor is duly elected or appointed and qualified or until
such director's earlier death, resignation or removal in accordance with the
Certificate of Incorporation and bylaws of the Surviving Corporation.
(f) The officers of Buyer at the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and bylaws of the Surviving Corporation until
such officer's successor is duly elected or appointed and qualified or until
such officer's earlier death, resignation or removal in accordance with the
Certificate of Incorporation and bylaws of the Surviving Corporation.
3.2 Merger Consideration And Cancellation Of Shares
At the Effective Time, pursuant to this Agreement and by virtue of the
Merger and without any action on the part of Parent, Buyer, the Company, or the
holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (including shares of Common Stock issued upon exercise of Options
and other convertible securities of the Company, but excluding any Dissenting
Shares, and shares to be cancelled pursuant to Section 3.2(b)), shall be
--------------
converted automatically into the right to receive an amount in cash equal to the
Offer Price (the "Per Share Amount"), without interest, payable to the holder
thereof, less any required withholding taxes, upon surrender of the certificate
formerly representing such share of Common Stock in the manner provided in
Section 3.3.
-----------
(b) Each Share held in the treasury of the Company or held by Parent
or Buyer or any other Subsidiary of Parent, if any, immediately prior to the
Effective Time, shall be cancelled without any conversion thereof and no payment
or distribution shall be made with respect thereto.
(c) Each outstanding share of common stock of Buyer shall be
converted into one (1) share of common stock of the Surviving Corporation.
(d) If between the date of this Agreement and the Effective Time the
number of outstanding shares of capital stock of the Company shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split-up,
combination, exchange of shares or the like other than pursuant to the Merger,
the Per Share Amount payable to each holder of Shares shall be correspondingly
adjusted.
3.3 Payment of Cash for Shares
(a) At the Effective Time, the Surviving Corporation shall
irrevocably deposit or cause to be deposited with a paying agent appointed by
Buyer and reasonably acceptable to the Company (the "Paying Agent"), as agent
for the holders of Shares to be cancelled in accordance with Section 3.2(a),
--------------
cash in the aggregate amount required to pay the Merger
15
Consideration in respect of such securities outstanding immediately prior to
the Effective Time. Pending distribution pursuant to Section 3.3(b) hereof of
--------------
the cash deposited with the Paying Agent, such cash shall be held in trust for
the benefit of the holders of the Shares converted pursuant to the Merger and
such cash shall not be used for any other purposes. Promptly, and in no event
later than five Business Days after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each Person who was, at the
Effective Time, a holder of record of Shares entitled to receive the Per Share
Amount pursuant to Section 3.2 hereof, a form of letter of transmittal (which
-----------
shall specify that delivery shall be effected, and risk of loss and title to the
certificates evidencing the Shares (the "Share Certificates") shall pass, only
upon proper delivery of the Share Certificate(s) to the Paying Agent) and
instructions for use in effecting the surrender of the Share Certificate(s)
pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a
Share Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Share Certificate shall be entitled to receive in exchange therefor the Per
Share Amount for each Share formerly evidenced by such Share Certificate, and
such Share Certificate shall thereupon be cancelled. No interest shall accrue or
be paid on the Per Share Amount payable upon the surrender of any Share
Certificate for the benefit of the holder of such Share Certificate and any
required withholding taxes on the Per Share Amount may be withheld by Buyer or
the Paying Agent. All interest accrued in respect of the cash deposited with the
Paying Agent shall accrue to the benefit of and be paid to the Surviving
Corporation.
(b) After surrender to the Paying Agent of any Share Certificate or other
instrument which prior to the Effective Time shall have represented any Shares,
the Paying Agent shall promptly distribute to the Person in whose name such
Share Certificate or other instrument shall have been registered, a check
representing the Merger Consideration that such Person has the right to receive
pursuant to the provisions of this ARTICLE 3. Until so surrendered and
cancelled, each such Share Certificate or other instrument shall, after the
Effective Time, be deemed to represent only the right to receive the Per Share
Amount, and until such surrender and cancellation, no cash shall be paid to the
holder of such outstanding Share Certificate or other instrument in respect
thereof. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease, except for Dissenting
Shares and otherwise as required by law, to have any rights with respect to such
Shares, other than the right to receive the Per Share Amount as provided in this
Agreement.
(c) If payment is to be made to a Person other than the registered holder
of the Shares represented by the Share Certificate or other instrument so
surrendered in exchange therefor, it shall be a condition to such payment that
the Share Certificate or other instrument so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Paying Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Paying Agent that
such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further transfers on the
stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, Share
Certificates representing the Shares are
16
presented to the Surviving Corporation, they shall be cancelled and
exchanged for the Per Share Amount provided for, and in accordance with the
procedures set forth in this ARTICLE 3.
(e) If any cash deposited with the Paying Agent for purposes of
payment in exchange for the Shares remains unclaimed one year after the
Effective Time, such cash shall be returned to the Surviving Corporation, upon
demand, and any such holder who has not converted the Shares into the Per Share
Amount or otherwise received the Per Share Amount pursuant to this Agreement
prior to that time shall thereafter look only to the Surviving Corporation for
payment of the Per Share Amount. Notwithstanding the foregoing, the Surviving
Corporation shall not be liable to any holder of Shares for any amount paid to a
public official pursuant to applicable unclaimed property laws. Any amounts
remaining unclaimed by holders of Shares seven (7) years after the Effective
Time (or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity) shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of any claims or interest of any Person previously
entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Paying Agent to pay for Shares for which dissenters' rights have been perfected
as provided in Section 3.4 hereof shall be returned to the Surviving Corporation
-----------
upon demand.
(g) No dividends or other distributions with respect to capital
stock of the Company with a record date after the Effective Time shall be paid
to the holder of any unsurrendered certificate for the Shares.
(h) In the event that any Share Certificate or other instrument
representing Shares shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such certificate or other
instrument to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such holder of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Share Certificate or other instrument, the
Paying Agent will issue in exchange for and in lieu of such lost, stolen or
destroyed certificate or other instrument representing the Shares, the Per Share
Amount, and unpaid dividends and distributions on Shares deliverable in respect
thereof, pursuant to this Agreement and the Merger, without interest and less
any required withholding taxes.
3.4 Dissenting Shares
Notwithstanding anything in this Agreement to the contrary, Shares
outstanding immediately prior to the Effective Time that are held by a holder
who has delivered a written demand for appraisal of such Shares in accordance
with Section 262 of the DGCL (the "Dissenting Shares") shall not be converted
into the right to receive the Per Share Amount as provided in Section 3.1
-----------
hereof, unless and until such holder fails to perfect or efficiently withdraws
or otherwise loses such holder's right to appraisal and payment under the DGCL.
Such holder shall be entitled to receive payment of the appraised value of such
Shares in accordance with the provisions of the DGCL; provided, that, such
-------- ----
holder complies with the provisions of Section 262 of the DGCL. If, after the
Effective Time, any such holder fails to perfect or effectively withdraws or
otherwise loses such holder's right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Per Share Amount, without
interest thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and, prior to the Effective
Time, Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
3.5 Stock Options
(a) At the Effective Time, each outstanding and unexercised option to
purchase Shares (a "Company Option") pursuant to the 1998 Stock Option Plan of
the Company (the "Company Option Plan") or pursuant to other compensatory option
plans or agreements set forth in Section 3.5(a) of the Disclosure Schedule,
--------------
whether vested or unvested, shall be converted into an obligation of the Company
to pay, and the right of the holder thereof to receive, in full satisfaction of
each Company Option, the "Cash Amount" with respect to such Company Option. The
"Cash Amount" for any Company Option shall equal the product of: (1) the excess,
if any, of the Offer Price over the exercise price per Share of such Company
Option and (2) the number of Shares underlying such Company Option. The Company
shall take all reasonable actions necessary to cause the Company's employees and
directors to consent, to the extent required, to the transactions contemplated
by this Section 3.5 no later than immediately prior to the Effective Time.
-----------
Except as may be otherwise agreed to by Parent or Buyer and the Company, as of
the Effective Time, (A) the Company Option Plan shall terminate, (B) the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any of its Subsidiaries shall be deleted and (C) no holder of Company Options or
any participant in the Company Option Plans or any other plans, programs or
arrangements shall have any rights thereunder to acquire any Equity Interests of
the Company, the Surviving Corporation or any subsidiary thereof. All Company
Options outstanding as of the date hereof and the price at which they are
exercisable are listed on Section 3.5(a) of the Company Disclosure Letter. The
--------------
Company and Parent agree that the Cash Amounts are the sole payments that will
be made with respect to or in relation to the Company Options.
(b) All warrants and other Equity Interests of the Company other than
Company Options (which shall be subject to the provisions of Section 3.5(a)
above) shall be canceled as of the Closing Date. At or before the Effective
Time, the Company shall use commercially reasonable efforts to take all actions,
in a manner reasonably satisfactory to Parent, necessary or advisable to give
effect to the foregoing provisions of this Section 3.5.
-----------
(c) As soon as practicable, and in no event greater than five
Business Days following, the Effective Time, Parent shall cause to be mailed to
the holder of each Company Option, the Cash Amount payable with respect to such
Company Option to such holder pursuant to Section 3.5(a) hereof.
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3.6 The Closing
18
The closing of the Merger (the "Closing") shall take place (i) at the
offices of Akin, Gump, Strauss, Xxxxx & Xxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 at 9:00 A.M. (Los Angeles time) on the Business Day on
which the Parties hereto designate as the closing date following the fulfillment
or waiver of the conditions set forth in ARTICLE 7 hereof in accordance with
this Agreement or (ii) at such other place and time and/or on such other date as
the Company and Parent may agree (the "Closing Date").
