Exhibit 99.2
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
BY
AND
AMONG
STEEL PARTNERS II, L.P.,
BZ ACQUISITION CORP.
AND
BAIRNCO CORPORATION
DATED AS OF FEBRUARY 23, 2007
TABLE OF CONTENTS
Page
ARTICLE I TERMS OF THE MERGER................................................2
1.1. The Offer............................................................2
1.2. Company Actions......................................................4
1.3. Directors of the Company.............................................5
1.4. The Merger...........................................................6
1.5. The Closing; Effective Time..........................................6
1.6. Conversion of Securities.............................................7
1.7. Tender of and Payment for Certificates...............................7
1.8. Options and Restricted Stock.........................................9
1.9. Dissenting Shares...................................................10
1.10. Certificate of Incorporation and Bylaws.............................10
1.11. Directors and Officers..............................................10
1.12. Other Effects of Merger.............................................11
1.13. Additional Actions..................................................11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................11
2.1. Due Organization and Good Standing..................................12
2.2. Capitalization......................................................12
2.3. Authorization; Binding Agreement....................................14
2.4. Governmental Approvals..............................................14
2.5. No Violations.......................................................14
2.6. SEC Filings; Company Financial Statements...........................15
2.7. Absence of Certain Changes..........................................16
2.8. Absence of Undisclosed Liabilities..................................17
2.9. Permits.............................................................18
2.10. Litigation..........................................................18
2.11. Material Contracts..................................................18
2.12. Intellectual Property...............................................18
2.13. Employee Benefit Plans..............................................19
2.14. Taxes and Returns...................................................21
2.15. Finders and Investment Bankers......................................21
2.16. Fairness Opinion....................................................22
2.17. Vote Required; DGCL Section 203.....................................22
2.18. Environmental Matters...............................................22
2.19. Schedule 14D-9; Offer Documents; and Proxy Statement................23
2.20. Rights Plan.........................................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................23
3.1. Due Organization and Good Standing..................................23
3.2. Authorization; Binding Agreement....................................24
3.3. Governmental Approvals..............................................24
3.4. No Violations.......................................................24
3.5. Finders and Investment Bankers......................................25
3.6. Disclosures.........................................................25
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3.7. Financing...........................................................26
3.8. Litigation..........................................................26
3.9. No Prior Activities.................................................26
ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY..............................26
4.1. Conduct of Business of the Company..................................26
4.2. Notification of Certain Matters.....................................29
4.3. Access and Information..............................................29
4.4. Special Meeting; Proxy Statement....................................30
4.5. Reasonable Efforts..................................................31
4.6. Public Announcements................................................31
4.7. Compliance..........................................................31
4.8. No Solicitation.....................................................32
4.9. SEC and Stockholder Filings.........................................34
4.10. State Takeover Laws.................................................34
ARTICLE V ADDITIONAL COVENANTS OF PURCHASER.................................34
5.1. Notification of Certain Matters.....................................34
5.2. Reasonable Efforts..................................................35
5.3. Compliance..........................................................35
5.4. Indemnification.....................................................35
5.5. Public Announcements................................................37
5.6. Employee Matters....................................................37
ARTICLE VI CONDITIONS.......................................................37
6.1. Conditions to Each Party's Obligations..............................37
6.2. Condition to Obligations of Purchaser...............................38
6.3. Frustration of Conditions...........................................38
ARTICLE VII TERMINATION AND ABANDONMENT.....................................38
7.1. Termination.........................................................38
7.2. Effect of Termination...............................................39
7.3. Fees and Expenses...................................................39
ARTICLE VIII MISCELLANEOUS..................................................41
8.1. Confidentiality.....................................................41
8.2. Amendment and Modification..........................................42
8.3. Waiver of Compliance; Consents......................................42
8.4. Survival............................................................42
8.5. Notices.............................................................42
8.6. Binding Effect; Assignment..........................................43
8.7. Governing Law.......................................................43
8.8. Counterparts........................................................44
8.9. Interpretation......................................................44
8.10. Entire Agreement....................................................44
8.11. Severability........................................................45
8.12. Specific Performance................................................45
8.13. Attorneys' Fees.....................................................45
8.14. Third Parties.......................................................45
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and entered
into as of February 23, 2007, by and among Steel Partners II, L.P., a Delaware
limited partnership ("PURCHASER"), BZ Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of Purchaser ("MERGER SUB"), and Bairnco
Corporation, a Delaware corporation (the "COMPANY").
WITNESSETH:
A. The respective Boards of Directors or other governing body or entity of
Merger Sub, Purchaser and the Company deem it advisable that Purchaser acquire
the Company upon the terms and subject to the conditions provided for in this
Agreement.
B. Merger Sub has outstanding a cash tender offer (the "EXISTING OFFER",
and, as amended from time to time in accordance with this Agreement, the
"OFFER") to purchase and acquire all shares of the issued and outstanding common
stock, par value $0.01 per share (the "COMMON STOCK"), and the associated
preferred stock purchase rights (the "RIGHTS", and, together with the shares of
Common Stock, the "SHARES"), of the Company, on the terms and subject to the
conditions set forth in the Offer to Purchase, dated June 22, 2006 (together
with all amendments and supplements thereto, the "OFFER TO PURCHASE").
C. The Board of Directors of the Company (the "BOARD") has unanimously
approved the Agreement, the Offer and the Merger (as defined below), and the
Board has determined that such approval is sufficient to render inapplicable to
this Agreement, the Offer, the Merger and the other transactions contemplated by
this Agreement the restriction against the parties hereto, or any of their
affiliates, engaging in any business combination as set forth in Section 203 of
the Delaware General Corporation Law ("DGCL") and has determined that this
Agreement, the Offer and the Merger and the other transactions contemplated
hereby and thereby are advisable to the Company and its stockholders, and has
resolved to recommend that holders of Shares accept the Offer, tender their
Shares to Merger Sub pursuant to the Offer and adopt this Agreement.
D. The Board of Directors or other governing body or entity of each of
Purchaser (on its own behalf and as the sole stockholder of Merger Sub), Merger
Sub and the Company have each approved this Agreement and the merger of Merger
Sub with and into the Company (the "MERGER"), with the Company continuing as the
surviving corporation in the Merger in accordance with the DGCL and, in each
such case, upon the terms and conditions set forth in this Agreement.
E. The Board has declared a quarterly cash dividend of $.10 per Share (the
"DIVIDEND") which will be payable to the stockholders of the Company of record
on the close of business on March 5, 2007 (the "DIVIDEND RECORD DATE"), and has
approved the payment of one-time bonuses to each officer, director or employee
of the Company who owns any unexercised options to purchase stock of the Company
as of the close of business on the Dividend Record Date, whether or not such
options are currently exercisable or vested, to account for the Dividend which
would not otherwise be payable to such optionholders.
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F. Concurrently with the execution and delivery of this Agreement and as a
condition and inducement to Purchaser's willingness to enter into this
Agreement, Purchaser and certain executive officers and directors of the Company
(the "STOCKHOLDERS") are entering into a Tender and Support Agreement in the
form attached hereto as EXHIBIT A (the "TENDER AND SUPPORT AGREEMENT") pursuant
to which such Stockholders are agreeing to take certain actions to support the
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
TERMS OF THE MERGER
1.1. THE OFFER.
(a) Promptly following the execution and delivery of this Agreement,
Purchaser shall amend, and Purchaser shall cause Merger Sub to amend, the
Existing Offer to increase the purchase price for the Offer to $13.50 per Share
(such amount or any greater amount per Share paid pursuant to the Offer being
hereinafter referred to as the "OFFER PRICE"), subject to any applicable
withholding for Taxes (as such term is defined in Section 2.14(d)), net to the
seller in cash. For the avoidance of doubt, the parties hereto agree that
restricted stock of the Company ("RESTRICTED STOCK") may be tendered in the
Offer and be acquired by Merger Sub pursuant to the Offer.
(b) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1, Purchaser shall amend, and Purchaser shall cause
Merger Sub to amend, the Offer to Purchase as soon as practicable after the date
hereof, but in no event later than five (5) business days (as defined in Rule
14d-1(g)(3) of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "EXCHANGE ACT")) from the
date of this Agreement, to reflect the terms set forth in this Agreement, the
Minimum Condition and the other conditions set forth in Annex A hereto and other
related terms and Purchaser and Merger Sub shall cause the Offer to remain open
for a period through March 16, 2007 (the "EXPIRATION DATE"), unless extended
pursuant to the terms of this Agreement. The obligation of Merger Sub to accept
for payment and to pay for any Shares validly tendered and not withdrawn prior
to the expiration of the Offer (as it may be extended in accordance with the
requirements of this Section 1.1(b)) shall be subject only to the satisfaction
(or, in the case of clause (ii) below, the satisfaction or waiver by Purchaser
or Merger Sub) of the following conditions: (i) there being validly tendered and
not withdrawn prior to the expiration of the Offer that number of shares of
Common Stock which, together with any shares of Common Stock then owned by
Purchaser, Merger Sub or any affiliates thereof, represents at least a majority
of the total number of shares of Common Stock outstanding on a fully-diluted
basis (the "MINIMUM CONDITION"); and (ii) the other conditions set forth in
Annex A hereto. Subject to the prior satisfaction of the Minimum Condition and
the satisfaction or waiver by Purchaser or Merger Sub of the other conditions of
the Offer set forth in Annex A hereto, Merger Sub shall consummate the Offer in
accordance with its terms and accept for payment and pay for all Shares tendered
and not withdrawn promptly following the acceptance of Shares for payment
pursuant to the Offer. The Offer shall be made by means of the Offer to
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Purchase. Merger Sub expressly reserves the right to waive any of the conditions
set forth in Annex A (other than the Minimum Condition), to increase the Offer
Price and to make any other changes in the terms of the Offer; PROVIDED,
HOWEVER, that Merger Sub shall not, and Purchaser shall cause Merger Sub not to,
decrease the Offer Price, change the form of consideration payable in the Offer,
decrease the number of Shares sought in the Offer, impose additional conditions
to the Offer, extend the Offer beyond the Expiration Date, purchase any Shares
pursuant to the Offer that when added to Shares owned by Purchaser and its
affiliates would represent less than the Minimum Condition or amend any other
term or condition of the Offer in any manner adverse to the holders of the
Shares, in each case without the prior written consent of the Company (such
consent to be authorized by the Board or a duly authorized committee thereof).
Notwithstanding the foregoing, Merger Sub may, without the consent of the
Company, prior to the termination of this Agreement, (i) if, at any scheduled
expiration of the Offer any of the conditions to Merger Sub's obligation to
accept Shares for payment (including, without limitation, the Minimum Condition)
shall not be satisfied or waived, extend the Offer beyond the then applicable
expiration date thereof for a time period reasonably necessary to permit such
condition to be satisfied in increments of not more than five business days
each, but in no event shall such extensions exceed an aggregate of 20 business
days, or (ii) extend the Offer for any period required by any rule, regulation
or interpretation of the United States Securities and Exchange Commission
("SEC"), or the staff thereof, applicable to the Offer, or (iii) if, at any
scheduled expiration of the Offer, the number of shares of Common Stock that
shall have been validly tendered and not withdrawn pursuant to the Offer,
together with any shares of Common Stock then owned by Purchaser, Merger Sub or
any affiliates thereof, satisfies the Minimum Condition but represents less than
90% of the shares of Common Stock outstanding, extend the Offer (one or more
times) for an aggregate additional period of not more than twenty (20) business
days. Merger Sub may also, without the consent of the Company, in lieu of
extending the Offer pursuant to clause (iii) above, make available a subsequent
offering period in accordance with Rule 14d-11 under the Exchange Act of not
less than ten business days nor more than 20 business days.
(c) As promptly as practicable following the date of this Agreement,
Purchaser and Merger Sub shall file with the SEC an amendment to their existing
Tender Offer Statement on Schedule TO (together with all amendments and
supplements thereto, the "SCHEDULE TO") with respect to the Offer. The Schedule
TO shall contain or incorporate by reference the Offer to Purchase and forms of
the related letter of transmittal and all other ancillary Offer documents
(collectively, together with all amendments and supplements thereto, the "OFFER
DOCUMENTS"). Purchaser and Merger Sub shall cause the Offer Documents to be
disseminated to the holders of the Shares as and to the extent required by
applicable federal securities laws. Purchaser and Merger Sub, on the one hand,
and the Company, on the other hand, will promptly correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect, and Merger Sub will
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment upon the amendment
to the Schedule TO and the Offer to Purchase before they are filed with the SEC.
In addition, Purchaser and Merger Sub agree to provide the Company and its
counsel with any comments, whether written or oral, that Purchaser or Merger Sub
or their counsel may receive from time to time from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments and
to consult with the Company and its counsel prior to responding to any such
comments.
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(d) As promptly as practicable after the date of this Agreement, Purchaser
and Merger Sub shall terminate their solicitation of written consents from the
Company's stockholders in connection with the Existing Offer and amend their
Consent Statement filed with the SEC on January 12, 2007 (the "CONSENT
STATEMENT") to provide for such termination, and in no event shall Purchaser,
Merger Sub or any of their affiliates take any action to replace the members of
the Board, by stockholder meeting, consent solicitation or otherwise, other than
pursuant to the terms of this Agreement; provided, however, that nothing
contained in this Agreement shall prevent Purchaser, Merger Sub or any of their
affiliates from taking any such action to replace the members of the Board at
any time following the earlier of the termination of this Agreement and the
First Acceptance Time (as defined in Section 7.1 below). The Company agrees to
take all required action to postpone its 2007 annual meeting of stockholders
until no earlier than May 10, 2007.
