Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
INTERMAGNETICS GENERAL CORPORATION,
PHILIPS HOLDING USA INC.
and
JUMBO ACQUISITION CORP.
Dated as of June 14, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger..................................................1
1.2. Closing.....................................................2
1.3. Effective Time..............................................2
ARTICLE II
Certificate of Incorporation and Bylaws of the Surviving Corporation
2.1. The Certificate of Incorporation............................2
2.2. The Bylaws..................................................2
ARTICLE III
Officers and Directors of the Surviving Corporation
3.1. Directors...................................................3
3.2. Officers....................................................3
ARTICLE IV
Effect of the Merger on Capital Stock; Exchange of Certificates
4.1. Effect on Capital Stock.....................................3
4.2. Exchange of Certificates....................................4
4.3. Treatment of Stock Plans....................................6
4.4. Adjustments to Prevent Dilution.............................8
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company...............8
5.2. Representations and Warranties of Parent and Merger Sub....32
ARTICLE VI
Covenants
6.1. Interim Operations.........................................34
6.2. Acquisition Proposals......................................38
PAGE
6.3. Information Supplied.......................................41
6.4. Stockholders Meeting.......................................41
6.5. Filings; Other Actions; Notification.......................42
6.6. Access and Reports.........................................45
6.7. Publicity..................................................46
6.8. Employee Benefits..........................................46
6.9. SuperPower Options.........................................47
6.10. Expenses...................................................48
6.11. Indemnification; Directors' and Officers' Insurance........48
6.12. Other Actions by the Company...............................50
6.13. Other Actions by Parent and Merger Sub.....................51
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger.51
7.2. Conditions to Obligations of Parent and Merger Sub.........52
7.3. Conditions to Obligations of the Company...................53
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent..............................53
8.2. Termination by Either Parent or the Company................53
8.3. Termination by the Company.................................54
8.4. Termination by Parent......................................55
8.5. Effect of Termination and Abandonment......................55
ARTICLE IX
Miscellaneous and General
9.1. Survival...................................................57
9.2. Modification or Amendment..................................57
9.3. Waiver of Conditions.......................................58
9.4. Counterparts...............................................58
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL;
SPECIFIC PERFORMANCE.......................................58
9.6. Notices....................................................59
9.7. Entire Agreement...........................................60
9.8. No Third Party Beneficiaries...............................60
9.9. Obligations of Parent and of the Company...................61
9.10. Definitions................................................61
9.11. Severability...............................................61
PAGE
9.12. Interpretation; Construction...............................61
9.13. Assignment.................................................62
Annex A Defined Terms.............................................A-1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "AGREEMENT"),
dated as of June 14, 2006, among Intermagnetics General Corporation, a Delaware
corporation (the "COMPANY"), Philips Holding USA Inc., a Delaware corporation
("PARENT"), and Jumbo Acquisition Corp., a Delaware corporation and an indirect
wholly-owned subsidiary of Parent ("MERGER SUB," the Company and Merger Sub
sometimes being hereinafter collectively referred to as the "CONSTITUENT
CORPORATIONS").
RECITALS
WHEREAS, the respective boards of directors of each of Parent,
Merger Sub and the Company have approved the merger of Merger Sub with and into
the Company (the "MERGER") upon the terms and subject to the conditions set
forth in this Agreement and have approved and declared advisable this
Agreement;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement; and
WHEREAS, as a condition and inducement to Parent and Merger Sub
entering into this Agreement, concurrently with the execution and delivery of
this Agreement, Xxxxx X. Xxxxxxx, Xxxxxx X. X'Xxxxx, Xxx Xxxxxxx, Xxxxxxxxx X.
Xxxxxxx and Xxxxx Xxxx (the "DESIGNATED EMPLOYEES") have entered into certain
employment and transition agreements with Parent or one of its Affiliates,
which shall become effective upon the Effective Time.
NOW, THEREFORE, in consideration of the promises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3)
Merger Sub shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"SURVIVING CORPORATION"), and the separate corporate existence of the Company,
with all its rights, privileges, immunities, powers
and franchises, shall continue unaffected by the Merger, except as set forth
in Article II. The Merger shall have the effects specified in the Delaware
General Corporation Law (the "DGCL").
1.2. CLOSING. Unless otherwise mutually agreed in writing between the
Company and Parent, the closing of the Merger (the "CLOSING") shall take place
at the offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
at 9:00 a.m. (Eastern Time) on the second business day (the "CLOSING DATE")
following the day on which the last to be satisfied or waived of the conditions
set forth in Article VII (other than those conditions that by their terms are to
be satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement. For
purposes of this Agreement, the term "BUSINESS DAY" shall mean any day ending at
11:59 p.m. (Eastern Time) other than a Saturday or Sunday or a day on which
banks are required or authorized to close in the City of New York.
1.3. EFFECTIVE TIME. As soon as practicable following the Closing,
the Company and Parent will cause a Certificate of Merger (the "DELAWARE
CERTIFICATE OF MERGER") to be executed, acknowledged and filed with the
Secretary of State of the State of Delaware as provided in Section 251 of the
DGCL. The Merger shall become effective at the time when the Delaware
Certificate of Merger has been duly filed with the Secretary of State of the
State of Delaware or at such later time as may be agreed by the parties in
writing and specified in the Delaware Certificate of Merger (the "EFFECTIVE
TIME").
ARTICLE II
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1. THE CERTIFICATE OF INCORPORATION. The certificate of incorpora-
tion of the Company as in effect immediately prior to the Effective Time shall
be the certificate of incorporation of the Surviving Corporation (the
"CHARTER"), until duly amended as provided therein or by applicable Laws (as
defined in Section 5.1(i)), except that Article FOURTH of the Charter shall be
amended at the Effective Time to read in its entirety as follows: "FOURTH: The
total number of shares of all classes of stock that the Corporation shall have
the authority to issue is 1,000, consisting of 1,000 shares of Common Stock, par
value $0.10 per share (the "Common Stock")."
2.2. THE BYLAWS. The parties hereto shall take all actions necessary
so that the bylaws of Merger Sub in effect immediately prior to the Effective
Time shall be the bylaws of the Surviving Corporation (the "BYLAWS"), until
thereafter amended as provided therein or by applicable law.
-2-
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. DIRECTORS. The parties hereto shall take all actions necessary
so that the board of directors of Merger Sub at the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the Bylaws.
3.2. OFFICERS. The parties hereto shall take all actions necessary
so that the officers of the Company at the Effective Time shall, from and after
the Effective Time, be the officers of the Surviving Corporation until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Charter and
the Bylaws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. EFFECT ON CAPITAL STOCK. At the Effective Time, as a result of
the Merger and without any action on the part of the holder of any capital stock
of the Company:
(a) MERGER CONSIDERATION. Each share of the common stock, par
value $0.10 per share, of the Company (a "SHARE" or, collectively, the
"SHARES") issued and outstanding immediately prior to the Effective Time
other than (i) Shares owned by Parent, Merger Sub or any other direct or
indirect wholly-owned subsidiary of Parent, and Shares owned by the Company
or any direct or indirect wholly-owned subsidiary of the Company, and in
each case not held on behalf of third parties (each, an "EXCLUDED SHARE"
and collectively, "EXCLUDED SHARES"), and (ii) Shares that are owned by
stockholders ("DISSENTING STOCKHOLDERS") who have perfected and not
withdrawn a demand for appraisal rights pursuant to Section 262 of the DGCL
(each, a "DISSENTING SHARE" and collectively, "DISSENTING SHARES")) shall
be converted into the right to receive $27.50 per Share in cash (the "PER
SHARE MERGER CONSIDERATION"). At the Effective Time, all of the Shares
shall cease to be outstanding, shall be cancelled and shall cease to exist,
and each certificate (a "CERTIFICATE") formerly representing any of the
Shares (other than Excluded Shares and Dissenting Shares) shall thereafter
represent only the right to receive the Per Share Merger Consideration,
without interest, and each certificate formerly representing Shares owned
by Dissenting Stockholders shall thereafter represent only the right to
receive the payment to which reference is made in Section 4.2(f).
-3-
(b) CANCELLATION OF SHARES. Each Excluded Share shall, by
virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist.
(c) MERGER SUB. At the Effective Time, each share of common
stock, par value $0.10 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of common stock, par value $0.10 per share, of the Surviving Corporation.