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
CONCERNING PARENT AND BUYER
Parent and Buyer each represent and warrant to the Company that, except as
set forth in the disclosure letter delivered at or prior to the execution of
this Agreement (the "Parent Disclosure Letter"):
4.1 Entity Status
Each of Parent and Buyer is a corporation duly created, formed or
organized, validly existing and in good standing under the Laws of the State of
Delaware. Parent and Buyer each has the requisite power and authority to own or
lease its properties and to carry on its business as currently conducted. Parent
has previously furnished to the Company complete and correct copies of its and
Buyer's Organizational Documents. Parent and Buyer are not in Breach of any
provisions of their respective Organizational Documents. Parent and Buyer each
are qualified to do business in all jurisdictions where such qualification is
required. There is no pending or Threatened Action for the dissolution,
liquidation, insolvency, or rehabilitation of Parent or Buyer.
4.2 Power and Authority; Enforceability
Parent and Buyer each has the requisite power and authority to execute and
deliver each Transaction Document to which it is party, and to perform and
consummate the Offer, the Merger and the other transactions contemplated hereby
and thereby. The execution, delivery and performance by Parent and Buyer of this
Agreement, the Buyer Option Agreement, and the consummation of the Offer, the
Merger and the other transactions contemplated hereby and thereby have been duly
authorized by the boards of directors of each of Parent and Buyer and by the
sole stockholder of Buyer, and no other corporate action on the part of Parent
or Buyer is necessary to authorize the execution and delivery or performance by
Parent and Buyer of this Agreement or the consummation of such transactions.
Each Transaction Document to which Parent and Buyer is a party has been duly
authorized, executed and delivered by, and is Enforceable against, Parent and
Buyer, respectively.
4.3 Consents and Approvals; No Defaults
(a) No consents or approvals of, or filings or registrations with, any
Governmental Entity or with any third party are required to be made or obtained
by Parent or Buyer in connection with the execution, delivery or performance by
Parent or Buyer of this Agreement except for (i) filings of applications,
registrations, statements, reports or notices (and
19
expiration of any applicable notice periods) with the United States Department
of Justice, the Federal Trade Commission, the SEC and state securities
authorities, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and (iii) consents, approvals, filings, or
registrations, the absence of which would not, individually or in the aggregate,
have a Material Adverse Effect on Parent or Buyer or adversely affect or delay
any of the transactions contemplated herein.
(b) Subject to receipt of the approvals referred to in the preceding
paragraph, and the expiration of related waiting periods, the execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby, and compliance with the provisions hereof do not and will
not (i) result in any Breach of the terms, conditions, or provisions of the
Organizational Documents of Parent or Buyer; (ii) result in a Breach of any
provisions of, or result in the creation or imposition of (or the obligation to
create or impose) any Encumbrance under, any of the terms, conditions or
provisions of any Contract, Order or Permit to which Parent or Buyer is a party
or by which it or any of its properties or assets may be bound or affected; or
(iii) violate any Law or Order applicable to Parent or Buyer, except for any
Breach, or Encumbrance which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent or Buyer or
adversely affect or delay any of the transactions contemplated herein.
4.4 Ownership of Buyer; Buyer's Operations
(a) As of the Effective Time, all of the outstanding capital stock of
Buyer will be owned directly by Parent.
(b) Buyer was formed solely for the purpose of engaging in the
transactions contemplated herein and has not engaged in any business activities
or conducted any operations other than in connection with such transactions.
4.5 Brokers' Fees
Neither Parent nor Buyer has any liability to pay any compensation to any
broker, finder, or agent with respect to the transactions contemplated hereby.
4.6 Ability to Consummate the Transactions
For all purposes of and under this Agreement, the Debt Commitment Letter
and the Equity Commitment Letter shall be referred to together as the "Financing
Agreements" and the financing to be provided thereunder and/or by Substitute
Lenders pursuant to Section 6.10 shall be referred to as the "Financing." The
aggregate proceeds of the Financing Agreements and the current capital of Parent
and Buyer as of the date hereof are in an amount sufficient to consummate the
transactions contemplated by this Agreement and the other transactions
contemplated hereby in accordance with the terms hereof and thereof. Neither the
Equity Commitment Letter nor the Debt Commitment Letter has been withdrawn and
neither Parent nor Buyer knows of any facts or circumstances that may reasonably
be expected to result in any of the conditions set forth in the Financing
Agreements not being satisfied.
20
4.7 Statements True and Correct
None of the information (including this Agreement) supplied or to be
supplied by Parent or Buyer (i) to the Company for inclusion in the Schedule
14D-9 or in any other filings with the SEC in connection with the transactions
contemplated by this Agreement or (ii) to any Governmental Entity in connection
with the transactions contemplated by this Agreement will, at the respective
time such documents are supplied, be false or misleading with respect to any
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, or omit to state any material fact necessary to correct any
statement in any earlier communication to any Governmental Entity.
4.8 Regulatory Approvals
Neither Parent nor Buyer has taken any action or has any Knowledge of any
fact or circumstance that is reasonably likely to materially impede or delay
receipt of any consents of a Governmental Entity necessary in connection with
the consummation of the Offer, the Merger, or any of the transactions
contemplated by this Agreement which if not obtained, individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect on
Parent or Buyer or materially alter or delay the transactions contemplated
herein.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
CONCERNING THE ACQUIRED ENTITIES
The Company represents and warrants to Parent and Buyer that, except as set
forth in the disclosure letter delivered at or prior to the execution of this
Agreement (the "Company Disclosure Letter"):
5.1 Corporate Status
Each Acquired Entity is an entity duly created, formed or organized,
validly existing, and in good standing under the Laws of the jurisdiction of its
creation, formation, or organization. Each Acquired Entity is duly authorized to
conduct its business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each Acquired Entity has the requisite
power and authority necessary to own or lease its properties and to carry on its
businesses as currently conducted, except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The Company has delivered to Parent correct and complete copies of its
Organizational Documents, as amended to date. The Company is not in Breach of
any provision of its Organizational Documents. No Acquired Entity is in Breach
of any provision of its Organizational Documents except where such breach would
not, individually or in the aggregate have a Material Adverse Effect on the
Company. There is no pending or, to the Company's Knowledge, Threatened Action
for the dissolution, liquidation, insolvency, or reorganization of any Acquired
Entity.
5.2 Power and Authority; Enforceability
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The Company has the requisite power and authority necessary to execute and
deliver each Transaction Document to which it is a party and to perform and
consummate the Offer, the Merger and the other transactions contemplated hereby
and thereby. The execution, delivery and performance by the Company of this
Agreement and the consummation of the Offer, the Merger and the other
transactions contemplated hereby and thereby have been duly authorized by the
Company Board, and no other corporate action on the part of the Company (other
than approval by the Company Stockholders of the Merger) is necessary to
authorize the execution, delivery and performance by the Company of this
Agreement or the consummation of such transactions. Each Transaction Document to
which the Company is a party has been duly authorized, executed and delivered
by, and, assuming due authorization by Parent and Buyer, is Enforceable against
the Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditor rights and for general equitable principles.
5.3 Consents and Approvals; No Defaults
(a) No consents or approvals of, or filings or registrations with,
any Governmental Entity are required to be made or obtained by any Acquired
Entity in connection with the execution, delivery or performance by any Acquired
Entity of this Agreement except for (i) filings of applications, registrations,
statements, reports or notices (and expiration of any applicable notice periods)
with the United States Department of Justice, the Federal Trade Commission, the
NASD, the SEC and state securities authorities, (ii) the requisite approval of
this Agreement by the holders of the capital stock of the Company entitled to
vote thereon, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and (iv) consents, approvals, filings, or
registrations, the absence of which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or adversely affect or delay any
of the transactions contemplated herein.
(b) Subject to receipt of the approvals referred to in the preceding
paragraph, and the expiration of related waiting periods, the execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby, and compliance with the provisions hereof do not and will
not (i) result in any Breach of the terms, conditions, or provisions of, the
respective Organizational Documents of the Acquired Entities; (ii) result in a
Breach of any provisions of, or result in the creation or imposition of (or the
obligation to create or impose) any Encumbrance upon any of the properties or
assets of an Acquired Entity under, any of the terms, conditions or provisions
of any Contract, Order or Permit to which an Acquired Entity is a party or by
which it or any of its properties or assets may be bound or affected so as in
any such case to result in a Material Adverse Effect on the Company; or (iii)
violate any Law or Order applicable to an Acquired Entity except for any Breach
or Encumbrance which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or adversely effect or
delay any of the transactions contemplated herein.
5.4 Brokers' Fees
Other than fees payable to the Financial Advisor under the letter agreement
between the Company and Credit Suisse First Boston dated November 1, 2001, no
Acquired Entity has any Liability to pay any
22
compensation to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
5.5 Capitalization
The Company's authorized capital stock consists of: (a) 350,000,000 Shares
of Company Common Stock, of which 145,511,579 Shares are issued and outstanding
as of November 16, 2001 and no Shares are held in treasury, and (b) 50,000,000
shares of preferred stock, of which 35,000,000 are designated Series A
Preferred, par value $.01 per share, of which none are issued and outstanding.