1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board, at a meeting duly called and held, has
(i) determined that the terms of the Offer and the Merger are advisable to the
stockholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and (iii) subject to
Section 4.8, resolved to recommend that the stockholders of the Company accept
the Offer, tender their Shares to Merger Sub thereunder and adopt this
Agreement. The Company hereby consents to the inclusion in the Offer Documents
of the recommendation of the Board described in the immediately preceding
sentence, and the Company shall not permit the recommendation of the Board to be
modified in any manner adverse to Purchaser, Merger Sub or any of their
respective affiliates or to be withdrawn by the Board, except as specifically
provided in Section 4.8 hereof.
(b) As promptly as practicable following the filing of the amendment to
the Schedule TO pursuant to Section 1.1(c), the Company shall file with the SEC,
an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, the "SCHEDULE 14D-9")
with respect to the Offer, which shall contain the recommendation referred to in
clause (iii) of Section 1.2(a) hereof, subject to Section 4.8. The Company
further agrees to take all steps necessary to cause the amendment to the
Schedule 14D-9 to be disseminated to holders of the Shares as and to the extent
required by applicable federal securities laws. The Company, on the one hand,
and each of Purchaser and Merger Sub, on the other hand, will promptly correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material respect,
and the Company will cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. Purchaser and its
counsel shall be given a reasonable opportunity to review and comment upon the
amendment to the Schedule 14D-9 before it is filed with the SEC. In addition,
the Company agrees to provide Purchaser, Merger Sub and their counsel with any
comments, whether written or oral, that the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to consult with Purchaser,
Merger Sub and their counsel prior to responding to any such comments.
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(c) The Company shall promptly furnish Merger Sub with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
non-objecting beneficial owners of Shares. The Company shall furnish Merger Sub
with such additional information, including, without limitation, updated
listings and computer files of holders of Shares, mailing labels and security
position listings, and such other assistance as Purchaser, Merger Sub or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares.
1.3. DIRECTORS OF THE COMPANY.
(a) Immediately upon the purchase of and payment for Shares by Merger Sub
or any of its affiliates pursuant to the Offer following satisfaction of the
Minimum Condition, Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board as is equal to the
product obtained by multiplying the total number of directors on such Board by
the percentage that the number of Shares so purchased and paid for bears to the
total number of Shares then outstanding, but in no event less than a majority of
the number of directors. In furtherance thereof, the Company and its Board
shall, after the purchase of and payment for Shares by Merger Sub or any of its
affiliates pursuant to the Offer, upon request of Merger Sub, immediately
increase the size of its Board of Directors, secure the resignations of such
number of directors or remove such number of directors, or any combination of
the foregoing, as is necessary to enable Purchaser's designees to be so elected
to the Company's Board and shall cause Purchaser's designees to be so elected
and shall comply with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in connection therewith. In the event that Merger Sub
requests the resignation of directors of the Company pursuant to the immediately
preceding sentence, the Company shall cause such directors of the Company to
resign as may be designated by Merger Sub in a writing delivered to the Company.
Immediately upon the first purchase of and payment for Shares by Merger Sub or
any of its affiliates pursuant to the Offer, the Company shall, if requested by
Purchaser, also cause directors designated by Purchaser to constitute at least
the same percentage (rounded up to the next whole number) of each committee of
the Board as is on the Board. Notwithstanding the foregoing, if Shares are
purchased pursuant to the Offer, the Company shall use its reasonable efforts to
assure that there shall be until the Effective Time (as hereinafter defined) at
least two of the members of the Board who are directors on the date hereof and
are not employees of the Company (each a "CONTINUING Director"). In addition to
any indemnification rights pursuant to this Agreement or the Company's
Certificate of Incorporation, as amended (the "CERTIFICATE OF INCORPORATION"),
and Amended and Restated Bylaws (the "Bylaws"), the Continuing Directors as a
group shall be entitled to retain independent legal counsel at Company expense
if and to the extent that issues are presented to them that involve a conflict
of interest for Company counsel. The Company and its Board shall promptly take
all actions as may be necessary to comply with their obligations under this
Section 1.3(a). If at any time prior to the Effective Time there shall be in
office only one Continuing Director for any reason, the Board shall be entitled
to appoint a person who is not an officer or employee of the Company or any
subsidiary designated by the remaining Continuing Director to fill such vacancy
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(and such person shall be deemed to be a Continuing Director for all purposes of
this Agreement), and if at any time prior to the Effective Time no Continuing
Directors then remain, the other directors of the Company then in office shall
use their reasonable efforts to designate two persons to fill such vacancies who
are not officers or employees or affiliates of the Company, its subsidiaries,
Purchaser or Merger Sub or any of their respective affiliates (and such persons
shall be deemed to be Continuing Directors for all purposes of this Agreement).
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with the amendment to the Schedule 14D-9 the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable
Purchaser's designees to be elected to the Board. Purchaser and Merger Sub will
supply the Company and be solely responsible for any information with respect to
them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(c) Following the election of Purchaser's designees to the Board pursuant
to this Section 1.3 and prior to the Effective Time, (i) any amendment or
termination of this Agreement by the Company, (ii) any extension or waiver by
the Company of the time for the performance of any of the obligations or other
acts of Purchaser or Merger Sub under this Agreement, or (iii) any waiver of any
of the Company's rights hereunder or any other action that could adversely
effect in any material respect the rights of the Company's stockholders
hereunder shall, in any such case, require the concurrence of a majority of the
directors of the Company then in office who neither were designated by Purchaser
nor are employees of the Company (the "INDEPENDENT DIRECTOR APPROVAL").
1.4. THE MERGER.
Upon the terms and subject to the conditions of this Agreement, the Merger
shall be consummated in accordance with the DGCL. At the Effective Time, upon
the terms and subject to the conditions of this Agreement, Merger Sub shall be
merged with and into the Company in accordance with the DGCL and the separate
existence of Merger Sub shall thereupon cease and the Company, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Delaware as a wholly-owned
subsidiary of the direct parent of Merger Sub immediately prior to the Effective
Time. It is intended that the Merger shall constitute a taxable purchase of the
Shares for federal, state and local tax purposes.
1.5. THE CLOSING; EFFECTIVE TIME.
(a) Unless this Agreement shall have been terminated previously, the
closing of the Merger (the "CLOSING") shall take place at the offices of Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP, Park Avenue Tower, 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. local time on a date to be specified by
the parties which shall be no later than the third business day after the date
that all of the closing conditions set forth in Article VI have been satisfied
or waived (if waivable), unless another time, date or place is agreed upon in
writing by the parties hereto.
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(b) Subject to the provisions of this Agreement, on the Closing Date the
parties shall file with the Secretary of State of the State of Delaware a
certificate of merger in accordance with the DGCL (the "CERTIFICATE OF Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL in order to effect the
Merger. The Merger shall become effective upon the filing of the Certificate of
Merger or at such other time as is agreed by the parties hereto and specified in
the Certificate of Merger. The time when the Merger shall become effective is
herein referred to as the "EFFECTIVE TIME" and the date on which the Effective
Time occurs is herein referred to as the "CLOSING DATE."
1.6. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action on
the part of the holders of any securities of Merger Sub or the Company:
(a) Each Share that is owned by Merger Sub or the direct parent of Merger
Sub, or that is owned by the Company as treasury stock, shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(b) Each issued and outstanding Share (other than Shares to be cancelled
in accordance with Section 1.6(a) hereof and Dissenting Shares (as defined in
Section 1.9 below)) shall automatically be converted into the right to receive
the Offer Price in cash (the "MERGER CONSIDERATION"), payable, without interest,
to the holder of such Share upon surrender, in the manner provided in Section
1.7 hereof, of the certificate that formerly evidenced such Share. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 1.7
hereof.
(c) Each issued and outstanding share of common stock of Merger Sub shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
1.7. TENDER OF AND PAYMENT FOR CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Purchaser shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of the Shares (other than Shares to be cancelled in accordance with
Section 1.6(a) hereof and Dissenting Shares) in connection with the Merger (the
"PAYING AGENT") to receive in trust the aggregate Merger Consideration to which
holders of Shares shall become entitled pursuant to Section 1.6(b) hereof.
Purchaser shall deposit such aggregate Merger Consideration with the Paying
Agent promptly following the Effective Time. Such aggregate Merger Consideration
shall be invested by the Paying Agent as directed by Purchaser.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, Purchaser and
the Surviving Corporation shall cause to be mailed to each holder of record, as
of the Effective Time, of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "CERTIFICATES"), whose
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Shares were converted pursuant to Section 1.6(b) hereof into the right to
receive the Merger Consideration, a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and shall be in such form and have such other provisions as Purchaser may
reasonably specify) and instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Purchaser, together with such letter of
transmittal, properly completed and duly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid all transfer and other Taxes required by reason of the issuance to a person
other than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such Tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Section 1.7, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
for each Share in cash as contemplated by Section 1.6(b) hereof.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE SHARES. At the
Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article I.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following the six-month
anniversary of the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent, and holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent nor any
party hereto shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate(s) shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate(s) to be lost,
stolen or destroyed and, if required by Purchaser, the posting by such person of
a bond in such sum as Purchaser may reasonably direct as indemnity against any
8
claim that may be made against any party hereto or the Surviving Corporation
with respect to such Certificate(s), the Paying Agent will disburse the Merger
Consideration pursuant to Section 1.6(b) payable in respect of the Shares
represented by such lost, stolen or destroyed Certificate(s).
(f) WITHHOLDING TAXES. Purchaser, Merger Sub and the Surviving Corporation
shall be entitled to deduct and withhold, or cause the Paying Agent to deduct
and withhold, from the Offer Price, the Merger Consideration or the Cash Amount
(as defined below) payable to a holder of Shares (including, for the avoidance
of doubt, Restricted Stock) or Company Options (as defined below) pursuant to
the Offer or the Merger, as the case may be, any such amounts as are required
under the Internal Revenue Code of 1986, as amended (the "CODE"), or any
applicable provision of state, local or foreign Tax law. To the extent that
amounts are so withheld by Purchaser or Merger Sub, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Shares in respect of which such deduction and withholding was made by
Purchaser or Merger Sub.
1.8. OPTIONS AND RESTRICTED STOCK.
(a) With respect to all outstanding options to purchase Shares (the
"COMPANY OPTIONS") granted under the Company's 1990 Stock Plan and 2000 Stock
Incentive Plan (the "COMPANY OPTION PLANS") or otherwise, whether or not then
vested, immediately prior to the consummation of the Offer, subject to the terms
and conditions set forth below in this Section 1.8(a), each holder of a Company
Option will be entitled to receive from the Company, and shall receive, in
settlement of each Company Option a Cash Amount. The "CASH Amount" shall be
equal to the net amount of (A) the product of (i) the excess, if any, of the
Offer Price over the exercise price per share of such Company Option immediately
prior to the consummation of the Offer, multiplied by (ii) the number of shares
subject to such Company Option, less (B) any applicable withholdings for Taxes.
If the exercise price per share of any Company Option equals or exceeds the
Offer Price, the Cash Amount therefor shall be zero. Notwithstanding the
foregoing, payment of the Cash Amount is subject to written acknowledgement, in
a form reasonably acceptable to Purchaser, consenting to the foregoing
arrangement and that no further payment is due to such holder on account of any
Company Option and all of such holder's rights under such Company Options have
terminated.
(b) Immediately prior to the consummation of the Offer, except as provided
in this Section 1.8, all rights under any Company Option and any provision of
the Company Option Plans and any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company shall be cancelled. The Company shall use reasonable efforts to
ensure that, immediately prior to, as of and after the consummation of the
Offer, except as provided in this Section 1.8, no person shall have any right
under the Company Option Plans or any other plan, program or arrangement with
respect to securities of the Company, the Surviving Corporation or any
subsidiary thereof.
(c) Prior to the consummation of the Offer, the Company shall use
reasonable efforts to cause to be effected any necessary amendments to the
Company Option Plans and any other resolutions, consents or notices, in such
form reasonably acceptable to Purchaser, required under any of the Company
Option Plans or any Company Options to give effect to the foregoing provisions
of this Section 1.8.
9
(d) The Company shall take all actions necessary to cause all shares of
Restricted Stock of the Company to become fully vested immediately prior to the
consummation of the Offer and shall make all required withholdings in connection
therewith under applicable Tax Laws.
1.9. DISSENTING SHARES.
Notwithstanding any provision of this Agreement to the contrary, each
outstanding Share, the holder of which has demanded and perfected such holder's
right to dissent from the Merger and to be paid the fair value of such Shares in
accordance with the DGCL and, as of the Effective Time, has not effectively
withdrawn or lost such dissenters' rights ("DISSENTING Shares"), shall not be
converted into or represent a right to receive the Merger Consideration into
which Shares are converted pursuant to Section 1.6(b) hereof, but the holder
thereof shall be entitled only to such rights as are granted by the DGCL.
Notwithstanding the immediately preceding sentence, if any holder of Shares who
demands dissenters' rights with respect to its Shares under the DGCL effectively
withdraws or loses (through failure to perfect or otherwise) its dissenters'
rights, then as of the Effective Time or the occurrence of such event, whichever
later occurs, such holder's Shares will automatically be converted into and
represent only the right to receive the Merger Consideration as provided in
Section 1.6(b) hereof, without interest thereon, upon surrender of the
certificate or certificates formerly representing such Shares. After the
Effective Time, Purchaser shall cause the Company to make all payments to
holders of Shares with respect to such demands in accordance with the DGCL. The
Company shall give Purchaser (i) prompt written notice of any notice of intent
to demand fair value for any Shares, withdrawals of such notices, and any other
instruments served pursuant to the DGCL and received by the Company, and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for fair value for Shares under the DGCL. The Company shall not, except
with the prior written consent of Purchaser, voluntarily make any payment with
respect to any demands for fair value for Shares or offer to settle or settle
any such demands.
