EXHIBIT 99.1
Execution Copy
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AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 19, 2004
BY AND AMONG
TSI HOLDING CO., INC.,
TSI ACQUISITION CO., INC.
AND
TROVER SOLUTIONS, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER......................................................................................... 1
Section 1.1 The Merger.................................................................................. 1
Section 1.2 Effective Time of the Merger................................................................ 1
Section 1.3 Effects of the Merger....................................................................... 2
Section 1.4 Closing..................................................................................... 2
ARTICLE II THE SURVIVING CORPORATION.......................................................................... 2
Section 2.1 Certificate of Incorporation................................................................ 2
Section 2.2 Bylaws...................................................................................... 2
Section 2.3 Directors................................................................................... 2
Section 2.4 Officers.................................................................................... 3
ARTICLE III EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES....... 3
Section 3.1 Conversion of Company Common Stock in the Merger............................................ 3
Section 3.2 Conversion of Subsidiary Shares............................................................. 3
Section 3.3 Surrender and Exchange of Certificates...................................................... 4
Section 3.4 Tax Withholding............................................................................. 5
Section 3.5 Closing of the Company's Transfer Books..................................................... 5
Section 3.6 Option Plans; Restricted Stock.............................................................. 5
Section 3.7 Dissenting Shares........................................................................... 6
Section 3.8 Further Assurances.......................................................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................... 7
Section 4.1 Organization and Qualification.............................................................. 7
Section 4.2 Capitalization.............................................................................. 7
Section 4.3 Ownership Interests in Other Entities....................................................... 9
Section 4.4 Authority; Non-Contravention; Approvals..................................................... 9
Section 4.5 SEC Reports and Financial Statements........................................................ 11
Section 4.6 Absence of Undisclosed Liabilities.......................................................... 13
Section 4.7 Absence of Certain Changes or Events........................................................ 13
Section 4.8 Litigation.................................................................................. 14
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TABLE OF CONTENTS
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Section 4.9 Information Supplied........................................................................ 14
Section 4.10 Compliance with Laws; Permits............................................................... 15
Section 4.11 Compliance with Agreements.................................................................. 15
Section 4.12 Taxes....................................................................................... 15
Section 4.13 Employee Benefit Plans; ERISA............................................................... 17
Section 4.14 Labor Controversies......................................................................... 19
Section 4.15 Environmental Matters....................................................................... 19
Section 4.16 Intellectual Property....................................................................... 20
Section 4.17 Material Contracts.......................................................................... 21
Section 4.18 Brokers and Finders......................................................................... 22
Section 4.19 Opinion of Company Financial Advisor........................................................ 22
Section 4.20 Significant Clients......................................................................... 22
Section 4.21 Vote Required............................................................................... 22
Section 4.22 Insurance................................................................................... 22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY............................................ 23
Section 5.1 Organization and Qualification.............................................................. 23
Section 5.2 Authority; Non-Contravention; Approvals..................................................... 23
Section 5.3 Information Supplied........................................................................ 24
Section 5.4 Financing................................................................................... 24
Section 5.5 Subsidiary.................................................................................. 24
Section 5.6 Brokers and Finders......................................................................... 24
Section 5.7 DGCL Section 203............................................................................ 24
ARTICLE VI COVENANTS OF THE PARTIES........................................................................... 25
Section 6.1 Conduct of the Company's Business........................................................... 25
Section 6.2 Reasonable Best Efforts to Consummate....................................................... 27
Section 6.3 Preparation of Proxy Statement; Meeting of Stockholders..................................... 28
Section 6.4 Public Statements........................................................................... 29
Section 6.5 Access to Information....................................................................... 29
Section 6.6 Acquisition Proposals....................................................................... 30
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TABLE OF CONTENTS
(continued)
PAGE
Section 6.7 Expenses and Fees........................................................................... 32
Section 6.8 Directors' and Officers' Indemnification and Insurance...................................... 32
Section 6.9 Employee Benefits........................................................................... 34
Section 6.10 Section 16 Matters.......................................................................... 35
Section 6.11 Rights Agreement............................................................................ 35
ARTICLE VII CONDITIONS......................................................................................... 35
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.................................. 35
Section 7.2 Conditions to Obligations of Parent and Subsidiary.......................................... 36
Section 7.3 Conditions to Obligations of the Company.................................................... 36
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.................................................................. 37
Section 8.1 Termination................................................................................. 37
Section 8.2 Effect of Termination....................................................................... 38
Section 8.3 Amendment................................................................................... 40
Section 8.4 Extension; Waiver........................................................................... 41
ARTICLE IX GENERAL PROVISIONS................................................................................. 41
Section 9.1 Non-Survival................................................................................ 41
Section 9.2 Notices..................................................................................... 41
Section 9.3 Governing Law............................................................................... 42
Section 9.4 Third Party Beneficiaries................................................................... 42
Section 9.5 Severability................................................................................ 43
Section 9.6 Assignment.................................................................................. 43
Section 9.7 Interpretation; Certain Definitions......................................................... 43
Section 9.8 Jurisdiction................................................................................ 43
Section 9.9 Enforcement................................................................................. 43
Section 9.10 Counterparts................................................................................ 44
Section 9.11 Entire Agreement............................................................................ 44
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INDEX OF DEFINED TERMS
Acquisition Agreement.................................... 30
Acquisition Proposal..................................... 32
Agreement................................................ 1
Antitrust Division....................................... 27
business day............................................. 43
Closing.................................................. 2
Closing Date............................................. 2
Code..................................................... 5
Common Stock Price....................................... 1
Company.................................................. 1
Company Certificates..................................... 4
Company Common Stock..................................... 1
Company Disclosure Schedule.............................. 7
Company Financial Advisor................................ 22
Company Financial Statements............................. 12
Company Insurance Policies............................... 23
Company Intellectual Property Rights..................... 20
Company Material Adverse Effect.......................... 7
Company Permits.......................................... 15
Company Plan............................................. 17
Company Preferred Stock.................................. 7
Company Regulatory Approvals............................. 10
Company Representative................................... 32
Company Right............................................ 7
Company Rights Agreement................................. 7
Company SEC Report....................................... 11
Company Stock Plan....................................... 5
Company Stockholders' Approval........................... 9
Company Subsidiary....................................... 3
Confidentiality Agreement................................ 30
Contract................................................. 10
Delaware Court........................................... 43
DGCL..................................................... 1
Dissenting Shares........................................ 1
Dissenting Stockholders.................................. 1
Effective Time........................................... 1
environment.............................................. 20
Environmental Event...................................... 19
Environmental Law........................................ 19
ERISA.................................................... 17
ERISA Affiliate.......................................... 17
Exchange Act............................................. 11
FTC...................................................... 27
GAAP..................................................... 12
Governmental Authority................................... 11
HSR Act.................................................. 10
IRS...................................................... 17
Indebtedness............................................. 36
knowledge of the Company................................. 43
Lien..................................................... 9
Material Contract........................................ 10
material Taxes........................................... 16
Merger................................................... 1
Merger Filing............................................ 2
Option................................................... 5
Option Payment........................................... 5
Parent................................................... 1
Parent Representatives................................... 29
Paying Agent............................................. 4
Pension Plan............................................. 17
person................................................... 43
Premium Amount........................................... 33
Proxy Statement.......................................... 10
release.................................................. 20
SEC...................................................... 10
Securities Act........................................... 11
SOX Act.................................................. 12
Stockholders Meeting..................................... 28
Subscription Agreement................................... 24
Subsidiary............................................... 1
Superior Proposal........................................ 32
Surviving Corporation.................................... 1
Tax Return............................................... 16
Taxes.................................................... 16
Termination Date......................................... 37
Termination Fee.......................................... 39
Welfare Plan............................................. 17
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 19, 2004 (this
"Agreement"), is made and entered into by and among TSI HOLDING CO., INC., a
Delaware corporation ("Parent"), TSI ACQUISITION CO., INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Subsidiary"), and TROVER
SOLUTIONS, INC., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, Parent, Subsidiary and the Company wish to provide for a
merger of Subsidiary with and into the Company (the "Merger"), upon the terms
and subject to the conditions set forth in this Agreement, whereby all of the
issued and outstanding shares of common stock, par value $.001 per share, of the
Company (the "Company Common Stock"), issued and outstanding immediately prior
to the Effective Time, other than (i) the shares of Company Common Stock owned
directly or indirectly by Parent, Subsidiary or the Company and (ii) any shares
of Company Common Stock ("Dissenting Shares") held by record holders or
beneficial owners of shares of Company Common Stock who do not vote for the
Merger and who comply with all applicable provisions of the Delaware General
Corporation Law (the "DGCL") (including all applicable provisions of Section 262
of the DGCL) concerning the right of holders of Company Common Stock to dissent
from the Merger and obtain fair value for their shares ("Dissenting
Stockholders"), will be converted into the right to receive $7.00 per share in
cash (the "Common Stock Price"); and
WHEREAS, the respective Boards of Directors of Parent, Subsidiary and
the Company have approved this Agreement and declared it advisable; and
WHEREAS, Parent, Subsidiary and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement and the
DGCL, Subsidiary shall be merged with and into the Company. At the Effective
Time, the separate existence of Subsidiary shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation").
Section 1.2 Effective Time of the Merger. The Merger shall become
effective at the time (such time, the "Effective Time") of the filing of a
certificate of merger (in the form required by, and executed in accordance with,
the relevant provisions of the DGCL) with the Secretary of
State of the State of Delaware in accordance with the DGCL (the "Merger
Filing"), or such later time as may be specified therein. The Merger Filing
shall be made simultaneously with or as soon as practicable following the
Closing.
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, at the Effective Time, except as otherwise provided
in this Agreement, all the property, rights, privileges, powers and franchises,
and all and every other interest, of Subsidiary and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Subsidiary
and the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.4 Closing. Subject to the satisfaction or waiver of the
conditions to the obligations of the parties to effect the Merger set forth in
this Agreement, a closing to effectuate the consummation of the Merger (the
"Closing") shall take place at 10:00 a.m. local time on the fifth business day
following the satisfaction or waiver of all the conditions set forth in Article
VII (other than conditions which, by their nature, are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at the
offices of Xxxxxxxx Chance US LLP, 200 Park Avenue, New York, New York, or at
such other time or place as Parent and the Company may agree in writing. The
date on which the Closing occurs is sometimes referred to in this Agreement as
the "Closing Date."
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be amended in the Merger to be in the form attached hereto as Exhibit
A, which will be identical to the Certificate of Incorporation of Subsidiary as
in effect immediately prior to the Effective Time (except that the name of the
Surviving Corporation shall be the name of the Company) and, as so amended,
shall be the Certificate of Incorporation of the Surviving Corporation after the
Effective Time until thereafter amended in accordance with its terms and the
DGCL.
Section 2.2 Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be amended in the Merger to be in the form
attached hereto as Exhibit B, which will be identical to the Bylaws of
Subsidiary as in effect immediately prior to the Effective Time (except that the
name of the Surviving Corporation shall be the name of the Company) and, as so
amended, shall be the Bylaws of the Surviving Corporation after the Effective
Time until thereafter amended in accordance with their terms and as provided by
the Certificate of Incorporation of the Surviving Corporation and the DGCL
(subject to Section 6.8(a) of this Agreement).
Section 2.3 Directors. From and after the Effective Time, the directors
of the Surviving Corporation shall be the directors of Subsidiary immediately
prior to the Effective Time and shall serve in accordance with the Certificate
of Incorporation and Bylaws of the Surviving
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Corporation until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal.
Section 2.4 Officers. From and after the Effective Time, the officers
of the Surviving Corporation shall be the officers of Subsidiary immediately
prior to the Effective Time and such officers shall serve in accordance with the
bylaws of the Surviving Corporation until their respective successors are duly
elected or appointed and qualified or until their earlier death, resignation or
removal.
ARTICLE III
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES
Section 3.1 Conversion of Company Common Stock in the Merger. At the
Effective Time, by virtue of the Merger and without any further action on the
part of any holder of any capital stock of Parent, Subsidiary or the Company:
(a) each previously-issued share of Company Common Stock that
remains outstanding immediately prior to the Effective Time, other than any
shares required to be canceled pursuant to Section 3.1(b) and any Dissenting
Shares, shall be converted into the right to receive the Common Stock Price,
payable to the holder thereof, in each case without interest, upon surrender of
the certificate formerly representing such share of the Company Common Stock and
such other documents as reasonably may be required in accordance with Section
3.3, and all such shares of Company Common Stock, when so converted, no longer
shall be outstanding and automatically shall be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Common Stock Price per share therefor, without
interest, upon the surrender of such certificate in accordance with Section 3.3
or to perfect any rights of appraisal as a holder of Dissenting Shares that such
holder may have pursuant to the DGCL; and
(b) each share of Company Common Stock of the Company, if any,
owned of record or beneficially by Parent or Subsidiary or held in treasury by
the Company or any subsidiary of the Company (each a "Company Subsidiary")
immediately prior to the Effective Time automatically shall be canceled and
retired and shall cease to exist and no cash or other consideration shall be
delivered or deliverable in exchange therefor.
Section 3.2 Conversion of Subsidiary Shares. At the Effective Time, by
virtue of the Merger and without any further action on the part of Parent as the
sole stockholder of Subsidiary, each issued and outstanding share of common
stock, par value $.001 per share, of Subsidiary that is issued and outstanding
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.001 per share, of the
Surviving Corporation.
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Section 3.3 Surrender and Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent in the
Merger (the "Paying Agent"), and at the Effective Time, Parent shall deposit
with the Paying Agent, or cause the Surviving Corporation to deposit with the
Paying Agent, cash in an amount equal to the aggregate amounts payable under
Sections 3.1(a) and 3.6(a). The funds so deposited with the Paying Agent shall
be held by the Paying Agent and applied by it in accordance with this Section
3.3 and Section 3.6(a).