All of the issued and outstanding Shares: (a) have been duly authorized and are
validly issued, fully paid, and nonassessable, (b) were issued in compliance in
all material respects with all applicable state and federal securities Laws, and
(c) were not issued in Breach of any Equity Commitments. No Equity Commitments
exist with respect to any Equity Interest of the Company, and no such Equity
Commitments will arise in connection with the transactions contemplated hereby.
Other than the Stock Purchase Agreements, there are no Contracts to which the
Company is a party or to the Knowledge of the Company, to which persons other
than the Company are party, with respect to the voting or transfer of the
Company's Equity Interests. The Company is not obligated to redeem or otherwise
acquire any of its outstanding Equity Interests.
5.6 Company Subsidiaries
All of the issued and outstanding Equity Interests of each Subsidiary (A)
that is a corporation have been duly authorized and are validly issued, fully
paid, and nonassessable and (B) that is not a corporation have (i) been duly
created pursuant to the Laws of the jurisdiction of such Subsidiary, (ii) have
been issued and paid for in accordance with the Organizational Documents
governing such Subsidiary, and (iii) except as expressly contemplated by the
Organizational Documents governing such Subsidiary, are fully paid and
non-assessable and require no further capital contribution. The Acquired
Entities hold of record and own beneficially all of the outstanding Equity
Interests of the Subsidiaries, free and clear of any Encumbrances, rights of
first refusal, preemptive rights, community property interest, or restrictions
of any nature (including any restriction on the voting, transfer, possession or
attribute of ownership of any security (other than restrictions under the
Securities Act and state securities Laws)). No Equity Commitments exist with
respect to any Equity Interests of such Subsidiaries and no such Equity
Commitments will arise in connection with the transactions contemplated by this
Agreement. There are no outstanding or authorized Equity Commitments with
respect to any Subsidiary or its Equity Interests. There are no Contracts with
respect to the voting or transfer of any Subsidiary's Equity Interests. No
Subsidiary is obligated to redeem or otherwise acquire any of its Equity
Interests. No Acquired Entity controls, directly or indirectly, or has any
direct or indirect Equity Interest in any Person that is not an Acquired Entity.
5.7 Company Reports and Financial Statement
The Company has filed with the SEC all forms, reports, registration
statements, proxy statements and other documents (collectively, the "Company
Reports") required to be filed by the Company under the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder
(collectively, the "Securities Laws"), except failures to file which,
23
individually or in the aggregate, do not have a Material Adverse Effect on the
Company. The Company has heretofore made available (which, for these purposes,
shall include items available in the XXXXX database) to Parent true and complete
copies of all Company Reports filed as of the date hereof. As of their
respective dates, or, if amended, as of the date of the last such amendment
prior to the date of this Agreement, or, in the case of registration statements,
as of their effective dates, all of the Company Reports, including all exhibits
and schedules thereto and all documents incorporated by reference therein: (i)
in all material respects were prepared in accordance with the requirements of
the Securities Laws applicable thereto, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements, in light of the
circumstances under which they were made, not misleading. The Company has filed
with the SEC all documents and agreements which were required to be filed as
exhibits to the Company Reports, except failures to file, if any, which,
individually or in the aggregate, do not have a Material Adverse Effect on the
Company. The audited consolidated financial statements and unaudited interim
consolidated financial statements of the Company included or incorporated by
reference in the Company Reports (collectively, the "Financial Statements") have
been prepared in accordance with GAAP applied on a consistent basis (except as
may be indicated therein or in the notes thereto or, in the case of unaudited
Financial Statements, do not contain footnotes as permitted by Form 10-Q of the
Exchange Act) and fairly present in all material respects the financial position
of the Company as of and at the dates thereof and the results of operations and
cash flows for the periods indicated, subject in the case of the unaudited
interim financial statements, to normal adjustments and any other adjustments
described therein, which were not and are not expected to be material in amount
or effect. Except as set forth or reflected in the Financial Statement at
September 29, 2001, included in the Company's report on Form 10Q for the quarter
ended September 29, 2001 (the "September 2001 Financial Statement"), neither the
Company nor any of its Subsidiaries, has any liabilities or obligations of any
kind or nature (whether accrued, absolute, contingent or otherwise) which would
be required to be reflected, reserved against or disclosed in any balance sheet
of the Company or any of its Subsidiaries, or in the notes thereto, prepared in
accordance with GAAP consistently applied, except liabilities arising since
September 29, 2001 (the "Balance Sheet Date") either (i) in the Company's
Ordinary Course of Business; (ii) which, individually or collectively, would not
have a Material Adverse Effect on the Company; or (iii) related to this
Agreement or the transactions contemplated hereby. The cash in the bank accounts
of the Company at October 27, 2001 is not materially less than the amount of
cash reflected on the unaudited balance sheet of the Company dated as of October
27, 2001 which was provided to the Parent.
5.8 Subsequent Events
Since the Balance Sheet Date, the Company has not experienced a Material
Adverse Change.
5.9 Legal Compliance
Each Acquired Entity: (i) is in compliance with all Laws and Orders
applicable thereto or to the business of the Acquired Entity, except where the
failure to so comply would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company; (ii) has all Permits,
Orders and approvals of, and has made all filings, applications and
24
registrations with, all Governmental Entities that are required in order to
permit them to own or lease their properties and to conduct their businesses as
presently conducted; all such Permits, Orders and approvals are in full force
and effect and, to the Knowledge of the Company no suspension or cancellation of
any of them is Threatened, except where such failure to obtain or maintain the
same would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company; and (iii) has not received any
notification or communication, from any Governmental Entity: (a) asserting that
any Acquired Entity is not in compliance with any of the statutes, regulations
or ordinances which such Governmental Entity enforces or (b) Threatening to
revoke any license, franchise, permit or governmental authorization nor, to the
Knowledge of the Company, does a basis for any of the foregoing exist, except
such notifications or communications which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
5.10 Tax Matters
All Tax Returns that are required to be filed (taking into account any
extensions of time within which to file) by or with respect to any Acquired
Entity have been duly filed, except where the failure to file would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company; (ii) each Acquired Entity has paid all Taxes
shown as due and payable on such Tax Returns or adequate reserves for such Taxes
are reflected on the September 2001 Financial Statement, (iii) all deficiencies
asserted or assessments made as a result of an examination by any taxing
authority have been paid in full or adequate reserves therefor are reflected on
the September 2001 Financial Statement, (iv) in connection with the examination
of any of the Tax Returns referred to in clause (i), no issues have been raised
by any taxing authority that are currently pending, and (v) there are no
outstanding or pending waivers of statutes of limitation that have been given by
or requested with respect to any Taxes of any Acquired Entity. The Company has
made available to Parent true and correct copies of the United States federal
income Tax Returns filed by each Acquired Entity for each of the three most
recent fiscal years ended on or before June 30, 2001. None of the Acquired
Entities has any liability with respect to income, franchise or similar Taxes
that accrued on or before the end of the most recent period covered by the
Financial Statements included in the Company Reports filed prior to the date
hereof in excess of the amounts accrued with respect thereto that are reflected
in such Financial Statements, except where the failure to so accrue would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. No Acquired Entity is a party to any Tax
allocation or sharing agreement (other than agreements among members of the
Affiliated Group of which the Company is the common parent), is or has been a
member of an Affiliated Group filing consolidated or combined Tax Returns (other
than a group the common parent of which is or was the Company is the common
parent) or otherwise has any liability for the Taxes of any Person (other than
an Acquired Entity).
5.11 Title to Assets
Each Acquired Entity holds good and marketable title to, or a valid
leasehold, consignment or License in each item of material tangible personal
property owned or used by or in the possession of that Acquired Entity except
where the failure to hold such title or interest would not have a Material
Adverse Effect on the Company.
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5.12 Intellectual Property
(a) The Software owned or purported to be owned by any Acquired
Entity was either (i) developed within the scope of their employment by
employees of an Acquired Entity who have assigned to the Company all rights to
such software; (ii) developed by independent contractors who have assigned their
rights to the Company or any of its Subsidiaries pursuant to written agreements;
or (iii) otherwise acquired by the Company or a Subsidiary from a third party.
(b) Each of the Acquired Entities has taken all reasonable
commercial steps to protect their respective rights in Trade Secrets. The
Acquired Entities have taken all reasonable commercial steps to protect their
respective rights in the Trade Secrets of third parties in accordance with the
terms of any Contracts relating to such third-party Trade Secrets to which any
Acquired Entity is a party.
(c) The Acquired Entities own or have the right to use pursuant to a
valid Contract, all Intellectual Property used by each Acquired Entity
immediately prior to the Closing or necessary to the operation of the business
of the Acquired Entities as currently proposed to be conducted, except where the
absence of such rights or licenses would not have a Material Adverse Effect on
the Company. Each item of material Intellectual Property owned or used by each
Acquired Entity immediately prior to the Closing will be owned or available for
use by such Acquired Entity on identical terms and conditions immediately
subsequent to the Closing. Each Acquired Entity has taken all commercially
reasonable actions to maintain and protect each item of Intellectual Property
that is material to its business that it owns or uses. To the Knowledge of the
Company no such Intellectual Property is subject to any adverse claim of title.
No adverse claim of title has been Threatened with respect to Intellectual
Property owned by the Company and to the Knowledge of the Company there is no
basis therefor except with respect to trademarks.