4.2. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. At the Closing, Parent shall deposit or
cause to be deposited with a paying agent selected by Parent with the
Company's prior approval, which shall not be unreasonably withheld (the
"PAYING AGENT") cash amounts in immediately available funds sufficient in
the aggregate to provide all funds necessary for the Paying Agent to make
payments of the Per Share Merger Consideration pursuant to Section 4.1(a)
(such cash being hereinafter referred to as the "EXCHANGE FUND"). The
Paying Agent shall invest the Exchange Fund as directed by Parent, PROVIDED
that such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations rated A-1 or P-1
or better by Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital
exceeding $1 billion. Any interest and other income resulting from such
investment in excess of the amounts payable under Section 4.1(a) shall be
the property of Parent and shall be returned to Parent from time to time.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time
(and in any event within three business days thereof), the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record
of Shares (other than holders of Excluded Shares and Dissenting Shares) (i)
a letter of transmittal in customary form specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates (or affidavits of loss in lieu thereof as
provided in Section 4.2(e)) to the Paying Agent, such letter of transmittal
to be in such form and have such other provisions as Parent and the Company
may reasonably agree, and (ii) instructions for use in effecting the
surrender of the Certificates (or affidavits of loss in lieu thereof as
provided in Section 4.2(e)) in exchange for the aggregate amount of the Per
Share Merger Consideration represented by such holder's Certificates (after
giving effect to any required tax
4
withholdings). Upon surrender of a Certificate (or affidavit of loss in
lieu thereof as provided in Section 4.2(e)) to the Paying Agent in
accordance with the terms of such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange
therefor a cash amount in immediately available funds (after giving effect
to any required tax withholdings) equal to (x) the number of Shares
represented by such Certificate (or affidavit of loss in lieu thereof as
provided in Section 4.2(e)) multiplied by (y) the Per Share Merger
Consideration, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any amount payable upon
due surrender of the Certificates. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
check for any cash to be exchanged upon due surrender of the Certificate
may be issued to such transferee if the Certificate formerly representing
such Shares is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid or are not applicable.
(c) TRANSFERS. From and after the Effective Time, there shall
be no transfers on the stock transfer books of the Company of Shares that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificate is presented to the Surviving Corporation,
Parent or the Paying Agent for transfer, it shall be cancelled and
exchanged for the cash amount in immediately available funds to which the
holder thereof is entitled pursuant to this Article IV.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund (including the proceeds of any investments thereof) that remains
unclaimed by the stockholders of the Company for 180 days after the
Effective Time shall be delivered to the Surviving Corporation. Any holder
of Shares (other than Excluded Shares and Dissenting Shares) who has not
theretofore complied with this Article IV shall thereafter look only to
Parent or the Surviving Corporation for payment of the Per Share Merger
Consideration (after giving effect to any required tax withholdings) upon
due surrender of its Certificates (or affidavits of loss in lieu thereof),
without any interest thereon. Notwithstanding the foregoing, none of the
Surviving Corporation, Parent, the Paying Agent or any other Person shall
be liable to any former holder of Shares for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar Laws. For the purposes of this Agreement, the term "PERSON" shall
mean any individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture, estate,
trust, association, organization, Governmental Entity (as defined in
Section 5.1(d)) or other entity of any kind or nature.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in customary amount and upon such terms as may be required
by Parent as indemnity against any claim that may be made against it or the
Surviving Corporation with respect to such Certificate, the Paying Agent
will issue a check
-5-
in the amount (after giving effect to any required tax withholdings) equal
to the number of Shares represented by such lost, stolen or destroyed
Certificate multiplied by the Per Share Merger Consideration.
(f) APPRAISAL RIGHTS. No Person who has perfected a demand
for appraisal rights pursuant to Section 262 of the DGCL shall be entitled
to receive the Per Share Merger Consideration with respect to the Shares
owned by such Person unless and until such Person shall have effectively
withdrawn or lost such Person's right to appraisal under the DGCL. Each
Dissenting Stockholder shall be entitled to receive only the payment
provided by Section 262 of the DGCL with respect to Shares owned by such
Dissenting Stockholder. The Company shall give Parent (i) prompt notice of
any written demands for appraisal, attempted withdrawals of such demands,
and any other instruments served pursuant to applicable Law that are
received by the Company relating to stockholders' rights of appraisal and
(ii) the opportunity to direct all negotiations and proceedings with
respect to demand for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any
payment with respect to any demands for appraisal, offer to settle or
settle any such demands or approve any withdrawal of any such demands.
(g) WITHHOLDING RIGHTS. Each of Parent, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "CODE"), or any other applicable state, local or
foreign Tax (as defined in Section 5.1(n)) law. To the extent that amounts
are so withheld by the Surviving Corporation, Parent or the Paying Agent,
as the case may be, such withheld amounts (i) shall be remitted by Parent,
the Surviving Corporation or the Paying Agent, as applicable, to the
applicable Governmental Entity, and (ii) shall be treated for all purposes
of this Agreement as having been paid to the holder of Shares in respect of
which such deduction and withholding was made by the Surviving Corporation,
Parent or the Paying Agent, as the case may be.
4.3. TREATMENT OF STOCK PLANS.
(a) TREATMENT OF OPTIONS. At the Effective Time each
outstanding option to purchase Shares (a "COMPANY OPTION") under the Stock
Plans (as defined in Section 5.1(b)), vested or unvested, shall be
cancelled and shall only entitle the holder thereof to receive, as soon as
reasonably practicable after the Effective Time (but in any event no later
than seven business days following the Effective Time), an amount in cash
equal to the product of (x) the total number of Shares subject to the
Company Option times (y) the excess, if any, of the value of the Per Share
Merger Consideration over the exercise price per Share under such Company
Option less applicable Taxes required to be
-6-
withheld with respect to such payment. To the extent that amounts are so
withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts (i) shall be remitted by Parent or the Surviving
Corporation, as applicable, to the applicable Governmental Entity, and (ii)
shall be treated for all purposes of this Agreement as having been paid to
the holder of Company Options in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case
may be.
(b) COMPANY AWARDS. At the Effective Time, each right of any
kind, contingent or accrued, to acquire or receive Shares or benefits
measured by the value of Shares, and each award of any kind consisting of
Shares that may be held, awarded, outstanding, payable or reserved for
issuance under the Stock Plans and any other Company Benefit Plans, other
than Company Options (the "COMPANY AWARDS"), shall be cancelled and shall
only entitle the holder thereof to receive, as soon as reasonably
practicable after the Effective Time (but in any event no later than seven
business days following the Effective Time), an amount in cash equal to (x)
the number of Shares subject to such Company Award immediately prior to the
Effective Time times (y) the Per Share Merger Consideration (or, if the
Company Award provides for payments to the extent the value of the Shares
exceed a specified reference price, the amount, if any, by which the Per
Share Merger Consideration exceeds such reference price), less applicable
Taxes required to be withheld with respect to such payment. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the
case may be, such withheld amounts (i) shall be remitted by Parent or the
Surviving Corporation, as applicable, to the applicable Governmental
Entity, and (ii) shall be treated for all purposes of this Agreement as
having been paid to the holder of Company Awards in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(c) CORPORATE ACTIONS. At or prior to the Effective Time, the
Company, the board of directors of the Company and the compensation
committee of the board of directors of the Company, as applicable, shall
adopt any resolutions and take any actions, including those actions set
forth on Section 4.3(c) of the Company Disclosure Letter, which are
reasonably necessary to effectuate the provisions of Section 4.3(a) and
(b). The Company shall take all actions reasonably necessary to ensure that
from and after the Effective Time neither Parent nor the Surviving
Corporation will be required to deliver Shares or other capital stock of
the Company to any Person pursuant to or in settlement of Company Options
or Company Awards.
(d) NOTICE. As soon as practicable following the execution of
this Agreement, the Company shall mail to each person who is a holder of
Company Options or Company Awards a letter approved in advance by Parent
describing the treatment of and payment for such Company Options or
Company
-7-
Awards pursuant to this Section 4.3 and providing instructions for use in
obtaining payment for such Company Options or Company Awards.