1.10. CERTIFICATE OF INCORPORATION AND BYLAWS.
Subject to Section 5.4 hereof, at and after the Effective Time until the
same have been duly amended, (i) the Certificate of Incorporation of the
Surviving Corporation shall be identical to the Certificate of Incorporation of
Merger Sub in effect at the Effective Time and (ii) the Bylaws of the Surviving
Corporation shall be identical to the Bylaws of Merger Sub in effect at the
Effective Time.
1.11. DIRECTORS AND OFFICERS.
At and after the Effective Time, the directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
and the officers of Merger Sub immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, except as Merger Sub shall otherwise
provide in writing, in each case until their successors are elected or appointed
and qualified. If, at the Effective Time, a vacancy shall exist on the Board of
Directors or in any office of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided by law.
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1.12. OTHER EFFECTS OF MERGER.
The Merger shall have all further effects as specified in the applicable
provisions of the DGCL.
1.13. ADDITIONAL ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of Merger Sub
or the Company or otherwise carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of Merger Sub or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Merger Sub or the Company, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The following representations and warranties by the Company to Purchaser
and Merger Sub are qualified by the Company Disclosure Schedule, which sets
forth certain disclosures concerning the Company, its subsidiaries and its
business (the "COMPANY DISCLOSURE SCHEDULE"). The Company hereby represents and
warrants to Purchaser and Merger Sub as follows:
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2.1. DUE ORGANIZATION AND GOOD STANDING.
Each of the Company and its subsidiaries is a corporation or other form of
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has all requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. For purposes of this Agreement, the term "COMPANY
MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or the ability of the Company to consummate the
transactions contemplated by this Agreement, except in each case for any such
effects resulting from, arising out of or relating to (a) the taking of any
action or incurring of any expense pursuant to this Agreement or the
transactions contemplated hereby, (b) the entry into or announcement of this
Agreement and the other transactions contemplated hereby, (c) any change in or
interpretations of (i) U.S. generally accepted accounting principles ("GAAP") or
(ii) any Law, (d) any change in interest rates or general economic conditions in
the industries or markets in which the Company or any of its subsidiaries
operates (which changes do not affect the Company or any of its subsidiaries to
a materially disproportionate degree related to the entities operating in such
markets or industries or serving such markets) or affecting the United States or
foreign economies in general or in the United States or foreign financial,
banking or securities markets, or (e) any natural disaster or act of God.
Company Material Adverse Effect does not include any adverse change in the stock
price of the Company in and of itself or any changes, events, conditions or
effects relating solely to Purchaser or any of its affiliates' financial
condition, results of operation or business. The Company has heretofore made
available to Purchaser accurate and complete copies of the Certificate of
Incorporation and Bylaws or other organizational documents, as currently in
effect, of the Company and each of its subsidiaries.
2.2. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, par value $.01
per share (the "PREFERRED STOCK" and, together with the Common Stock, the
"COMPANY CAPITAL STOCK"). As of the close of business on the date hereof, (i)
7,293,978 shares of Common Stock were issued and outstanding, (ii) no shares of
Preferred Stock were issued and outstanding, and (iii) 348,061 shares of Common
Stock were reserved for issuance pursuant to outstanding Company Options. All of
the outstanding shares of Company Capital Stock are, and all shares of Company
Capital Stock which may be issued pursuant to the exercise of outstanding
Company Options will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and non-assessable. None of
the outstanding securities of the Company has been issued in violation of any
federal or state securities laws.
(b) Except as set forth above and on SECTION 2.2(B) of the Company
Disclosure Schedule, as of the date hereof, (i) the Company directly or
indirectly owns all of the capital stock of, or other equity interests in, its
12
subsidiaries, free and clear of all Encumbrances (as defined below), and all
such capital stock of, and other equity interests in, the Company' subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and were
issued free of preemptive rights and in compliance with applicable Laws, (ii)
there are no existing options, warrants, puts, calls, preemptive or similar
rights, bonds, debentures, notes or other indebtedness having general voting
rights or debt convertible into securities having such rights ("VOTING DEBT") or
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of, or other equity
interests in, the Company or any of its subsidiaries obligating the Company or
any of its subsidiaries to issue, transfer or sell or cause to be issued,
transferred, sold or repurchased any options or shares of capital stock or
Voting Debt of, or other equity interest in, the Company or any of its
subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, or obligating the Company or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment and (iii) there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Capital Stock, or other capital stock
of, or equity interests in, the Company or any of its subsidiaries or to provide
funds to make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
(c) There are no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of the Company Capital
Stock.
(d) Following the Effective Time, no holder of Company Options will have
any right to receive shares of common stock of the Surviving Corporation upon
exercise of Company Options.
(e) Except as set forth in the Company SEC Reports (as defined below) and
as set forth on SECTION 2.2(E) of the Company Disclosure Schedule, no
Indebtedness of the Company or any of its subsidiaries contains any restriction
upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of
Indebtedness by the Company or any of its subsidiaries, or (iii) the ability of
the Company or any of its subsidiaries to grant any lien on its properties or
assets. As used in this Agreement, "INDEBTEDNESS" means (A) all indebtedness for
borrowed money or for the deferred purchase price of property or services (other
than current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), (B) any other indebtedness that
is evidenced by a note, bond, debenture or similar instrument, (C) all
obligations in respect of acceptances issued or created and (D) all guarantee
obligations.
(f) SECTION 2.2(F) of the Company Disclosure Schedule lists (i) all
Company Options outstanding as of the date hereof, the name of the holder of
each Company Option, the date of grant and the exercise price of such Company
Option, the number of shares of Common Stock as to which such Company Option has
vested and the vesting schedule for such Company Option and (ii) all shares of
Restricted Stock outstanding as of the date hereof, the names of the holders of
the Restricted Stock and the vesting schedule for the Restricted Stock.
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2.3. AUTHORIZATION; BINDING AGREEMENT.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement, the Tender and Support Agreement and the Rights
Amendment (as defined below) (collectively, the "COMPANY TRANSACTION Documents")
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of the Company Transaction Documents and the consummation
of the transactions contemplated hereby and thereby, including, but not limited
to, the Offer and the Merger, have been duly and validly authorized and approved
by the Board, such approval is sufficient to render inapplicable to this
Agreement, the Offer, the Merger and the other transactions contemplated by this
Agreement the provisions of Section 203 of the DGCL such that said provision
will not apply to this Agreement, the Offer, the Merger and the other
transactions contemplated by this Agreement, and no other corporate proceedings
on the part of the Company are necessary to authorize the execution and delivery
of the Company Transaction Documents or to consummate the transactions
contemplated hereby or thereby (other than the requisite approval of the Merger
by the stockholders of the Company in accordance with the DGCL). Each of the
Company Transaction Documents has been duly and validly executed and delivered
by the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies ("ENFORCEABILITY EXCEPTIONS").
2.4. GOVERNMENTAL APPROVALS.
No consent, approval, waiver or authorization of, notice to or declaration
or filing with ("CONSENT"), any nation or government, any state or other
political subdivision thereof, any entity, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any governmental or
regulatory authority, agency, department, board, commission, administration or
instrumentality, any court, tribunal or arbitrator or any self-regulatory
organization ("GOVERNMENTAL AUTHORITY") on the part of the Company or any of its
subsidiaries is required to be obtained or made in connection with the execution
or delivery by the Company of any of the Company Transaction Documents, the
Offer, the Merger or the consummation by the Company of the other transactions
contemplated hereby or thereby other than (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware in accordance with
the DGCL, (ii) filings with the SEC and state securities laws administrators,
(iii) such filings as may be required in any jurisdiction where the Company is
qualified or authorized to do business as a foreign corporation in order to
maintain such qualification or authorization, (iv) pursuant to applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and (v) those Consents that, if they were not obtained
or made, would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
2.5. NO VIOLATIONS.
Except as set forth on SECTION 2.5 of the Company Disclosure Schedule, the
execution and delivery of each of the Company Transaction Documents, the Offer,
the Merger, the consummation of the other transactions contemplated hereby and
14
thereby and compliance by the Company with any of the provisions hereof and
thereof will not (i) conflict with or result in any breach of any provision of
the Certificate of Incorporation or Bylaws or other governing instruments of the
Company or any of its subsidiaries, (ii) require any Consent under or result in
a material violation or material breach of, or constitute (with or without due
notice or lapse of time or both) a material default (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any Company Material Contract (as defined below),
(iii) result in the creation or imposition of any liens, charges, security
interests, options, claims, mortgages, pledges, assessments, adverse claims,
rights of others or restrictions (whether on voting, sale, transfer, disposition
or otherwise) or other encumbrances or restrictions of any nature whatsoever,
whether imposed by agreement, understanding, law or equity, or any conditional
sale contract, title retention contract or other contract to give or refrain
from giving any of the foregoing ("ENCUMBRANCES") of any kind upon any of the
material assets of the Company or any of its subsidiaries or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in Section 2.4
hereof, contravene in any material respect any applicable provision of any
statute, law, rule or regulation or any legally binding order, decision,
injunction, judgment, award or decree ("LAW" or "LAWS") to which the Company or
any of its subsidiaries any of their respective assets or properties is subject.
2.6. SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, schedules, statements and
other documents required to be filed by the Company with the SEC since December
31, 2004 under the Exchange Act or the Securities Act of 1933, as amended (the
"SECURITIES ACT"). All such required forms, reports and documents (including
those that the Company may file subsequent to the date hereof) are referred to
herein as the "COMPANY SEC REPORTS." At the time when filed (or if amended or
superseded by a subsequent filing prior to the date hereof then on the date of
such later filing), the Company SEC Reports (i) as amended to date complied in
all material respects with the applicable requirements of the Securities Act or
the Exchange Act, as the case may be, the Xxxxxxxx-Xxxxx Act of 2002 and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Reports and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Between
the date of this Agreement and the Closing Date, the Company will timely file
with the SEC all documents required to be filed by it under the Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports as amended
to date (the "COMPANY FINANCIALS"), including each Company SEC Report filed
after the date hereof until the Closing, (i) was prepared from, in accordance
with and accurately reflects in all material respects the Company's books and
records as of the times and for the periods referred to therein, (ii) complied
in all material respects with the published rules and regulations of the SEC
with respect thereto, (iii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act), and (iv)
fairly presented the consolidated financial position of the Company as at the
15
respective dates thereof and the consolidated results of the Company's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments. The balance sheet of the Company
contained in the Company SEC Report as of September 30, 2006 (the "BALANCE SHEET
DATE") as filed with the SEC before the date hereof is hereinafter referred to
as the "COMPANY BALANCE SHEET."
(c) The Company has heretofore made available to Purchaser a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) Except as set forth on SECTION 2.6(D) of the Company Disclosure
Schedule, the Company has established and maintains disclosure controls and
procedures (as defined in Rules 13a-14 and 15d-14 promulgated under the Exchange
Act) designed to ensure that material information relating to the Company is
made known to the Chief Executive Officer and Chief Financial Officer. To the
Company's knowledge, there is no fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls.
2.7. ABSENCE OF CERTAIN CHANGES.
Except as set forth in SECTION 2.7 of the Company Disclosure Schedule,
from the Balance Sheet Date to the date hereof, neither the Company nor any of
its subsidiaries has:
(a) suffered any Company Material Adverse Effect or any event or change
which is reasonably expected to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect;
(b) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of claims, liabilities and obligations reflected or reserved against in
the Company Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the Balance Sheet Date;
(c) permitted or allowed any of its properties or assets (real, personal
or mixed, tangible or intangible) to be subjected to any Encumbrances, except
for liens for current Taxes not yet due or liens the incurrence of which would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(d) sold, transferred or otherwise disposed of any of its material
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business, consistent with past practice;
(e) granted any material increase in the compensation or benefits payable
or to become payable to any director, officer or employee, except in the case of
employees other than officers for such increases in compensation or benefits
made in the ordinary course of business, consistent with past practice, or made
any material change in severance policy or practices;
16
(f) other than capital expenditures in accordance with the Company's
capital expenditure budget for the 2007 fiscal year (the "CAPEX BUDGETS"), made
any capital expenditure or acquired any property, plant or equipment for a cost
in excess of $250,000 in the aggregate;
(g) declared, paid or set aside for payment any dividend or other
distribution (whether in cash, stock or property) in respect of their respective
capital stock or other equity interests or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities or equity interests, other than dividends and distributions to the
Company or one if its wholly-owned subsidiaries or the Company's quarterly cash
dividend payments to stockholders;
(h) (i) made any changes in any of the accounting methods used by it
materially affecting its assets, liabilities or business, except for such
changes required by GAAP; or (ii) made or changed any election relating to Taxes
to the extent inconsistent with past practice, adopted or changed any accounting
method relating to Taxes, entered into any closing agreement relating to Taxes,
filed any amended Tax Return, settled or consented to any claim or assessment
relating to Taxes, but in each case in clauses (i) and (ii), only to the extent
such action could reasonably be expected to have a Company Material Adverse
Effect, and in each case in clause (ii), except as required by applicable Law;
(i) paid, loaned, modified or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of their
respective officers, directors or stockholders or any affiliate or associate of
any of their respective officers, directors or stockholders, except for
directors' fees, expense reimbursements in the ordinary course of business
consistent with past practice and compensation and benefits to officers at rates
not inconsistent with past practice;
(j) granted, issued, accelerated, paid, accrued or agreed to pay or make
any accrual or arrangement for payments or benefits pursuant to any Company
Employee Plans (as defined in Section 2.13(a) below) except in accordance with
the terms of the respective Company Employee Plans, or adopted any Company
Employee Plan, or amended any Company Employee Plan, except in the ordinary
course of business consistent with past practice and except as permitted or
contemplated by this Agreement; or
(k) authorized or agreed, whether in writing or otherwise, to take any
action described in this Section 2.7.