(d) No Acquired Entity has in any material respect interfered with,
infringed upon, (whether directly, or by contribution or inducement),
misappropriated, or otherwise come into conflict with any other Person's
material Intellectual Property, and no Acquired Entity has ever received any
written notice alleging any such interference, infringement, misappropriation,
or violation (including any claim that each Acquired Entity must license or
refrain from using any other Person's Intellectual Property). To the Knowledge
of the Company, no third Person has any Intellectual Property that interferes or
would be likely to interfere with any Acquired Entity's use of any of its
Intellectual Property where such interference would have a Material Adverse
Effect on the Company. To the Company's Knowledge, no other Person has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Acquired Entity's Intellectual Property where such
interference would have a Material Adverse Effect on the Company. For the
purpose of this Section 5.12(d) trademarks shall be excluded from the definition
of Intellectual Property.
(e) No Acquired Entity has granted any sublicense or similar
Contract with respect to the Contract.
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(f) All current technical employees of any Acquired Entity have
executed written Contracts with the applicable Acquired Entity that assign to
such Person all rights to any inventions, improvements, discoveries or
information relating to any Acquired Entity's business.
5.13 Material Contracts; Defaults
The Company is not in Breach of any material Contract except for such
Breaches that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. None of the Contracts of the Company contain any
provisions that upon a change of control of the Company would have a Material
Adverse Effect on the Company.
5.14 Litigation
Except as disclosed in the Company Reports, no Acquired Entity: (a) is
subject to any outstanding Order or (b) is a party or, to the Knowledge of the
Company, is Threatened to be made a party to any Action.
5.15 Labor; Employees
No Acquired Entity is a party to or bound by any collective bargaining
Contract, nor have any of them experienced any strikes, grievances, material
claims of unfair labor practices, or other collective bargaining disputes. To
the Knowledge of the Company, no acquired entity has committed any unfair labor
practice. The Company does not have any Knowledge of any organizational effort
currently being made or Threatened by or on behalf of any labor union with
respect to employees of any Acquired Entity.
5.16 Employee Benefits
(a) Neither the Company nor any ERISA Affiliate maintains,
administers or otherwise contributes to any Employee Benefit Plan with respect
to any Acquired Entity's or ERISA Affiliate's current or former employees. The
Company has delivered or made available to Parent correct and complete copies of
the plan, Contracts and summary plan descriptions, the most recent determination
letter or similar ruling received from the Internal Revenue Service, the Form
5500 Annual Report (if applicable) for the three (3) most recent years
available, and all related trust, insurance, and other funding Contracts which
implement each such Employee Benefit Plan.
(b) Each such Employee Benefit Plan (and each related trust,
insurance Contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other Laws.
Each such Employee Benefit Plan that is intended to meet the requirements to be
a "qualified plan" under Code Section 401(a) has a current favorable
determination letter (prototype opinion letter or similar letter or opinion)
from the Internal Revenue Service or has a remaining period of time to apply for
such letter or opinion. The requirements of Part 6 of Title I of ERISA and of
Code Section 4980B have been met with respect to each such Employee Benefit Plan
that is an Employee Welfare Benefit Plan, in all material respects, that
provides group health benefits.
27
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, and Summary Plan Descriptions) have been filed
or distributed appropriately, in all material respects, with respect to each
such Employee Benefit Plan.
(d) All contributions and premiums required of any Acquired Entity by any
legal requirement or by the terms of any of its Employee Benefit Plans or any
Contract relating thereto have been timely made (without regard to any waivers
granted with respect thereto) or accrued except where any noncompliance or late
payment would be immaterial. All material obligations of the Acquired Entities
with respect to each of their Employee Benefit Plans have been paid or
performed. All such amounts properly accrued through the Closing with respect to
the current plan year thereof will be paid by the Company or a Subsidiary of the
Company when due.
(e) (i) none of such Employee Benefit Plans is a money purchase plan or a
defined benefit plan, and (ii) none of such Employee Benefit Plans is a
"multi-employer plan" as defined in Section 3(37) of ERISA and Seller has not
been obligated to make a contribution to any "multi-employer plan" within the
past six years. Seller would have no withdrawal liability if it withdrew from
any "multi-employer plan" in which it participates.
(f) With respect to each Employee Benefit Plan that each Acquired Entity,
and the ERISA Affiliates which includes the Acquired Entities, maintains or ever
has maintained or to which any of them contributes, ever has contributed, or
ever has been required to contribute:
(i) there have been no Prohibited Transactions that are not exempt
with respect to any such Employee Benefit Plan;
(ii) no Fiduciary, to the Knowledge of the Company, has any Liability
for Breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan; and
(iii) no Action with respect to the contribution, administration or
the investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits or related to qualified domestic relations Orders
(within the meaning of Code Section 414(p))) is pending or, to the Knowledge of
the Company, Threatened and no Acquired Entity has incurred, and no Acquired
Entity has any reason to expect that each Acquired Entity will incur, any
material Liability under the requirements of ERISA, the Code, and other Laws
with respect to any such Employee Benefit Plan that is an Employee Pension
Benefit Plan.
(g) No Acquired Entity maintains or ever has maintained or contributes,
ever has contributed, or ever has been required to contribute, to any Employee
Welfare Benefit Plan providing post-employment medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B and Part 6 of Title I of ERISA or applicable
state law or pursuant to employment or severance agreements).
28
(h) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in payment (either of
severance pay or otherwise) becoming due from any of the Employee Benefit Plans,
Company or Buyer to any current or former employee or self-employed individual,
and will not result in the payment, vesting, acceleration or increase of any
benefit payable under any Employee Benefit Plan to any current or former
employee or self-employed individual.
Notwithstanding anything in this Section 5.16 to the contrary, Breaches of
------------
this Section 5.16 shall only be taken into account to the extent that they,
------------
individually or in the aggregate, would have a Material Adverse Effect on the
Company.
5.17 Statements True and Correct
None of the information (including this Agreement) supplied or to be
supplied by any Acquired Entity: (i) to Parent and Buyer for inclusion in the
Offer Documents or in any other filings with the SEC in connection with the
transactions contemplated by this Agreement; or (ii) to any Governmental Entity
in connection with the transactions contemplated by this Agreement will, at the
respective time such documents are supplied, be false or misleading with respect
to any 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, or omit to state any material fact necessary to correct any
statement in any earlier communication to any Governmental Entity.
5.18 Regulatory Approvals
No Acquired Entity has taken any action, nor does the Company have any
Knowledge of any fact or circumstance that is reasonably likely to materially
impede or delay receipt of any Consents of a Governmental Entity necessary in
connection with the consummation of the Offer and the Merger, which if not
obtained, individually or in the aggregate, would be reasonably expected to have
a Material Adverse Effect on the Company or materially alter or delay the
transactions contemplated herein.
5.19 Opinion of Financial Advisor
The Company has received the written opinion of the Financial Advisor,
dated as of the date of this Agreement, to the effect that the consideration to
be received pursuant to this Agreement by the holders of the shares of Common
Stock is fair to such holders (other than, Mr. Lap Xxxx Xxx, KDS USA, Parent and
their respective Affiliates) from a financial point of view.
ARTICLE 6.
COVENANTS
The Parties covenant and agree as follows:
6.1 Notices and Consents
Each of the Company, Parent and Buyer, will give any notices to third
parties, and will use its reasonable best efforts to obtain any third party
Consents listed in Sections 4.3 and 5.3 of
--------------------
29
the Company Disclosure Letter and the Parent Disclosure Letter, respectively.
Each Party will give any notices to, make any filings with, and use its
reasonable efforts to obtain any Consents of Governmental Authorities, if any,
required in connection with the transactions contemplated herein including in
connection with the matters referred to in Sections 4.3 and 5.3, respectively,
--------------------
and to use such Party's commercially reasonable efforts to agree jointly on a
method to overcome any objections by any Governmental Entity to the transactions
contemplated herein. Nothing in this Section 6.1 will require that Parent or its
-----------
Affiliates divest, sell, or hold separately any of its assets or properties, nor
will this Section 6.1 require that Parent, its Affiliates, or the Acquired
-----------
Entities take any actions that could affect the normal and regular operations of
Parent, its Affiliates, or the Acquired Entities after the Closing.