4.4. ADJUSTMENTS TO PREVENT DILUTION. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into
or exercisable for Shares issued and outstanding prior to the Effective Time as
a result of a reclassification, stock split (including a reverse stock split),
stock dividend or distribution, recapitalization, merger, issuer tender or
exchange offer, or other similar transaction, the Per Share Merger Consideration
shall be equitably adjusted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company prior to entering into this Agreement
(provided that the disclosures shall qualify other sections and subsections of
the disclosure letter to the extent it is reasonably apparent (notwithstanding
the absence of a specific cross-reference) that such disclosure is clearly
applicable to such other sections and subsections) (the "COMPANY DISCLOSURE
LETTER"), and except as set forth in the Company Reports filed after May 30,
2004 and prior to the date hereof (except for the text of any "risk factors" and
the text of any disclaimers with respect to forward-looking statements), the
Company hereby represents and warrants to Parent and Merger Sub that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of
the Company and its Subsidiaries is a legal entity duly organized, validly
existing and (to the extent such concept is applicable) in good standing
under the Laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a
foreign corporation or other legal entity in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of
its business requires such qualification, except where the failure to be so
organized, qualified or in good standing, or to have such power or
authority, are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect (as defined below). The Company has made
available to Parent complete and correct copies of the Company's and its
Subsidiaries' certificates of incorporation and bylaws or comparable
governing documents, each as amended to the date hereof, and each as so
delivered is in full force and effect. Section 5.1(a) of the Company
Disclosure Letter contains a correct and complete list of each jurisdiction
where the Company and its Subsidiaries are organized and qualified to do
business. As used in this Agreement, the term (i) "SUBSIDIARY" means, with
respect to any Person, any other Person of which at least a majority of the
securities or ownership interests having by their terms ordinary voting
-8-
power to elect a majority of the board of directors or other persons
performing similar functions is directly or indirectly owned or controlled
by such Person and/or by one or more of its Subsidiaries, and (ii)
"MATERIAL ADVERSE EFFECT" with respect to the Company means a material
adverse effect on the financial condition, assets, liabilities, business or
results of operations of the Company and its Subsidiaries taken as a whole;
PROVIDED, HOWEVER, that none of the following, in and of itself or
themselves, shall constitute, or be taken into account in determining
whether there is or has been, a Material Adverse Effect:
(A) changes in the economy or financial markets generally
in the United States;
(B) changes in the industries in which the Company and its
Subsidiaries operate;
(C) changes that are the result of acts of war, terrorism
or natural disasters, except to the extent that such acts directly
and materially affect the material properties or assets of the
Company and its Subsidiaries;
(D) any loss of, or adverse change in, the relationship of
the Company with its customers, employees or suppliers to the extent
that the Company establishes was caused by the pendency or the
announcement of the transactions contemplated by this Agreement;
(E) any action expressly required by this Agreement or
taken pursuant to this Agreement upon the specific, written request
of Parent or Merger Sub;
(F) changes in United States generally accepted accounting
principles ("GAAP") after the date hereof;
(G) any failure of the Company to meet financial
projections provided by the Company to the investment community;
PROVIDED that the exception in this clause shall not prevent or
otherwise affect a determination that any change, effect,
circumstance or development underlying such failure has resulted in,
or contributed to, a Material Adverse Effect; and
(H) a decline in the price of the Shares on the NASDAQ
National Market; PROVIDED that the exception in this clause shall not
prevent or otherwise affect a determination that any change, effect,
circumstance or development underlying such decline in price has
resulted in, or contributed to, a Material Adverse Effect;
-9-
PROVIDED, FURTHER, that, with respect to clauses (A) and (B), such change,
event, circumstance or development does not (i) primarily relate only to (or
have the effect of primarily relating only to) the Company and its Subsidiaries
or (ii) disproportionately adversely affect the Company and its Subsidiaries
compared to other companies of similar size operating in the industries in which
the Company and its Subsidiaries operate.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company consists of
80,000,000 Shares, of which 45,593,035 Shares (including 3,187,723
shares of treasury stock, of which 107,694 are being held pursuant to
rabbi trust agreements) were outstanding as of the date hereof, and
2,000,000 shares of preferred stock, $0.10 per share, no shares of
which were outstanding as of the date hereof. All of the outstanding
Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Other than no more than 6,826,500 Shares reserved
for issuance under the Company's 1990 Stock Option Plan and 2000 Stock
Option and Stock Award Plan (collectively, the "STOCK PLANS"), the
Company has no Shares reserved for issuance. Section 5.1(b)(i) of the
Company Disclosure Letter contains a correct and complete list of
options, restricted stock, restricted stock units and performance
units under the Stock Plans, including the holder, date of grant,
term, number of Shares and, where applicable, exercise price and
vesting schedule, including whether the vesting will be accelerated by
the execution of this Agreement or consummation of the Merger or by
termination of employment or change of position following consummation
of the Merger. Each of the outstanding shares of capital stock or
other securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and owned by
the Company or by a direct or indirect wholly-owned Subsidiary of the
Company, free and clear of any lien, charge, pledge, security
interest, claim or other encumbrance (each, a "LIEN"). Except as set
forth above, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind that obligate the Company or any of
its Subsidiaries to issue or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries or any securities
or obligations convertible or exchangeable into or exercisable for, or
giving any Person a right to subscribe for or acquire, any securities
of the Company or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or
outstanding. Upon any issuance of any Shares in accordance with the
terms of the Stock Plans, such Shares will be duly authorized, validly
issued, fully paid and nonassessable and free and clear of any Liens.
The Company does not have outstanding any bonds, debentures, notes or
other
-10-
obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter.
(ii) Section 5.1(b)(ii) of the Company Disclosure Letter sets
forth (x) each of the Company's Subsidiaries and the ownership
interest of the Company in each such Subsidiary, as well as the form
and percentage ownership interest of any other Person or Persons in
each such Subsidiary and (y) the Company's or its Subsidiaries'
capital stock, equity interest or other direct or indirect ownership
interest in any other Person. The Company does not own, directly or
indirectly, any voting interest in any Person that requires an
additional filing by Parent under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT").
(c) CORPORATE AUTHORITY; APPROVAL AND OPINION OF FINANCIAL
ADVISOR.
(i) The Company has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to
consummate the Merger, subject only to adoption of this Agreement by
the holders of a majority of the outstanding Shares entitled to vote
on such matter at a stockholders' meeting duly called and held for
such purpose (the "COMPANY REQUISITE VOTE"), and to consummate the
Merger. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or
affecting creditors' rights and to general equity principles (the
"BANKRUPTCY AND EQUITY EXCEPTION").
(ii) The board of directors of the Company has (A) unanimously
determined that the Merger is fair to, and in the best interests of,
the Company and its stockholders, approved and declared advisable this
Agreement and the Merger and the other transactions contemplated
hereby and resolved to recommend adoption of this Agreement to the
holders of Shares (the "COMPANY RECOMMENDATION"), (B) directed that
this Agreement be submitted to the holders of Shares for their
adoption and (C) received the opinion of the Company's financial
advisor, Banc of America Securities LLC, to the effect that, as of the
date of such opinion, the Per Share Merger Consideration is fair, from
a financial point of view, to the holders of Shares. The board of
directors of the Company has taken all action so that Parent will not
be an "interested stockholder" or prohibited from entering into or
consummating a "business combination" with the Company (in each case
as such term is
-11-
used in Section 203 of the DGCL) as a result of the execution of this
Agreement or the consummation of the transactions in the manner
contemplated hereby.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS; CERTAIN CONTRACTS.
(i) Other than the filings and/or notices pursuant to Section 1.3
and 6.5, and under the HSR Act, the Dutch Competition Act
(MEDEDINGINGSWET) of May 22, 1997 (the "DUTCH COMPETITION Act"), and
any other applicable antitrust, competition or premerger notification,
trade regulation Law, regulation or Order (collectively, the "COMPANY
APPROVALS"), no notices, reports or other filings are required to be
made by the Company with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by the
Company from, any (a) nation, state, commonwealth, province,
territory, county, municipality, district, or other jurisdiction of
any nature, or any political subdivision thereof, (b) federal, state,
local, municipal, foreign, or other government, including any state
Medicaid Agency or state licensing authority, or (c) governmental or
quasi-governmental authority of any nature, including any governmental
division, department, agency, commission, instrumentality, official,
organization, contractor, regulatory body, or other entity and any
court, arbitrator, or other tribunal (each a "GOVERNMENTAL ENTITY"),
in connection with the execution, delivery and performance of this
Agreement by the Company and the consummation of the Merger and the
other transactions contemplated hereby, except those that the failure
to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent,
materially delay or materially impair the consummation of the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation of the Merger and the other
transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, the certificate of
incorporation or bylaws of the Company or the comparable governing
instruments of any of its Subsidiaries, (B) with or without notice,
lapse of time or both, a breach or violation of, a termination (or
right of termination) or a default under, the creation or acceleration
of any obligations or the creation of a Lien on any of the assets of
the Company or any of its Subsidiaries pursuant to any agreement,
lease, license, contract, note, mortgage, indenture, arrangement or
other obligation (each, a "CONTRACT") binding upon the Company or any
of its Subsidiaries or, assuming (solely with respect to performance
of this Agreement and consummation of the Merger and the other
transactions contemplated hereby) compliance with the matters referred
to in Section 5.1(d)(i), under
-12-
any Law to which the Company or any of its Subsidiaries is subject, or
(C) any change in the rights or obligations of any party under any
Contract binding on the Company or any of its Subsidiaries, except, in
the case of clause (B) or (C) above, for any such breach, violation,
termination, default, creation, acceleration or change that,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect or prevent, materially delay or materially
impair the consummation of the transactions contemplated by this
Agreement. Section 5.1(d)(ii) of the Company Disclosure Letter sets
forth a correct and complete list of Material Contracts (as defined in
Section 5.2(j)) pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by
this Agreement (whether or not subject to the exception set forth with
respect to clauses (B) and (C) above).
(iii) To the knowledge of the Company, the Company and its
Subsidiaries are not creditors or claimants with respect to any
debtors or debtor-in-possession subject to proceedings under chapter
11 of title 11 of the United States Code with respect to claims that
constitute, individually or in the aggregate, more than $250,000. As
used in this Agreement, "KNOWLEDGE" of the Company means the actual
knowledge of Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. X'Xxxxx,
Xxx Xxxxxxx, Xxxxxx X. Xxxxxxxxxx, Xxxxxxxxx X. Xxxxxxx, any other
Executive Vice President or Senior Vice President of the Company, and
the Company's Controller.
(iv) Except for: (A) relationships with Company or any of its
Subsidiaries as an officer, director, or employee thereof (and
compensation by the Company or any of its Subsidiaries in
consideration of such services) in accordance with the terms of their
employment; and (B) relationships with the Company as stockholders or
option holders therein, to the knowledge of the Company, none of the
directors or officers, or any Persons who, to the knowledge of the
Company, beneficially own five percent or more of the outstanding
Shares (each, a "5% STOCKHOLDER") as of the date hereof, is presently
a party to, or was a party to during the year preceding the date of
this Agreement, any transaction, agreement or arrangement with the
Company or any of its Subsidiaries. To the knowledge of the Company,
none of the employees or 5% Stockholders (who are 5% Stockholders as
of the date hereof) of the Company has any material interest in any
property, real or personal, tangible or intangible, including
inventions, copyrights, trademarks, or trade names, used in or
pertaining to the business, except for the normal rights of a
stockholder of the Company, and except for rights under the Stock
Plans.