(b) Promptly after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of a certificate or certificates
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Company Certificates"), whose shares were converted
into the right to receive the Common Stock Price pursuant to Section 3.1(a), (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Company Certificates shall pass, only upon
actual delivery of the Company Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent reasonably may specify), and
(ii) instructions for use in effecting the surrender of the Company Certificates
in exchange for the Common Stock Price. Upon delivery to the Paying Agent of a
Company Certificate, a duly executed letter of transmittal and such other
documents specified in the instructions for use referred to above as the Paying
Agent reasonably shall require, the holder of such Company Certificates shall be
entitled to receive in exchange therefor the Common Stock Price for each share
of Company Common Stock formerly represented thereby, in accordance with Section
3.1(a), and the Company Certificates so surrendered shall be canceled. If a
transfer of ownership of shares of Company Common Stock has occurred but has not
been registered in the transfer records of the Company, a check representing the
proper amount of Common Stock Price may be issued to the transferee if the
Company Certificate representing such shares of Company Common Stock is
presented to the Paying Agent accompanied by all documents and endorsements
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as provided in
this Section 3.3, each Company Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Common Stock Price for each share of Company Common Stock represented thereby.
No interest will be paid or accrue on any amounts payable upon surrender of any
Company Certificate.
(c) Promptly following the date which is six months after the
Effective Time, the Paying Agent shall deliver to Parent all cash and any
documents in its possession relating to the transactions described in this
Agreement, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Company Certificate may surrender such Company Certificate to the
Surviving Corporation or Parent, together with such other documents specified in
the instructions referred to above in Section 3.3(b) as Parent reasonably shall
require, and (subject to applicable abandoned property, escheat or other similar
laws) receive in exchange therefor the Common Stock Price, payable upon due
surrender of the Company Certificate without any interest thereon.
Notwithstanding the foregoing, none of the Paying Agent, Parent, Subsidiary, the
Company or the Surviving Corporation shall be liable to a holder of shares of
Company
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Common Stock for any amounts properly delivered to a public official pursuant to
any applicable abandoned property, escheat or other similar laws.
(d) If any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Company Certificate the
Common Stock Price deliverable in respect thereof determined in accordance with
this Article III; provided, however, that Parent or the Paying Agent may, in its
discretion, require the delivery of a reasonable indemnity or bond against any
claim that may be made against the Surviving Corporation with respect to the
Company Common Stock represented by such Company Certificate or ownership
thereof.
Section 3.4 Tax Withholding. Each of the Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of shares of Company Common Stock or of Options (as defined in Section 3.6) such
amounts as the Paying Agent, Parent or the Surviving Corporation is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any other provision
of federal, state, local or foreign tax law. To the extent that amounts are so
withheld by the Paying Agent, Parent or Surviving Corporation, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the former holder of the shares of Company Common Stock or Options in respect
of which such deduction and withholding was made.
Section 3.5 Closing of the Company's Transfer Books. At and after the
Effective Time, holders of Company Certificates shall cease to have any rights
as stockholders of the Company, except for the right to receive the Common Stock
Price pursuant to Section 3.1, without interest. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time shall thereafter be made. If, after the Effective Time, subject to the
terms and conditions of this Agreement, Company Certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Common Stock Price in
accordance with this Article III.
Section 3.6 Option Plans; Restricted Stock.
(a) As of the Effective Time, each option, warrant or other
similar right to acquire shares of Company Common Stock (each an "Option") that
then remains outstanding and originally was granted under any stock option or
compensation plan or arrangement of the Company (each a "Company Stock Plan"),
whether or not then vested or exercisable, automatically shall be converted into
an obligation of the Surviving Corporation to pay, and a right of the holder
thereof to receive thereupon in full satisfaction of such Option, an amount in
cash (subject to any applicable withholding taxes) equal to the product of (x)
the excess, if any, of the Common Stock Price over the applicable exercise price
of such Option and (y) the number of shares of Company Common Stock subject to
such Option (the "Option Payment"). Parent shall direct the Paying Agent to make
the payments required under this Section 3.6(a) at or as promptly as practicable
following the Effective Time.
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(b) Notwithstanding the foregoing provisions of Section 3.6(a), as
of the Effective Time, each Option held by an employee of the Company listed on
a supplementary schedule to be provided by Parent to the Company at least five
business days prior to the Effective Time that then remains outstanding and
originally was granted under any Company Stock Plan, whether or not then vested
or exercisable, and with respect to which such employee shall have executed and
delivered to Parent an exchange agreement, shall be exchanged for an option to
acquire shares of Parent common stock on terms comparable to the terms of such
employee's Option immediately prior to the Effective Time.
(c) Upon the consummation of the Merger, each holder of a
restricted share of Company Common Stock outstanding at the Effective Time shall
be entitled to receive the Common Stock Price payable with respect to such
restricted share as contemplated by Sections 3.1 and 3.3.
Section 3.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Dissenting Shares held by a Dissenting Stockholder shall not be
converted into the right to receive the Common Stock Price but shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the DGCL; provided, however, that each share
of Company Common Stock outstanding immediately prior to the Effective Time and
held by a Dissenting Stockholder who, after the Effective Time, withdraws his
demand or fails to perfect or otherwise loses his right of appraisal pursuant to
the DGCL, shall be deemed to be converted as of the Effective Time into the
right to receive the Common Stock Price, without interest.
(b) The Company shall give Parent (i) notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal, or
settle, or offer to settle, or agree to do any of the foregoing.
Section 3.8 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Subsidiary, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that,
except as set forth in the disclosure schedule (with specific reference to the
particular Section or subsection of this Agreement to which the information set
forth in such disclosure schedule relates) delivered by the Company to Parent
prior to the execution and delivery of this Agreement (the "Company Disclosure
Schedule") and except as otherwise expressly contemplated by this Agreement:
Section 4.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to own,
license, use, lease or otherwise hold its assets and properties and to carry on
its business as it is now being conducted. The Company is qualified to transact
business and is in good standing (with respect to jurisdictions that recognize
such concept) in each jurisdiction in which the properties owned, licensed,
used, leased, held or operated by it or the nature of the business conducted by
it makes such qualification necessary, except where the failure to be so
qualified would not have, individually or in the aggregate, a Company Material
Adverse Effect. As used in this Agreement, a "Company Material Adverse Effect"
means any material adverse effect on the business, operations, assets,
liabilities, financial condition or results of operations of the Company and the
Company Subsidiaries taken as a whole or on the consummation by the Company of
the Merger and the other transactions contemplated hereby, other than effects
due to general economic, market or political conditions. The Company has made
available to Parent and Subsidiary complete and correct copies of the
Certificate of Incorporation and Bylaws of the Company, in each case as in
effect as of the date of this Agreement. The Company has made available to
Parent and Subsidiary complete and correct copies of the minutes (or, in the
case of minutes that have not yet been finalized, drafts thereof (if available))
of all meetings and written consents of the stockholders of the Company, the
Board of Directors of the Company and the committees of the Board of Directors,
in each case since October 1, 2001 (other than portions of minutes relating to
this Agreement and the process followed by the Company that resulted in this
Agreement, which shall be made available promptly after the date of this
Agreement, provided that the terms of other acquisition proposals and any
discussion of valuation of the Company or of the negotiation of this Agreement
set forth in such minutes may be redacted).
Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists solely of
20,000,000 shares of Company Common Stock and 2,000,000 shares of preferred
stock, par value $.00l per share ("Company Preferred Stock"), of which 500,000
shares have been designated as Series A Junior Participating Preferred Stock. As
of February 17, 2004, (i) 8,494,977 shares of Company Common Stock were issued
and outstanding (not including shares of Company Common Stock held in the
treasury of the Company), all of which were duly and validly issued and are
fully paid, nonassessable and free of preemptive and other similar rights and
each of which also entitles the holder to one preferred stock purchase right (a
"Company Right") issued pursuant to the Rights Agreement, dated as of February
12, 1999, between the Company and National City
7
Bank of Kentucky, as rights agent (the "Company Rights Agreement"); (ii) no
shares of Company Preferred Stock were issued and outstanding; (iii) 3,260,756
shares of Company Common Stock and no shares of Company Preferred Stock were
held in the treasury of the Company; and (iv) 2,874,267 shares of Company Common
Stock were reserved for issuance upon exercise, conversion or exchange of
Options and pursuant to the Company's Employee Stock Purchase Plan. Since
February 17, 2004, no shares of capital stock or other voting securities or
equity interests of the Company have been issued or reserved for issuance,
except in connection with the exercise, exchange or conversion of the
outstanding Options.
(b) The Company has previously made available to Parent complete
and correct copies of all Company Stock Plans, including all amendments thereto.
Section 4.2(b) of the Company Disclosure Schedule completely and accurately sets
forth: (i) the name of each Company Stock Plan and each restricted stock,
phantom stock and other equity-based compensation plan of the Company; (ii) the
name of each holder of Options, restricted stock or other rights awarded or held
pursuant to any plan described in clause (i); and (iii) for each holder
described in clause (ii), the number of shares issuable upon exercise of the
holder's Options, the number of shares of restricted stock held, the other
rights held, and in each such instance the applicable grant dates, expiration
dates, exercise or base prices (if applicable), restrictions and other
equivalent provisions and proceeds (if applicable) due to the Company upon such
exercise.
(c) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote are authorized, issued or outstanding.
(d) Except for the Options, there are no outstanding
subscriptions, options, calls, contracts, scrip, commitments, understandings,
restrictions, arrangements, rights, warrants, stock appreciation or other rights
(contingent or other) including phantom stock rights or preemptive or similar
rights, or rights of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any Company Subsidiary
to issue, deliver or sell, redeem or repurchase, or cause to be issued,
delivered or sold, redeemed or repurchased, shares of the capital stock of the
Company or any Company Subsidiary or obligating the Company or any Company
Subsidiary to grant, extend or enter into any such agreement or commitment and
there is no commitment of the Company or any Company Subsidiary to distribute to
holders of any class of its capital stock, any dividends, distributions,
evidences of indebtedness or assets. There are no voting trusts, proxies or
other agreements or understandings to which the Company or any Company
Subsidiary is a party or is bound with respect to the voting of any shares of
capital stock of the Company and no shares of capital stock of the Company are
subject to transfer restrictions imposed by or with the knowledge, consent or
approval of the Company, or other similar arrangements imposed by or with the
knowledge, consent or approval of the Company, except for restrictions on
transfer imposed by the Securities Act and state securities laws. The Company
Common Stock (including the associated Company Rights) constitutes the only
class of equity securities of the Company or any Company Subsidiary registered
or required to be registered under the Exchange Act.
(e) The Company has obtained all consents and made all amendments,
if any, to the terms of the Company Stock Plans and each outstanding award
agreement issued pursuant to the
8
Company Stock Plans, as applicable, that are necessary to give effect to the
provisions of Section 3.6(a).
Section 4.3 Ownership Interests in Other Entities.
(a) The only Company Subsidiaries are those set forth in Section
4.3(a) of the Company Disclosure Schedule. Except for shares of, or ownership
interests in, the Company Subsidiaries, the Company does not own of record or
beneficially, directly or indirectly, (i) any shares of outstanding capital
stock or securities convertible into or exchangeable or exercisable for capital
stock of any other corporation or (ii) any equity interest in any limited or
unlimited liability company, partnership, joint venture or other business
enterprise. Each Company Subsidiary is a corporation, partnership, limited
liability company or similar business entity duly organized, validly existing
and in good standing (with respect to jurisdictions that recognize such concept)
under the laws of the jurisdiction of its incorporation or organization and has
all requisite power and authority to own, license, use, lease or otherwise hold
its assets and properties and to carry on its business as it is now being
conducted. Each Company Subsidiary is qualified to transact business and is in
good standing (with respect to jurisdictions that recognize such concept) in
each jurisdiction in which the properties owned, licensed, used, leased, held or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not
have, individually or in the aggregate, a Company Material Adverse Effect. The
Company has heretofore made available to Parent and Subsidiary complete and
correct copies of the charter and by-laws (or other comparable organizational
documents) of all Company Subsidiaries as in effect as of the date of this
Agreement. The Company has heretofore made available to Parent and Subsidiary
complete and correct copies of the minutes (or, in the case of minutes that have
not yet been finalized, drafts thereof (if available)) of all meetings and
written consents of the stockholders, members, or partners, as the case may be,
of the Company Subsidiaries, the board of directors, management committee, or
managers of the Company Subsidiaries, as the case may be, and the committees of
the board of directors, management committees, or managers of the Company
Subsidiaries, as the case may be, in each case since October 1, 2001.
(b) All of the issued and outstanding shares of capital stock of,
or other ownership interests in, each Company Subsidiary are validly issued,
fully paid, nonassessable and free of preemptive or similar rights and are owned
directly or indirectly by the Company free and clear of any liens, claims,
mortgages, hypothecations, pledges, charges, encumbrances, security interests,
right of first refusal or adverse claims of any kind (any of the foregoing, a
"Lien").