6.2 Operation of Business
Except as set forth in Section 6.2 of the Company Disclosure Letter or
-----------
otherwise expressly contemplated by this Agreement or as consented to in writing
by Parent (any decision grant or withhold such consent to be given in a timely
manner) during the period from the date hereof to the Changeover Time the
Company will, and will cause each of the Company's Subsidiaries to: (i) conduct
its operations in the Ordinary Course of Business and, to the extent consistent
therewith, with no less diligence and effort than would be applied in the
absence of this Agreement, (ii) use commercially reasonable efforts to preserve
intact its current business organizations, keep available the service of its
current officers and employees and preserve its current relationships with
customers, suppliers, distributors, lessors, creditors, employees, contractors
and others having business dealings with it, and (iii) continue to take all
commercially reasonable action that may be necessary or advisable to protect and
preserve its Intellectual Property. Without limiting the generality of the
foregoing, except as set forth in Section 6.2 of the Company Disclosure letter
or otherwise expressly provided in this Agreement or as consented to in writing
by Parent, prior to the Expiration Date, neither the Company nor any of its
Subsidiaries will:
(a) amend its Organizational Documents;
(b) authorize for issuance, issue, sell, deliver or agree to commit to
issue, sell or deliver (whether through the issuance or granting of Equity
Commitments or otherwise) any stock of any class or any other debt or equity
securities or equity equivalents (including any stock options or stock
appreciation rights), except for the issuance and sale of Shares pursuant to the
exercise of Options or Equity Commitments granted prior to the date hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of its
capital stock or otherwise make any payments to stockholders in their capacity
as such, or redeem or otherwise acquire any of its securities or any securities
of any of the Company's Subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of any Acquired Entity (other than the Merger);
30
(e) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of any of the Company's
Subsidiaries;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities in each case, except for borrowings under existing lines of
credit in the Company's Ordinary Course of Business, or modify or agree to
any amendment of the terms of any of the foregoing; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person except
for obligations of the Company's Subsidiaries incurred in the Company's
Ordinary Course of Business; (iii) make any loans, advances or capital
contributions to or investments in any other Person (other than to a
Subsidiary of the Company) or customary loans or advances to employees in
each case in the Ordinary Course of Business; (iv) pledge or otherwise
create or suffer to exist any Encumbrance with respect to shares of capital
stock of the Company or its Subsidiaries or (v) mortgage or pledge any of
its assets, tangible or intangible, or create or suffer to exist any other
Encumbrance thereupon;
(g) except for: (i) increases in salary, wages and benefits of
employees of the Company or its Subsidiaries (other than officers and
directors of the Company) in accordance with past practices and (ii)
increases in salary, wages and benefits granted to employees of the Company
or its Subsidiaries (other than officers and directors of the Company) in
conjunction with promotions or other changes in job status consistent with
past practice or required under existing agreements, except as may be
required by applicable Law, enter into, adopt or amend or terminate any
bonus, special remuneration, compensation, severance, stock option, stock
purchase agreement, retirement, health, life, or disability insurance,
severance or other employee benefit plan agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer, employee
or consultant in any manner or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including the granting of stock appreciation rights or performance units);
(h) grant any severance or termination pay to any director, officer,
employee or consultant, except payments made pursuant to written agreements
outstanding on the date hereof, which are disclosed in the Company
Disclosure Letter and copies of which have been provided to Parent, or as
required by applicable federal, state or local law or regulations;
(i) exercise its discretion to or otherwise voluntarily accelerate the
vesting of any Option as a result of the Merger, or otherwise;
(j) (i) acquire, sell, lease, license, transfer or otherwise dispose
of any material assets in any single transaction or series of related
transactions having a fair market value in excess of $200,000 in the
aggregate, other than sales of its products in the Ordinary Course of
Business; (ii) enter into any exclusive license, distribution, marketing,
sales or other agreement; or (iii) sell, transfer (other than non-exclusive
licenses entered into in the Ordinary Course of Business of the applicable
Acquired Entity) or otherwise dispose of any Intellectual Property;
31
(k) except as may be required as a result of a change in applicable
Law or in GAAP, change any of the accounting principles, practices or
methods used by it;
(l) except as required by GAAP, revalue in any material respect any of
its assets, including writing down the value of inventory or writing-off
notes or accounts receivable;
(m) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other entity or division thereof or
any equity interest therein; (ii) enter into any Contract having a term in
excess of six (6) months, or any other material Contract; (iii) amend,
modify or waive any material right under any material Contract of the
Company or any of its Subsidiaries; (iv) modify, in any material respect,
its standard warranty terms for its products or amend or modify any product
warranties in effect as of the date hereof in any manner that is adverse to
the Company or any of its Subsidiaries; or (v) authorize any new capital
expenditure or expenditures in excess of $500,000 in the aggregate in any
calendar quarter; or (vi) authorize any new or additional manufacturing
capacity expenditure or new expenditures for any manufacturing capacity
Contracts or arrangements;
(n) make or revoke any material tax election or settle or compromise
any income tax liability in excess of $200,000 or permit any Insurance
Policy to expire, or to be canceled or terminated, unless a comparable
insurance policy reasonably acceptable to Parent is obtained and in effect;
(o) fail to file any Tax Returns when due (or, alternatively, fail to
file for available extensions) or fail to cause such Tax Returns when filed
to be complete and accurate in all material respects;
(p) fail to pay any material Taxes or other material debts when due
unless being contested in good faith and promptly disclosed to Parent;
(q) settle or compromise any pending or Threatened suit, Action or
claim that (i) relates to the transactions contemplated hereby; (ii) the
settlement or compromise of which would involve more than $250,000; or
(iii) that (A) would otherwise be material to the Company and the its
Subsidiaries or (B) relates to any Intellectual Property matters;
(r) except for this Agreement and the transactions expressly
contemplated hereby, take any action or fail to take any action that could
(i) limit the utilization of any of the net operating losses, built-in
losses, tax credits or other similar items of the Acquired Entities under
Section 382, 383, 384 or 1502 of the Code and the Treasury Regulations
thereunder, or (ii) cause any transaction in which any Acquired Entity was
a party that was intended to be treated as a reorganization under Section
368(a) of the Code to fail to qualify as a reorganization under Section
368(a) of the Code;
(s) accelerate the collection of receivables or defer the payment of
payables, or modify the payment terms of any receivables or payables, other
than immaterial changes in a manner consistent with prudent and past
business practice and after prior consultation with Parent;
32
(t) sell, securitize, factor or otherwise transfer any accounts
receivable;
(u) incur costs or fees in connection with the Offer including the
engagement of the Financial Advisor in excess of the amounts set forth in the
Company Disclosure Letter; or
(v) take or agree in writing or otherwise to take any of the actions
described in Sections 6.2(a) through 6.2(u) (and it shall not take any action
that would make any of the representations or warranties of the Company
contained in this Agreement (including the exhibits hereto)) untrue or
incorrect.
6.3 Access to Information
(a) Upon reasonable prior notice, the Company shall afford reasonable
access to the officers, employees, accountants, counsel and other
representatives of Parent and Buyer (including financing sources and their
employees, accountants, counsel and other representatives), during normal
business hours during the period prior to the Effective Time, to all its
properties, books, Contracts, and records; provided that the Company will not be
required to provide such information to the extent that, in the opinion of the
Company's legal counsel, such disclosure would constitute a waiver of the
attorney-client privilege with respect to the subject matter of underlying the
information sought to be disclosed or materially and adversely prejudice the
Company in any material pending or Threatened Action.
(b) During the period prior to the Effective Time, the Company shall
promptly furnish to Parent and Buyer (i) a copy of each report, schedule,
registration statement and other document in advance of filing it with the SEC,
and shall provide Parent and Buyer a reasonable opportunity to review and
comment upon such document, during such period, (ii) a copy of each document
received by it from the SEC, during such period, and (iii) all other information
concerning its business, properties and personnel as Parent and Buyer may
reasonably request.
(c) The Confidentiality Agreement shall apply with respect to the
information furnished pursuant to this Section 6.3 and otherwise pursuant to
-----------
this Agreement.
6.4 Acquisition Proposal
(a) The Company shall not, nor shall it authorize or permit any
Company Subsidiary to, nor shall it authorize or permit any officer, director or
any investment banker, attorney or other advisor, agent or representative
(collectively, "Representatives") of, nor shall it authorize and it shall use
commercially reasonable efforts not to permit any employee of, the Company or
any Company Subsidiary to, (i) directly or indirectly solicit, initiate or
encourage the submission of, any Acquisition Proposal (as defined below), (ii)
enter into any agreement with respect to any Acquisition Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to any Acquisition Proposal; provided,
however, that nothing in this Section 6.4 or elsewhere in this Agreement shall
-----------
prohibit the Company, before the Expiration Date or adoption of this Agreement
by the Company Stockholders, if applicable, from furnishing information
regarding the Company or entering into negotiations or discussions with, any
person in response to an Acquisition Proposal made, submitted, or announced by
such person (and not withdrawn) and any such actions enumerated
33
in this provision shall not be considered a Breach of this Agreement if and
to the extent that each of the following conditions is satisfied: (1) such
Acquisition Proposal will, in the good faith judgment of the Company Board, lead
to a Superior Proposal, (2) such Acquisition Proposal is not attributable to a
Breach by the Company of this Section 6.4(a) or Section 6.4(b); (3) the Company
-------------- --------------
Board concludes in good faith, after consultation with its outside legal
counsel, that it is reasonably likely that the failure to take such action would
constitute a Breach of its fiduciary duties to the Company Stockholders under
applicable Law; (4) prior to furnishing any such information to, or entering
into discussions or negotiations with, such Person, the Company gives Parent
written notice of the identity of such Person, the terms and conditions of such
Acquisition Proposal and the Company's intention to furnish information to, or
enter into discussions or negotiations with, such Person; (5) the Company
receives from such Person an executed confidentiality agreement, which shall not
in any way restrict the Company from complying with its disclosure obligations
under this Agreement, and which shall have terms which (i) are no less favorable
in the aggregate to the Company than those set forth in the Confidentiality
Agreement and (ii) standstill provisions which are no less favorable to the
Company than those set forth in the Confidentiality Agreement; and (6)
contemporaneously with furnishing any such information to such Person, the
Company furnishes such information to Parent (to the extent that such
information has not been previously furnished by the Company to Parent). The
Company promptly shall advise Parent of any inquiry with respect to or which
could lead to an Acquisition Proposal and shall promptly inform Parent of any
material change in any such Acquisition Proposal or inquiry. Subject to the
foregoing provisions of this Section 6.4, the Company shall, and shall cause its
-----------
Representatives to, cease immediately all existing activities, discussions and
negotiations with Persons other than Parent and Buyer regarding any proposal
that constitutes, or which the Company reasonably believes would lead to an
Acquisition Proposal, and will take the necessary steps to inform the Persons
referred to above of the obligations undertaken in this Section 6.4.