(e) COMPANY REPORTS; FINANCIAL STATEMENTS.
-13-
(i) The Company has filed or furnished, as applicable, on a
timely basis all forms, statements, certifications, reports and
documents required to be filed or furnished by it with the Securities
and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") or the Securities Act of 1933,
as amended (the "SECURITIES ACT") since May 25, 2003 (the "APPLICABLE
DATE") (the forms, statements, reports and documents filed or
furnished since the Applicable Date and those filed or furnished
subsequent to the date hereof, including any amendments thereto, the
"COMPANY REPORTS"). Each of the Company Reports, at the time of its
filing or being furnished complied or, if not yet filed or furnished,
will comply in all material respects with the applicable requirements
of the Securities Act, the Exchange Act and the Xxxxxxxx-Xxxxx Act of
2002 (the "XXXXXXXX-XXXXX ACT"), and any rules and regulations
promulgated thereunder applicable to the Company Reports. As of their
respective dates (or, if amended prior to the date hereof, as of the
date of such amendment), the Company Reports did not, and any Company
Reports filed with or furnished to the SEC subsequent to the date
hereof will not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
(ii) The Company is in compliance in all material respects with
the applicable listing and corporate governance rules and regulations
of the NASDAQ. Except as permitted by the Exchange Act, including
Sections 13(k)(2) and (3) or rules of the SEC, since the enactment of
the Xxxxxxxx-Xxxxx Act, neither the Company nor any of its Affiliates
has made, arranged or modified (in any material way) any extensions of
credit in the form of a personal loan to any executive officer or
director of the Company. For purposes of this Agreement, the term
"AFFILIATE" when used with respect to any party shall mean any Person
who is an "affiliate" of that party within the meaning of Rule 405
promulgated under the Securities Act.
(iii) The Company maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. The Company
maintains internal control over financial reporting as required by
Rule 13a-15 or 15d-15, as applicable, under the Exchange Act. The
Company has disclosed, based on the most recent evaluation of its
chief executive officer and its chief financial officer prior to the
date hereof, to the Company's auditors and the audit committee of the
Company's board of directors (A) any significant deficiencies in the
design or operation of its internal control over financial reporting
that are reasonably likely to adversely affect the Company's ability
to record, process, summarize and report financial information and has
identified for the Company's auditors
-14-
and audit committee of the Company's board of directors any material
weaknesses in internal control over financial reporting and (B) any
fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal
control over financial reporting. The Company has made available to
Parent any material communication since the Applicable Date made by
management or the Company's auditors to the audit committee required
or contemplated by the listing standards of the NASDAQ, the audit
committee's charter or the professional standards of the Public
Company Accounting Oversight Board. Since the Applicable Date, no
material complaints from any source regarding accounting, internal
accounting controls or auditing matters, and no material concerns from
Company employees regarding questionable accounting or auditing
matters, have been received by the Company. The Company has made
available to Parent a summary of all complaints or concerns relating
to other matters made since the Applicable Date through the Company's
whistleblower hot-line or equivalent system maintained by the Company
for receipt of employee concerns regarding possible violations of Law.
No attorney representing the Company or any of its Subsidiaries,
whether or not employed by the Company or any of its Subsidiaries, has
reported evidence of a violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Company's chief legal
officer, any committee of the board of directors or the board of
directors.
(iv) Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents, in all material
respects, or, in the case of Company Reports filed after the date
hereof, will fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of its date and each of the consolidated statements of
income, changes in shareholders' equity (deficit) and cash flows
included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents, in all
material respects, or in the case of Company Reports filed after the
date hereof, will fairly present, in all material respects, the
results of operations, retained earnings (loss) and changes in
financial position, as the case may be, of such companies for the
periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with
GAAP consistently applied during the periods involved, except as may
be noted therein.
(f) ABSENCE OF CERTAIN CHANGES. Since May 29, 2005, the Company
and its Subsidiaries have conducted their respective businesses only in,
-15-
and have not engaged in any material transaction other than according to
the ordinary and usual course of such businesses and there has not been:
(i) any change in the financial condition, properties, assets,
liabilities, business or results of their operations or any
circumstance, occurrence or development (including any adverse change
with respect to any circumstance, occurrence or development existing
on or prior to May 29, 2005) which, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect;
(ii) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise
used by the Company or any of its Subsidiaries, whether or not covered
by insurance;
(iii) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of
the Company or any of its Subsidiaries (except for dividends or other
distributions by any direct or indirect wholly owned Subsidiary to the
Company or to any wholly owned Subsidiary of the Company), or any
repurchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any outstanding shares of capital stock or other
securities of the Company or any of its Subsidiaries;
(iv) other than as required by GAAP, any material change in any
method of accounting or accounting practice by the Company or any of
its Subsidiaries;
(v) (A) any increase in the compensation payable or to become
payable to its officers or employees (except for increases in the
ordinary course of business and consistent with past practice) or (B)
any establishment, adoption, entry into or amendment of any collective
bargaining, bonus, profit sharing, thrift, compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee,
except for any such agreement, plan, trust, fund, policy or
arrangement with non-executive employees of the Company or its
Subsidiaries entered into in the ordinary course of business or to the
extent required by applicable Laws; or
(vi) any agreement to do any of the foregoing.
(g) LITIGATION AND LIABILITIES. There are (i) no material civil,
criminal or administrative actions, suits, claims, hearings, arbitrations,
investigations or other proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, and
(ii) except as
-16-
reflected or reserved against in the Company's consolidated balance sheets
(and the notes thereto) included in the Company Reports filed prior to the
date hereof, and except for obligations or liabilities incurred in the
ordinary course of business since April 7, 2006, no material obligations or
material liabilities of the Company or any of its Subsidiaries, whether or
not accrued, contingent or otherwise and whether or not required to be
disclosed. Neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of any judgment, order, writ, injunction, decree
or award of any Governmental Entity that are reasonably likely to have a
Material Adverse Effect.
(h) EMPLOYEE BENEFITS.
(i) All Company Benefit Plans (other than Non-U.S. Benefit Plans
(as defined below)) are listed on Section 5.1(h)(i) of the Company
Disclosure Letter. "COMPANY BENEFIT PLANS" means all benefit and
compensation plans, contracts, policies or arrangements covering
current or former employees of the Company and its Subsidiaries (the
"EMPLOYEES") and current or former directors of the Company,
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and all deferred compensation,
severance, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans. Each Company Benefit Plan
which has received a favorable opinion letter from the Internal
Revenue Service National Office, including any master or prototype
plan, has been separately identified on Section 5.1(h)(i) of the
Company Disclosure Letter. True and complete copies of all Company
Benefit Plans listed on Schedule 5.1(h)(i) of the Company Disclosure
Letter, including, but not limited to, any trust instruments,
insurance contracts and, with respect to any employee stock ownership
plan, loan agreements forming a part of any Company Benefit Plans, and
all amendments thereto have been provided or made available to Parent.
Except as set forth in Section 5.1(h)(i) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to
any employment, severance or change-in-control agreement with any
Person.
(ii) All Company Benefit Plans other than Company Benefit Plans
maintained outside of the United States primarily for the benefit of
employees working outside of the United States (such plans hereinafter
being referred to as "NON-U.S. BENEFIT PLANS") (collectively, "U.S.
COMPANY BENEFIT PLANS") are in substantial compliance with ERISA, the
Code and other applicable laws. Each U.S. Company Benefit Plan which
is subject to ERISA (an "ERISA PLAN") that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "PENSION
PLAN") intended to be qualified under Section 401(a) of the Code, has
-17-
received a favorable determination letter from the Internal Revenue
Service covering all tax law changes prior to the Economic Growth and
Tax Relief Reconciliation Act of 2001 or has applied to the Internal
Revenue Service (the "IRS") for such favorable determination letter
within the applicable remedial amendment period under Section 401(b)
of the Code, and the Company is not aware of any circumstances likely
to result in the loss of the qualification of such Plan under Section
401(a) of the Code. Neither the Company nor any of its Subsidiaries
has engaged in a transaction with respect to any ERISA Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, could subject the Company or any Subsidiary to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA in an amount which would be material. Neither the Company nor
any of its Subsidiaries has incurred or reasonably expects to incur
any material tax or penalty imposed by Section 4980 of the Code or
Section 502 of ERISA or any material liability under Section 4071 of
ERISA.