2.8. ABSENCE OF UNDISCLOSED LIABILITIES.
As of the date hereof, except (a) as disclosed in the Company Balance
Sheet or the Company SEC Reports or (b) for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the
Balance Sheet Date, neither the Company nor any of its subsidiaries has incurred
any material liabilities or obligations of any nature, required by GAAP to be
recognized or disclosed on a consolidated balance sheet of the Company or in the
notes thereto.
17
2.9. PERMITS.
To the knowledge of the Company, each of the Company and its subsidiaries
has all material permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of its business,
including those required under regulatory Laws (collectively, "COMPANY
PERMITS"). To the knowledge of the Company, neither the Company nor any of its
subsidiaries is in violation of any Company Permit. No proceedings are pending
or, to the knowledge of the Company, threatened to revoke or limit any Company
Permit, except, in each case, those the absence or violation of which would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
2.10. LITIGATION.
Except as disclosed in the Company SEC Reports and as of the date hereof,
there is no private or governmental action, suit, proceeding, claim, arbitration
or, to the Company's knowledge, investigation ("LITIGATION") pending before any
agency, court or tribunal, foreign or domestic, or, to the knowledge of the
Company, threatened, against the Company, any of its subsidiaries, any of their
respective properties or any of their respective officers or directors (in their
capacities as such) that would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. As of the date hereof,
there is no judgment, decree or order against the Company, any of its
subsidiaries or any of their respective directors or officers (in their
capacities as such) that would prevent, enjoin or materially alter or delay any
of the transactions contemplated by any of the Company Transaction Documents, or
that would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except as disclosed in the Company SEC Reports,
as of the date hereof there is no material litigation that the Company or any of
its subsidiaries have pending against other parties.
2.11. MATERIAL CONTRACTS.
Neither the Company nor any of its subsidiaries is a party or is subject
to any material note, bond, mortgage, indenture, contract, lease, license,
agreement or instrument required to be filed with the SEC under the applicable
Exchange Act rules ("COMPANY MATERIAL CONTRACT") that is not filed as an exhibit
to the Company SEC Reports. All such Company Material Contracts are valid and
binding and are in full force and effect and enforceable by the Company or its
applicable subsidiaries in accordance with their respective terms, subject to
the Enforceability Exceptions. Neither the Company or any of its subsidiaries
nor, to the knowledge of the Company, any other party thereto is in violation or
breach of or default under any such Company Material Contract where such
violation, breach or default would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
2.12. INTELLECTUAL PROPERTY.
To the knowledge of the Company, each of the Company and its subsidiaries
owns, or holds adequate licenses or other rights to use, all material patents,
trade names, trademarks, service marks, copyrights, technology, know-how and
processes necessary for their respective businesses as now conducted by them
(the "COMPANY INTELLECTUAL PROPERTY"), and, to the knowledge of the Company,
neither the Company nor any of its subsidiaries has received any notice of
18
infringement of or conflict with, and, to the Company's knowledge, there are no
infringements of or conflicts with, the rights of others with respect to the use
of any of the Company Intellectual Property that, in either such case, has had
or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
2.13. EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, bonus, incentive, deferred compensation and other material benefit
plans, agreements, policies and other arrangements, whether or not subject to
ERISA, whether written or oral, under which any employee of the Company or any
of its subsidiaries has any present or future right to benefits, maintained or
contributed to by the Company (or any subsidiary thereof), or under which the
Company or any subsidiary has any present or future liability (together, the
"COMPANY EMPLOYEE PLANS") has been funded, operated and administered in
compliance with its terms, the terms of any applicable collective bargaining
agreement, and with all applicable requirements of Law, including ERISA and the
Code, except as would not subject the Company or any of its subsidiaries to any
liability that has had or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(b) There has been no "prohibited transaction," as such term is defined in
Section 406 of ERISA and Section 4975 of the Code, by the Company or, to the
knowledge of the Company, by any trusts created thereunder or any trustee or
administrator thereof, with respect to any Company Employee Plan. To the
Company's knowledge, neither the Company nor any of its subsidiaries is subject
to any liability or penalty under Sections 4976 through 4980 of the Code or
ERISA with respect to any of the Company Employee Plans. Except as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, no suit, administrative proceeding, action or other
litigation is pending, or to the knowledge of the Company is threatened, against
or with respect to any such Company Employee Plan, including any audit or
inquiry by the Internal Revenue Service (the "IRS") or United States Department
of Labor, other than routine claims for benefits.
(c) With respect to any applicable Company Employee Plan, each of the
Company and its subsidiaries has complied with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations thereunder, (ii) the
applicable requirements of the Family Medical and Leave Act of 1993 and the
regulations thereunder and (iii) the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996 and the regulations
thereunder, except where the failure to comply with the applicable requirements
of such laws and regulations would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(d) Except as disclosed in SECTION 2.13(D) of the Company Disclosure
Schedule or as provided in Section 1.8 (it being understood that the
consummation of the transactions contemplated hereby will constitute a change in
control), the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee, director or consultant of
19
the Company or any of its subsidiaries to any payment (whether of severance pay,
unemployment compensation, golden parachute, bonus or otherwise), (ii)
accelerate, forgive indebtedness, vest, distribute, or increase benefits or
obligation to fund benefits with respect to any employee or director of the
Company or any of its subsidiaries, or (iii) accelerate the time of payment or
increase the amount of compensation due any such employee, director or
consultant.
(e) SECTION 2.13(E) of the Company Disclosure Schedule, which assumes
termination of the Company's Chief Executive Officer as of the consummation of
the Offer, sets forth (a)(i) all amounts that are required to be paid,
contractually or otherwise (other than any gross-up on such payments or any
other payment derived therefrom), to the Company's Chief Executive Officer as a
result of the Offer and the Merger and the other transactions contemplated
hereby under any of the Company Employee Plans or any other compensation
arrangements between the Company's Chief Executive Officer and the Company (or
any subsidiary thereof), and (ii) the Chief Executive Officer's W-2 gross
compensation for the years 2002 through 2006, which shall be used to calculate
the "base amount" (as defined in Section 280G(b)(3) of the Code) for the
Company's Chief Executive Officer as of the date hereto, and his current annual
salary and his annual bonus for the years 2004 through 2006, and (b) designates
each such amount that is (by contractual agreement or otherwise with the
Company) subject to the gross-up as set forth in Section 9 of the Employment
Agreement between the Company and the Company's Chief Executive Officer dated
January 22, 1990, as amended.
(f) No Company Employee Plan maintained by the Company or any of its
subsidiaries provides material health and welfare benefits with respect to
current or former employees of the Company or any of its subsidiaries after
retirement or other termination of service (other than (i) coverage mandated by
applicable Laws, (ii) benefits accrued in accordance with GAAP on the most
recent Company Financials, (iii) benefits, the full direct cost of which is
borne by the current or former employee (or beneficiary thereof), or (iv)
benefits described in the Company SEC Reports, including the exhibits thereto).
(g) There has been no amendment to, written or oral interpretation or
announcement by the Company, any subsidiary or any trade or business (whether or
not incorporated) which is treated as a single employer with the Company and its
subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code
(an "ERISA AFFILIATE") relating to, or change in participation or coverage
under, any Company Employee Plan which would materially increase the expense of
maintaining such Company Employee Plan above the level of expense incurred with
respect to that Company Employee Plan for the most recent fiscal quarter
included in the Company Financials.
(h) To the Company's knowledge, neither the Company nor any ERISA
Affiliate has any liability with respect to any "multiemployer plan" as defined
in Section 3(37) of ERISA.
(i) Each "nonqualified deferred compensation plan" (as defined in Section
409A(d)(1) of the Code) of the Company and its subsidiaries has been operated
since January 1, 2005 in good faith compliance with Section 409A of the Code,
the proposed regulations thereunder, IRS Notice 2005 1, Notice 2005 91, Notice
2006 33, Notice 2006 79 and Notice 2006 100.
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2.14. TAXES AND RETURNS.
(a) The Company has timely filed, or caused to be timely filed, all
material Tax Returns (as defined in Section 2.14(d) below) required to be filed
by it and its subsidiaries taking into account applicable extensions, and has
paid, collected or withheld, or caused to be paid, collected or withheld, all
material Taxes (as defined in Section 2.14(d) below) required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Company Financials have been established. As of the date hereof, there are no
written claims or assessments pending against the Company or any of its
subsidiaries for any alleged deficiency in any Tax, and neither the Company nor
any of its subsidiaries has been notified in writing of any proposed Tax claims
or assessments against the Company or any of its subsidiaries (other than, in
each case, claims or assessments for which adequate reserves in the Company
Financials have been established or which are being contested in good faith and
other than claims or assessments that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect). There are
no liens for Taxes on the assets of the Company or any of its subsidiaries,
except for statutory liens for current Taxes not yet due and payable and liens
that would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
(b) The Company has not constituted either a "distributing corporation" or
a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock (to any person or entity that is not a member
of the consolidated group of which the Company is the common parent corporation)
qualifying for tax-free treatment under Section 355 of the Code (i) within the
two-year period ending on the date hereof or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(c) As of the date hereof, neither the Company nor any of its subsidiaries
is being audited by any foreign, federal or state taxing authority or, to the
knowledge of the Company, has been notified by any foreign, federal or state tax
authority that any such audit is contemplated or pending.
(d) For purposes of this Agreement, the term "TAX" or "TAXES" shall mean
any tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, imposed by any Governmental Authority (including, but not
limited to, any federal, state, local, foreign or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax) together with
any interest, addition or penalty imposed thereon. The term "TAX RETURN" shall
mean a report, return or other information statement (including any attached
schedules or any amendments to such report, return or other information
statement) required to be supplied to or filed with a Governmental Authority
with respect to any Tax, including an information return, claim for refund,
amended return or declaration of estimated Tax.
2.15. FINDERS AND INVESTMENT BANKERS.
Except for Lazard Freres & Co. LLC ("LAZARD"), the Company has not
employed any broker or finder or otherwise incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
21
contemplated hereby. SECTION 2.15 of the Company Disclosure Schedule sets forth
the amount of any brokerage fees, commissions or finders' fees payable in
connection with the transactions contemplated hereby.
2.16. FAIRNESS OPINION.
The Company has received from Lazard, its financial advisor, a written
opinion addressed to it for inclusion in the Schedule 14D-9 and the Proxy
Statement (as defined in Section 4.4(a)) to the effect that the consideration to
be received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders (other than Purchaser, Merger Sub and their
respective affiliates) from a financial point of view.
2.17. VOTE REQUIRED; DGCL SECTION 203.
(a) The affirmative vote of the holders (including Merger Sub and its
affiliates following Merger Sub's acceptance of Shares for payment under the
Offer) of a majority of the outstanding shares of Common Stock (the "COMPANY
STOCKHOLDER APPROVAL"), if necessary to approve the Merger, is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the Merger.
(b) Other than any actions described in Section 2.17(a), the Company has
taken all actions necessary under the DGCL to approve the Offer, the Merger and
the other transactions contemplated by this Agreement. The Board, at a meeting
duly called and held, has approved the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement.
2.18. ENVIRONMENTAL MATTERS.
(a) Neither the Company nor any of its subsidiaries is the subject of any
federal, state, local or foreign investigation, and neither the Company nor any
of its subsidiaries has received any written notice or claim, or entered into
any negotiations or agreements with any person, relating to any material
liability or material remedial action under any applicable Environmental Laws.
(b) The Company and its subsidiaries have for the past three years
complied in all material respects and currently comply in all material respects
with all Environmental Laws.
(c) Neither the Company nor any of its subsidiaries has manufactured,
treated, stored, disposed of, generated, handled or released any pollutants,
contaminants, wastes, hazardous substances, noise or odor in a manner that has
given rise to material liability under Environmental Laws.
(d) No pollutants, contaminants, wastes, hazardous substances, noise or
odor have been released or otherwise come to be located at any property or
facility owned or operated by or on behalf of the Company or any of its
subsidiaries in a manner that has given rise to material liability under
Environmental Laws.
22
For purposes of this Agreement, "ENVIRONMENTAL LAWS" shall mean all
federal, state, local and foreign statutes, laws, rules, ordinances and similar
legally binding authority, including all common law, relating to pollution or
protection of the environment or natural resources.
2.19. SCHEDULE 14D-9; OFFER DOCUMENTS; AND PROXY STATEMENT.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Schedule TO or the Offer Documents will, at the respective
times the Schedule 14D-9, the Schedule TO, the Offer Documents or any amendments
or supplements thereto are filed with the SEC or are first published, sent or
given to stockholders of the Company, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading. The Proxy
Statement, if filed, will not, on the date the Proxy Statement (or any amendment
or supplement thereto) is first mailed to 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 the light of the circumstances under which they are made, not
misleading or, at the time of the Special Meeting (as defined in Section
4.4(a)), omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Special Meeting which shall have become false or misleading in any material
respect. The Schedule 14D-9 and the 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
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to information supplied by or on behalf of Purchaser or
Merger Sub which is contained in any of the foregoing documents.