-----------
(b) Neither the Company Board nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent or
Buyer, the approval or recommendation by the Company Board or any such committee
of this Agreement, the Offer or the Merger, (ii) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement relating to
any Acquisition Proposal, or (iii) approve or recommend, or propose to approve
or recommend, any Acquisition Proposal. Notwithstanding any provision of this
Agreement, if, prior to the acceptance for payment of Shares pursuant to the
Offer, the Company receives a Superior Proposal and the Company Board determines
in good faith, after consultation with outside legal counsel, that it is
reasonably likely that the failure to do so would constitute a Breach of its
fiduciary duties to the Company Stockholders imposed by applicable Law, the
Company Board may withdraw its approval or recommendation of the Offer, the
Merger and this Agreement and, in connection therewith, approve or recommend
such Superior Proposal, provided, that prior to withdrawing its recommendation
or entering into an agreement with respect to or recommending a Superior
Proposal the Company Board shall (A) give Parent three Business Days notice of
such Superior Proposal, (B) subsequent to such three days notice, terminate this
Agreement pursuant to Section 8.1(c) hereof and (C) pay to Parent the
Termination Fee provided for in Section 8.3.
-----------
34
(c) Nothing contained in this Section 6.4 or elsewhere in this
-----------
Agreement shall prohibit the Company from complying with Rule 14d-9 under the
Exchange Act, from taking and disclosing to its Stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company Stockholders if, in the good faith judgment of the
Company Board, after consultation with outside legal counsel, the failure so to
disclose would constitute a Breach of its fiduciary duties or a violation of
applicable Law.
(d) For purposes of this Agreement:
"Acquisition Proposal" means any offer, inquiry or proposal (other than an
offer or proposal by Parent or an Affiliate of Parent) relating to (i) a merger,
tender offer, exchange offer, acquisition, consolidation, or similar transaction
involving the at least 10% of the equity securities of the Company or (ii) the
acquisition (other than an acquisition by Parent) of a material portion of the
assets of the Company outside the Ordinary Course of Business.
"Superior Proposal" means an unsolicited bona fide Acquisition Proposal (i)
to acquire, for consideration consisting of solely of cash and/or marketable
equity securities, all of the equity securities of the Company entitled to vote
generally in the election of directors to the Company Board or all or
substantially all of the assets of the Company, (ii) that is not subject to a
financing contingency or, if it is subject to a financing contingency, is
accompanied by commitment letters in customary form for sufficient financing
amounts to satisfy such conditions and containing conditions no less favorable
than the conditions in the Commitment Letter, (iii) that the Company Board
determines in its good faith judgment (after consultation with a financial
advisor and its legal and other advisors) to be more favorable to the Company's
stockholders (other than Mr. Lap Xxxx Xxx, KDS USA, Parent and their respective
Affiliates) from a financial perspective than the Offer and the Merger, (iv)
that the Company Board determines in its good faith judgment (after consultation
with its financial advisor and its legal and other advisors) that such
Acquisition Proposal is reasonably capable of being completed (taking into
account all legal, financial, regulatory and other aspects of the Acquisition
Proposal and the party making the Acquisition Proposal), and (v) that does not
contain any "due diligence" condition.
6.5 Covenants to Satisfy Conditions
Each of the Company and Parent will use its reasonable best efforts to
ensure, and to cause its respective Affiliates to ensure, that the conditions
set forth in Annex A and ARTICLE 7 hereof are satisfied, insofar as such matters
are within the control of such party. Parent and the Company further covenant
and agree, with respect to any pending or Threatened Action, preliminary or
permanent injunction or other Order, that would adversely affect the ability of
the Parties to consummate the transactions contemplated herein, to use their
respective reasonable best efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
6.6 Disclosure Prior to Closing
In the event that, at any time prior to the Closing, the Company or Parent
becomes aware that any representation or warranty made by it (and in the case of
Parent, by Buyer) in this Agreement shall have become untrue or incorrect in any
material respect or of any failure by
35
such party (and in the case of Parent, by Buyer) to perform or comply in any
material respect its obligations, agreements and covenants under this Agreement
such Party shall promptly provide written notice of such matters to the other
Party. However, no such notice provided under this Section 6.6 shall be deemed
-----------
to cure any Breach of any representation or warranty made in this Agreement
whether for purposes of determining whether or not the conditions set forth in
ARTICLE 7 hereof have been satisfied or otherwise. In addition, the Company
shall promptly provide written notice of any events occurring after the date
hereof and prior to the Closing that individually or in the aggregate have had
or are reasonably expected to have a Material Adverse Effect on the Company.
6.7 Indemnification and Directors' and Officer's Insurance
(a) After the acceptance of Shares for payment in the Offer, the
Company shall indemnify and hold harmless (and shall also advance expenses as
incurred to the fullest extent permitted under applicable Law), each person who
is now or has been prior to the date hereof or who becomes prior to the
Effective Time an officer or director of the Company or any of its Subsidiaries
(the "Indemnified Persons") against (i) all losses, claims, damages, costs,
expenses (including counsel fees and expenses), settlement, payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was an officer or
director of the Company or any of its Subsidiaries, whether or not pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
or not asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in whole
or in part on or arising in whole or in part out of or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the fullest
extent required or permitted under applicable Law. Nothing contained herein
shall make Parent, Buyer, the Company or the Surviving Corporation, an insurer,
a co-insurer or an excess insurer in respect of any insurance policies which may
provide coverage for Indemnified Liabilities, nor shall this Section 6.7 relieve
-----------
the obligations of any insurer with respect thereto. The parties hereto intend,
to the extent not prohibited by applicable Law, that the indemnification
provided for in this Section 6.7 shall apply without limitation to negligent
-----------
acts or omissions by an Indemnified Person. Each Indemnified Person is intended
to be a third party beneficiary of this Section 6.7 and may specifically enforce
-----------
its terms. This Section 6.7 shall not limit or otherwise adversely affect any
-----------
rights any Indemnified Person may have under any agreement with the Company or
under the Company's Organizational Documents as presently in effect.
(b) From and after the Changeover Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
its directors and officers provided to Parent as of or prior to the date hereof
(or indemnification agreements in the Company's customary form for directors
joining the Company Board prior to the Effective Time) and any indemnification
provisions under the Company's or any Acquired Entity's Organizational Documents
as in effect immediately prior to the Effective Time.
(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who, as of
immediately prior to the Effective Time, are
36
covered by the Company's directors' and officers' liability insurance policy
(the "Insured Parties") on terms no less favorable to the Insured Parties than
those of the Company's present directors' and officers' liability insurance
policy; provided however, that in no event will Parent or the Company be
required to expend in any year an annual premium for such coverage in excess of
two hundred percent (200%) of the annual premium currently paid by the Company
for such coverage (or such coverage as is available for two hundred percent
(200%) of such annual premium); provided further, that, in lieu of maintaining
such existing insurance as provided above, Parent, at its election, may cause
coverage to be provided under any policy maintained for the benefit of Parent or
any of its Subsidiaries, so long as the terms are not materially less favorable
to the intended beneficiaries thereof than such existing insurance.
(d) The provisions of this Section 6.7 are intended to be for the
-----------
benefit of, and will be Enforceable by, each Indemnified Person and the heirs
and representatives of such Indemnified Person. Parent will not permit the
Company or the Surviving Company to, and Parent will not, merge or consolidate
with or transfer or assign all or substantially all of its assets to any other
Person unless Parent ensures that the surviving or resulting entity or
transferee assumes the obligations imposed by this Section 6.7.
-----------
6.8 Financing Agreements.
Parent shall promptly forward to the Company's counsel a copy of all credit
documentation prepared pursuant to the Financing Agreements. In the event that
one or more of the lenders under the Financing Agreements withdraws its
Financing Agreement (or commitment thereunder) or invokes a condition that would
prevent the closing of the Financing from occurring, Parent shall promptly
notify the Company thereof. In the event that Parent invokes the condition set
forth in paragraph (ii) of Annex A hereto, or one or more lenders withdraws its
commitment under the Financing Agreements, Parent shall use its commercially
reasonable efforts to enter into contracts with one or more substitute lenders
designated by Parent ("Substitute Lenders") to allow for the condition set forth
in paragraph (ii) of the Annex A hereto to be satisfied.
6.9 Publicity.
The initial press release relating to this Agreement shall be a joint press
release in a form mutually agreeable to Parent and the Company and the Parent
and the Company shall, subject to their respective legal obligations, use
reasonable efforts to agree upon the text of any other press release before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby; provided, however, that this
Section 6.9 shall not apply if the Company Board shall have withdrawn, or
modified, in a manner adverse to Parent or Buyer, its approval or recommendation
of this Agreement, the Offer or the Merger or if any Acquisition Proposal shall
be publicly disclosed after the date hereof.
6.10 Escrow Funding.
In accordance with the Debt Commitment Letter, Company shall immediately
prior to the Funding Date establish an escrow account with a financial
institution designated by the lender
37
under the Debt Commitment Letter and deposit into such escrow account sufficient
funds to satisfy the cash escrow funding requirements set forth in the Debt
Commitment Letter.