(iii) Neither the Company, any or its Subsidiaries nor any entity
which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA AFFILIATE") maintains
or has an obligation to contribute to or has within the past six years
maintained or had an obligation to contribute to a "multiemployer
plans" within the meaning of Section 3(37) of ERISA. No material
liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by the Company or any of its subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any
entity which is an ERISA Affiliate. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the reporting
requirement has not been waived or extended, other than pursuant to
Pension Benefit Guaranty Corporation ("PBGC") Reg. Section 4043.33 or
4043.66, has been required to be filed for any Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof
or will be required to be filed in connection with the transaction
contemplated by this Agreement. No notices have been required to be
sent to participants and beneficiaries or the PBGC under Section 302
or 4011 of ERISA or Section 412 of the Code.
(iv) All contributions required to be made under each Company
Benefit Plan, as of the date hereof, have been timely made and all
obligations in respect of each Company Benefit Plan have been properly
accrued and reflected in the most recent consolidated balance sheet
filed or incorporated by reference in the Company Reports prior to the
date hereof. Neither any Pension Plan nor, to the knowledge of the
Company,
-18-
any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither any Pension Plan nor, to
the knowledge of the Company, any single-employer plan of an ERISA
Affiliate has been required to file information pursuant to Section
4010 of ERISA for the current or most recently completed plan year. It
is not reasonably anticipated that required minimum contributions to
any Pension Plan under Section 412 of the Code will be materially
increased by application of Section 412(l) of the Code. Neither the
Company nor any of its Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single- employer plan, as
of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
Pension Plan's most recent actuarial valuation), did not exceed the
then current value of the assets of such Pension Plan, and there has
been no material adverse change in the financial condition, whether or
not as a result of a change in the funding method, of such Pension
Plan since the last day of the most recent plan year.
(vi) As of the date hereof, there is no material pending or, to
the knowledge of the Company threatened, litigation relating to the
Company Benefit Plans. Neither the Company nor any of its Subsidiaries
has any obligations for post-termination health and life benefits
under any ERISA Plan, other than in accordance with Section 4980B of
the Code.
(vii) There has been no amendment to, announcement by the Company
or any of its Subsidiaries relating to, or change in employee
participation or coverage under, any Company Benefit Plan which would
increase materially the expense of maintaining such plan above the
level of the expense incurred therefor for the most recent fiscal
year. Neither the execution of this Agreement, stockholder adoption of
this Agreement nor the consummation of the transactions contemplated
hereby will (w) entitle any employees of the Company or any of its
Subsidiaries to severance pay or any increase in severance pay upon
any termination of employment after the date hereof, (x) accelerate
the time of payment or vesting or result in any payment or funding
(through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or result in any other material
obligation pursuant to, any of the Company Benefit Plans, (y) limit or
restrict the right of the Company or, after the
-19-
consummation of the transactions contemplated hereby, Parent to merge,
amend or terminate any of the Company Benefit Plans or (z) result in
payments under any of the Company Benefit Plans which would not be
deductible under Section 162(m) or Section 280G of the Code.
(viii) All Non-U.S. Company Benefit Plans comply in all material
respects with applicable local law. All Non-U.S. Company Benefit Plans
are listed on Schedule 5.1(h)(viii) of the Company Disclosure Letter.
The Company and its Subsidiaries have no material unfunded liabilities
with respect to any such Non-U.S. Company Benefit Plan. As of the date
hereof, there is no pending or, to the knowledge of the Company,
threatened material litigation relating to Non-U.S. Company Benefit
Plans.
(i) COMPLIANCE WITH LAWS; LICENSES.
(i) The businesses of each of the Company and its Subsidiaries
have not been, and are not being, conducted in violation of any
federal, state, local or foreign law, statute or ordinance, common
law, or any rule, regulation, standard, judgment, order, writ,
injunction, decree, arbitration award, agency requirement, license or
permit of any Governmental Entity (collectively, "LAWS"), except for
violations that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect or prevent, materially delay
or materially impair the consummation of the transactions contemplated
by this Agreement. To the knowledge of the Company, no investigation
or review by any Governmental Entity with respect to the Company or
any of its Subsidiaries is pending or threatened, nor has any
Governmental Entity indicated to the Company an intention to conduct
the same. To the knowledge of the Company, no material change is
required in the Company's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws, and the
Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the
date hereof. Each of the Company and its Subsidiaries has obtained and
the businesses of each of the Company and its Subsidiaries have not
been, and are not being, conducted in violation of or inconsistent
with all permits, licenses, certifications, approvals, registrations,
consents, authorizations, enrollments, accreditations, franchises,
variances, waivers, exemptions and orders issued or granted by a
Governmental Entity ("LICENSES") necessary to conduct its business as
presently conducted, except for any violations or inconsistencies
that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect or prevent, materially delay or
materially impair the consummation of the transactions contemplated by
this Agreement. To the knowledge of the Company, there exists no
grounds for revocation, suspension or limitation of any
-20-
material License (including, but not limited to, as a result of the
Merger) and no notices have been received by the Company, its officers
or managing employees with respect to any threatened, pending or
possible termination, revocation, suspension or limitation of any
License.
(ii) Except in each case as is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect,
(A) all of the Company's and its Subsidiaries' products are in
compliance with all applicable requirements of the Food and Drug
Administration ("FDA") or any other relevant Governmental Entity and
all Licenses, permissions, authorizations, notified body certificates
of compliance or consents required for placing the products on the
market in the United States and Canada, (B) any modifications by the
Company or any of its Subsidiaries to any product marketed by the
Company or any of its Subsidiaries have been made in accordance with
applicable Law, and (C) all manufacturing facilities are operated in
compliance with the FDA's Quality System Regulation requirements at 21
C.F.R. Part 820, as applicable.
(iii) Except as is not reasonably likely to have a Material
Adverse Effect, any and all preclinical and clinical trials conducted
or supervised by the Company or any of its Subsidiaries have been
conducted in substantial compliance with all applicable Laws,
including, but not limited to, FDA good clinical practice and good
laboratory practice requirements.
(iv) In the last three years, none of the Company's or its
Subsidiaries' products have been recalled or subject to FDA correction
or removal requirements, and the Company and each of its Subsidiaries
have not received notice, either completed or pending, of any
proceeding seeking a corrective action, recall, suspension or seizure
of any products. Neither the Company nor any of its Subsidiaries has
received any order, demand or other formal proceedings from any
competent authority or notified body for medical devices to undertake
any form of withdrawal from the market of any of its products or any
product recall, and the Company has notified any competent authority
or notified body of the intent to conduct a market withdrawal, product
recall or field correction, and, to the knowledge of the Company, no
facts or circumstances have occurred that are reasonably likely to
give rise to any such corrective action, recall, suspension or
seizure.
(v) Neither the Company nor any of its Subsidiaries is included
on FDA's AIP list.
(vi) As of the date hereof, neither the Company nor any of its
Subsidiaries, nor, to the Company's knowledge, any of its employees,
-21-
agents or consultants retained to assist with product license
submissions, has been disqualified or debarred by the FDA, pursuant to
21 U.S.C. xx.xx. 335(a) or (b), or for any purpose, been charged with
or convicted under United States law for conduct relating to the
development, approval, marketing or sale of drugs or devices or
otherwise relating to the regulation of any drug product under the
Generic Drug Enforcement Act of 1992 or any other relevant Law or been
disbarred, disqualified or convicted under or for any equivalent or
similar applicable foreign laws.
(j) MATERIAL CONTRACTS AND GOVERNMENTAL CONTRACTS.