Section 4.4 Authority; Non-Contravention; Approvals.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been approved and declared advisable by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
or, except for the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock in accordance with the requirements
of the DGCL (the "Company Stockholders' Approval"), the consummation by the
Company of the
9
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Subsidiary, constitutes a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(b) The execution, delivery and performance of this Agreement by
the Company and the consummation of the Merger and the other transactions
contemplated hereby do not and will not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with or
without notice or passage of time or both, would constitute a default) under, or
result in the termination of, or the loss of a benefit under or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under any of the terms,
conditions or provisions of (i) the Company's Certificate of Incorporation or
Bylaws or the organizational documents of any Company Subsidiary; (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or other Governmental Authority applicable
to the Company or any Company Subsidiary or any of their respective properties
or assets; or (iii) any note, bond, mortgage, indenture, deed of trust, loan,
credit agreement, guarantee, letter of credit, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind, whether oral or written (each, including all amendments thereto, a
"Contract") to which the Company or any Company Subsidiary is now a party or by
which the Company or any Company Subsidiary or any of their respective
properties or assets may be bound or affected (A) that is or should be listed in
Section 4.17(a) of the Company Disclosure Schedule (each such Contract, a
"Material Contract") or (B) that is not a Material Contract, except in the case
of the Contracts referred to in this subclause (B) for such violations,
conflicts, breaches and defaults as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. None of the
Material Contracts requires the consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with any
third party for the Company to enter into this Agreement or to consummate the
transactions contemplated hereby. Except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, none
of the Contracts that are not Material Contracts requires the consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with any third party for the Company to enter into this
Agreement or to consummate the transactions contemplated hereby
(c) Except for (i) the filings by the Company required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the Securities and Exchange Commission (the "SEC")
of the proxy statement (as amended and supplemented, the "Proxy Statement") and
related proxy materials to be used in soliciting the Company Stockholders'
Approval and the filing of such other reports under and such other compliance
with the Exchange Act and the Securities Act and the rules and regulations
thereunder as may be required in respect of this Agreement and the transactions
contemplated hereby, (iii) the Merger Filing, and (iv) compliance with the rules
and regulations of the Nasdaq National Market (the filings and approvals
referred to in clauses (i) through (iv) are sometimes collectively referred to
in this Agreement as the "Company Regulatory Approvals"), no
10
declaration, filing or registration with, or notice to, or authorization,
consent, order or approval of, any federal, state, local, municipal or foreign
government, whether national, regional or local, any instrumentality,
subdivision, court, administrative agency or commission or other authority
thereof, or any quasi-governmental or private body exercising any regulatory,
taxing or other governmental or quasi-governmental authority (any of the
foregoing, a "Governmental Authority") is required to be obtained or made in
connection with or as a result of the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Merger and the other
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents, orders or approvals as, if not
made or obtained, as the case may be, would not reasonably be expected to impair
the validity of the Merger or the other transactions provided for in this
Agreement, to impose a material liability or disability on the Surviving
Corporation or to materially impair the ability to conduct the business of the
Surviving Corporation in the same manner as the Company conducts its business on
the date hereof.
(d) The Company has taken all action necessary (i) to render the
Company Rights Agreement and Section 203 of the DGCL inapplicable to the
execution of this Agreement, the consummation of the Merger and the consummation
of the other transactions contemplated by this Agreement, such that none of the
execution of this Agreement, the consummation of the Merger or the consummation
of the other transactions contemplated by this Agreement will be prohibited by
the Company Rights Agreement, result in the grant of any rights to any person
under the Company Rights Agreement or enable or require any rights outstanding
thereunder to be exercised, distributed or triggered or will contravene or
require any further action pursuant to Section 203 of the DGCL; and (ii) to
cause the Company Rights Agreement and all of the Company Rights automatically
to expire at or immediately prior to the Effective Time. No other state
antitakeover statute is applicable to the execution of this Agreement, the
consummation of the Merger or the consummation of the other transactions
contemplated by this Agreement.
Section 4.5 SEC Reports and Financial Statements.
(a) The Company previously has delivered to Parent (except to the
extent such filings are publicly available on the SEC's XXXXX system) each
registration statement, report, proxy statement or information statement,
including all amendments and supplements (each a "Company SEC Report") filed by
the Company since January 1, 2002 pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company has filed with the SEC all Company SEC
Reports required to be so filed under each of the Exchange Act, the Securities
Act and the respective rules and regulations promulgated thereunder. Each such
Company SEC Report, as amended or supplemented (if applicable), complied in all
material respects, when filed, with all applicable requirements of the
appropriate act (including the applicable rules and regulations thereunder). As
of their respective dates (or to the extent amended, supplemented or superseded
by a subsequent filing, with respect to the information in such subsequent
filing, or as of the date of the subsequent filing), the Company SEC Reports 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 therein,
in the light of the circumstances under which they were made, not misleading.
None of the Company Subsidiaries is required under the Exchange Act, by contract
11
or otherwise, to file any forms, reports, schedules, statements or other
documents with the SEC. Neither the SEC nor its staff has challenged, or alleged
or asserted any deficiency in, the accuracy or appropriateness of any of the
Company's financial reporting or other disclosure, except for those challenges,
allegations or assertions that have been resolved.
(b) The audited financial statements (including the related notes)
of the Company included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002 and the unaudited interim financial statements included
in the Company's Quarterly Report on Form 10-Q for the period ended September
30, 2003 (collectively, the "Company Financial Statements") complied at the time
they were filed as to form in all material respects with applicable accounting
requirements and the published rules and regulation of the SEC with respect
thereto, were prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior periods
(except as may be indicated therein or in the notes thereto or as may be
permitted by the rules and regulations applicable to quarterly reports on Form
10-Q), fairly present in all material respects the financial position, results
of operations, cash flows and stockholders' equity of the Company at the dates
and for the periods indicated (subject, in the case of unaudited interim
statements, to normal year-end adjustments and the absence of certain footnote
disclosures) and are consistent with the books and records of the Company. The
principal executive officer of the Company and the principal financial officer
of the Company have made the certifications required by Sections 302 and 906 of
the Xxxxxxxx-Xxxxx Act of 2002 (the "SOX Act") and the rules and regulations
promulgated by the SEC thereunder with respect to each Company SEC Report
subject to that requirement; and neither the Company nor any of its officers has
received notice from any Governmental Authority questioning or challenging the
accuracy, completeness, form or manner of filing or submission of such
certifications.
(c) The Company maintains disclosure controls and procedures in
accordance with Rule 13a-15 under the Exchange Act. Those controls and
procedures are effective to ensure that all material information concerning the
Company and the Company Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the Company's filings with the
SEC. The Company has not received notice from the SEC that any of its accounting
policies or practices are the subject of any review, investigation or challenge
other than comments furnished by the staff of the SEC in respect of Company SEC
Reports that have been addressed or withdrawn.
(d) Each of the Company and the Company Subsidiaries maintains
accurate books and records reflecting its assets and liabilities. The Company
maintains proper and adequate internal accounting controls which provide
assurance that (i) transactions are executed with management's authorization;
(ii) transactions are recorded as necessary to permit preparation of the
financial statements of the Company and to maintain accountability for the
Company's assets; (iii) access to the Company's assets is permitted only in
accordance with management's authorization; (iv) the reporting of the Company's
assets is compared with existing assets at regular intervals; and (v) accounts,
notes and other receivables and inventory are recorded accurately, and proper
and adequate procedures are implemented to effect the collection thereof on a
current and timely basis.
12
(e) Except as set forth in the Company SEC Reports filed prior to
the date of this Agreement, neither the Company nor any Company Subsidiary is a
party to or bound by any "material contract" (as defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC).
Section 4.6 Absence of Undisclosed Liabilities.
(a) Except as disclosed in the Company Financial Statements,
neither the Company nor any of the Company Subsidiaries had at December 31,
2002, or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except liabilities or
obligations which (i) were incurred after December 31, 2002 in the ordinary
course of business and consistent with past practices, (ii) are non-contingent
monetary obligations that were incurred in connection with the preparation,
negotiation and performance of this Agreement, (iii) are monetary obligations
incurred after May 1, 2003 in connection with the process leading up to this
Agreement (provided that as of the Effective Time the aggregate amount of such
obligations that remain unpaid shall not exceed $75,000), (iv) were expressly
permitted under another provision of this Agreement, or (v) have been discharged
or paid in full or will have been discharged or paid in full prior to the
Effective Time. Since December 31, 2000, neither the Company nor any Company
Subsidiary has been a party to any asset securitization transaction or
"off-balance sheet arrangement" (as defined in Item 303(c) of Regulation S-K
promulgated under the Exchange Act).
(b) Except as specifically disclosed in the Company SEC Reports
filed prior to the date of this Agreement, there are no transactions,
agreements, arrangements or understandings between the Company or the Company
Subsidiaries, on the one hand, and the Company's affiliates (other than wholly
owned subsidiaries of the Company) or other persons, on the other hand, that
would be required to be disclosed under Item 404 of Regulation S-K promulgated
under the Securities Act. Except as specifically disclosed in the Company SEC
Reports filed prior to the date of this Agreement, the Company has not, since
July 1, 2002, extended or maintained credit, arranged for the extension of
credit, or renewed an extension of credit, in the form of a personal loan to or
for any director or executive officer (or equivalent thereof) of the Company.
There are no loans or extensions of credit maintained by the Company to which
the second sentence of Section 13(k)(1) of the Exchange Act applies.
Section 4.7 Absence of Certain Changes or Events. Since December 31,
2002, except as specifically disclosed in any Company SEC Report filed before
the date of this Agreement, neither the Company nor any Company Subsidiary has
suffered or experienced any changes, events, circumstances or developments
which, individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect. Since December 31, 2002
through the date of this Agreement, (a) the Company and the Company Subsidiaries
have conducted their respective businesses only in the ordinary course
consistent with past practice; and (b) there has not occurred (i) any
declaration, setting aside or payment of any dividend, or other distribution in
cash, stock or property in respect of the capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company; (ii) any split in the Company's capital stock, combination,
subdivision or reclassification of any of the Company's capital stock or
issuance or authorization of any issuance of any other securities in respect of,
in
13
lieu of, or in substitution for, shares of its capital stock, except as
expressly contemplated by this Agreement; (iii) any modification, amendment or
other change of any term of any outstanding security of the Company; (iv) any
change by the Company in financial accounting principles, practices or methods,
except as required by GAAP or by a change of law, statute, rule or regulation;
(v) any granting by the Company or any Company Subsidiary to any current or
former director, officer, employee or consultant of the Company or any Company
Subsidiary of any increase in compensation, bonus or fringe or other benefits or
any granting of any type of compensation or benefits to any current or former
director, officer, employee or consultant not previously receiving or entitled
to receive such type of compensation or benefit, except for normal increases in
cash compensation (including cash bonuses) in the ordinary course of business
consistent with past practice or as was required under any Company Plan in
effect as of the date of the most recent financial statements included in the
Company SEC Report; (vi) any entry by the Company or any Company Subsidiary
into, or any amendments of, (A) any employment, deferred compensation,
consulting, severance, change of control, termination or indemnification
agreement or any other agreement with or involving any current or former
director, officer, employee or consultant of the Company or any Company
Subsidiary or (B) any agreement with any current or former director, officer,
employee or consultant of the Company or any Company Subsidiary the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any Company Subsidiary of a
nature contemplated by this Agreement; (vii) any adoption of, any amendment to
or any termination of any Company Plan; (viii) any elections with respect to
Taxes by the Company or any Company Subsidiary that could have the effect of
materially increasing any liability or materially decreasing any refund of
Taxes, or any settlement or compromise by the Company or any Company Subsidiary
of any material Tax liability or refund; or (ix) any other action specified in
Section 6.1.
Section 4.8 Litigation. There are no claims, suits, actions,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Company Subsidiary before any Governmental
Authority or arbitrator which, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary is subject to any judgment, decree,
injunction, rule or order of any Governmental Authority or arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby
or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 4.9 Information Supplied. The definitive Proxy Statement will
not, on the date it is first mailed to the stockholders of the Company, contain
any untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not misleading
and will not, at the time of the meeting of the Company's stockholders to which
the Proxy Statement relates, omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meeting which shall have become
false or misleading in any material respect. The definitive Proxy Statement
will, when filed by the Company with the SEC, comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations
14
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information which may be supplied by or on
behalf of Parent or Subsidiary and which is contained in the Proxy Statement.
Section 4.10 Compliance with Laws; Permits. Neither the Company nor any
Company Subsidiary is in violation of or noncompliance with, nor since October
1, 2001 has the Company or any Company Subsidiary received any written notice of
violation of or noncompliance with or been charged with any violation of or
noncompliance with, any applicable law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, the requirements of the
SOX Act) of any Governmental Authority. The Company and the Company Subsidiaries
have all permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, certificates, consents and approvals necessary to
conduct their businesses as presently conducted and to own their assets and
properties (collectively, the "Company Permits"). All such Company Permits are
listed in Section 4.10 of the Company Disclosure Schedule. The Company and the
Company Subsidiaries are not in violation in any material respect of the terms
of any Company Permit.
Section 4.11 Compliance with Agreements. The Company and the Company
Subsidiaries are not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
or without lapse of time, notice or action by a third party, would result in a
default on the part of the Company or any Company Subsidiary under (a) its
Certificate of Incorporation or Bylaws or comparable organizational instruments
or (b) any Contract, approval or other instrument to which the Company or any of
the Company Subsidiaries is a party or by which any of them is bound or to which
any of their properties or assets are subject, other than, in the case of clause
(b), such breaches, violations and defaults which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
Section 4.12 Taxes.