6.11 Employee Benefits
Each participant in a Company Employee Benefit Plan who continues to be
employed by Parent (or any of its Subsidiaries) immediately following the
Effective Time shall receive service credit for purposes of determining
eligibility to participate, vesting and for any schedule of benefits based on
service under Parent Plans for years of service with Company (and its
Subsidiaries and predecessors) prior to the Effective Time, provided that such
service shall not be recognized to the extent such recognition would result in a
duplication of benefits. If Parent elects to cover employees under Employee
Benefit Plans maintained by Parent, Parent shall then cause any and all
pre-existing condition (or actively-at-work or similar) limitations, eligibility
waiting periods and evidence of insurability requirements under any group health
plans to be waived with respect to such participants and shall, for the coverage
period that includes the Closing Date, provide them with credit for any payments
made towards co-payments, deductibles, and offsets (or similar payments) for
purposes of satisfying any applicable deductible, out-of-pocket, or similar
requirements under any Parent Employee Benefit Plans in which they are eligible
to participate after the Effective Time.
ARTICLE 7.
CLOSING CONDITIONS
7.1 General Conditions
The obligations of the Parties to effect the Closing shall be subject to
the satisfaction or waiver, in whole or in part, at or prior to the closing, of
each of the following conditions unless waived in writing by Parent and the
Company:
(a) No Law Or Orders. No Law or Order shall have been enacted, entered,
----------------
issued or promulgated by any Governmental Entity (and be in effect) which
declares this Agreement invalid or unenforceable in any material respect or
which prohibits consummation of the Merger or the transactions contemplated
herein, and all governmental Consents and Orders required for the consummation
of the Merger and the transactions contemplated hereby shall have been obtained
and shall be in effect at the Effective Time.
(b) Purchase of Shares in Offer. Buyer shall have purchased all Shares
---------------------------
validly tendered and not withdrawn pursuant to the Offer; provided, however that
neither Parent nor Buyer may invoke this condition if Buyer shall have failed to
purchase Shares so tendered and not withdrawn in violation of the terms of this
Agreement or the Offer.
(c) HSR. Any applicable waiting period under the HSR Act or other
---
applicable antitrust or similar Law shall have expired or have been terminated
with respect to the transactions contemplated herein.
38
ARTICLE 8.
TERMINATION
8.1 Termination of Agreement
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and the transactions contemplated herein abandoned
at any time prior to the Effective Time, whether before or after stockholder
approval of the Merger:
(a) By mutual written consent of the Parties;
(b) By either of the Company or the Parent (acting pursuant to a valid
board of directors action) (i) if any Governmental Entity shall have issued an
Order, or taken any action which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares pursuant to the
Offer or the Merger and such Order or Action shall have become final and
non-appealable; provided, however, the Party seeking to terminate this Agreement
shall have used its commercially reasonable efforts to remove or lift such Order
or Action or (ii) the Offer has not been consummated on or before February 28,
2002 (the "Termination Date"); provided, however, that the right to terminate
this Agreement under this Section 8.1(b)(ii) shall not be available to any Party
------------------
whose failure to fulfill any obligation under this Agreement has been the
principal cause of or resulted in the failure of the Offer to have been
consummated on or before such date and such action or failure to act constitutes
a material Breach of this Agreement;.
(c) By the Company, if, prior to acceptance of the Shares pursuant to
the Offer, (x) the Company shall have entered into an agreement with respect to
a Superior Proposal or the Company Board shall have recommended to the Company
Stockholders any Superior Proposal or, in either case, resolved by valid Company
Board action to do so and (y) the Company first makes the payment of the
Termination Fee as required by Section 6.4(b); provided, however that in order
--------------
for the termination of this Agreement pursuant to this Section 8.1(c) to be
--------------
deemed effective, the Company shall have complied with the provisions of
Section 6.4(b) hereof in connection with such Superior Proposal;
--------------
(d) By the Company, if the Offer has not been commenced by Parent or
Buyer on or prior to five Business Days following the date of the initial public
announcement of the Offer; provided, that the Company may not terminate this
Agreement pursuant to this Section 8.1(d) if it is in material breach of this
--------------
Agreement;
(e) By the Company, if (i) any of the representations and warranties
of Parent or Buyer set forth in this Agreement shall not be true and correct in
all material respects as if such representations and warranties were made at the
time of such determination (except as to any such representation and warranty
which speaks as of a specific date, which must be untrue and incorrect as of
such date) except where the failure to be so true and correct would not
individually or in the aggregate, be reasonably likely to interfere with
Parent's or Buyer's ability to consummate the Offer, the Merger or the other
transactions contemplated by this Agreement, or (ii) if Parent or Buyer shall
have failed to perform or comply in any material respect with its obligations,
agreements and covenants under this Agreement, in each case which inaccuracy or
39
failure to perform is not cured in all material respects within ten (10)
Business Days following written notice from the Company of such Breach;
(f) By Parent, if prior to the Changeover Time (i) the Company Board
(A) withdraws, modifies or changes (including by amendment of the Schedule
14D-9) its recommendation of the Offer, this Agreement or the Merger in a manner
adverse to Parent or shall have resolved pursuant to valid Company Board action
to do any of the foregoing, (B) shall have recommended to the Company
Stockholders any Acquisition Proposal or resolved by valid Company Board action
to do so or (C) shall have failed to reaffirm publicly and unconditionally its
recommendation to the Company Stockholders that they tender their Shares in the
Offer, which public reaffirmation must be made within five days after Parent's
reasonable written request to do so; or (ii) the Minimum Condition (as defined
in Annex A) shall not have been satisfied by the Expiration Date and any "group"
(as defined in Section 13(d)(3) of the Exchange Act) or Person (including the
Company or any of its Affiliates), other than Parent or its Affiliates, shall
have become then beneficial owner of more than 50% of the Shares; provided,
however, the current ownership of Shares by the Company Stockholders who are
party to the Stock Purchase Agreements shall not be deemed to trigger this
clause.
(g) By Parent, if prior to the Changeover Time, the Company shall have
Breached any of its representations and warranties, which Breach shall have
given rise to the failure of the condition set forth in clause (f) of Annex A
hereto to be satisfied or the Company shall have failed to perform its covenants
of other agreements contained in this Agreement which failure to perform would
give rise to the failure of the condition set forth in clause (f) of Annex A to
be satisfied, which in each case, Breach or failure to perform is not cured in
all material respects within ten Business Days following receipt of written
notice from Parent of such Breach.
8.2 Manner and Effect of Termination
(a) Termination shall be effected by the giving of written notice to
that effect by the party seeking termination. If this Agreement is validly
terminated and the transactions contemplated hereby are not consummated, this
Agreement shall become null and void and of no further force and effect and no
party shall be obligated to the others hereunder; provided, however, that
-------- -------
termination shall not affect: (i) the rights and remedies available to a party
as a result of the Breach by the other party or parties hereunder, (ii) the
provisions of Sections 9.1, 9.8, and 9.11 hereof, or (iii) the obligations of
---------------------------
the Company pursuant to Section 8.3 below.
-----------
8.3 Certain Payments Upon Termination
(a) In the event that: (A) the Company terminates this Agreement under
Section 8.1(c) or (B) Parent terminates this Agreement under Section 8.1(f), the
-------------- --------------
Company shall pay to Parent a termination fee of $4,830,000 (the "Termination
Fee").
(b) All payments required to be made hereunder shall be made by wire
transfer of immediately available funds within five (5) Business Days of the
event giving rise to the payment of such Parent Expenses. Each of Parent and the
Company acknowledges that the agreements contained in this Section 8.3 are an
-----------
integral part of the transactions contemplated
40
herein and that, without said agreements, neither Parent nor the Company
would have entered into this Agreement; accordingly, if Company fails promptly
to pay the Termination Fee due pursuant to this Section 8.3, and, in order to
-----------
obtain such payment, Parent commences an Action that results in a judgment
against the Company for failure to make such payments, the Company will pay
Parent's reasonable expenses (including attorneys' fees and expenses) in
connection with such Action, together with interest on the amounts due hereunder
at the prime rate of Bank of America in effect on the date the payment was due
determined by the court rendering such judgment.
ARTICLE 9.
MISCELLANEOUS
9.1 Entire Agreement; Third Party Beneficiaries
(a) This Agreement, together with the Exhibits, Annexes and Disclosure
Letters hereto and the certificates, documents, instruments and writings that
are contemplated by or referred to herein and delivered pursuant hereto,
constitute the entire agreement and understanding of the Parties in respect of
its subject matters and supersede all prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof or the transactions contemplated
herein it being understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) except as provided in Section 6.8, are not intended to
-----------
confer upon any other Person any rights or remedies hereunder.
9.2 Successors
All of the terms, agreements, covenants, representations, warranties, and
conditions of this Agreement are binding upon, and inure to the benefit of and
are Enforceable by, the Parties and their respective successors and permitted
assigns.
9.3 Assignments
No Party may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of the other Party.
9.4 Notices
All notices, requests, demands, claims and other communications hereunder
will be in writing. Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient and such notice,
request, demand, claim or other communication will be deemed given if delivered
to the address set forth below using personal delivery, commercial courier,
messenger service, telecopy (receipt confirmed), registered or certified mail
(postage pre-paid, return receipt requested), but no such notice, request,
demand, claim, or other communication will be deemed to have been duly given
unless and until it actually is received by the intended recipient.
41
If to Parent and after Closing to EM Holdings, Inc.
the Acquired Entities: 0000 Xxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Lap Xxxx Xxx
Fax: (000) 000-0000
Copy to (which will not constitute Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
notice): 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to Company and before Closing to the eMachines, Inc.