2.20. RIGHTS PLAN.
The Board has approved, and the Company and Computershare Investor
Services, LLC (the "RIGHTS AGENT") have entered into, an amendment to the Rights
Agreement, dated as of June 22, 2006 (the "RIGHTS AGREEMENT"), between the
Company and the Rights Agent, in the form of EXHIBIT B hereto (the "RIGHTS
AMENDMENT"). Pursuant to the Rights Amendment, neither the execution and
delivery of this Agreement or the Tender and Support Agreement nor the
consummation of the Offer, the Merger or any of the other transactions
contemplated hereby or thereby will result in (i) Purchaser, Merger Sub or any
of their respective affiliates becoming an Acquiring Person or (ii) the
occurrence of (A) a Distribution Date, (B) the Stock Acquisition Time, (C) a
Section 11(a)(ii) Event or (D) a Section 13 Event, in each case as such terms
are defined in the Rights Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
3.1. DUE ORGANIZATION AND GOOD STANDING.
Purchaser is a limited partnership and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite partnership or corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
23
3.2. AUTHORIZATION; BINDING AGREEMENT.
Purchaser and Merger Sub have all requisite partnership or corporate power
and authority to execute and deliver this Agreement and the Tender and Support
Agreement (collectively, the "PURCHASER TRANSACTION DOCUMENTS") and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of the Purchaser Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, including, but not limited to, the
Offer and the Merger, have been duly and validly authorized by the Board of
Directors or other governing body or entity of Purchaser and Merger Sub, as
appropriate, and no other partnership or corporate proceedings on the part of
Purchaser or Merger Sub are necessary to authorize the execution and delivery of
the Purchaser Transaction Documents or to consummate the transactions
contemplated hereby or thereby (other than the requisite approval by the sole
stockholder of Merger Sub of this Agreement and the Merger). Each of the
Purchaser Transaction Documents has been duly and validly executed and delivered
by each of Purchaser and Merger Sub and constitutes the legal, valid and binding
agreement of each of Purchaser and Merger Sub, enforceable against each of
Purchaser and Merger Sub in accordance with its terms, subject to the
Enforceability Exceptions.
3.3. GOVERNMENTAL APPROVALS.
No Consent from or with any Governmental Authority on the part of
Purchaser or Merger Sub is required to be obtained or made in connection with
the execution or delivery by Purchaser or Merger Sub of any of the Purchaser
Transaction Documents, the Offer, the Merger or the consummation by Purchaser or
Merger Sub of the other transactions contemplated hereby or thereby other than
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the DGCL, (ii) filings with the SEC, state
securities laws administrators and the National Association of Securities
Dealers, Inc. (the "NASD"), (iii) pursuant to applicable requirements of the HSR
Act and (iv) those Consents that, if they were not obtained or made, would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of Purchaser or Merger Sub to consummate the
transactions contemplated by this Agreement, except in each case for any such
effects resulting from, arising out of or relating to the taking of any action
or incurring of any expense pursuant to this Agreement or the transactions
contemplated hereby or the entry into or announcement of this Agreement and the
other transactions contemplated hereby ("PURCHASER MATERIAL ADVERSE EFFECT").
3.4. NO VIOLATIONS.
The execution and delivery of each of the Purchaser Transaction Documents,
the Offer, the Merger, the consummation of the other transactions contemplated
hereby and thereby and compliance by Purchaser and Merger Sub with any of the
provisions hereof and thereof will not (i) conflict with or result in any breach
of any provision of the certificate of incorporation or bylaws or other
governing instruments of Purchaser or Merger Sub, (ii) require any Consent under
or result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
24
cancellation or acceleration) under, any of the terms, conditions or provisions
of any agreement or other instrument to which Purchaser or Merger Sub is a party
or by which any of their respective assets are bound, (iii) result in the
creation or imposition of any Encumbrance of any kind upon any of the assets of
Purchaser or Merger Sub or (iv) subject to obtaining the Consents from
Governmental Authorities referred to in Section 3.3 hereof, contravene any Law
to which Purchaser or Merger Sub or any of their respective assets or properties
is subject, except, in the case of clauses (ii), (iii) and (iv) above, for any
deviations from the foregoing which would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.
3.5. FINDERS AND INVESTMENT BANKERS.
Neither Purchaser nor Merger Sub has employed any broker or finder or
otherwise incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated hereby.
3.6. DISCLOSURES.
Neither the Schedule TO or the Offer Documents nor any information
supplied by Purchaser or Merger Sub for inclusion in the Schedule 14D-9 will, at
the respective times the Schedule TO, the Offer Documents, the Schedule 14D-9 or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Purchaser or Merger Sub for inclusion in
the Proxy Statement will not, on the date the Proxy Statement (or any amendment
or supplement thereto) is first mailed to 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
therein, in the light of the circumstances under which they are made, not
misleading or, at the time of the Special Meeting, omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Special Meeting which shall have
become false or misleading in any material respect. The Schedule TO will, when
filed by Purchaser and Merger Sub with the SEC, comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Purchaser and Merger Sub
make no representation or warranty with respect to any information supplied by
or on behalf of the Company which is contained in any of the foregoing
documents.
25
3.7. FINANCING.
At the date that Merger Sub becomes obligated to accept for payment and
pay for Shares pursuant to the Offer, and at the Effective Time, Purchaser and
Merger Sub will have sufficient cash and cash equivalents resources available to
pay for the Shares that the Merger Sub becomes so obligated to accept for
payment and pay for pursuant to the Offer and to pay the aggregate Merger
Consideration pursuant to the Merger.
3.8. LITIGATION.
There is no Litigation pending before any agency, court or tribunal,
foreign or domestic, or, to the knowledge of Purchaser, threatened, against
Purchaser, Merger Sub, any of their respective properties or any of their
respective officers or directors (in their capacities as such) that would
prevent, enjoin or materially alter or delay any of the transactions
contemplated by any of the Purchaser Transaction Documents. There is no
judgment, decree or order against Purchaser, Merger Sub or any of their
respective directors or officers (in their capacities as such) that would
prevent, enjoin or materially alter or delay any of the transactions
contemplated by any of the Purchaser Transaction Documents.
3.9. NO PRIOR ACTIVITIES.
Except for obligations or liabilities incurred in connection with its
incorporation or the negotiation and consummation of the Purchaser Transaction
Documents, the Offer, the Merger and the other transactions contemplated hereby
and thereby, and the Consent Statement, Merger Sub has not incurred any
obligations or liabilities, engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any person
or entity.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
4.1. CONDUCT OF BUSINESS OF THE COMPANY.
(a) Unless Purchaser shall otherwise agree in writing or except as
expressly provided by this Agreement or as set forth in SECTION 4.1 of the
Company Disclosure Schedule (the inclusion of any item thereon having been
consented to by Purchaser), during the period from the date of this Agreement to
the Effective Time, (i) the Company and its subsidiaries shall conduct their
respective businesses in the ordinary course and consistent with past practice
and (ii) the Company shall use its reasonable efforts to preserve intact its
business organization, to keep available the services of its and its
subsidiaries' officers and employees, to maintain satisfactory relationships
with all persons with whom it and its subsidiaries do business, and to preserve
the possession, control and condition of all of its and its subsidiaries'
assets.
(b) Without limiting the generality of the foregoing clause (a) and except
as expressly provided by this Agreement or as set forth in SECTION 4.1 of the
Company Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, neither the Company nor any of its subsidiaries will,
without the prior written consent of Purchaser:
26
(A) amend or propose to amend its Certificate of Incorporation or
Bylaws (or comparable governing instruments);
(B) authorize for issuance, issue, grant, sell, pledge or dispose of
any shares of, or any options, warrants, commitments, subscriptions or rights of
any kind to acquire or sell any shares of, its capital stock or other securities
or equity interests or any Voting Debt, including, but not limited to, any
securities convertible into or exchangeable for shares of stock of any class,
except for the issuance of Shares pursuant to the exercise of stock options
outstanding on the date of this Agreement in accordance with their present
terms;
(C) split, combine or reclassify any shares of its capital stock or
equity interests or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock or equity interests, or directly or indirectly redeem,
purchase or otherwise acquire or offer to acquire any shares of its capital
stock or other securities or equity interests, other than dividends and
distributions to the Company or one of its wholly-owned subsidiaries and the
Company's quarterly cash dividend of $0.10 per Share payable on March 30, 2007
to stockholders of record on the close of business on March 5, 2007;
(D) (a) create, incur, assume, forgive or make any changes to the
terms or collateral of any debt or receivables, or any employee or officer loans
or advances, except in the ordinary course of business consistent with past
practice or incurrences that constitute a refinancing of existing obligations on
terms that are no less favorable to the Company than the existing terms; (b)
except in the ordinary course of business consistent with past practice, assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
indirectly, contingently or otherwise) for the obligations of any person; (c)
except in accordance with the Capex Budgets, make any capital expenditures in
excess of $250,000; (d) make any loans, advances or capital contributions to, or
investments in, any other person (other than customary travel, relocation or
business advances to employees); (e) acquire the stock or assets of, or merge or
consolidate with, any other person; (f) voluntarily incur any material liability
or obligation (absolute, accrued, contingent or otherwise) other than in the
ordinary course of business consistent with past practice; or (g) sell,
transfer, mortgage, pledge, encumber or otherwise dispose of, or agree to sell,
transfer, mortgage, pledge, encumber or otherwise dispose of, any material
assets or properties (real, personal or mixed, tangible or intangible) other
than to secure debt permitted under subclause (a) of this clause (D) or other
than in the ordinary course of business consistent with past practice;
(E) increase in any manner the wages, salaries, bonus, compensation
or other benefits of any of its officers or employees or enter into, establish,
amend or terminate any employment, consulting, retention, change in control,
collective bargaining, bonus or other incentive compensation, profit sharing,
health or other welfare, stock option or other equity, pension, retirement,
vacation, severance, termination, deferred compensation or other compensation or
benefit plan, policy, agreement, trust, fund or other arrangement with, for or
in respect of any officer, director, employee, agent, consultant or affiliate
other than as required by applicable Law or pursuant to the terms of agreements
in effect on the date of this Agreement or in the ordinary course of business
consistent with past practice with employees (other than officers) of the
Company or any of its subsidiaries or enter into or engage in any agreement,
27
arrangement or transaction with any of its directors, officers, employees or
affiliates, except for expense reimbursements, and current compensation and
benefits, in the ordinary course of business consistent with past practice or as
permitted under the terms of this Agreement;
(F) (i) commence any litigation or other proceedings with any
Governmental Authority or other person or (ii) make or rescind any election
relating to Taxes except to the extent consistent with prior practice, settle
any material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, file any amended Tax
Return or claim for refund, change any method of accounting or make any other
material change in its accounting or Tax policies, but in each case only if such
action could reasonably be expected to have a Company Material Adverse Effect,
and in each case except as required by applicable Law or GAAP;
(G) adopt or amend any resolution or agreement concerning
indemnification of its directors, officers, employees or agents;
(H) materially modify or amend, or terminate, any Company Material
Contract, or waive, release or assign any material rights or claims thereunder,
except, in each case, in the ordinary course of business consistent with past
practice;
(I) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any confidentiality agreement or
non-competition agreement to which the Company or any of its subsidiaries is a
party;
(J) establish any subsidiary or enter into any new line of business;
(K) enter into any lease, contract or agreement pursuant to which
the Company or any of its subsidiaries is obligated to pay or incur obligations
of more than $250,000 per year, other than leases contemplated in connection
with the Capex Budgets or other leases, contracts or agreements in the ordinary
course of business consistent with past practice;
(L) permit any material insurance policy naming the Company or any
of its subsidiaries as a beneficiary or a loss payee to be cancelled or
terminated without notice to and consent by Purchaser, unless the Company uses
reasonable efforts to maintain substantially similar insurance coverage as is
currently in place;
(M) revalue any of its assets or make any change in accounting
methods, principles or practices, except as required by GAAP;
(N) fail to make in a timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder;
(O) discharge any obligations (including accounts payable) other
than intercompany obligations or other obligations discharged on a timely basis
in the ordinary course of business consistent with past practice;
(P) close or materially reduce the Company's or any subsidiary's
activities, or effect any material layoff at any of the Company's or any
subsidiary's facilities; or
28
(Q) authorize any of, or agree to commit to do any of, the foregoing
actions.
(c) The Company shall use its reasonable efforts to comply in all material
respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all the Company Permits necessary
for, or otherwise material to, such business.
4.2. NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Purchaser if any of the following
occur after the date of this Agreement: (i) there has been a material failure of
the Company to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; (ii) receipt of any notice or other
communication in writing from any third party alleging that the Consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement, provided that such Consent would have been
required to have been disclosed in this Agreement; (iii) receipt of any material
notice or other communication from any Governmental Authority (including, but
not limited to, the NASD or any securities exchange) in connection with the
transactions contemplated by this Agreement; (iv) the occurrence of an event
which would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect or that would otherwise reasonably be expected
to cause a condition in Article VI or Annex A not to be satisfied; or (v) the
commencement or, to the Company's knowledge, threat of any Litigation against
the Company, any of its subsidiaries, any of their respective properties or
assets or any employee, agent, director or officer, in his or her capacity as
such, of the Company or any of its subsidiaries which, if pending on the date
hereof, would have been required to have been disclosed in this Agreement or
which relates to the consummation of the Offer or the Merger. No such notice to
Purchaser shall have any effect on the determination of whether or not any of
the conditions to Closing or to the consummation of the Offer have been
satisfied or in determining whether or not any of the representations,
warranties or covenants contained in this Agreement have been breached. The
Company shall deliver to Purchaser promptly following the close of business on
the then-scheduled expiration date of the Offer a certificate as to whether the
conditions to the Offer described in paragraphs (c), (e)(ii), (f), (g), (i) and
(k) on Annex A hereto have been satisfied.