(i) As of the date of this Agreement, neither the Company nor any
of its Subsidiaries is a party to or bound by:
(A) any lease of real or personal property providing for
annual rentals of $250,000 or more;
(B) any Contract (i) that is reasonably likely to require
aggregate annual payments to or from the Company and its Subsidiaries
of more than $250,000, (ii) that is not entered into in the ordinary
course of business with a vendor or customer and is reasonably likely
to require aggregate annual payments to or from the Company and its
Subsidiaries of more than $100,000 or (iii) that is reasonably likely
to require aggregate payments to or from the Company and its
Subsidiaries of more than $1,000,000;
(C) other than with respect to any partnership that is
wholly-owned by the Company or any wholly-owned Subsidiary of the
Company, any partnership, joint venture or other similar agreement or
arrangement relating to the formation, creation, operation, management
or control of any partnership or joint venture that is material to the
Company;
(D) any Contract (other than among direct or indirect
wholly-owned Subsidiaries of the Company) relating to indebtedness for
borrowed money or the deferred purchase price of property (in either
case, whether incurred, assumed, guaranteed or secured by any asset)
in each case in excess of $250,000;
(E) any Contract required to be filed as an exhibit to the
Company's Annual Report on Form 10-K pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act;
(F) any non-competition Contract or other Contract that (I)
purports to limit in any material respect either the type of business
in which the Company or its Subsidiaries (or, after the Effective
Time, Parent or its Subsidiaries) may engage or the manner or
locations in which
-22-
any of them may so engage in any business, (II) could require the
disposition of any material assets or line of business of the Company
or its Subsidiaries or, after the Effective Time, Parent or its
Subsidiaries, (III) grants "most favored nation" status or (IV)
prohibits or limits the right of the Company or any of its
Subsidiaries to make, sell or distribute any products or services or
use, transfer, license, distribute or enforce any of their respective
Intellectual Property rights in any way that is material to the
Company or its magnets business group;
(G) any Contract containing a standstill or similar
agreement pursuant to which the Company or any of its Subsidiaries has
agreed not to acquire material assets or securities of the other party
or any of its Affiliates;
(H) any Contract between the Company or any of its
Subsidiaries and any director or officer of the Company or any 5%
Stockholder, other than Contracts relating to employment, bonus,
profit sharing, thrift, compensation, termination or severance;
(I) any Contract providing for indemnification by the
Company or any of its Subsidiaries of any Person, except for any such
Contract that is (x) not material to the Company and its Subsidiaries,
taken as a whole, or (y) entered into in the ordinary course of
business;
(J) any Contract that contains a put, call or similar right
pursuant to which the Company or any of its Subsidiaries could be
required to purchase or sell, as applicable, any equity interests of
any Person or assets that have a fair market value or purchase price
of more than $250,000;
(K) any Contract concerning Intellectual Property (as
defined in Section 5.1(p)) to which the Company or the Subsidiaries
are a party, including agreements granting the Company and the
Subsidiaries rights to use Intellectual Property owned by third
parties, non-assertion agreements, settlement agreements, agreements
granting rights to use Scheduled Intellectual Property (as defined in
Section 5.1(p)), trademark coexistence agreements and trademark
consent agreements (other than (x) licenses for commercial
"off-the-shelf" or "shrink-wrap" software that has not been modified
or customized for the Company and (y) Contracts that are not material
to the Company or its material products or businesses);
(L) any Contract to authorize or license any third party to
manufacture, reproduce or sell any products of the Company or any of
its Subsidiaries;
-23-
(M) any Contract regarding any acquisition of assets or a
business by the Company or any of its Subsidiaries to which there may
be any future obligation on the part of the Company or any of its
Subsidiaries to make additional payments in excess of $500,000,
including by means of an earn-out or similar contingent payment
mechanism;
(N) any Contract regarding any disposition of assets or a
business by the Company or any of its Subsidiaries to which there may
be any future obligation on the part of the Company to make additional
payments or as to which there is any continuing liability of the
Company or any of its Subsidiaries, if such additional payments or
continuing liability is reasonably expected to be in excess of
$500,000;
(O) any other Contract or group of related Contracts that,
if terminated or subject to a default by any party thereto, would,
individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect (the Contracts described in clauses (A) -
(O), together with all exhibits and schedules to such Contracts, being
the "MATERIAL CONTRACTS").
(ii) A copy of each Material Contract, has previously been (A)
delivered to Parent, (B) made available to Parent in the on-line data
room or otherwise or (C) publicly filed with the SEC as an exhibit to
the Company Reports filed prior to the date hereof, and each such
Contract is a valid and binding agreement of the Company or one of its
Subsidiaries, as the case may be, and is in full force and effect, and
neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto is in material default or
breach in any respect under the terms of any such Material Contract.
(iii) (A) With respect to each Governmental Contract, except as
would not reasonably be expected to have a Material Adverse Effect,
(x) all representations and certifications executed, acknowledged or
set forth in or pertaining to such Governmental Contract were complete
and correct as of their effective date, and the Company and each of
its Subsidiaries have complied in all material respects with all such
representations and certifications; (y) neither the United States
government nor any prime contractor, subcontractor or other Person has
notified the Company or any of its Subsidiaries that the Company or
any such Subsidiary has breached or violated any material
certification, representation, clause, provision or requirement,
pertaining to such Governmental Contract; and (z) no termination for
convenience, termination for default, cure notice or show cause notice
is in effect as of the date hereof pertaining to any Governmental
Contract.
-24-
(B) Except as would not reasonably be expected to have a
Material Adverse Effect, (x) to the knowledge of the Company, neither
the Company nor any of its Subsidiaries nor any of their respective
personnel is or has been under administrative, civil, or criminal
investigation, or indictment or audit by any Governmental Entity with
respect to any alleged irregularity, misstatement or omission arising
under or relating to any Governmental Contract; (y) neither the
Company nor any of its Subsidiaries has conducted or initiated any
internal investigation or made a voluntary disclosure to the United
States government with respect to any alleged irregularity,
misstatement or omission arising under or relating to a Governmental
Contract; and (z) neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any of their respective personnel has
been suspended or debarred from doing business with the United States
government or is, or at any time has been, the subject of a finding of
non-responsibility or ineligibility for United States government
contracting.
As used herein, "GOVERNMENTAL CONTRACT" means any contract to which
the Company or any of its Subsidiaries is a party, or by which any of them
are bound, the ultimate contracting party of which to the knowledge of the
Company is a Governmental Entity (including any subcontract with a prime
contractor or other subcontractor who is a party to any such contract).
(k) REAL PROPERTY.
(i) Except in any such case as is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect, with
respect to the real property owned by the Company or its Subsidiaries
(the "OWNED REAL PROPERTY"), (A) the Company or one of its
Subsidiaries, as applicable, has good and marketable title to the
Owned Real Property, free and clear of any Encumbrance, and (B) there
are no outstanding options or rights of first refusal to purchase the
Owned Real Property, or any portion thereof or interest therein.
(ii) With respect to the real property leased or subleased to the
Company or its Subsidiaries (the "LEASED REAL PROPERTY"), the lease or
sublease for such property is valid, legally binding, enforceable and
in full force and effect, and none of the Company or any of its
Subsidiaries is in material breach of or default under such lease or
sublease, and no event has occurred which, with notice, lapse of time
or both, would constitute a material breach or default by any of the
Company or its Subsidiaries or permit termination, modification or
acceleration by any third party thereunder, or prevent, materially
delay or materially impair the consummation of the transactions
contemplated by this Agreement except in each case, for such
invalidity, failure to be binding, unenforceability,
-25-
ineffectiveness, breaches, defaults, terminations, modifications,
accelerations or repudiations that is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. A
correct and complete copy of each lease or sublease for Leased Real
Property has previously been made available to Parent.
(iii) Section 5.1(k)(iii) of the Company Disclosure Letter
contains a true and complete list in all material respects of all
Owned Real Property. Section 5.1(k)(iii) of the Company Disclosure
Letter sets forth (x) a description of the principal functions
conducted at each parcel of Owned Real Property and (y) a correct
street address and such other information as is reasonably necessary
to identify each parcel of Owned Real Property.
(iv) For purposes of this Section 5.1(k) only, "ENCUMBRANCE"
means any mortgage, lien, pledge, charge, security interest, easement,
covenant, or other restriction or title matter or encumbrance of any
kind in respect of such asset but specifically excludes (a) specified
Encumbrances described in Section 5.1(k)(iv) of the Company Disclosure
Letter; (b) Encumbrances for current Taxes or other governmental
charges that are not yet due and payable or the validity or amount of
which is being contested in good faith by appropriate proceedings and
are reflected on or specifically reserved against or otherwise
disclosed in the consolidated balance sheets included in the Company
Reports; (c) mechanics', carriers', workmen's, repairmen's or other
like encumbrances arising or incurred in the ordinary course of
business consistent with past practice relating to obligations as to
which there is no default on the part of Company, or the validity or
amount of which is being contested in good faith by appropriate
proceedings and are reflected on or specifically reserved against or
otherwise disclosed in the consolidated balance sheets included in the
Company Reports; and (d) other Encumbrances that do not, individually
or in the aggregate, materially impair the continued (consistent with
past practice) use or operation or value of the specific parcel of
Owned Real Property to which they relate or the conduct of the
business of the Company and its Subsidiaries as presently conducted.
(l) TAKEOVER STATUTES. Except for Section 203 of the DGCL, no
"fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation (each, a "TAKEOVER STATUTE") or any
anti-takeover provision in the Company's certificate of incorporation or
bylaws is applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement. The board of directors of the
Company has taken all actions necessary to render inapplicable to this
Agreement (and the transactions contemplated hereby) the restrictions on
"business combinations" set forth in Section 203 of the DGCL.
-26-
(m) ENVIRONMENTAL MATTERS. Except as is not reasonably likely to
have a Material Adverse Effect, (i) the Company and its Subsidiaries have
complied at all times with all applicable Environmental Laws; (ii) no
property currently owned or operated by the Company or any of its
Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) is contaminated with any Hazardous Substance; (iii) no
property formerly owned or operated by the Company or any of its
Subsidiaries was contaminated with any Hazardous Substance during or prior
to such period of ownership or operation; (iv) neither the Company nor any
of its Subsidiaries is liable for any Hazardous Substance disposal or
contamination on any third party property; (v) neither the Company nor any
of its Subsidiaries has had any reportable release of any Hazardous
Substance; (vi) neither the Company nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information
alleging that the Company or any of its Subsidiaries may be in violation of
or subject to liability under any Environmental Law, except to the extent
that all potential liability for such matter has been fully resolved and
that no further action by the Company is required; (vii) neither the
Company nor any of its Subsidiaries is subject to any order, decree,
injunction or other arrangement with any Governmental Entity or any
indemnity or other agreement with any third party relating to obligations
or liability involving any Environmental Law or otherwise relating to
Hazardous Substances; (viii) none of the Owned Real Property (and, to the
knowledge of the Company, none of the Leased Real Property) contain any
underground storage tanks, asbestos-containing material, lead products, or
polychlorinated biphenyls; (ix) except as set forth in the Company
Disclosure Letter, neither the Company nor any Subsidiary has engaged in
any activities involving the generation, use, handling or disposal of any
Hazardous Substance; (x) to the knowledge of the Company, there are no
other circumstances or conditions involving the Company or any of its
Subsidiaries that could reasonably be expected to result in any claim,
liability, investigation, cost or restriction on the ownership, use, or
transfer of any property pursuant to any Environmental Law; and (xi) the
Company has delivered to Parent copies of all environmental reports,
studies, assessments, sampling data and other environmental information in
its possession relating to Company or its Subsidiaries or their respective
current and former properties or operations.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state,
local or foreign statute, law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement now or hereafter in effect relating
to: (A) the protection of the environment, health, safety, or natural resources,
(B) the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, indoor air, employee exposure, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property relating to any Hazardous Substance.