(a) Each of the Company and the Company Subsidiaries has (i) duly
filed with the appropriate Governmental Authorities all Tax Returns required to
be filed by it for all periods ending on or prior to the Effective Time, and
(ii) duly paid in full all material Taxes due and owing by the Company and the
Company Subsidiaries, or made adequate provision in accordance with GAAP for the
payment of all material Taxes not yet due and owing. All such Tax Returns were
correct and complete in all material respects. The Company and each Company
Subsidiary has withheld and paid all material Taxes required to have been
withheld and paid, and complied with all information reporting and backup
withholding requirements, in connection with material amounts paid or owing to
any employee, creditor, independent contractor or other third party. No claim or
dispute concerning the Tax liability of the Company or any of the Company
Subsidiaries has been asserted or, to the knowledge of the Company, threatened
by any Governmental Authority. Neither the Company nor any Company Subsidiary
has waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency for any Tax
period. The copies of the Tax Returns that the Company has provided for review
by Parent or its advisors are true and complete copies of the Tax Returns that
the Company has filed with the applicable
15
Governmental Authorities. For purposes of this Agreement, (i) "Taxes" means all
taxes (whether disputed or not), including, without limitation, income, gross
receipts, excise, property (including transfer duties), sales, withholding,
social security, occupation, use, service, license, payroll, franchise,
transfer, value added and recording taxes, fees and charges, windfall profits,
severance, customs, import, export, employment or similar taxes, charges, fees,
levies or other assessments imposed by the United States, or any Governmental
Authority, whether computed on a separate, consolidated, unitary, combined, or
any other basis, and such term shall include any interest, fines, penalties or
additional amounts of any interest in respect of any additions, fines or
penalties attributable or imposed or with respect to any such taxes, charges,
fees, levies or other assessments, (ii) "Tax Return" means any return, report or
other document required to be supplied to a Governmental Authority in connection
with Taxes, including any information returns or reports with respect to backup
withholding and other payments to third parties, and including any schedules or
attachments to, or amendments of, any of the foregoing, and (iii) "material
Taxes" means any particular Taxes which are material in amount when considered
individually and those Taxes which are not material in amount when considered
individually but which, when considered in the aggregate, are material in
amount.
(b) There are no Liens for Taxes upon the assets of the Company or
any of the Company Subsidiaries other than (i) Liens for Taxes not yet due and
(ii) Liens which individually and in the aggregate are not material in amount.
(c) The Company and Troveris Intellectual Property, LLC are
members of an affiliated group within the meaning of Code Section 1504(a), the
common parent of which is the Company; Troveris, LLC is treated for United
States federal and all applicable state income tax purposes as a disregarded
entity. Neither the Company nor any Company Subsidiary has ever been a member of
an affiliated group within the meaning of Code Section 1504(a) other than one of
which the Company is the common parent. Neither the Company nor any Company
Subsidiary has any liability for the Taxes of any other person which is not
included in the Company's consolidated United States federal Tax Return (i)
under Section 1.1502-6 of the Treasury Regulations; (ii) as a transferee or
successor; (iii) by Contract or (iv) otherwise. Neither the Company nor any
Company Subsidiary has agreed to make, nor is any of them required to make, any
adjustment under Section 481 of the Code by reason of a change in accounting
method.
(d) Neither the Company nor any Company Subsidiary is a party to
or bound by any obligations under any tax sharing, tax allocation, tax indemnity
or similar agreement or arrangement with any person.
(e) The unpaid Taxes of the Company and the Company Subsidiaries
at September 30, 2003 did not, as of that date, exceed the reserve for Tax
liabilities (as distinguished from a reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the face of
the balance sheet as of that date included in the Company Financial Statements.
(f) No power of attorney currently in force has been granted by
the Company or any of the Company Subsidiaries with respect to any Tax matter.
16
(g) The Company has provided for review by Parent and its advisors
a complete and accurate list of the jurisdictions in which federal, state,
local, municipal and foreign Tax Returns are filed by the Company and the
Company Subsidiaries.
(h) Section 4.12(h) of the Company Disclosure Schedule sets forth
the following information with respect to each of the Company and the Company
Subsidiaries as of the most recent practicable date: (i) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Company or any
Company Subsidiary and any limitations thereon; and (ii) all Tax rulings
requested or received from any Governmental Authority. The information and
estimates that the Company has made available for review by Parent and its
advisors pertaining to the tax basis of assets, amounts of deferred
inter-company gains and losses and earnings and profits, as described in Section
4.12(h) of the Company Disclosure Schedule, are consistent in all material
respects with the computations, amounts and items set forth in the Company's
federal income Tax Returns.
(i) All material elections with respect to income Taxes affecting
the Company and the Company Subsidiaries are set forth in Section 4.12(i) of the
Company Disclosure Schedule.
(j) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code at any time in
the five-year period ending on the date hereof.
Section 4.13 Employee Benefit Plans; ERISA.
(a) With respect to each Company Plan, the Company has made
available to Parent a true, correct and complete copy of: (i) any current plan
documents, trust agreements, insurance contracts and other funding vehicles, and
amendments thereto; (ii) for the most recently ended plan year, all United
States Internal Revenue Service ("IRS") Form 5500 series forms (and any
financial statements and other schedules attached thereto) filed with respect to
any Company Plan; (iii) all current summary plan descriptions and subsequent
summaries of material modifications with respect to each Company Plan for which
such descriptions and modifications are required under ERISA; and (iv) the most
recent IRS determination letter for each Pension Plan which is intended to be
qualified under Section 401(a) of the Code. For purposes of this Agreement, (i)
"Company Plan" means (x) each employee pension benefit plan (as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) ("Pension Plan"); and each employee welfare benefit plan
(as such term is defined in Section 3(1) of ERISA) ("Welfare Plan") maintained
by the Company and any of its ERISA Affiliates, and (y) each stock option, stock
purchase, stock appreciation right and equity based plan and each material
deferred compensation, employment, severance, change in control, incentive,
bonus, medical, fringe benefit, life insurance, vacation, layoff, dependent
care, legal services, cafeteria plan, or agreement, arrangement, policy or
program maintained or contributed to by the Company for the benefit of current
or former employees or current or former directors of the Company whether
written or oral, and whether or not subject to ERISA; and (ii) "ERISA Affiliate"
means any trade or business whether or not incorporated, under common control
with the Company within the meaning of Section 414(b), (c), (m), or (o) of the
Code or Section
17
4001(b) of ERISA. All Company Plans and all severance and change in control
plans and agreements that apply to the Company's and Company Subsidiaries'
executive officers and other employees are listed in Section 4.13(a) of the
Company Disclosure Schedule.
(b) Neither the Company nor any of its ERISA Affiliates maintains
or has, within the previous six years, maintained a Pension Plan which is
subject to Section 412 of the Code or Title IV of ERISA.
(c) Neither the Company nor any of its ERISA Affiliates currently
maintains or has, within the previous six years, maintained or been obligated to
contribute to any multiemployer plan, as defined in Section 3(37) of ERISA.
(d) No Company Plan that is a "welfare benefit plan" as defined in
Section 3(1) of ERISA provides for continuing benefits or coverage for any
participant or beneficiary or covered dependent or a participant after such
participant's termination of employment, except to the extent required by law.
(e) With respect to any Welfare Plan, (i) no such plans are
"multiple employer welfare arrangements" within the meaning of Section 3(40) of
ERISA and (ii) no such plan is a "voluntary employees' beneficiary association"
within the meaning of Section 501(c)(9) of the Code or other funding arrangement
for the provision of welfare benefits (such disclosure to include the amount of
any such funding).
(f) Neither the Company nor any of its ERISA Affiliates is bound
by any collective bargaining agreement or similar agreement to maintain or
contribute to any Company Plan.
(g) Each Company Plan (i) has been administered in material
compliance with its terms and is in material compliance with the applicable
provisions of ERISA and has been administered in material compliance with the
applicable provisions of ERISA, the Code and other applicable laws; (ii) which
is intended to be a qualified plan within the meaning of Section 401(a) of the
Code has a favorable determination from the IRS as to its qualified status or is
within the remedial amendment period for making any required changes and, to the
knowledge of the Company, there are no circumstances likely to result in
revocation of any such favorable determination letter; and (iii) may, without
liability, be amended, terminated or otherwise discontinued, except as
specifically prohibited by applicable law.
(h) With respect to each Company Plan, (i) there are no inquiries
or proceedings pending or threatened by the IRS, the Department of Labor, or any
participant or beneficiary (other than claims for benefits in the ordinary
course) with respect to the design or operation of the Company Plans; (ii) the
Company has timely made or provided for all contributions, premiums and benefit
payments required under the material terms of such Company Plans and any
applicable laws for all periods through the Closing Date; and (iii) there have
been no "prohibited transactions" (as described in Section 4975 of the Code or
in Part 4 of Subtitle B of Title I of ERISA) for which a statutory,
administrative, or regulatory exemption is not available.
18
(i) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any (current or former) employee, director,
officer or consultant of the Company or any Company Subsidiary to severance pay,
(ii) accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Company Plans, (iii) result in any payments under any of the
Company Plans which would not be deductible under Section 280G of the Code or
any similar provision of state, local or foreign Tax law, or (iv) cause any
payments under any Company Plan to cease to be excluded from "applicable
employee remuneration" for purposes of Section 162(m) of the Code.
Section 4.14 Labor Controversies. There are no controversies pending
or, to the knowledge of the Company, threatened between the Company or any
Company Subsidiary and any of their respective employees. The Company and the
Company Subsidiaries are in compliance with all applicable laws respecting
employment and employment practices, terms, and conditions of employment, and
wages and hours and have not engaged in any unfair labor practices. Neither the
Company nor any Company Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or any Company Subsidiary, nor does the Company know of any activities
or proceedings of any labor union to organize any such employees. The Company
has no knowledge of any strikes, slowdowns, work stoppages, lockouts or threats
thereof, by or with respect to any employees of the Company or any Company
Subsidiary.
Section 4.15 Environmental Matters.
(a) The Company and each Company Subsidiary conducts its business
and operations in compliance with all applicable Environmental Laws and holds,
and is in compliance with, all Company Permits required under applicable
Environmental Laws. None of the Company nor the Company Subsidiaries has
received any written notice of or is subject to, any action, claim, suit,
investigation, demand or notice that remains outstanding and that asserts any
liability on the part of the Company or any Company Subsidiary under any
Environmental Law or in respect of the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or industrial, hazardous or toxic substances or waste
(collectively, an "Environmental Event"). For purposes of this Agreement,
"Environmental Law" means any federal, state, local, municipal or foreign law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation, any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
or transportation of industrial, toxic or hazardous substances or solid
hazardous waste; (ii) soil, air, water and noise pollution; (iii) surface water,
groundwater and soil contamination; (iv) the release or threatened release into
the environment of waste or industrial, toxic or hazardous substances, or solid
or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wildlife, marine sanctuaries and wetlands, including
without limitation all endangered and threatened species; (vi) storage tanks,
vessels and containers; (vii) underground and other storage tanks or vessels,
abandoned, disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture,
19
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
As used above, the terms "release" and "environment" have the meaning set forth
in the federal Comprehensive Environmental Compensation, Liability and Response
Act of 1980.
(b) To the knowledge of the Company, no notice of any
Environmental Event was given to any person that occupied any of the premises
occupied, owned or used by the Company or any Company Subsidiary prior to the
date such premises were so occupied, owned or used. To the knowledge of the
Company, there are no PCBs, asbestos, urea formaldehyde, radioactive substances
or ozone-depleting substances on, under or in any property, facility or
equipment occupied, owned or used by the Company or the Company Subsidiaries.
Section 4.16 Intellectual Property.
(a) (i) The Company and/or each of the Company Subsidiaries owns
or is duly licensed to use all patents, trademarks, trade names, service marks,
domain names, copyrights, trade secrets, know-how, software, databases and other
intellectual property rights and all applications therefor which are material to
the conduct of the business of the Company and the Company Subsidiaries as
currently conducted (the "Company Intellectual Property Rights") and a true and
complete list of all Company Intellectual Property Rights, except for any such
trade secrets, know-how and other intellectual property rights which have not
been reduced to written or electronic form, is set forth in Section 4.16(a) of
the Company Disclosure Schedule, which separately identifies those Company
Intellectual Property Rights that are owned and those that are licensed; (ii)
all Company Intellectual Property Rights are either owned by the Company or the
Company Subsidiaries free and clear of all Liens or are used pursuant to a
license agreement; (iii) each such license agreement is valid and enforceable
and in full force and effect; (iv) neither the Company nor any of the Company
Subsidiaries is in default under any such license agreement in any material
respect, and to the knowledge of the Company, no corresponding licensor is in
default thereunder in any material respect; (v) to the knowledge of the Company,
no Company Intellectual Property Right that is owned by the Company or any
Company Subsidiary infringes or otherwise conflicts with any material right of
any person; (vi) there is no pending or, to the knowledge of the Company,
threatened litigation, adversarial proceeding, administrative action or other
challenge or claim relating to any Company Intellectual Property Right that is
owned by the Company or any Company Subsidiary; (vii) to the knowledge of
Company, there is currently no infringement by any person of any Company
Intellectual Property Right; and (viii) the Company Intellectual Property Rights
owned, used or possessed by the Company and the Company Subsidiaries are
sufficient and adequate to conduct the business of the Company and the Company
Subsidiaries in all material respects as such business is currently conducted.
The Company Intellectual Property Rights may be freely transferred, assigned,
licensed, or sublicensed without the consent of any person other than the
Company and/or a Company Subsidiary.
(b) The Company and the Company Subsidiaries have taken reasonable
steps to protect, maintain and safeguard the Company Intellectual Property
Rights, including any Company Intellectual Property Rights for which improper or
unauthorized disclosure would
20
impair its value or validity, and have executed and required nondisclosure
agreements when reasonably appropriate and made any required filings and
registrations in connection with the foregoing.
(c) To the knowledge of the Company, the conduct of the business
of the Company and the Company Subsidiaries as now conducted does not infringe
any valid patents, trademarks, trade names, service marks, copyrights, trade
secrets or other intellectual property of other persons. The consummation of the
transactions contemplated hereby will not result in the loss or impairment of
any Company Intellectual Property Rights.
(d) Neither the Company nor any Company Subsidiary has licensed
(or otherwise entered into any Contract permitting) any person or entity to use
or market any of the Company Intellectual Property Rights, other than the
licensing of Company Intellectual Property Rights in the ordinary course of
business consistent with past practice or solely with respect to any such
licenses granted by Troveris LLC, in the ordinary course of business consistent
with the manner in which Troveris LLC has conducted its business prior to the
date of this Agreement.