4.3. ACCESS AND INFORMATION.
(a) Between the date of this Agreement and the Effective Time, the Company
will give, and shall direct its accountants and legal counsel to give,
Purchaser, its affiliates and their respective authorized representatives
(including, without limitation, accountants, legal counsel and consultants), at
all reasonable times, access as reasonably requested to all offices and other
facilities and to all contracts, agreements, commitments, books and records of
or pertaining to the Company and its subsidiaries, will permit the foregoing to
make such reasonable inspections as they may require and will cause its
officers, with reasonable promptness, to furnish Purchaser with (i) such
financial and operating data and other information with respect to the
respective businesses and properties of the Company and its subsidiaries as
Purchaser may from time to time reasonably request, and (ii) a copy of each
material report, schedule and other document filed or received by the Company
pursuant to the requirements of applicable securities laws or the NASD;
PROVIDED, HOWEVER, that, between the date hereof and the time of first
acceptance of Shares for payment under the Offer, Purchaser, its affiliates and
their respective authorized representatives may, upon the prior approval (which
29
shall not be unreasonably withheld or delayed) of the Company's Chief Executive
Officer, (i) contact any employee of the Company or any of its subsidiaries
directly, provided that such contact is for informational purposes only and does
not unreasonably interfere with such employee's ongoing responsibilities to the
Company or any of its subsidiaries, and (ii) have access to the Company's or any
of its subsidiaries' offices and facilities, and, following the time of first
acceptance of Shares for payment under the Offer, Purchaser, its affiliates and
their respective authorized representatives shall not be restricted in any
manner in contacting employees of the Company or any of its subsidiaries or in
accessing the Company's or any of its subsidiaries' offices and facilities. No
such access, inspections or furnishing of information shall have any adverse
effect on Purchaser or Merger Sub's ability to assert that conditions to Closing
or to the consummation of the Offer have not been satisfied.
(b) Prior to the execution and delivery of this Agreement, the Company
shall have delivered to Purchaser a copy of duly adopted resolutions of the
Board approving the execution, delivery and performance of the Company
Transaction Documents, the Offer, the Merger and the other transactions
contemplated hereby and thereby, certified by the Secretary of the Company.
4.4. SPECIAL MEETING; PROXY STATEMENT.
(a) As promptly as practicable after Purchaser and Merger Sub have
purchased sufficient Shares pursuant to the Offer to satisfy the Minimum
Condition, if required by applicable Law in order to consummate the Merger, the
Company, acting through its Board, shall, in accordance with applicable Law:
(i) (A) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "SPECIAL MEETING") for the purposes of
considering and taking action upon the approval and adoption of the Merger and
this Agreement;
(B) subject to Section 4.8, declare advisable and recommend to
its stockholders that they approve the Merger and adopt this Agreement, and
shall include disclosure regarding the approval of the Company's Board;
(C) without limiting the generality of the foregoing, the
Company agrees that its obligations under clause (A) of this Section 4.4(a)(i)
shall not be affected by the commencement, public proposal, public disclosure or
communication to the Company or any other person of any Company Takeover
Proposal (as such term is defined in Section 4.8(a)) or the withdrawal or
modification by the Board of its approval or recommendation of the Offer, the
Merger or this Agreement; and
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and obtain and
furnish the information required to be included by the SEC therein and, after
consultation with Purchaser, respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendments or
supplements thereto (the "PROXY STATEMENT"), to be mailed to its stockholders at
the earliest practicable date, provided that no amendments or supplements to the
Proxy Statement will be made by the Company without prior consultation with
Purchaser and its counsel.
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(b) Purchaser shall vote, or cause to be voted, all of the Shares acquired
in the Offer or otherwise then owned by it or Merger Sub in favor of the
approval and adoption of the Merger and this Agreement.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, in the
event that Purchaser and Merger Sub shall acquire that number of Shares which,
together with the Shares they already own, constitute in the aggregate at least
90% of the outstanding Shares, pursuant to the Offer or otherwise, the parties
hereto shall, subject to Article VI hereof, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
4.5. REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, including Section 4.8
of this Agreement, the Company agrees to use its reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the Offer and the Merger and the other transactions contemplated by
this Agreement, including, but not limited to, (i) obtaining all Consents from
Governmental Authorities and other third parties required for the consummation
of the Offer and the Merger and the other transactions contemplated hereby
(provided that the Company shall not make any payment or amend the terms of any
agreement in connection with obtaining any such Consent without the prior
written approval of Purchaser) and (ii) consulting and cooperating with,
providing assistance to and furnishing information requested by Purchaser and
Merger Sub in the preparation and filing with the SEC of the Schedule TO, the
Offer Documents and all necessary amendments and supplements thereto. Upon the
terms and subject to the conditions hereof, the Company agrees to use reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the conditions to the consummation of the
Offer and the Closing set forth herein.
4.6. PUBLIC ANNOUNCEMENTS.
So long as this Agreement is in effect, the Company shall not (a) issue or
cause the publication of any press release or any other announcement or
communication with respect to this Agreement, the Offer or the Merger or the
other transactions contemplated hereby without the prior written consent of
Purchaser, or (b) discuss with the press or the media this Agreement, the Offer,
the Merger or the other transactions contemplated hereby (and will refer any and
all questions and inquiries concerning Purchaser or its affiliates to
Purchaser), except in any case under (a) or (b) where such release,
announcement, communication or discussion is required by applicable Law,
Governmental Authority, court process or by obligations pursuant to any listing
agreement with any national securities exchange, in which case the Company shall
consult with Purchaser prior to making any such disclosure.
4.7. COMPLIANCE.
In consummating the Offer, the Merger and the other transactions
contemplated hereby, the Company shall comply in all material respects with the
provisions of the Exchange Act and the Securities Act and shall comply in all
31
material respects with all other applicable Laws. The Company shall use its
reasonable efforts to prepare, and shall cause the Company's independent public
accountants to audit and issue its report with respect to the Company's
financial statements to be included in, the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2006.
4.8. NO SOLICITATION.
(a) For purposes of this Agreement, "COMPANY TAKEOVER PROPOSAL" means
(other than the transactions contemplated by this Agreement) any inquiry,
proposal or offer from any person relating to (1) any direct or indirect
acquisition or purchase of assets representing 10% or more of the assets of the
Company or any of its subsidiaries, (2) any issuance, sale or other disposition
of (including by way of merger, consolidation, business combination, share
exchange, joint venture or any similar transaction) securities (or options,
rights or warrants to purchase, or securities convertible into or exchangeable
for, such securities) representing 10% or more of the voting power of the
Company, (3) any tender offer, exchange offer or other transaction in which, if
consummated, any person or "group" (as such term is defined under the Exchange
Act) shall acquire beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act), or the right to acquire beneficial ownership, of 10% or
more of the outstanding voting capital stock of the Company, or (4) any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation or dissolution involving the Company or any of its subsidiaries. For
purposes of this Agreement, a "COMPANY SUPERIOR OFFER" means a Company Takeover
Proposal on terms that the Board determines, in good faith, based upon
consultations with its outside legal counsel and its financial advisor, if
consummated, are more favorable to the Company's stockholders than this
Agreement, the Offer and the Merger and is reasonably likely to be consummated,
taking into account all legal, financial (including, without limitation, any
financing contingencies) and regulatory aspects of the offer and the person
making the offer.
(b) Except as set forth in this Section 4.8, the Company shall not,
directly or indirectly, and shall not, directly or indirectly, authorize or
permit any officer, director, employee, agent or representative of the Company
to, (i) solicit, encourage, initiate or facilitate the making, submission or
announcement of any Company Takeover Proposal, (ii) furnish any non-public
information regarding the Company to any person (other than Purchaser, Merger
Sub, any of their respective affiliates or any of their respective
representatives) in connection with or in response to a Company Takeover
Proposal or an inquiry that the Company believes in good faith could reasonably
be expected to lead to a Company Takeover Proposal, (iii) engage in discussions
or negotiations with any person with respect to any Company Takeover Proposal,
except as to the existence of these provisions, (iv) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Purchaser, Merger
Sub or any of their respective affiliates, the approval or recommendation by the
Board of the Offer, this Agreement or the Merger, (v) approve or recommend, or
propose publicly to approve or recommend, any Company Takeover Proposal or (vi)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "COMPANY ACQUISITION
AGREEMENT") related to any Company Takeover Proposal.
32
(c) Notwithstanding the provisions of Section 4.8(b), nothing in this
Agreement shall prohibit or limit (A) the Company, or the Board, prior to the
time of the first acceptance of Shares for payment pursuant to the Offer, from
furnishing non-public information regarding the Company to, or entering into
discussions or negotiations with, any person in response to an unsolicited, bona
fide written Company Takeover Proposal that the Board concludes in good faith
(after consultation with its financial advisor) could reasonably be expected to
constitute a Company Superior Offer if (1) the Company has not violated any of
the provisions in Section 4.8(b) in connection with such Company Takeover
Proposal, (2) the Board determines in good faith, after consultation with its
outside legal counsel, that such action with respect to such Company Takeover
Proposal is consistent with its fiduciary duties to the stockholders of the
Company under applicable Law, (3) the Company receives from such person an
executed confidentiality agreement with provisions not substantially more
favorable to such person than those contained in the Confidentiality Agreement
(as defined below) (but not including a provision similar to the seventh
paragraph thereof), and (4) the Company furnishes such non-public information to
such person and to Purchaser at substantially the same time (to the extent such
non-public information has not been previously furnished by the Company to
Purchaser); or (B) the Company from complying with Rules l4d-9 and 14e-2
promulgated under the Exchange Act with regard to any Company Takeover Proposal.
(d) The Company shall notify Purchaser as promptly as practicable (and in
any event within two business days) of the receipt by the Company, or any of its
representatives, of any bona fide inquiries, proposals or offers, requests for
information or requests for discussions or negotiations relating to any Company
Takeover Proposal (including providing the identity of the person making or
submitting such Company Takeover Proposal or request, and a summary of the
material terms and conditions thereof, if the Company Takeover Proposal or
request is not in writing, or a copy of the Company Takeover Proposal or request
and any related draft Company Acquisition Agreements if it is in writing). The
Company shall keep Purchaser informed on a current basis of the status of any
such discussions or negotiations and of any modifications to such inquiries,
proposals or offers. The Company agrees that it shall not terminate, waive,
amend or modify, or release any person from, any provision of any standstill or
confidentiality agreement to which it is a party and that relates to a Company
Takeover Proposal, and the Company shall use reasonable efforts to enforce the
provisions of any such agreement. The Company shall immediately cease and cause
to be terminated any discussions or negotiations with any parties with respect
to any Company Takeover Proposal and shall take reasonable steps to inform its
representatives of the obligations undertaken in this Section 4.8.
(e) Notwithstanding anything in this Agreement to the contrary, including
Section 4.8(b), the Board may, at any time prior to the first acceptance of
Shares for payment pursuant to the Offer (subject to the Company's compliance
with the provisions of this Section 4.8): (i) withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger or (ii) approve or
recommend a Company Superior Offer if, in the case of both clause (i) and (ii)
above: (A) an unsolicited, bona fide written offer is made to the Company (and
not withdrawn) by a third party for a Company Takeover Proposal; (B) the Board
determines in good faith, after consultation with its financial advisor, that
such offer constitutes a Company Superior Offer; and (C) following consultation
with outside legal counsel, the Board determines in good faith that the
withdrawal or modification of its approval or recommendation of the Offer, this
Agreement or the Merger is consistent with its fiduciary duties to the
stockholders of the Company under applicable Law, but only, in the case of both
33
clause (i) and (ii) above, (x) after providing written notice to Purchaser (a
"NOTICE OF SUPERIOR OFFER") advising Purchaser that the Board has received a
Company Superior Offer, specifying the material terms and conditions of such
Company Superior Offer (and including with such notice any draft Company
Acquisition Agreement) and identifying the person or persons making such Company
Superior Offer, and (y) if Purchaser, or an affiliate thereof, does not, within
three (3) business days of Purchaser's receipt of the Notice of Superior Offer,
make an offer that the Board determines in good faith, after consultation with
its financial advisor, to be at least as favorable to the Company's stockholders
as the Company Superior Offer; PROVIDED that during such three (3) business day
period, the Company shall, and shall use reasonable efforts to cause its
financial and legal advisors to, negotiate in good faith with Purchaser and its
affiliates (to the extent Purchaser wishes to negotiate) to enable Purchaser or
its affiliate to make such an offer.
4.9. SEC AND STOCKHOLDER FILINGS.
The Company shall send to Purchaser a copy of all public reports and
materials promptly after the time it sends the same to its stockholders, the SEC
or any state or foreign securities commission.
4.10. STATE TAKEOVER LAWS.
Notwithstanding any other provision in this Agreement, if any state
takeover statute may become applicable to the transactions contemplated by this
Agreement, the Company and the members of its Board will grant such approvals
and take such actions as are necessary so that the transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms and
conditions contemplated hereby and otherwise act to eliminate the effect of any
takeover statute on any of the transactions contemplated by this Agreement.