As used herein, the term "HAZARDOUS SUBSTANCE" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or
-27-
plumbing, polychlorinated biphenyls, radioactive material, mold or radon; and
(C) any other substance which may be the subject of regulatory action by any
Governmental Entity in connection with any Environmental Law.
(n) TAXES. (i) Except for such failures as would not,
individually or in the aggregate, have a Material Adverse Effect, the
Company and each of its Subsidiaries (A) have prepared in good faith and
duly and timely filed with the appropriate Tax authorities (taking into
account any extension of time within which to file) all Tax Returns (as
defined below) required to be filed by any of them and all such filed Tax
Returns are complete and accurate in all respects; (B) have paid all Taxes
(as defined below) that are required to be paid or that the Company or any
of its Subsidiaries are obligated to withhold and pay from amounts owing to
any employee, creditor or third party, except with respect to matters
contested in good faith; and (C) have not waived or requested a waiver of
any statute of limitations with respect to Taxes or agreed to or requested
any extension of time with respect to a Tax assessment or deficiency.
(i) There are not pending or, to the knowledge of the Company,
threatened in writing, any audits, examinations, investigations or
other proceedings in respect of material Taxes or Tax matters.
(ii) There are not, to the knowledge of the Company, any
unresolved questions or claims concerning the Company's or any of its
Subsidiaries' Tax liability that are, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
(iii) The Company has made available to Parent true and correct
copies of the United States federal income Tax Returns filed by the
Company and its Subsidiaries for each of the fiscal years ended May
29, 2005, May 30, 2004, May 25, 2003, May 26, 2002, and May 27, 2001.
(iv) The charges, accruals and reserves with respect to Taxes
that will be provided in the May 28, 2006 financial statements
included in the Company Reports will be determined in accordance with
GAAP, and will be at least equal to the liability for Taxes of the
Company and its Subsidiaries in all material respects as of such date.
(v) No Tax is required to be withheld pursuant to Section 1445 of
the Internal Revenue Code as a result of the Merger.
(vi) Neither the Company nor any of its Subsidiaries has
participated in any "reportable transactions" within the meaning of
Section 1.6011-4 of the regulations promulgated by the U.S. Department
of the Treasury pursuant to the Code (the "TREASURY REGULATIONS") nor
has the Company or any of its Subsidiaries been a "material advisor"
to any such transactions within the meaning of Section 6111 of the
Code.
-28-
(vii) None of the Company or any of its Subsidiaries has any
liability for the Taxes of any person (other than members of the
consolidated group of which the Company is the common parent) (i)
under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign Law), (ii) as a transferee or successor,
or (iii) by contract, except in each case where such liability for
Taxes would not, individually or in the aggregate, have a Material
Adverse Effect with respect to the Company.
(viii) Neither the Company nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any Tax sharing or Tax
indemnity agreement or similar contract or arrangement other than any
agreement, contract or other arrangement between the Company and its
Subsidiaries, except in each case where such obligations would not,
individually or in the aggregate, have a Material Adverse Effect with
respect to the Company.
(ix) Neither the Company nor any of its Subsidiaries will be
required to include any item of material income in, or exclude any
item of material deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any
(A) change in accounting method for a taxable period ending on or
before the Closing Date, or (B) "closing agreement" as described in
Section 7121 of the Code (or any similar provision of state, local or
foreign Tax law), executed on or before the Closing Date.
(x) Neither the Company nor any of its Subsidiaries has
distributed stock of another person, or has had its stock distributed
by another person, in a transaction that was purported or intended to
be governed in whole or in part by Section 355 or Section 361 of the
Code.
(xi) Except where such Liens would not have, individually or in
the aggregate, a Material Adverse Effect with respect to the Company,
there are no Liens on any of the assets of the Company or any of its
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Tax.
As used in this Agreement, (A) the term "TAX" (including, with
correlative meaning, the term "TAXES") includes all federal, state, local and
foreign income, profits, franchise, gross receipts, environmental, customs duty,
capital stock, severances, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties, assessments or other charges of any kind
imposed by any government or taxing authority whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (B) the term "TAX
RETURN" includes all returns
-29-
and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes, including any schedule or attachment thereto and including
any amendment thereof.
(o) LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement or other Contract with a labor union or labor organization, nor
is any such Contract presently being negotiated. There has not been in the
last three years, a representation question in respect of any of the
employees of the Company or any of its Subsidiaries, and, to the knowledge
of the Company, there are no campaigns being conducted to solicit cards
from employees of the Company or any of its Subsidiaries to authorize
representation by any labor union or labor organization. The Company and
its Subsidiaries are in material compliance with all relevant labor and
employment laws and are not the subject of any proceeding that asserts that
the Company or any of its Subsidiaries has committed an unfair labor
practice or that seeks to compel it to bargain with any labor union or
labor organization nor is there pending or, to the knowledge of the
Company, threatened. For the past three years there has been no labor
strike, dispute, walk-out, work stoppage, slow-down or lockout involving
the Company or any of its Subsidiaries. The Company and its Subsidiaries
are not required to comply with the reporting requirements of the Labor
Management Reporting and Disclosure Act.
(p) INTELLECTUAL PROPERTY. The Company has sufficient
rights to use all Intellectual Property used in and material to its
business as presently conducted, all of which rights to use shall survive
the consummation of the Merger without any change or any additional third
party rights being created. The Intellectual Property owned by the Company
or its Subsidiaries is valid, subsisting and enforceable, and is not
subject to any outstanding order, judgment, decree or agreement materially
and adversely affecting the Company's or its Subsidiaries' use thereof or
its/their rights thereto. Section 5.1(p) of the Company Disclosure Letter
sets forth a correct and complete list of all registered and/or material
Intellectual Property owned by the Company or its Subsidiaries, all of
which are owned exclusively by each of them free and clear of any Liens or
encumbrances (including licenses) (collectively, the "SCHEDULED
INTELLECTUAL PROPERTY"). The Company and its Subsidiaries do not and have
not in the past five year period immediately preceding the date of this
Agreement infringed or otherwise violated the Intellectual Property rights
of any third party. No assertions of infringement or, to the knowledge of
the Company, violations of third party Intellectual Property rights are
occurring, have occurred during the five year period immediately preceding
the date of this Agreement or are threatened. To the Company's knowledge,
no person is violating any Scheduled Intellectual Property or other
Intellectual Property right that the Company or its Subsidiaries hold
exclusively. The Company and its Subsidiaries have taken all reasonable
measures to protect the confidentiality and value of all Trade Secrets that
are
-30-
owned, used or held by the Company and its Subsidiaries, and to the
Company's knowledge, such Trade Secrets have not been used, disclosed to or
discovered by any person except pursuant to valid and appropriate
non-disclosure and/or license agreements which have not been breached. The
Company and its Subsidiaries have not granted any licenses or other rights
to third parties to use their Intellectual Property other than
non-exclusive licenses granted in the ordinary course of business pursuant
to standard terms, which have been previously provided to Parent and the
Contracts set forth on Section 5.1(j)(i)(K) of the Company Disclosure
Letter. The Company and its Subsidiaries do not and have not used any Open
Source Software and have not made available any software to third parties
under Open License Terms. "OPEN SOURCE SOFTWARE" means any software that is
licensed under Open License Terms. "OPEN LICENSE TERMS" means terms in any
license that require as a condition of use, modification and/or
distribution of a work (1) the making available of source code or other
materials preferred for modification, (2) the granting of permission for
creating derivative works, (3) the reproduction of certain notices or
license terms in derivative works or accompanying documentation or (4) the
granting of a royalty-free license to any party under Intellectual Property
rights regarding the work and/or any work that contains, is combined with,
requires or otherwise is based on the work. The IT Assets operate and
perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required by the Company and its
Subsidiaries in connection with their business, and the Company and its
Subsidiaries have implemented reasonable backup and disaster recover
technology consistent with industry practices.
For purposes of this Agreement, the following terms have the following
meanings:
"INTELLECTUAL PROPERTY" means all (i) trademarks, service marks, brand
names, certification marks, collective marks, d/b/a's, Internet domain names,
logos, symbols, trade dress, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all goodwill associated
therewith and symbolized thereby, including all renewals of same; (ii)
inventions and discoveries, whether patentable or not, and all patents, utility
models, registrations, invention disclosures and applications therefore,
including divisions, continuations, continuations-in-part and renewal
applications, and including renewals, extensions and reissues; (iii) industrial
design rights/design patents and all registrations and applications therefore;
(iv) confidential information, trade secrets and know-how, including processes,
schematics, business methods, formulae, drawings, prototypes, models, designs,
customer lists and supplier lists (collectively, "TRADE SECRETS"); (v) published
and unpublished works of authorship, whether copyrightable or not (including
databases and other compilations of information), copyrights therein and
thereto, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof; and (vi) all other intellectual
property or industrial property or proprietary rights.