(e) To the knowledge of the Company, no employee of the Company or
any of the Company Subsidiaries is in material violation or breach of any term
of any employment contract, patent disclosure agreement or any other Contract
with the Company, any Company Subsidiary or any other party, which is a breach
or violation of provisions relating to the nondisclosure or confidentiality of
intellectual property rights or of noncompete covenants designed to protect
intellectual property rights.
Section 4.17 Material Contracts.
(a) Section 4.17(a) of the Company Disclosure Schedule lists,
under the relevant heading, all oral or written Contracts to which the Company
or any Company Subsidiary is a party or by which the Company or such Company
Subsidiary is bound and which fall within any of the following categories: (i)
material Contracts not entered into in the ordinary course of the Company's and
the Company Subsidiaries' businesses; (ii) joint venture and partnership
agreements; (iii) Contracts which contain requirements for payments by the
Company or a Company Subsidiary in excess of $250,000; (iv) Contracts relating
to any outstanding commitment for capital expenditures in excess of $250,000;
(v) notes, bonds, indentures, deeds of trust, mortgages, hypothecations, loan
agreements, credit agreements or guarantees of borrowed money, letters of credit
or other agreements or instruments of the Company or the Company Subsidiaries or
commitments for the borrowing or the lending by the Company or any Company
Subsidiary of amounts in excess of $250,000 in the aggregate or providing for
the creation of any Lien upon any of the assets or properties of the Company or
any Company Subsidiary with an aggregate value in excess of $250,000; (vi)
Contracts providing for "earn-outs" or other contingent payments by the Company
or any Company Subsidiary; (vii) Contracts associated with off balance sheet
financing by the Company or a Company Subsidiary in excess of $250,000 in the
aggregate, including but not limited to arrangements for the sale by the Company
or a Company Subsidiary of receivables; (viii) supply or distribution Contracts
requiring a payment or a commitment by the Company or any Company Subsidiary to
make a payment in excess of $250,000; (ix) Contracts with customers of the
Company or any Company
21
Subsidiary involving payments being made by or to the Company or any Company
Subsidiary in excess of $250,000 in the aggregate; (x) stock purchase
agreements, asset purchase agreements or other acquisition or divestiture
agreements where the consideration to be paid in any individual transaction
exceeds $250,000; (xi) master service and other master Contracts with clients;
(xii) Contracts imposing any material restrictions on the ability of the Company
or any Company Subsidiary or other affiliate of the Company to engage in any
line of business, or otherwise imposing material limitations on the conduct of
business by the Company or any Company Subsidiary or other affiliate of the
Company; and (xiii) other Contracts which are material to the Company or any
Company Subsidiary, irrespective of amount.
(b) All Contracts to which the Company or any Company Subsidiary
is a party or by which it or such Company Subsidiary is bound are valid and
binding obligations of the Company or the Company Subsidiary and, to the
knowledge of the Company, the valid and binding obligation of each other party
thereto.
Section 4.18 Brokers and Finders. Except for the fees and expenses
payable to Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. and its
affiliates (collectively, the "Company Financial Advisor"), which fees have been
disclosed to Parent, no agent, broker, investment banker, financial advisor or
other firm or person is entitled to any brokerage, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
Section 4.19 Opinion of Company Financial Advisor. The Company
Financial Advisor has rendered an opinion to the Board of Directors of the
Company, dated the date of this Agreement, to the effect that, as of such date,
the consideration to be received by the holders of the Company Common Stock is
fair from a financial point of view to the holders of the Company Common Stock,
and the Company Financial Advisor has consented, subject to the customary terms
and conditions contained in the Engagement Letter by and between the Company and
the Company Financial Advisor dated as of June 30, 2003, to the inclusion of
such opinion in the Proxy Statement. A correct and complete copy of the written
opinion shall be delivered to Parent as soon as it is available to the Company.
Section 4.20 Significant Clients. None of the clients listed in Section
4.20 of the Company Disclosure Schedule has delivered any written notice to the
Company or any of the Company Subsidiaries that any such client (i) has
terminated, or will terminate any Contract with the Company or any of the
Company Subsidiaries or (ii) has ceased, or will cease, to use the services of
the Company or the Company Subsidiaries provided as of the date of this
Agreement, as the case may be.
Section 4.21 Vote Required. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company capital stock or debt
instruments necessary to adopt this Agreement and approve the transactions
contemplated hereby.
Section 4.22 Insurance. Section 4.22 of the Company Disclosure Schedule
contains a complete and correct list of all fire and casualty, liability, errors
and omissions, workers'
22
compensation, title, directors and officers and other forms of insurance owned,
held by or applicable to the Company and the Company Subsidiaries (or their
assets or businesses) as of the date hereof (the "Company Insurance Policies").
The Company and the Company Subsidiaries maintain the Company Insurance Policies
in such amounts, with such deductibles and against such risks and losses as are
customary for companies of similar size in the Company's industry, and also
maintain all policies of insurance which are required by their Contracts, in
such amounts as specified in the respective Contracts. All of the Company
Insurance Policies are in full force and effect, all premiums due and payable
thereon have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. All claims, suits and actions pending
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary are covered by such insurance (subject to applicable
deductibles), and the Company has given timely notice to the appropriate
insurance carrier with respect thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary jointly and severally represent and warrant to
the Company that:
Section 5.1 Organization and Qualification. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and otherwise hold its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and Subsidiary is qualified to transact business and is in good standing
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing could not
reasonably be expected to prevent or delay the consummation of the Merger.
Section 5.2 Authority; Non-Contravention; Approvals.
(a) Parent and Subsidiary each have all requisite corporate power
and authority to enter into this Agreement and to consummate the Merger and the
other transactions contemplated hereby. This Agreement has been approved by the
Boards of Directors of Parent and Subsidiary and the sole stockholder of
Subsidiary, and no other corporate proceedings on the part of Parent or
Subsidiary are necessary to authorize the execution and delivery of this
Agreement or the consummation by Parent and Subsidiary of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and Subsidiary, and assuming the due authorization, execution and
delivery of this Agreement by the Company, constitutes a valid and legally
binding agreement of each of Parent and Subsidiary, enforceable against each of
them in accordance with its terms.
(b) The execution, delivery and performance of this Agreement by
each of Parent and Subsidiary and the consummation of the Merger and the other
transactions contemplated hereby do not and will not violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with or without notice or passage of time or both, would constitute a
23
default) under, or result in the termination of or a loss of a benefit under, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
properties or assets of Parent or Subsidiary under any of the terms, conditions
or provisions of (i) the respective certificates of incorporation or bylaws (or
equivalent documents) of Parent or any of its subsidiaries; (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any court or other Governmental Authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets; or (iii) any note, bond, mortgage, indenture, deed of trust, loan,
credit agreement, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which Parent or any of
its subsidiaries is now a party or by which Parent or any of its subsidiaries or
any of their respective properties or assets may be bound or affected.
(c) Except for (i) the filings by Parent required by the HSR Act,
and (ii) the Merger Filing, no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any Governmental Authority
is necessary for the execution and delivery of this Agreement by Parent or
Subsidiary or the consummation by Parent or Subsidiary of the transactions
contemplated hereby.
Section 5.3 Information Supplied. The copy of the letter agreement
dated concurrently herewith between Parent and Xxxxxx Xxxxxx Capital Partners,
L.P. (the "Subscription Agreement") previously furnished by Parent is true,
correct and complete. The Subscription Agreement is the valid and binding
obligation of Xxxxxx Xxxxxx Capital Partners, L.P., and there is no other
agreement between the parties thereto as to the subject matter thereof. None of
the information to be provided by Parent or Subsidiary for inclusion in the
Proxy Statement will contain any untrue statement of a material fact or omit to
state any material fact required to be stated in any such document or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 5.4 Financing. Parent will have at the Effective Time the funds
necessary to consummate the Merger on the terms contemplated by this Agreement.
Section 5.5 Subsidiary. Subsidiary was formed solely for the purposes
of engaging in the transactions contemplated hereby, and has not engaged, and
will not engage, in any other business activities and has conducted its
operations only as contemplated hereby.
Section 5.6 Brokers and Finders. No agent, broker, investment banker,
financial advisor or other firm or person is entitled to any brokerage,
finder's, financial advisor's or other similar fee or commission for which the
Company could become liable in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or
Subsidiary.
Section 5.7 DGCL Section 203. At no time since November 1, 2000, has
Parent or Subsidiary been an "interested stockholder" within the meaning of
Section 203 of the DGCL.
24
ARTICLE VI
COVENANTS OF THE PARTIES
Section 6.1 Conduct of the Company's Business. The Company covenants
that during the period from the date of this Agreement and continuing until the
earlier of the Effective Time and termination of this Agreement pursuant to its
terms, unless Parent shall otherwise consent in writing (such consent not to be
unreasonably withheld or delayed), and except to the extent required by law or
disclosed in Section 6.1 of the Company Disclosure Schedule, and except as
otherwise expressly required or permitted by this Agreement:
(a) the business of the Company and the Company Subsidiaries shall
be conducted only in, and the Company and the Company Subsidiaries shall not
take any action except in, the ordinary course of business consistent with past
practice and the Company shall use reasonable best efforts to preserve intact
its present business organization, keep available the services of officers and
key employees of the Company and the Company Subsidiaries, keep its and their
relationships with clients, customers, suppliers, licensors, licensees,
distributors and others having business dealings with them intact and its and
their goodwill and ongoing business unimpaired;
(b) the Company shall not, and shall not cause or permit any
Company Subsidiary to, do any of the following: (i) sell, pledge, lease, dispose
of or encumber or subject to any Lien any property or assets, except for
dispositions of inventory and immaterial assets and encumbrances and pledges in
the ordinary course of business consistent with past practice; (ii) amend or
propose to amend its Certificate of Incorporation or Bylaws (or comparable
organizational documents); (iii) split, combine or reclassify any shares of its
capital stock, or declare, set aside or pay any dividend on or make any other
distributions (whether in cash, stock, property or otherwise) with respect to
such shares (except for any dividends paid by a wholly owned direct or indirect
Company Subsidiary to such Company Subsidiary's parent); (iv) redeem, purchase,
acquire or offer to acquire any shares of its capital stock or other securities
of, or other ownership interests in, the Company; or (v) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters listed in clauses (i) through (iv) above; and
(c) the Company shall not, and shall not cause or permit any
Company Subsidiary to, (i) issue, sell, grant, pledge, dispose of, or encumber
or subject to any Lien, or agree to issue, sell, grant, pledge, dispose of, or
encumber or subject to any Lien, any shares of, or securities convertible or
exchangeable for, or any options, warrants or rights of any kind to acquire any
shares of, its (x) capital stock of any class or (y) other property or assets,
in each case whether pursuant to the Company Stock Plans or otherwise; provided,
however, that the Company may issue shares of Company Common Stock (A) upon
exercise of Options that are outstanding on the date of this Agreement or are
permitted under this Agreement to be issued following the date of this Agreement
and are exercised in accordance with their respective terms as in effect on the
date of this Agreement and (B) pursuant to the Company's 401(k) plan and
Employee Stock Purchase Plan, each as in effect on the date of this Agreement,
consistent with the ordinary course past practices regarding such plan; (ii)
acquire or agree to acquire (A) (by merger, consolidation or acquisition of
stock or assets) any corporation, partnership or other business
25
organization or division thereof (except an existing wholly owned Company
Subsidiary) or (B) any assets or properties that, individually, have a purchase
price in excess of $250,000 or, in the aggregate, have a purchase price in
excess of $1,000,000 (except for acquisitions of spare parts, office equipment
and supplies and of replacements for worn or obsolete items); (iii) except for
borrowings and re-borrowings in the ordinary course under credit facilities in
existence on the date of this Agreement (including all future renewals,
replacements and extensions thereof), incur, create, assume or guarantee any
indebtedness for borrowed money or issue or sell any debt securities or calls,
options, warrants or other rights to acquire any debt securities of the Company
or any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing; (iv) except in the ordinary course of
business, consistent with past practice, make any loans, advances or capital
contributions to, or investments in, any other person, other than by the Company
or a wholly owned Company Subsidiary to the Company or a wholly owned Company
Subsidiary; (v) enter into or materially modify any material lease, contract,
agreement or commitment (including, without limitation, any such contract,
lease, agreement or commitment of a nature that would be required to be filed as
an exhibit to Form 10-K under the Exchange Act), other than entering into or
modifying contracts for the sale, license, lease or rent of the Company's or the
Company Subsidiaries' products or services in the ordinary course of business
consistent with past practice; (vi) terminate, amend, modify, assign, waive,
release or relinquish any material contract rights or any other material rights
or claims; (vii) pay, discharge, settle or compromise any material claim,
action, suit or proceeding pending or threatened against the Company or any
Company Subsidiary; (viii) (A) grant any current or former director, officer,
employee or consultant of the Company or any Company Subsidiary any increase in
compensation, bonus or fringe or other benefits or grant any type of
compensation or benefits to any current or former director, officer, employee or
consultant not previously receiving or entitled to receive such type of
compensation or benefit, except for normal increases in cash compensation
(including cash bonuses) in the ordinary course of business consistent with past
practice or as required under any Company Plan in effect as of the date of the
most recent financial statements included in the Company SEC Reports, or (B)
enter into or amend any employment, deferred compensation, consulting,
severance, change of control, termination or indemnification agreement or any
other agreement with or involving any current or former director, officer,
employee or consultant of the Company or any Company Subsidiary; (ix) change its
accounting principles, practices or methods or increase the Tax liability of, or
decrease any Tax attribute of, the Company or any Company Subsidiary, except as
may be required by the SEC, applicable law or GAAP; (x) make or change any
election, file any amended Tax Return, enter into any closing agreement, settle
any Tax claim or assessment, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to the Company or any Company Subsidiary, or
take any other similar action relating to the filing of any Tax Return or the
payment of any Tax, if such action would increase the Tax liability of the
Company or any Company Subsidiary or decrease a Tax attribute of, the Company or
any Company Subsidiary existing on the Effective Time; (xi) cancel or amend any
of the Company Insurance Policies or (xii) agree, in writing or otherwise, to
take any of the actions listed in clauses (i) through (xi) above.