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER
5.1. NOTIFICATION OF CERTAIN MATTERS.
Purchaser shall give prompt notice to the Company if any of the following
occur after the date of this Agreement: (i) there has been a material failure of
Purchaser or Merger Sub to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; (ii) receipt of any
notice or other communication in writing from any third party alleging that the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, provided that such Consent would
have been required to have been disclosed in this Agreement; (iii) receipt of
any material notice or other communication from any Governmental Authority
(including, but not limited to, the NASD) in connection with the transactions
contemplated by this Agreement; (iv) the occurrence of an event which would
reasonably be expected to have, individually or in the aggregate, a Purchaser
Material Adverse Effect; or (v) the commencement or, to the Purchaser's
knowledge, threat of any Litigation against Purchaser, Merger Sub, any of their
respective properties or assets, or any employee, agent, director or officer, in
his or her capacity as such, of Purchaser or Merger Sub which, if pending on the
date hereof, would have been required to have been disclosed in this Agreement
34
or which relates to the consummation of the Offer or the Merger. No such notice
to the Company shall have any effect on the determination of whether or not any
of the conditions to Closing or to the consummation of the Offer have been
satisfied or in determining whether or not any of the representations,
warranties or covenants contained in this Agreement have been breached
5.2. REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, Purchaser agrees to
use its reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the Offer and the Merger and the other
transactions contemplated by this Agreement, including, but not limited to: (i)
obtaining all Consents from Governmental Authorities and other third parties
required for the consummation of the Offer and the Merger and the other
transactions contemplated hereby and (ii) consulting and cooperating with,
providing assistance to and furnishing information requested by the Company in
the preparation and filing with the SEC of the Schedule 14D-9 and the Proxy
Statement, if applicable, and all necessary amendments and supplements thereto.
Upon the terms and subject to the conditions hereof, Purchaser agrees to use
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary to satisfy the conditions to the
consummation of the Offer and the Closing set forth herein.
5.3. COMPLIANCE.
In consummating the Offer, the Merger and the other transactions
contemplated hereby, Purchaser and Merger Sub shall comply in all material
respects with the provisions of the Exchange Act and the Securities Act and
shall comply in all material respects with all other applicable Laws.
5.4. INDEMNIFICATION.
(a) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in the Certificate of Incorporation and
Bylaws, respectively, of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals
who, at or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of the Company or any of its subsidiaries. After the
Effective Time, the Surviving Corporation shall, to the fullest extent permitted
under applicable Law, indemnify and hold harmless each present and former
director and officer of the Company and each of its subsidiaries (collectively,
the "INDEMNIFIED PARTIES") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission, in his or her capacity as an officer, director,
employee, fiduciary or agent of the Company or any of its subsidiaries,
occurring at or before the Effective Time, to the same extent as provided in the
Certificate of Incorporation or Bylaws of the Company. In the event of any such
35
claim, action, suit, proceeding or investigation, (i) the Surviving Corporation
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Surviving Corporation, promptly after statements therefor are received (provided
the applicable Indemnified Party provides an undertaking to repay all advanced
expenses if it is finally judicially determined that such Indemnified Party is
not entitled to indemnification) and (ii) the Surviving Corporation shall
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
the Surviving Corporation's prior written consent (which consent shall not be
unreasonably withheld or delayed); and provided, further, that the Surviving
Corporation shall not be obligated pursuant to this Section 5.4(a) to pay the
fees and expenses of more than one counsel (selected by a plurality of the
applicable Indemnified Parties) for all Indemnified Parties in any jurisdiction
with respect to any single action except to the extent that two or more of such
Indemnified Parties shall have conflicting interests in the outcome of such
action; and provided, further, that, in the event that any claim for
indemnification is asserted or made within such six-year period, all rights to
indemnification in respect of such claim shall continue until the disposition of
such claim.
(b) The Company shall purchase at or prior to the consummation of the
Offer, and the Surviving Corporation shall maintain in effect, tail policies to
the Company's current directors' and officers' liability insurance, which tail
policies (i) shall be effective for a period of six years after the Effective
Time with respect to claims arising from acts or omissions occurring prior to
the Effective Time with respect to those persons who are currently covered by
the Company's directors' and officers' liability insurance and (ii) shall
contain terms with respect to coverage and amount no less favorable, in the
aggregate, than those of such policy or policies as in effect on the date
hereof. Notwithstanding the foregoing, if the tail policies described above
cannot be obtained or can only be obtained by paying aggregate premiums in
excess of 225% of the aggregate annual amount currently paid by the Company for
such coverage, the Surviving Corporation shall only be required to provide as
much coverage as can be obtained by paying aggregate premiums equal to 225% of
the aggregate annual amount currently paid by the Company for such coverage,
which amount is set forth on SECTION 5.4(B) of the Company Disclosure Schedule.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall succeed to the obligations set forth in this Section 5.4.
(d) The provisions of this Section 5.4 (i) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
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5.5. PUBLIC ANNOUNCEMENTS.
So long as this Agreement is in effect, each of Purchaser and Merger Sub
shall not (a) issue or cause the publication of any press release or any other
announcement or communication with respect to this Agreement, the Offer or the
Merger or the other transactions contemplated hereby without the prior written
consent of the Company, or (b) discuss with the press or the media this
Agreement, the Offer, the Merger or the other transactions contemplated hereby
(and will refer any and all questions and inquiries concerning the Company or
its affiliates to the Company), except in any case under (a) or (b) where such
release, announcement, communication or discussion is required by applicable
Law, Governmental Authority, court process or by obligations pursuant to any
listing agreement with any national securities exchange, in which case Purchaser
shall consult with the Company prior to making any such disclosure.
5.6. EMPLOYEE MATTERS
From and after the Effective Time, Purchaser shall, and shall cause the
Surviving Corporation to, honor all Company Employee Plans in accordance with
their terms as in effect immediately before the consummation of the Offer,
provided that nothing herein shall prohibit Purchaser or the Surviving
Corporation from amending or terminating any such Company Employee Plan in
accordance with its terms at any time or from time to time thereafter.
ARTICLE VI
CONDITIONS
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
(a) STOCKHOLDER APPROVAL. If required under the DGCL, the Company
Stockholder Approval shall have been obtained.
(b) NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
since the date of this Agreement, which prohibits or prevents the consummation
of the Merger and which has not been vacated, dismissed or withdrawn prior to
the Effective Time. The Company and Purchaser shall use their reasonable efforts
to have any of the foregoing vacated, dismissed or withdrawn by the Effective
Time.
(c) PURCHASE OF SHARES. Purchaser or Merger Sub or any affiliate of either
of them shall have purchased Shares pursuant to the Offer that together with
shares otherwise owned by Purchaser and its affiliates represent at least the
Minimum Condition.
(d) EXPIRATION OF OFFERING. Any "subsequent offering period" shall have
expired.
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6.2. CONDITION TO OBLIGATIONS OF PURCHASER.
The obligations of Purchaser and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional condition, which may be waived by Purchaser:
(a) CONSENTS. All material Consents required in connection with this
Agreement or the transactions contemplated hereby shall have been obtained and
shall be in full force and effect.
6.3. FRUSTRATION OF CONDITIONS.
Neither Purchaser nor the Company may rely on the failure of any condition
set forth in this Article VI to be satisfied if such failure was caused by such
party's failure to comply with or perform any of its covenants or obligations
set forth in this Agreement.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. TERMINATION.
This Agreement may be terminated and the Offer, the Merger and the other
transactions contemplated hereby may be abandoned at any time prior to the time
of the first acceptance of Shares for payment pursuant to the Offer ("FIRST
ACCEPTANCE TIME") by action taken or authorized by the Board of Directors, or
other governing body or entity, of the terminating party or parties, as follows
(the date of any such termination, the "TERMINATION Date"):
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company, if the First Acceptance Time shall
not have occurred on or before May 15, 2007; PROVIDED, HOWEVER, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the First Acceptance Time to occur
on or before such date;
(c) by either Purchaser or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any legally binding
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) or taken any other action (including the failure to have taken an
action) which has become final and non-appealable and has the effect of making
consummation of the Offer or the Merger illegal or otherwise preventing or
prohibiting consummation of the Offer or the Merger;
(d) by Purchaser, if neither Purchaser nor Merger Sub is in material
breach of any of its representations, warranties or covenants under this
Agreement, and if (i) any of the representations or warranties of the Company
herein become untrue or inaccurate such that the condition set forth in
paragraph (f) of Annex A would not be satisfied, (ii) there has been a breach on
the part of the Company of any of its covenants or agreements herein such that
the condition set forth in paragraph (g) of Annex A would not be satisfied, and
such breach (if curable) has not been cured within twenty (20) days after
written notice to the Company or (iii) the Company has breached in any material
respect any of the provisions of Section 4.8(b), (c), (d) or (e);
38
(e) by the Company, if the Company is not in material breach of any of its
representations, warranties or covenants under this Agreement, and if (i) any of
the representations or warranties of Purchaser or Merger Sub herein become
untrue or inaccurate, except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Material Adverse Effect" set forth therein) would not be
reasonably expected to have, individually or in the aggregate, a Purchaser
Material Adverse Effect on the date of this Agreement and as of the expiration
of the Offer, as if made at and as of such date (except to the extent expressly
made as of an earlier date, in which case as of such date), or (ii) either
Purchaser or Merger Sub shall have failed to perform in any material respect its
obligations or to comply in any material respect with its agreements or
covenants to be performed or complied with by it under this Agreement, and such
breach (if curable) has not been cured within twenty (20) days after written
notice to Purchaser;
(f) by Purchaser, if the Board shall have (i) withdrawn or modified, in a
manner adverse to Purchaser, Merger Sub or any of their respective affiliates,
its approval or recommendation of the Offer, this Agreement or the Merger or
(ii) recommended or approved, or proposed publicly to recommend or approve, any
Company Takeover Proposal or any Company Acquisition Agreement relating to any
Company Takeover Proposal or (iii) resolved to do any of the foregoing; or
(g) by the Company, if the Board shall have withdrawn or modified in a
manner adverse to Purchaser, Merger Sub or any of their respective affiliates
its approval or recommendation of the Offer, this Agreement or the Merger in
compliance with Section 4.8(e) of this Agreement; PROVIDED, however, that any
such purported termination pursuant to this Section 7.1(g) shall be void and of
no force or effect unless the Company concurrently with such termination pays to
Purchaser the Company Termination Fee and the Termination Expenses in accordance
with Section 7.3.
7.2. EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section 7.1,
this Agreement shall forthwith become void, and there shall be no liability
under this Agreement on the part of any party hereto (except that the provisions
of this Section 7.2, Section 7.3 (Fees and Expenses) and Section 8.1
(Confidentiality) shall survive any such termination); PROVIDED, HOWEVER, that
nothing herein shall relieve any party from liability for any breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement prior to such termination.
7.3. FEES AND EXPENSES.
(a) Except as otherwise set forth in this Section 7.3, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Offer, the Merger or any other related transaction is consummated. As used in
this Agreement, "EXPENSES" shall include all documented reasonable out-of-pocket
39
expenses (including all fees and expenses of counsel, accountants, investment
bankers, financing sources, experts and consultants to a party hereto and its
affiliates) incurred by a party or any of its affiliates or on its or any of
their behalf in connection with or related to the authorization, preparation,
negotiation, execution or performance of this Agreement, the preparation,
printing, filing or mailing of the Schedule TO, the Offer Documents, the
Schedule 14D-9 or the Proxy Statement, if any, the solicitation of stockholder
approvals and all other matters related to the consummation of the Offer, the
Merger and the other transactions contemplated hereby. Purchaser and the Company
shall each pay one-half of the filing fee in connection with any filings under
the HSR Act.
(b) The Company agrees that if this Agreement shall be terminated:
(i) by Purchaser or the Company pursuant to Section 7.1(b) if (A) at
any time prior to such termination a Company Takeover Proposal has been publicly
announced or has been made or submitted to the Company and (B) concurrently with
such termination or within twelve (12) months after the Termination Date the
Company or any of its subsidiaries enters into a definitive agreement with
respect to, or consummates, any Company Takeover Proposal, then the Company
shall pay Purchaser the Company Termination Fee and the Termination Expenses, as
such terms are defined below;
(ii) by Purchaser pursuant to Section 7.1(d), then (A) the Company
shall pay Purchaser the Termination Expenses and (B) if, concurrently with such
termination or within twelve (12) months after the Termination Date the Company
or any of its subsidiaries enters into a definitive agreement with respect to,
or consummates, any Company Takeover Proposal, then the Company shall also pay
Purchaser the Company Termination Fee;
(iii) by Purchaser pursuant to Section 7.1(f), then the Company
shall pay Purchaser the Company Termination Fee and the Termination Expenses; or
(iv) by the Company pursuant to Section 7.1(g), then the Company
shall pay Purchaser the Company Termination Fee and the Termination Expenses
(which Company Termination Fee and Termination Expenses shall be paid
concurrently with such termination).
(c) The Company Termination Fee shall be paid to Purchaser or its designee
by the Company in immediately available funds (i) concurrently with and as a
condition to the effectiveness of a termination of this Agreement by the Company
pursuant to Section 7.1(g) and (ii) otherwise, within two business days after
the date of the event giving rise to the obligation to make such payment. The
Termination Expenses shall be paid to Purchaser or its designee by the Company
in immediately available funds (i) concurrently with and as a condition to the
effectiveness of a termination of this Agreement by the Company pursuant to
Section 7.1(g) and (ii) otherwise, within two business days after receipt by the
Company of reasonable documentation with respect to such Termination Expenses.