Acquired Entities: 00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Fax: (000) 000-0000
Copy to (which will not constitute Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
notice): A Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
And
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
A Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
9.5 Specific Performance
Each Party acknowledges and agrees that the other Parties would be damaged
irreparably if any provision of this Agreement is not performed in accordance
with its specific terms or is otherwise Breached. Accordingly, each Party agrees
that the other Parties will be entitled to an injunction or injunctions to
prevent Breaches of the provisions of this Agreement and to enforce
42
specifically this Agreement and its terms and provisions in any Action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, subject to Section 9.8, in
-----------
addition to any other remedy to which they may be entitled, at Law or in equity.
9.6 Counterparts
This Agreement may be executed in two or more counterparts, each of which
will be deemed an original and all of which together will constitute one and the
same instrument.
9.7 Headings
The article and section headings contained in this Agreement are inserted
for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
9.8 Governing Law
This Agreement and the performance of the transactions contemplated herein
and obligations of the Parties hereunder will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to any
choice of Law principles.
9.9 Amendments and Waivers
No amendment, modification, replacement, termination or cancellation of any
provision of this Agreement will be valid, unless the same will be in writing
and signed by Parent and the Company. No waiver by any Party of any default,
misrepresentation, or Breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default,
misrepresentation, or Breach of warranty or covenant hereunder or affect in any
way any rights arising because of any prior or subsequent such occurrence.
9.10 Severability
The provisions of this Agreement will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof. The Parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provisions.
9.11 Expenses
Except as otherwise expressly provided in this Agreement, each Party will
bear its own costs and expenses incurred in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated
herein including all fees and expenses of agents, representatives, financial
advisors, legal counsel and accountants.
9.12 Construction
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The Parties have participated jointly in the negotiation and drafting of
this Agreement. If an ambiguity or question of intent or interpretation arises,
this Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party
because of the authorship of any provision of this Agreement. The word
"including" means "including without limitation." Pronouns in masculine,
feminine, and neuter genders will be construed to include any other gender, and
words in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires. The words "this Agreement,"
"herein," "hereof," "hereby," "hereunder," and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited.
The Parties intend that each representation, warranty, and covenant
contained herein will have independent significance. If any Party has Breached
any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the Party has not Breached will not detract from or mitigate the fact that the
party is in Breach of the first representation, warranty, or covenant.
9.13 Non-Survival of Representations and Warranties
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement will survive the Effective Time
and only the covenants that by their terms survive the Effective Time shall
survive the Effective Time.
9.14 Submission to Jurisdiction
All Actions arising out of or relating to this Agreement shall be heard and
determined exclusively in any Delaware state or federal court sitting in
Newcastle County. The Parties hereto hereby (a) submit to the exclusive
jurisdiction of any state or federal court sitting in the Newcastle County for
the purpose of any Action arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the action is improper or
that this Agreement or the transactions contemplated hereby may not be enforced
in or by any of the above-named courts.
9.15 Buyer Compliance
Whenever this Agreement requires Buyer to take action, such requirement
shall be deemed to include an undertaking on the part of the Parent to cause
Buyer to take such action.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
EMACHINES, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
----------------------------------------------
Title: President and Chief Executive Officer
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EM HOLDINGS, INC.
By: /s/ Lap Xxxx Xxx
------------------------------------------------
Name: Lap Xxxx Xxx
----------------------------------------------
Title: President
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EMPIRE ACQUISITION CORP.
By: /s/ Lap Xxxx Xxx
------------------------------------------------
Name: Lap Xxxx Xxx
----------------------------------------------
Title: President
---------------------------------------------
45
ANNEX A
OFFER CONDITIONS
Capitalized terms used in this Annex A have the meanings set forth in the
attached Agreement, except that the term "Merger Agreement" shall be deemed to
refer to the attached Agreement.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) Parent's rights to extend and amend the Offer at any time
in its sole discretion (pursuant and subject to Section 2.1 of the provisions of
the Merger Agreement), Buyer shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Parent's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, and may postpone the acceptance for payment of and payment for any
tendered Shares, if as of the Expiration Date (i) a number of Shares which (when
added to the number of Shares held by Mr. Lap Xxxx Xxx, KDS USA, Parent and
their respective affiliates and the number of Shares purchasable by Buyer
pursuant to the Stock Purchase Agreements) constitutes at least 90% of the
Shares outstanding shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer (the "Minimum Condition"); (ii) the Parent and
Buyer have not received and do not have available to them on the Funding Date,
the proceeds of the Financing, including but not limited to funds sufficient to
enable Buyer to (x) finance the purchase of the Shares and other securities
which the Buyer is agreeing to pay for and purchase pursuant to the Offer, the
Buyer Option Agreement and the Stock Purchase Agreements; (y) pay the Per Share
Amount pursuant to the Merger; and (z) pay the fees and expenses required to be
paid by the Buyer in connection with the transactions contemplated by the
Agreement, provided that the proceeds of the Financing will be considered
"available" if the conditions to the financing commitment are satisfied (other
than any conditions which Parent or Buyer can cause to be satisfied within five
business days following their acceptance for payment of the Shares tendered in
the Offer which conditions need not be satisfied in order for the proceeds of
the Financing Agreement to be considered "available"); (iii) the waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer; (iv) the Board of Directors of the Company has not
received a solvency opinion in substantially the same form and from the same
investment bank as the solvency opinion delivered to the lender pursuant to the
Financing, or (v) any of the following events shall have occurred and be
continuing at the Expiration Date:
(a) there shall have been any Action, Law or Order enacted or entered into,
issued or instituted or promulgated, or Threatened by any Governmental Entity
(i) challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Buyer or any Affiliate
of Buyer, or the consummation of any other transaction contemplated herein, or
seeking to obtain damages that are material in relation to the Company and its
Subsidiaries, taken as a whole, in connection with the Offer, the Merger or any
transaction herein; (ii) seeking to prohibit or limit materially the ownership
or operation by Parent, Buyer or any Acquired Entity of all or any material
portion of the business or assets of the Company and Subsidiaries, taken as a
whole, or to compel the Company, Parent or any of their respective Subsidiaries
to dispose of or hold separate all or any portion of the business or assets of
the Company, Parent or any of
1
their respective Subsidiaries, as a result of the Offer, the Merger or any of
the transactions contemplated herein; (iii) seeking to impose or confirm
limitations on the ability of Parent or any Affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Parent pursuant to the
Offer or otherwise on all matters properly presented to the Company
Stockholders, including, without limitation, the approval and adoption of this
Agreement and the Merger; (iv) seeking to require divestiture by Parent or any
Affiliate of Parent of any Shares; or (v) which otherwise has a Material Adverse
Effect on the Company;
(b) there shall be any Law or Order enacted, entered, enforced, promulgated
or deemed applicable to the Offer or the Merger, or any other action shall be
taken by any Governmental Entity, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the NASDAQ SmallCap Market System, (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States (whether or
not mandatory), (iii) any limitation (whether or not mandatory) by any United
States or foreign governmental authority on the extension of credit by banks or
other financial institutions, or (iv) a change in general financial, bank or
capital market conditions which Materially Adversely Affects the ability of
financial institutions in the United States to extend credit;
(d) except as disclosed in the Company Disclosure Letter, since the
September 2001 Financial Statement there shall have occurred any Material
Adverse Change (or any development that, insofar as reasonably can be foreseen,
is reasonably likely to result in any Material Adverse Change) in the
consolidated financial condition, businesses, or results of operations of the
Acquired Entities, taken as a whole;
(e) (i) it shall have been publicly disclosed that the beneficial ownership
(determined for the purposes of this paragraph (e) as set forth in Rule 13d 3
promulgated under the Exchange Act) of 50% or more of the outstanding Shares has
been acquired by any Person other than Parent and Buyer and except for any
Person having such beneficial ownership as of the date of the Merger Agreement,
(ii) the Board of Directors of the Company (A) withdraws, modifies or changes
(including by amendment of the Schedule 14D-9) its recommendation of the Offer,
this Agreement or the Merger in a manner adverse to Parent, (B) shall have
recommended to the Stockholders of the Company any Acquisition Proposal, or (C)
shall have failed to reaffirm publicly and unconditionally its recommendation to
the Company's Stockholders that they tender their Shares in the Offer, which
public reaffirmation must be made within five days after Parent's written
request to do so, (iii) a third party shall have entered into a definitive
agreement or a written agreement in principle with the Company with respect to
an Acquisition Proposal, or (iv) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(f) (i) any of the representations and warranties of the Company set forth
in Sections 5.5 of the Merger Agreement shall not be true and correct in all
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material respects as if
2
such representations and warranties were made at the Expiration Date (except
as to any such representation or warranty that speaks as of a specific date,
which must be untrue or incorrect as of such date); or (ii) any of the other
representations and warranties of the Company set forth in the Merger Agreement,
when read without any exception or qualification as to materiality or reference
to Material Adverse Effect or Material Adverse Change, shall not be true and
correct as if such representations and warranties were made at the time of such
determination (except as to any such representation and warranty which speaks as
of a specific date, which must be untrue or incorrect as of such date) except
where the failure to be so true and correct would not individually or in the
aggregate have a Material Adverse Effect on the Company;
(g) the Company shall have failed to perform or comply in any material
respect with its obligations, agreements and covenants under the Merger
Agreement, which Breach has not been cured in all material respects within ten
(10) Business Days following receipt by the Company of written notice of such
Breach; or
(h) the Merger Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the benefit of Parent and Buyer and may be
asserted by Parent or Buyer regardless of the circumstances giving rise to any
such conditions, may be waived by Parent or Buyer, in whole or in part, in
accordance with Section 2.1 of the Merger Agreement. The failure by Parent or
Buyer at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
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