26
Section 6.2 Reasonable Best Efforts to Consummate.
(a) General. Subject to the terms and conditions of this
Agreement, each of the parties shall (and shall cause its respective
subsidiaries, if any, to) use its reasonable best efforts to take all actions
and to do all things necessary, proper or advisable to consummate the Merger and
the other transactions contemplated by this Agreement as promptly as
practicable, including, without limitation, using its reasonable best efforts to
(i) prepare, execute and deliver such instruments and take or cause to be taken
such actions as any other party shall reasonably request, and (ii) after
consultation with the other parties, obtain any consent, waiver, approval or
authorization from any third party required in order to maintain in full force
and effect any of the Company Permits or the Company's Contracts, licenses or
other rights following the Merger and the other transactions contemplated by
this Agreement.
(b) HSR Act. Without limiting the generality of anything contained
in Section 6.2(a) or elsewhere in this Agreement, each of the parties undertakes
and agrees to file as soon as practicable, and in any event within 12 business
days after the date of this Agreement, a Notification and Report Form under the
HSR Act with the United States Federal Trade Commission (the "FTC") and the
United States Department of Justice, Antitrust Division (the "Antitrust
Division") and all other filings required under applicable antitrust or
competition laws, rules or regulations. Each of the parties shall (i) respond as
promptly as practicable to any inquiries received from the FTC, the Antitrust
Division or other applicable Governmental Authorities for additional information
or documentation and to all inquiries and requests received from any State
Attorney General or other Governmental Authority in connection with antitrust
matters; (ii) take all commercially reasonable steps to avoid any extension of
the waiting period under the HSR Act and other applicable antitrust or
competition laws, rules or regulations; and (iii) refrain from entering into any
agreement with the FTC, the Antitrust Division or other applicable Governmental
Authorities not to consummate the transactions contemplated by this Agreement,
except with the prior written consent of the other parties hereto. Each party
shall (i) promptly notify the other party of any written communication to that
party or its affiliates from any Governmental Authority and, subject to
applicable law, permit the other party to review in advance any proposed written
communication to any of the foregoing; (ii) not agree to participate, or to
permit its affiliates to participate, in any substantive meeting or discussion
with any Governmental Authority in respect of any filings, investigation or
inquiry concerning this Agreement or the Merger unless it consults with the
other party in advance and, to the extent permitted by such Governmental
Authority, gives the other party the opportunity to attend and participate in
such meeting; and (iii) furnish the other party with copies of all
correspondence, filings, and communications (and memoranda setting forth the
substance thereof) between them and their affiliates and their respective
representatives on the one hand, and any Governmental Authority or members of
their respective staffs on the other hand, with respect to this Agreement and
the Merger.
(c) Subscription Agreement. Parent shall not amend, modify or
waive the Subscription Agreement or any of its rights thereunder, and will take
all actions required to preserve and enforce its rights thereunder in order
that, not later than Closing, Parent will have access to all funds required to
fully perform its obligations under Article III of this Agreement.
27
Section 6.3 Preparation of Proxy Statement; Meeting of Stockholders.
(a) The Company shall, as soon as practicable following the date
of this Agreement, prepare and file a preliminary Proxy Statement with the SEC
and each of the Company and Parent shall use its reasonable best efforts to
respond to any comments of the SEC or its staff, and to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as reasonably
practicable after responding to all such comments to the satisfaction of the
SEC's staff. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event that
is required to be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare, and, after consultation with
Parent, mail to its stockholders such an amendment or supplement. Parent shall
cooperate fully with the Company in the preparation of the Proxy Statement or
any amendment or supplement thereto and shall furnish the Company with all
information reasonably requested by the Company for inclusion in, or otherwise
in respect of, the Proxy Statement. Parent and its counsel shall be given a
reasonable opportunity to review and comment upon the Proxy Statement and
related proxy materials and any proposed amendment or supplement to the Proxy
Statement prior to its filing with the SEC or dissemination to the Company's
stockholders.
(b) Without limiting the generality of the foregoing, each of the
parties shall correct promptly any information provided by it for use in the
Proxy Statement, if and to the extent any such information shall be or have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and (to the extent necessary) have cleared by the
SEC any amendment or supplement to the Proxy Statement so as to correct the same
and to cause the Proxy Statement as so corrected to be disseminated to the
stockholders of the Company, in each case to the extent required by applicable
law or otherwise reasonably deemed appropriate by the Company.
(c) The Company shall, in accordance with and subject to the
requirements of applicable law and its Certificate of Incorporation and Bylaws,
as promptly as reasonably practicable following the date on which the Proxy
Statement is cleared by the staff of the SEC, duly call, give notice of, convene
and hold a stockholders meeting for the purpose of obtaining the Company
Stockholders' Approval (the "Stockholders Meeting") and permit the Company's
stockholders to vote on this Agreement and the Merger. Subject to the provisions
of Section 6.6(b), the Company shall include in the Proxy Statement the
recommendation of its Board of Directors that the Company Stockholders' Approval
be given. The Company agrees that, except as permitted by Section 6.6(b) and
subject to the requirements of the federal securities laws and any position with
respect thereto that may be taken by the staff of the SEC, its obligations
pursuant to this Section 6.3(c) shall not be affected by the commencement,
public disclosure or communication to the Company of any Acquisition Proposal.
(d) Notwithstanding anything to the contrary in Section 6.3(c), at
any time prior to the Stockholders Meeting, (i) the Stockholders Meeting may be
adjourned in response to an
28
unsolicited Acquisition Proposal which did not result from a breach of Section
6.6 and which the Company's Board of Directors determines in good faith, after
consultation with outside legal counsel and the Company's financial advisor,
reasonably may be expected to lead to a Superior Proposal for such time as the
Company's Board of Directors reasonably may require (not to exceed 10 business
days) for the purpose of evaluating and negotiating such Acquisition Proposal
and furnishing information to the Company's stockholders with respect to such
Acquisition Proposal, (ii) the Stockholders Meeting may be adjourned for such
period of time as may be necessary for the Company to disseminate a
reaffirmation by the Company's Board of Directors or any committee thereof of
its approval or recommendation of the Merger or this Agreement after Parent
requests such a reaffirmation if such request is received within the 7 business
day period preceding the Stockholders Meeting, provided that the Stockholders
Meeting shall be re-convenened within 7 business days after the date such
request is received, and (iii) the Company's Board of Directors' recommendation
may be withdrawn or modified in accordance with Section 6.6(b) (irrespective of
whether the Stockholders Meeting was adjourned).
(e) The Company shall not be required to hold the Stockholders
Meeting if this Agreement is terminated before that meeting is held.
Section 6.4 Public Statements. Unless otherwise required by applicable
law or by obligations pursuant to any listing agreement with or rules of the
Nasdaq National Market or any securities exchange, none of the parties to this
Agreement will cause or permit any public announcement with respect to the
subject matter of this Agreement. The initial press release with respect to the
Merger and the other transactions contemplated by this Agreement shall require
the prior mutual agreement and approval of both Parent and the Company and any
subsequent press releases or other public statements with respect to the Merger
or the other transactions contemplated by this Agreement shall be made only
following prior consultation between Parent and the Company.
Section 6.5 Access to Information.
(a) The Company shall, and shall cause the Company Subsidiaries
and each of its and their respective officers, directors, employees,
representatives and agents to, afford to Parent, Subsidiary, each financing
source of Parent, and each of their respective officers, directors, counsel,
financial advisors, and other representatives (collectively "Parent
Representatives") reasonable access during normal business hours with reasonable
notice throughout the period from the date hereof through the Effective Time to
all of the Company's properties, books, Contracts, commitments, records
(including, but not limited to, Tax Returns and records) and personnel, and
shall furnish promptly to Parent and the Parent Representatives (i) a copy of
each form, report, schedule and other document filed by the Company pursuant to
the requirements of federal or state securities laws or filed by the Company
with the SEC in connection with the transactions contemplated by this Agreement,
and (ii) such other information concerning the Company's business, properties,
books, Contracts, commitments, records (including, but not limited to, Tax
Returns and records) and personnel as Parent shall reasonably request. Except as
required by law, Parent and Subsidiary shall hold and shall cause the Parent
Representatives to hold in strict confidence all nonpublic documents and
confidential information furnished to Parent, Subsidiary and any Parent
Representative in connection with the transactions
29
contemplated by this Agreement in accordance with the confidentiality agreement
dated as of August 16, 2003 between the Company and Xxxxxx Xxxxxx Partners, LLC
(the "Confidentiality Agreement").
(b) No investigation pursuant to this Section 6.5 shall affect,
add to or subtract from any representations or warranties of the parties hereto
or the conditions to the obligations of the parties hereto to effect the Merger.
Section 6.6 Acquisition Proposals.
(a) Except as otherwise expressly provided in this Section 6.6,
the Company shall not, nor shall it permit any of the Company Subsidiaries to,
nor shall it authorize or permit any Company Representative to, (i) directly or
indirectly solicit, initiate or knowingly encourage the submission of any
Acquisition Proposal, (ii) enter into any Acquisition Agreement or other
arrangement or understanding with respect to any Acquisition Proposal or (iii)
directly or indirectly participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action to knowingly facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that if prior to receipt of the Company Stockholders'
Approval, the Board of Directors of the Company determines in good faith (after
consultation with outside legal counsel) that it is required to do so in order
to comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to an unsolicited Acquisition
Proposal which did not result from a breach of this Section 6.6 and which the
Company's Board of Directors determines in good faith, after consultation with
outside legal counsel and the Company's financial advisor, reasonably may be
expected to lead to a Superior Proposal, and provided that the person making
such Acquisition Proposal enters into a customary confidentiality agreement not
less restrictive of such person than the Confidentiality Agreement, (x) furnish
information with respect to the Company to the person making such Acquisition
Proposal and its representatives, and (y) participate in discussions or
negotiations with such person and its representatives regarding such Acquisition
Proposal.
(b) Neither the Company's Board of Directors nor any committee
thereof shall (i) withdraw or modify in a manner adverse to Parent or
Subsidiary, or publicly propose to withdraw or modify in a manner adverse to
Parent or Subsidiary, the approval or recommendation by the Company's Board of
Directors or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or publicly propose to approve or recommend, or authorize or cause
the Company to execute or enter into, any letter of intent, agreement in
principle, merger agreement, option agreement, acquisition agreement or other
similar agreement providing for any Acquisition Proposal (each, an "Acquisition
Agreement") or (iii) approve or recommend, or publicly propose to approve or
recommend, any Acquisition Proposal, other than pursuant to the next sentence.
Notwithstanding the foregoing sentence, until the receipt of the Company
Stockholders' Approval, provided that the Company is not in breach of this
Section 6.6, if the Company's Board of Directors or any such committee
authorized with respect thereto determines in good faith (after consultation
with outside legal counsel and the Company's financial advisor) that such action
is required in order for it to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Company's Board of Directors or such
30
committee may, prior to the receipt of the Company Stockholders' Approval,
withdraw or modify its approval or recommendation of the Merger and this
Agreement; provided, however, (x) if such withdrawal or modification of such
approval or recommendation by the Company's Board of Directors or such committee
is in response to a Superior Proposal, then on the same day the Company takes
such action the Company also shall terminate this Agreement pursuant to Section
8.1(c)(i) and execute an Acquisition Agreement to implement such Superior
Proposal, but only at a time that is after the fifth business day following
Parent's receipt of notice advising Parent that the Company's Board of Directors
or such committee is prepared to accept such Superior Proposal, specifying the
terms and conditions of such Superior Proposal (including a copy of a draft in
substantially final form of any relevant Acquisition Agreement), and provided
that no such termination of this Agreement by the Company shall be effective
unless and until Parent shall have received the Termination Fee and (y) if the
Company's Board or Directors or such committee elects to withdraw or modify such
approval or recommendation other than in response to a Superior Proposal, then
simultaneously with taking such action the Company shall so notify Parent.
(c) In addition to the obligations set forth in the other
paragraphs of this Section 6.6, the Company promptly (and in no event more than
48 hours after receipt) shall advise Parent orally or in writing of any
Acquisition Proposal or any inquiry with respect to, or that may reasonably be
expected to lead to, any Acquisition Proposal, the material terms and conditions
of any such Acquisition Proposal and the identity of the person making any such
Acquisition Proposal or inquiry, and shall keep Parent reasonably and promptly
informed of the status and material terms of any such Acquisition Proposal or
inquiry and the substance of any discussions relating to such Acquisition
Proposal or inquiry. The Company shall promptly provide Parent with a copy of
any written materials (including emails) provided to such person that include
any material information regarding the Company and the Company Subsidiaries not
previously provided to Parent.
(d) Nothing contained in this Section 6.6 shall prohibit the
Company 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's stockholders required under applicable law, or from
making any other disclosure if, in the good faith judgment of the Company's
Board of Directors, after consultation with outside legal counsel, such other
disclosure is required in order to comply with its fiduciary obligations or with
any other requirement of applicable law; provided, however, that, subject to
Section 6.6(b), neither the Company nor the Company's Board of Directors nor any
committee thereof shall approve or recommend, or propose publicly to approve or
recommend, an Acquisition Proposal or withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or committee
of this Agreement or the Merger, except as otherwise contemplated by Section
6.6(b).
(e) The Company shall, and shall cause the Company Subsidiaries
and the Company Representatives to, cease immediately any discussions regarding
any potential Acquisition Proposal that were ongoing before or as of the date of
this Agreement, other than in respect of the transactions contemplated by this
Agreement.