(d) For purposes of this Agreement, (i) "COMPANY TERMINATION FEE" means an
amount equal to $3,500,000 and (ii) "TERMINATION EXPENSES" means an amount, not
to exceed $1,000,000, equal to the reasonably documented Expenses of Purchaser,
Merger Sub and their respective affiliates. For purposes of this Section 7.3, a
"Company Takeover Proposal" shall have the meaning set forth in Section 4.8,
40
except that references to "10%" in such definition shall be replaced by "50%";
provided, however, that, notwithstanding anything to the contrary contained in
the foregoing, the sale, in whatever form (whether by merger, consolidation,
stock or asset sale, joint venture or otherwise), of all or a material part of
any segment of the Company shall be deemed to constitute a "Company Takeover
Proposal" for purposes of this Section 7.3.
(e) Each of the Company and Purchaser acknowledges that the agreements
contained in this Section 7.3 are an integral part of the transactions
contemplated by this Agreement. In the event that the Company shall fail to pay
the Company Termination Fee or any Termination Expenses when due, the Company
shall reimburse Purchaser, in addition to the Termination Expenses and not
subject to any cap or limit thereon, for all reasonable costs and expenses
actually incurred or accrued by Purchaser (including reasonable fees and
expenses of counsel) in connection with the collection under and enforcement of
this Section 7.3. Notwithstanding anything to the contrary in this Agreement, if
this Agreement is terminated under any of the circumstances set forth in Section
7.3(b) as a result of which Purchaser is entitled to receive payment of the
Company Termination Fee and/or Termination Expenses, Purchaser's right to
receive payment of the Company Termination Fee and/or Termination Expenses
pursuant to this Section 7.3 shall be the exclusive remedy of Purchaser and
Merger Sub for the loss suffered as a result of any such termination of this
Agreement, and upon payment of the Company Termination Fee and/or Termination
Expenses in accordance with this Section 7.3, the Company shall have no further
liability or obligation relating to or arising out of this Agreement (except
with respect to the second sentence of this Section 7.3(e) and with respect to
Section 8.1) if this Agreement is terminated under any of the circumstances set
forth in Section 7.3(b).
ARTICLE VIII
MISCELLANEOUS
8.1. CONFIDENTIALITY.
Unless (i) otherwise expressly provided in this Agreement, (ii) required
by applicable Law or Governmental Authority, (iii) necessary to secure any
required Consent as to which the other party has been advised or (iv) consented
to in writing by Purchaser or the Company, as applicable, any information or
documents furnished in connection herewith shall be kept strictly confidential
by the Company, Purchaser, Merger Sub and their respective officers, directors,
employees, agents and representatives. Prior to any disclosure pursuant to the
preceding sentence, the party intending to make such disclosure shall use its
reasonable efforts to consult with the other party regarding the nature and
extent of the disclosure. Nothing contained herein shall preclude disclosures to
the extent necessary to comply with accounting, SEC and other disclosure
obligations imposed by applicable Law. To the extent required by such disclosure
obligations, Purchaser or the Company, after a party uses its reasonable efforts
to consult with the other party, may file with the SEC a Report on Form 8-K
pursuant to the Exchange Act with respect to the Offer and the Merger, which
report may include, among other things, financial statements and pro forma
financial information with respect to the other party. Purchaser and the Company
shall cooperate with the other and provide such information and documents as may
be required in connection with any filings with the SEC. In the event the Offer
or the Merger is not consummated, each party shall return to the other any
documents furnished by the other and all copies thereof any of them may have
made and will hold in absolute confidence any information obtained from the
41
other party except to the extent (i) such party is required to disclose such
information by applicable Law or such disclosure is necessary in connection with
the pursuit or defense of a claim, (ii) such information was known by such party
prior to such disclosure or was thereafter developed or obtained by such party
independent of such disclosure or (iii) such information becomes generally
available to the public other than by breach of this Section 8.1. Prior to any
disclosure of information pursuant to the exception in clause (i) of the
preceding sentence, the party intending to disclose the same shall so notify the
party which provided the same in order that such party may seek a protective
order or other appropriate remedy should it choose to do so.
8.2. AMENDMENT AND MODIFICATION.
This Agreement may be amended, modified or supplemented only by a written
agreement among the Company, Purchaser and Merger Sub.
8.3. WAIVER OF COMPLIANCE; CONSENTS.
Any failure of the Company, on the one hand, or Purchaser or Merger Sub,
on the other hand, to comply with any obligation, covenant, agreement or
condition herein may be waived by Purchaser, on the one hand, or the Company, on
the other hand, only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 8.3.
8.4. SURVIVAL.
The respective representations and warranties of the Company and Purchaser
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement,
notwithstanding any investigation made or information obtained by the other
party, but shall terminate at the Effective Time.
8.5. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person, by facsimile,
receipt confirmed, or on the next business day when sent by overnight courier or
on the second succeeding business day when sent by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to the Company, to:
Bairnco Corporation
000 Xxxxxxx Xxxx.
Xxxx Xxxx, XX 00000
Attention: CEO
Facsimile: 000-000-0000
42
with a copy to (but which shall not constitute notice to the Company):
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Bab, Esq.
Facsimile: (000) 000-0000
(ii) if to Purchaser or Merger Sub, to:
Steel Partners II, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Facsimile: 000-000-0000
with a copy to (but which shall not constitute notice to Purchaser or Merger
Sub)
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
8.6. BINDING EFFECT; ASSIGNMENT.
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto prior to
the Effective Time, without the prior written consent of the other parties
hereto; provided, however, that Purchaser may assign any or all of its rights or
delegate any or all of its obligations hereunder, and may transfer, sell or
otherwise dispose of all or any part of its interest in Merger Sub, to any of
its affiliates without such prior written consent.
8.7. GOVERNING LAW.
This Agreement shall be deemed to be made in, and in all respects shall be
interpreted, construed and governed by and in accordance with the internal laws
of, the State of Delaware, without regard to the conflicts of law principles
thereof.
43
8.8. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.
8.9. INTERPRETATION.
The article and section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a limited liability
company, a trust, an association, an unincorporated organization, a Governmental
Authority and any other entity, (ii) unless otherwise specified herein, the term
"AFFILIATE," with respect to any person, shall mean and include any person
controlling, controlled by or under common control with such person, (iii) the
term "SUBSIDIARY" of any specified person shall mean any corporation a majority
of the outstanding voting power of which, or any partnership, joint venture,
limited liability company or other entity a majority of the total equity
interest of which, is directly or indirectly owned by such specified person,
(iv) the term "KNOWLEDGE," when used with respect to the Company, shall mean the
knowledge of the executive officers of the Company (after reasonable
investigation) and, when used with respect to Purchaser, shall mean the
knowledge of the executive officers of Purchaser (after reasonable
investigation), and (v) the term "INCLUDING" shall mean "including, without
limitation." The parties have participated jointly in the negotiation and
drafting of this Agreement. Consequently, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
8.10. ENTIRE AGREEMENT.
This Agreement and the documents or instruments referred to herein,
including, but not limited to, the Exhibit(s) attached hereto and the Disclosure
Schedules referred to herein, which Exhibit(s) and Disclosure Schedules are
incorporated herein by reference, any other written agreement entered into
contemporaneously herewith, including the Tender and Support Agreement and the
Rights Amendment, and the confidentiality agreement, dated October 31, 2006, as
amended, between Purchaser and the Company (the "CONFIDENTIALITY AGREEMENT"),
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement and such other
agreements supersede all prior agreements and the understandings among the
parties with respect to such subject matter.
44
8.11. SEVERABILITY.
In case any provision in this Agreement shall be held invalid, illegal or
unenforceable in a jurisdiction, such provision shall be modified or deleted, as
to the jurisdiction involved, only to the extent necessary to render the same
valid, legal and enforceable, and the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision be
affected thereby in any other jurisdiction.
8.12. SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
further agree that each party shall be entitled to an injunction or restraining
order to prevent breaches or threatened breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, without the need to post bond or other
security, this being in addition to any other right or remedy to which such
party may be entitled under this Agreement, at law or in equity.
8.13. ATTORNEYS' FEES.
If any legal action or any arbitration is brought for the enforcement of
this Agreement or because of an alleged dispute, controversy, breach or default
in connection with this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and all other reasonable costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.14. THIRD PARTIES.
Nothing contained in this Agreement or in any instrument or document
executed by any party in connection with the transactions contemplated hereby
shall create any rights in, or be deemed to have been executed for the benefit
of, any person or entity that is not a party hereto or thereto or a successor or
permitted assign of such a party, except for Indemnified Parties pursuant to, as
provided by and in accordance with the provisions of Section 5.4 hereof.
[SIGNATURE PAGE FOLLOWS]
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed and delivered by their respective duly authorized
officers as of the date first above written.
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
BZ ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President
BAIRNCO CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Chief
Financial Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
46
ANNEX A
Conditions to the Offer
The capitalized terms used but not defined in this Annex A and which are
defined in the attached Agreement and Plan of Merger shall have the meanings
ascribed to such terms in such attached agreement. Notwithstanding any other
provision of the Offer, Merger Sub shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to Merger Sub's obligation
to pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), pay for any Shares tendered pursuant to the Offer if (i) the Minimum
Condition shall not have been satisfied at any scheduled expiration date of the
Offer or (ii) immediately prior to the expiration of the Offer, any of the
following conditions shall exist:
(a) there shall have been entered, enforced, instituted or issued by any
Governmental Authority any legally binding judgment, order, temporary
restraining order, temporary or permanent injunction, ruling, proceeding,
action, suit, charge or decree which: (i) makes illegal, prevents, restrains or
prohibits the making of the Offer, the acceptance for payment of, or payment
for, any Shares by Purchaser, Merger Sub or any other affiliate of Purchaser, or
the consummation of the Merger or any of the other transactions contemplated by
the Agreement; (ii) prohibits or limits the ownership or operation by the
Company, Purchaser or any of their respective subsidiaries or affiliates of all
or a material portion of the business or assets of the Company, Purchaser or any
of their respective subsidiaries or affiliates; (iii) imposes limitations on the
ability of Purchaser, Merger Sub or any other affiliate of Purchaser to exercise
full rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired pursuant to the Offer or otherwise on all matters
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Agreement and the Merger; (iv) would reasonably be
expected to require divestiture by Purchaser, Merger Sub or any other affiliate
of Purchaser of any Shares; or (v) otherwise would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect or a
Purchaser Material Adverse Effect;
(b) there shall have been any Law enacted, enforced, promulgated or issued
by any Governmental Authority, or deemed by any Governmental Authority
applicable to (i) Purchaser, the Company or any subsidiary or affiliate of
Purchaser or the Company or (ii) any transaction contemplated by the Agreement,
which is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any changes, conditions, events or
developments that would have, or be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the New York Stock Exchange, other than
a shortening of trading hours or any coordinated trading halt triggered solely
as a result of a specified increase or decrease in a market index, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, or (iii) any limitation (whether or not mandatory)
on the extension of credit by banks or other lending institutions in the United
States or a disruption of or material adverse change in either the syndication
market for credit facilities or the financial, banking or capital markets;
A-1
(e) the Board shall have (A) withdrawn or modified, in a manner adverse to
Purchaser, Merger Sub or any of their respective affiliates, its approval or
recommendation of the Offer, the Agreement or the Merger, (B) approved or
recommended, or proposed publicly to approve or recommend, any Company Takeover
Proposal or any Company Acquisition Agreement relating to any Company Takeover
Proposal or (C) resolved to do any of the foregoing;
(f) the representations and warranties of the Company (i) set forth in the
Agreement (other than Section 2.2(a) and 2.3) shall not be true and correct, and
the failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein) would be reasonably expected to have,
individually or in the aggregate, a Company Material Adverse Effect and (ii) set
forth in Sections 2.2(a) and 2.3 shall not be true and correct, in each case on
the date of this Agreement and as of the expiration of the Offer, as if made at
and as of such date (except to the extent expressly made as of an earlier date,
in which case as of such date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, any update of
or modification to the Company Disclosure Schedule made or purported to have
been made after the date of the Agreement shall be disregarded);
(g) the Company shall have failed to perform in any material respect its
obligations or to comply in any material respect with its agreements or
covenants to be performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance with its terms;
(i) there shall have been instituted or pending any stockholder derivative
litigation or stockholder class action litigation against the Company, any of
its subsidiaries or its executive officers or directors, which, after taking
into account any then existing director and officer insurance coverage, would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(j) the applicable waiting period, if any, under the HSR Act shall not
have expired or been terminated;
(k) all material Consents required in connection with the Agreement or the
transactions contemplated thereby (other than any Consent related to the Loan
and Security Agreement listed in SECTION 2.5 of the Company Disclosure Schedule)
shall not have been obtained or shall not be in full force and effect, and the
failure to so obtain or have in effect such Consents could reasonably be
expected to have, in the aggregate, a Company Material Adverse Effect; or
(l) the Company shall not have filed with the SEC its Annual Report on
Form 10-K for the fiscal year ended December 31, 2006.
A-2
The foregoing conditions are for the sole benefit of Purchaser and Merger
Sub and may be asserted by Purchaser or Merger Sub regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Merger Sub in whole or in part at any time and from time to time in their
reasonable discretion. The failure by Purchaser or Merger Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-3