31
(f) For purposes of this Agreement:
"Acquisition Proposal" means any proposal or offer (i) for a merger,
consolidation, dissolution, liquidation, recapitalization, business combination
or other similar transaction involving the Company, (ii) for the issuance of 20%
or more of the equity securities of the Company as consideration for the assets
or securities of another person, (iii) relating to any tender offer or exchange
offer that, if consummated, would result in any person acquiring 20% or more of
the equity securities of the Company or (iv) to acquire in any manner, directly
or indirectly, 20% or more of the equity securities of the Company or assets
(including equity securities of any Company Subsidiary) that represent 20% or
more of the assets of the Company, in each case other than the transactions
contemplated by this Agreement.
"Company Representative" means any director, officer or employee of the
Company or of any of the Company Subsidiaries, or any investment banker,
financial advisor, attorney, accountant or other agent or representative
retained by the Company or by any of the Company Subsidiaries.
"Superior Proposal" means any bona fide written proposal made by a
third party and not solicited by the Company to acquire, directly or indirectly,
all or substantially all of the equity securities or assets of the Company,
pursuant to a tender or exchange offer, a merger, a consolidation, a liquidation
or dissolution, a recapitalization, a business combination, a sale of assets, a
sale of securities or otherwise, (i) on terms which the Company's Board of
Directors determines in good faith after consultation with the Company's
financial advisor to be superior from a financial point of view to the Merger,
taking into account all the terms and conditions of such proposal and this
Agreement (including any proposal by Parent to amend the terms of the Merger and
including in each case any break-up fees and expense reimbursements and the
risks and probabilities of consummation), (ii) that is reasonably capable of
being completed, taking into account all financial, regulatory, legal and other
aspects of such proposal and (iii) for which financing, to the extent required,
is then committed or is capable of being obtained by such third party.
Section 6.7 Expenses and Fees. Whether or not the Merger is
consummated, except as provided in Section 8.2, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that the expenses incurred
in connection with the filing, printing and mailing of the Proxy Statement shall
be borne equally by Parent and the Company.
Section 6.8 Directors' and Officers' Indemnification and Insurance.
(a) Parent agrees that all rights to indemnification and related
rights to advancement of expenses on the part of each person who at the
Effective Time is a current or former director or officer of the Company,
including all such rights existing pursuant to the DGCL, the Company's
Certificate of Incorporation or Bylaws or any written agreement between any such
person and the Company in effect on the date of this Agreement, shall survive
the Merger and shall continue in full force and effect until 180 days after the
expiration of the longest applicable statute of limitations. Parent also agrees
that from and after the Effective Time it shall (and shall
32
cause the Surviving Corporation to) indemnify all such persons to the fullest
extent permitted by applicable law with respect to all actual or alleged acts or
omissions prior to the Effective Time occurring in connection with or arising
out of such individuals' service as officers or directors of the Company or any
of the Company Subsidiaries or as trustees, fiduciaries or administrators of any
plan for the benefit of employees of the Company. Without limitation of the
foregoing, in the event any such person is or becomes involved in any such
capacity in any action, proceeding or investigation (other than in connection
with a proceeding initiated by such person), in connection with any actual or
alleged action, inaction, state of affairs or other matter, including, without
limitation, any matter related to the transactions contemplated by this
Agreement, occurring on or prior to the Effective Time, Parent shall (or shall
cause the Surviving Corporation to) pay, as incurred, within ten business days
after receipt of such person's request and statement therefor from time to time,
such person's reasonable fees and other expenses of counsel selected by such
person incurred in connection therewith, including the cost of any
investigation, preparation and settlement; provided, however, that such payments
need not be made unless Parent shall have received an undertaking from such
person to repay such amount to Parent if it is determined by a court of
competent jurisdiction, in a final order or decree not subject to further
appeal, that neither Parent nor the Surviving Corporation is legally permitted
to indemnify such person under applicable law, and provided, further, that
neither Parent nor the Surviving Corporation shall, in connection with any one
such action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations, be liable for
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all indemnified persons. Parent
shall be entitled to participate in the defense of any such action or
proceeding, and counsel for the indemnified person shall, to the extent
consistent with their professional responsibilities, cooperate with Parent and
any counsel designated by Parent. Parent shall pay all reasonable fees and
expenses, including fees and expenses of counsel, that may be incurred by any
indemnified person in enforcing the indemnity and other obligations provided for
in this Section.
(b) Parent agrees that from and after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect for not less than
six years from the Effective Time the insurance coverage provided under the
policies of directors' and officers' liability insurance maintained by the
Company at the date of this Agreement; provided, however, that the Surviving
Corporation may substitute therefor policies issued by reputable and financially
sound carriers, reasonably acceptable to a majority of the members of the
Special Committee of the Company's Board of Directors who were appointed on June
20, 2003, that provide at least the same coverage, on terms and conditions which
are no less advantageous to such persons but only if such substitution does not
result in any gaps or lapses in coverage with respect to matters occurring prior
to the Effective Time; and provided, further, that the Surviving Corporation
shall not be required to pay an annual premium for such coverage in excess of
200% of the last annual premium paid by the Company prior to the date of this
Agreement (the "Premium Amount"); and if the Surviving Corporation is unable to
obtain the insurance required by this Section 6.8(b), it shall obtain as much
comparable insurance as possible for an annual premium equal to the Premium
Amount. In lieu of the foregoing, Parent or the Surviving Corporation may
purchase six-year "tail" coverage covering acts or omissions of such persons
prior to the Effective Time
33
on substantially similar terms to the directors' and officers' liability
insurance policy maintained by the Company at the date of this Agreement.
Section 6.9 Employee Benefits.
(a) Following the Effective Time, Parent shall honor, and cause
the Surviving Corporation to honor, each Company Plan and the related funding
arrangements of such Company Plan in accordance with its terms. Without limiting
the generality of the foregoing, Parent shall honor, and cause the Surviving
Corporation to honor, all rights to vacation, personal and sick days accrued by
employees of the Company and the Company Subsidiaries under any plans, policies,
programs and arrangements of the Company and its ERISA Affiliates through and
including the Effective Time. Until the first anniversary of the Effective Time,
Parent shall provide, and cause the Surviving Corporation to provide, employee
benefits under employee benefit plans to the employees and former employees of
the Company and the Company Subsidiaries that are in the aggregate no less
favorable than those provided to such persons pursuant to Company Plans on the
date of this Agreement. Nothing herein shall prohibit any changes to any Company
Plan that are (i) required by law (including, without limitation, any applicable
qualification requirements of Section 401(a) of the Code); (ii) necessary as a
technical matter to reflect the transactions contemplated hereby; or (iii)
required for the Surviving Corporation to provide for or permit investment in
its securities or Parent's securities. Furthermore, nothing herein shall require
Parent to (x) continue, or cause the Surviving Corporation to continue, any
particular Company Plan or prevent the amendment or termination thereof (subject
to the maintenance, in the aggregate, of the benefits (including severance pay
and benefits) as provided in this Section 6.9(a)) or (y) honor, or cause the
Surviving Corporation to honor, any Company Plan that is a stock option, stock
purchase, stock appreciation right or other equity based or related plan,
policy, program, arrangement or agreement. This Section 6.9 is not intended to,
and shall not be interpreted to, create any right of continued employment for
any employee of the Company or the Company Subsidiaries.
(b) With respect to any employee benefit plans in which any
employees of the Company or the Company Subsidiaries first become eligible to
participate, on or after the Effective Time, and in which the Company employees
did not participate prior to the Effective Time, Parent shall: (i) waive all
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the employees of the
Company and the Company Subsidiaries under any such new plans in which such
employees may be eligible to participate after the Effective Time, except to the
extent such pre-existing conditions, exclusions or waiting periods would apply
under the analogous Company Plan; (ii) provide each employee of the Company and
the Company Subsidiaries with credit for any co-payments and deductibles paid
prior to the Effective Time (to the same extent such credit was given under the
analogous Company Plan prior to the Effective Time) in satisfying any applicable
deductible or out-of-pocket requirements under any such new plan in which such
employees may be eligible to participate after the Effective Time; (iii)
recognize all service of such employees for all purposes (including, without
limitation, purposes of eligibility to participate, vesting, and, entitlement to
benefits, and, except with respect to defined benefit pension plans, benefit
accrual) in any such new plan in which such employees may be eligible to
participate after the Effective Time, and (iv) with respect to flexible spending
accounts, provide each employee of the Company and the
34
Company Subsidiaries with a credit for any salary reduction contributions made
thereto and a debit for any expenses incurred thereunder with respect to the
plan year in which the Effective Time occurs; provided that (x) the foregoing
shall not apply to the extent it would result in duplication of benefits and (y)
the foregoing shall be subject to any term or condition of any such employee
benefit plan imposed by a third party insurer or plan administrator.
Section 6.10 Section 16 Matters. Prior to the Effective Time, the
Company shall take all such steps as may be required or permitted to cause any
dispositions of shares of Company Common Stock (including options or other
derivative securities with respect to shares of Company Common Stock) that occur
or are deemed to occur by reason of or pursuant to the transactions contemplated
by this Agreement by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act, including by
taking steps in accordance with the No-Action Letter, dated January 12, 1999,
issued by the SEC regarding such matters.
Section 6.11 Rights Agreement. Neither the Company nor the Company's
Board of Directors shall (a) amend the Company Rights Agreement, (b) redeem any
of the Company Rights or (c) take any action with respect to, or make any
determination under, the Company Rights Agreement, except (x) as approved in
writing by Parent; provided, however, that if any person has commenced or
publicly announced the intent to commence a tender offer or exchange offer upon
the successful consummation of which such person, together with its Affiliates
and Associates (as such terms are defined in the Company Rights Agreement) would
be the Beneficial Owner (as that term is defined in the Company Rights
Agreement) of 20% or more of the outstanding Company Common Stock, Parent will
not unreasonably withhold or delay its consent to a request from the Company's
Board of Directors to cause a date other than the tenth business day after such
commencement or public announcement to be the Distribution Date (as such term is
defined in the Company Rights Agreement), (y) in connection with a termination
of this Agreement pursuant to Section 8.1(c)(i) or (z) to make a determination
in the good faith judgment of the Company's Board of Directors that a person or
entity has inadvertently become a Beneficial Owner (as that term is defined in
the Company Rights Agreement) of 20% or more of the outstanding Company Common
Stock pursuant to Section 1(a)(ii) of the Company Rights Agreement.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger and to consummate
the other transactions contemplated by this Agreement at and following the
Closing are subject to the satisfaction or waiver, where permissible, at or
prior to the Effective Time, of each of the following conditions:
(a) the Company Stockholders' Approval shall have been obtained;
35
(b) no statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by any
court or other Governmental Authority of competent jurisdiction which has the
effect of making the Merger illegal or otherwise restraining or prohibiting the
consummation of the Merger; and
(c) any waiting period (and any extension thereof) applicable to
consummation of the Merger under the HSR Act shall have expired or been
terminated.
Section 7.2 Conditions to Obligations of Parent and Subsidiary. The
obligations of Parent and Subsidiary to effect the Merger and to consummate the
other transactions contemplated by this Agreement at and following the Closing
are further subject to the following conditions, any one or more of which may be
waived by Parent:
(a) the representations and warranties of the Company contained in
this Agreement (i) that are qualified as to Company Material Adverse Effect or
materiality shall be true and correct in all respects as of the Closing Date
(other than representations and warranties that expressly relate to an earlier
date, which shall be true and correct in all respects as of such earlier date),
(ii) that are not so qualified shall be true and correct in all material
respects as of the Closing Date (other than representations and warranties that
expressly relate to an earlier date, which shall be true and correct in all
material respects as of such earlier date) and (iii) that are set forth in
Section 4.2(a), 4.2(b)(iii), 4.2(c) or 4.2(d) (solely with respect to the first
and third sentences thereof) shall be true and correct in all respects as of the
Closing Date;
(b) the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing;
(c) (i) all Indebtedness of the Company and the Company
Subsidiaries shall have been satisfied in full, (ii) all mortgages, security
interests, Liens and other encumbrances securing such Indebtedness shall have
been released, and (iii) all of the Company's obligations under Section 6.7
shall have been satisfied in full; provided, however, that the requirements of
this clause (iii) shall be deemed satisfied if the aggregate unpaid amount as of
the Closing of all obligations referred to in Section 6.7 is less than $75,000;
for purposes hereof, "Indebtedness" means (A) all obligations of the Company or
any of the Company Subsidiaries for borrowed money or with respect to deposits
or advances of any kind, (B) all obligations of the Company or any of the
Company Subsidiaries evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of the Company or any of the Company
Subsidiaries upon which interest charges are customarily paid (other than trade
payables incurred in the ordinary course of business), and (D) all guarantees by
the Company or any of the Company Subsidiaries of Indebtedness of other persons;
and
(d) Parent shall have received a certificate signed on behalf of
the Company by an executive officer of the Company to the effect that the
conditions contained in Sections 7.2(a) through (c) have been satisfied.
Section 7.3 Conditions to Obligations of the Company. The obligations
of the Company to effect the Merger and to consummate the other transactions
contemplated by this Agreement
36
at and following the Closing are further subject to the following conditions,
any one or more of which may be waived by the Company:
(a) the representations and warranties of Parent and Subsidiary
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date;
(b) Parent and Subsidiary shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing; and
(c) the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to the effect that the conditions
provided in Sections 7.3(a) and (b) have been satisfied.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time before the Effective Time, whether before or
after approval of this Agreement and the Merger by the stockholders of the
Company (subject to the applicable provisions of the DGCL):
(a) by mutual written consent of the Company and Parent, by action
of their respective Boards of Directors;
(b) by either the Company or Parent, if:
(i) the Merger has not occurred on or before July 15,
2004 (the "Termination Date"); provided, however, that the right to terminate
this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any
party whose breach of any provision of this Agreement has been the cause of, or
resulted in, or materially contributed to the failure to hold the Closing on or
before the Termination Date;
(ii) any statute, rule, regulation, executive order,
decree, ruling, judgment, decision, order or injunction of or by any court or
other Governmental Authority of competent jurisdiction which makes the
consummation of the Merger illegal shall be in effect and shall have become
final and nonappealable; provided, however, that neither party may terminate
this Agreement pursuant to this Section 8.1(b)(ii) unless that party first shall
have used its reasonable best efforts to prevent the entry of and to procure the
removal, reversal, dissolution, setting aside or invalidation of such order,
decree, ruling, judgment, decision, order or injunction; or
(iii) the Company Stockholders' Approval shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders (including any adjournment thereof);
37
(c) by the Company:
(i) in accordance with Section 6.6(b), but only if the
Company is in compliance with Section 6.6(b), including having paid the
Termination Fee as required thereby; or
(ii) if (A) there shall have been a breach in any material
respect of any representation or warranty in this Agreement of Parent or
Subsidiary or (B) Parent or Subsidiary shall not have performed or complied in
any material respect with any material covenant or material agreement contained
in this Agreement, in either case such that the condition set forth in Section
7.3(a) or (b), as the case may be, would be incapable of being satisfied by the
Termination Date; or
(d) by Parent, if:
(i) the Company shall have breached in any material
respect any of its obligations under Section 6.6, or the Company's Board of
Directors or any committee thereof shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Merger or this
Agreement, regardless of whether such withdrawal or modification is permitted
under Section 6.6(b), it being understood that neither (x) disclosure of any
Acquisition Proposal that is not being recommended by the Board of Directors of
the Company or any committee thereof nor (y) disclosure of any other facts or
circumstances that is not accompanied by a statement that the Board of Directors
of the Company or any committee thereof has withdrawn or modified its previous
approval or recommendation of the Merger and this Agreement, shall be considered
to be a withdrawal or modification of such approval or recommendation; or
(ii) (A) there shall have been a breach in any material
respect of any representation or warranty in this Agreement of the Company or
(B) the Company shall not have performed or complied in any material respect
with any material covenant or material agreement contained in this Agreement, in
either case such that the condition set forth in Section 7.2(a) or (b), as the
case may be, would be incapable of being satisfied by the Termination Date.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Parent
or the Company pursuant to the provisions of Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or further obligation on
the part of the Company, Parent, Subsidiary or their respective officers or
directors, other than the last sentence of Section 6.5(a), Section 6.7, this
Section 8.2 and Article IX, all of which shall survive, and except to the extent
that such termination results from a willful or intentional breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement or a failure or refusal by such party to consummate the
transactions contemplated hereby when such party was obligated to do so in
accordance with the terms hereof. Under any and all circumstances, the Company
shall not be liable to Parent and Merger Sub for more than $10,000,000 in the
aggregate (including, without limitation, any expense reimbursed or fee paid
pursuant to Section 8.2(b), (c) and (d)),
38
and Parent and Merger Sub shall not be liable to the Company for more than
$5,000,000 in the aggregate, with respect to any and all damages, claims,
losses, liabilities, judgments, obligations, costs and expenses of whatever kind
and nature arising from or relating in any way to the willful or intentional
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement or a failure or refusal by such party to
consummate the transactions contemplated hereby when such party was obligated to
do so in accordance with the terms hereof; provided, however, no party shall
have any liability arising from the willful or intentional breach of any of the
representations, warranties, covenants or agreements contained in this Agreement
or a failure or refusal to consummate the transactions contemplated hereby
unless such party shall have received written notice of a claim therefor within
30 days of the termination of this Agreement. The limitation of monetary
liabilities set forth in this Section 8.2(a) shall not restrict any party's
right to the remedies set forth in Section 9.9 or the enforcement of such
remedies.
(b) The Company agrees that if this Agreement is terminated by
Parent or the Company pursuant to Section 8.1(b)(i), 8.1(b)(ii), 8.1(b)(iii),
8.1(c)(i), 8.1(d)(i) or 8.1(d)(ii), then the Company shall reimburse Parent for
all out-of-pocket fees and expenses incurred by or on behalf of or borne by
Parent in connection with this Agreement and the transactions contemplated
hereby (including fees and disbursements payable to Parent's financing sources
and any of its or their respective legal counsel and accountants); provided,
however, that the aggregate amount of such reimbursement shall not exceed
$2,000,000 and provided, further however, that if this Agreement is terminated
pursuant to Section 8.1(d)(ii) as a result of a breach of a representation or
warranty of the Company, which representation or warranty is true and correct as
of the date of this Agreement but thereafter ceases to be true and correct due
to an occurrence or circumstance beyond the reasonable control of the Company,
the aggregate amount of such reimbursement shall not exceed $1,000,000. The
reimbursement shall be paid by wire transfer of immediately available funds
promptly, but in no event later than five business days after Parent's
submission to the Company of a statement therefor; provided, however, that if
this Agreement is terminated pursuant to Section 8.1(b)(ii), such reimbursement
shall be paid only if, and only at the time, the Company consummates an
Acquisition Proposal that would have required payment of a fee pursuant to the
first sentence of Section 8.2(d).
(c) The Company agrees that if this Agreement is terminated by
Parent or the Company pursuant to Section 8.1(b)(iii), 8.1(c)(i) or 8.1(d)(i)
(but in the case of termination pursuant to Section 8.1(b)(iii) only if the
Company's Board of Directors or any committee thereof shall not have reaffirmed
its approval or recommendation of the Merger or this Agreement within a
reasonable time after Parent requested such a reaffirmation (and at least five
business days prior to the Stockholders Meeting or any re-convening thereof)),
then the Company shall pay to Parent, or as directed by Parent, a fee equal to
$1,000,000 (the "Termination Fee"). The Termination Fee shall be paid by wire
transfer of immediately available funds (i) in the case of a termination by the
Company pursuant to Section 8.1(b)(iii) or 8.1(c)(i), on the date of such
termination and (ii) in the case of a termination by Parent pursuant to Section
8.1(b)(iii) or 8.1(d)(i) promptly, but in no event later than two business days
after, it first becomes due.
39
(d) The Company agrees that if (i) after the date of this
Agreement and prior to any termination of this Agreement pursuant to Section
8.1, an Acquisition Proposal by a third party has been made to the Company or
its Board of Directors or any committee thereof, or has been made directly to
the Company's stockholders generally, or has been publicly disclosed or
announced, and (ii) thereafter this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b)(i), 8.1(c)(i), 8.1(d)(i) or 8.1(d)(ii) and
within one year after the termination the Company shall approve or consummate or
enter into an Acquisition Agreement with respect to any Acquisition Proposal
(for purposes of this Section 8.2(d) only, all references to "20%" in the
definition of "Acquisition Proposal" shall be deemed to be references to "50%")
with any third party (whether or not such Acquisition Proposal or third party is
the Acquisition Proposal or third party referred to in clause (i) of this
Section 8.2(d)), then upon consummation of such Acquisition Proposal (but if
such Acquisition Agreement is a letter of intent, then only if such consummation
occurs within 18 months after this Agreement is terminated) the Company shall
pay to Parent, or as directed by Parent, a fee equal to (A) in the case of a
termination by Parent or the Company pursuant to Section 8.1(c)(i) or 8.1(d)(i),
$1,000,000 or (B) in the case of a termination by Parent or the Company pursuant
to Section 8.1(b)(i) or 8.1(d)(ii), $2,000,000. The Company agrees that if this
Agreement is terminated by Parent or the Company pursuant to Section 8.1(b)(iii)
and within one year after the termination the Company shall approve or
consummate or enter into an Acquisition Agreement with respect to an Acquisition
Proposal with any third party, then upon consummation of such Acquisition
Proposal (but if such Acquisition Agreement is a letter of intent, then only if
such consummation occurs within 18 months after this Agreement is terminated)
the Company shall pay to Parent, or as directed by Parent, a fee equal to (x)
$2,000,000 if no Termination Fee is payable pursuant to Section 8.2(c) or (y)
$1,000,000 if a Termination Fee has been paid pursuant to Section 8.2(c). The
fee shall be paid by wire transfer of immediately available funds promptly, but
in no event later than the date of consummation of such Acquisition Proposal.
Under no circumstance shall the Company be required to pay more than one fee
pursuant to Section 8.2(c) or more than one fee pursuant to this Section 8.2(d),
or be required to pay fees and expense reimbursements under Sections 8.2(b),
8.2(c) and 8.2(d) in excess of $4,000,000 in the aggregate.
(e) The Company acknowledges that the agreements contained in
Sections 8.2(b), 8.2(c) and 8.2(d) are cumulative and not exclusive of each
other, and are an integral part of this Agreement and that, without those
agreements, Parent would not enter into this Agreement; accordingly, if the
Company fails to pay any amount when due pursuant to Section 8.2(b), 8.2(c) or
8.2(d), the Company shall also pay to Parent its costs and expenses (including
reasonable attorneys fees and expenses) incurred in enforcing payment of any
such amount.
(f) Parent and Subsidiary acknowledge and agree that the right to
receive the expense reimbursement, fees, costs and expenses described in
Sections 8.2(b), 8.2(c), 8.2(d) and 8.2(e) shall be their exclusive remedies
under this Agreement following termination, except to the extent otherwise
provided in Section 8.2(a).
Section 8.3 Amendment. This Agreement may not be amended except by
action authorized by the respective Boards of Directors of Parent and the
Company and taken before or after the Company Stockholders' Approval is obtained
and prior to the time of the Merger Filing; provided, however, that after the
Company Stockholders' Approval is obtained, no such
40
amendment may be made which would reduce the amount or change the kind of
consideration to be received by the holders of Company Common Stock upon
consummation of the Merger or alter or change any of the terms and conditions of
this Agreement if such alteration or change would adversely affect the Company's
stockholders.
Section 8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (c) waive
compliance by the party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival. None of the representations or warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, and after the Effective Time, none of the Company,
Parent, Subsidiary or their respective officers or directors shall have any
further obligation with respect thereto. None of the covenants or other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, nor any rights or obligations arising out of the breach of any such
covenant or other agreement, shall survive the Effective Time except for those
covenants or agreements that by their terms apply or are to be performed in
whole in part after the Effective Time, and except that this Article IX shall
survive the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid return receipt requested or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number (or such other address or facsimile number for such party as shall be
specified by such party by notice given hereunder):
If to Parent or Subsidiary, to:
c/x Xxxxxx Xxxxxx Capital Partners, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
41
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxx & Xxxxxx LLP
Two Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
If to the Company, to:
Trover Solutions, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Force, Chairman, Special Committee of the
Board of Directors
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance US LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
All such notices and other communications shall be deemed received (i) in the
case of personal delivery, upon actual receipt thereof by the addressee, (ii) in
the case of overnight delivery, on the first business day following delivery to
the overnight delivery service, (iii) in the case of mail, on the date of
delivery indicated on the return receipt and (iv) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice has been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above;
however, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
Section 9.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY
WITHIN THAT STATE.
Section 9.4 Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and except as set
forth in this Agreement nothing in
42
this Agreement, expressed or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement; provided, however, that the provisions of Section 6.8 are for
the benefit of, and shall be enforceable by, each person who at the Effective
Time is a current or former director or officer of the Company.
Section 9.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by reason of any
law or public policy, all other terms and provisions of this Agreement
nevertheless shall remain in full force and effect.
Section 9.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 9.7 Interpretation; Certain Definitions. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (a) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, (b) the word "including" means
"including without limitation" and is intended by the parties to be by way of
example rather than limitation and (c) reference to any Article or Section means
such Article or Section of this Agreement. As used in this Agreement, "business
day" means any day other than a Saturday, a Sunday or other day on which
commercial banks in New York City, New York are permitted or required by law or
executive order to be closed for the conduct of regular banking business;
"knowledge of the Company" and similar phrases mean the actual knowledge of any
of the executive officers of the Company and of the Company Subsidiaries, or of
any of the direct reports to the Chief Executive Officer of the Company; and
except where the context otherwise requires, "person" means any individual,
partnership, joint venture, corporation, limited liability company, trust,
unincorporated organization or other entity and a government or any department,
agency or subdivision thereof. No provision of this Agreement shall be
interpreted or construed against any party solely because that party or its
legal representative drafted the provision.
Section 9.8 Jurisdiction. Each of the Company, Parent and Subsidiary
hereby irrevocably and unconditionally consents and agrees to submit to the
exclusive jurisdiction of the Court of Chancery of the State of Delaware (the
"Delaware Court") for any litigation between them arising out of or relating to
this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such court), waives any
objection to the laying of venue of any such litigation in the Delaware Court
and agrees not to plead or claim in any court that such litigation brought in
the Delaware Court has been brought in an inconvenient forum.
Section 9.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their
43
specific terms. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedies to which they are entitled at law or in equity, without
having to post any bond or to prove actual damages.
Section 9.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 9.11 Entire Agreement. This Agreement (including the documents
and instruments referred to herein) and the Confidentiality Agreement constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, and supersede all prior agreements and understandings, both oral and
written, among the parties with respect to the subject matter of this Agreement.
No representations, warranty, promise, inducement or statement of intention has
been made by any party that is not embodied in this Agreement or such other
documents, and none of the parties shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement or statement of intention
not embodied herein or therein.
[Signature Page Follows]
44
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers as of the date first written
above.
TSI HOLDING CO., INC.
By:_/s/ Xxxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
TSI ACQUISITION CO., INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
TROVER SOLUTIONS, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
--------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Chairman & Chief
Executive Officer
Signature Page to Merger Agreement
EXHIBITS
Exhibit A Certificate of Incorporation of the Surviving Corporation
Exhibit B ByLaws of the Surviving Corporation
-iv-