-31-
"IT ASSETS" means the Company's and the Subsidiaries' computers,
computer software, firmware, middleware, servers, workstations, routers, hubs,
switches, data communications lines, and all other information technology
equipment.
(q) INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by the Company or any of its Subsidiaries
("INSURANCE POLICIES") are with reputable insurance carriers, and are in
character and amount reasonably determined by the Company to be
appropriate, except for any such failures to maintain insurance policies
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect. Each Insurance Policy (including but not limited
to those provided by the Company to Parent or made available in the on-line
data room) is in full force and effect and all premiums due with respect to
all Insurance Policies have been paid, with such exceptions that,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect. The information (including but not limited to
claim history) furnished by the Company to Parent or made available in the
on-line data room with respect to the Insurance Policies is correct and
complete in all material respects.
(r) BROKERS AND FINDERS. Neither the Company nor any of its
officers, directors or employees has employed any broker, finder or
investment banking firm or incurred any liability for any brokerage fees,
commissions, finder's fees or financial advisory fees in connection with
the Merger or the other transactions contemplated in this Agreement except
that the Company has employed Banc of America Securities LLC as its
financial advisor. The Company has made available to Parent a complete and
accurate copy of all agreements pursuant to which Banc of America
Securities LLC is entitled to any fees and expenses in connection with any
of the transactions contemplated by this Agreement.
5.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub each hereby represent and warrant to the Company that:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of Parent
and Merger Sub is a legal entity duly organized, validly existing and in
good standing under the Laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation
of its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, qualified or in
such good standing, or to have such power or authority, would not,
individually or in the aggregate, reasonably be expected to prevent or
-32-
materially delay or impair the ability of Parent and Merger Sub to
consummate the Merger and the other transactions contemplated by this
Agreement.
(b) CORPORATE AUTHORITY. (i) Each of Parent and Merger Sub has
all requisite corporate power and authority and has taken all corporate
action necessary (other than the adoption of this Agreement by Parent in
its capacity as sole stockholder of Merger Sub, which adoption Parent shall
effect as soon as practicable following the execution hereof) in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the Merger. This Agreement has been duly executed and delivered
by each of Parent and Merger Sub and is a valid and binding agreement of,
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS; ETC.
(i) Other than the filings and/or notices pursuant to Section 1.3
and under the HSR Act, the Dutch Competition Act, and any other
antitrust, competition or premerger notification, trade regulation
Law, regulation or Order (collectively, the "PARENT APPROVALS"), no
notices, reports or other filings are required to be made by Parent or
Merger Sub with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Parent or Merger
Sub from, any Governmental Entity in connection with the execution,
delivery and performance of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the Merger and the
other transactions contemplated hereby, except those that the failure
to make or obtain would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay the ability of
Parent or Merger Sub to consummate the Merger and the other
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of,
or a default under, the certificate of incorporation or bylaws of
Parent or Merger Sub, (B) with or without notice, lapse of time or
both, a breach or violation of, a termination (or right of
termination) or a default under, the acceleration of any obligations
or the creation of a Lien on any of the assets of Parent or Merger Sub
pursuant to, any Contracts binding upon Parent or Merger Sub or any
Laws or governmental or non-governmental permit or license to which
Parent or Merger Sub is subject; or (C) any change in the rights or
obligations of any party under any of such Contracts, except, in the
case of clause (B) or (C) above, for any breach, violation,
termination, default,
-33-
creation, acceleration or change that would not, individually or in
the aggregate, reasonably be expected to prevent or materially delay
or impair the ability of Parent or Merger Sub to consummate the Merger
and the other transactions contemplated by this Agreement.
(d) CAPITALIZATION OF MERGER SUB. The authorized capital stock of
Merger Sub consists solely of 1,000 shares of Common Stock, par value $0.10
per share, all of which are validly issued and outstanding. All of the
issued and outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent or a direct or indirect wholly-owned
Subsidiary of Parent. Merger Sub has not conducted any business prior to
the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident
to its formation and pursuant to this Agreement and the Merger and the
other transactions contemplated by this Agreement.
(e) SUFFICIENT FUNDS. Parent and Merger Sub will have at and
after the Closing funds sufficient to pay the Per Share Merger
Consideration and any other amounts required to be paid in connection with
the consummation of the transactions contemplated hereby, and to pay all
related fees and expenses.
ARTICLE VI
COVENANTS
6.1. INTERIM OPERATIONS.
(a) The Company covenants and agrees as to itself and its
Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, and except as otherwise
expressly contemplated by this Agreement) and except as required by
applicable Laws, the business of it and its Subsidiaries shall be conducted
in the ordinary and usual course and, to the extent consistent therewith,
it and its Subsidiaries shall use their respective reasonable best efforts
to preserve their business organizations substantially intact and maintain
existing relations and goodwill with Governmental Entities, customers,
suppliers, distributors, creditors, lessors, employees and business
associates. Without limiting the generality of the foregoing and in
furtherance thereof, from the date of this Agreement until the Effective
Time, except (A) as otherwise expressly required or expressly permitted by
this Agreement, (B) as Parent may approve in writing (such approval not to
be unreasonably withheld, conditioned or delayed) or (C) as set forth in
Section 6.1 of the Company Disclosure Letter, the Company will not and will
not permit its Subsidiaries to:
-34-
(i) adopt or propose any change in its certificate of
incorporation or bylaws or other applicable governing instruments;
(ii) merge or consolidate the Company or any of its Subsidiaries
with any other Person, except for any such transactions among
wholly-owned Subsidiaries of the Company, or restructure, reorganize
or completely or partially liquidate its assets, operations or
businesses or otherwise enter into any hold separate agreement or
other agreement imposing material limitations on its business;
(iii) acquire assets or any securities of any business from any
other Person in any transaction or series of related transactions,
other than (A) acquisitions pursuant to Contracts in effect as of the
date of this Agreement, (B) capital expenditures made in accordance
with capital budgets included in Section 6.1(a)(iii) of the Company
Disclosure Letter, (C) acquisitions with a value or purchase price in
the aggregate of less than $500,000 or (D) acquisitions of inventory
and other purchases in the ordinary course of business;
(iv) issue, sell, pledge, dispose of, grant, transfer, encumber,
or authorize the issuance, sale, pledge, disposition, grant, transfer,
lease, license, guarantee or encumbrance of, any shares of capital
stock of the Company or any of its Subsidiaries (other than the
issuance of shares by a wholly-owned Subsidiary of the Company to the
Company or another wholly-owned Subsidiary), or securities convertible
or exchangeable into or exercisable for any shares of such capital
stock, or any options, warrants or other rights of any kind to acquire
any shares of such capital stock or such convertible or exchangeable
securities, other than required issuances of shares of Company Common
Stock upon the exercise of Company Stock Options outstanding as of the
date of this Agreement;
(v) create or incur any Lien on any assets of the Company or any
of its Subsidiaries in amounts in excess of $1,000,000 in the
aggregate;
(vi) make any loans, advances or capital contributions to or
investments in any Person (other than the Company or any direct or
indirect wholly-owned Subsidiary of the Company) in excess of $100,000
in the aggregate;
(vii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (except for dividends paid by any
direct or indirect wholly-owned Subsidiary to the Company or to any
other direct or indirect wholly-owned Subsidiary) or enter into any
agreement with respect to the voting of its capital stock;
-35-
(viii) reclassify, split, combine, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock
or securities convertible or exchangeable into or exercisable for any
shares of its capital stock;
(ix) incur any indebtedness for borrowed money or guarantee such
indebtedness of another Person, or issue or sell any debt securities
or warrants or other rights to acquire any debt security of the
Company or any of its Subsidiaries, except for (A) indebtedness for
borrowed money incurred in the ordinary course of business consistent
with past practices not to exceed $5,000,000 in the aggregate, (B)
indebtedness for borrowed money in replacement of existing
indebtedness for borrowed money on terms substantially consistent with
or more beneficial than the indebtedness being replaced, (C)
guarantees by the Company of indebtedness of wholly-owned Subsidiaries
of the Company incurred in compliance with this Section 6.1 or (D)
interest rate swaps on customary commercial terms consistent with past
practice and not to exceed $5,000,000 of notional debt in the
aggregate;
(x) except as set forth in the capital budgets set forth in
Section 6.1(a)(iii) of the Company Disclosure Letter and consistent
therewith, make or authorize any capital expenditure in excess of
$500,000 in the aggregate during any 12 month period;
(xi) enter into any Contract that would have been a Material
Contract had it been entered into prior to this Agreement, other than
Contracts that are entered into in the ordinary course of business and
do not include any agreement or commitment to take any action
described by Sections 6.1(a)(i) through (x) or Sections 6.1(a)(xii)
through (xviii);
(xii) make any changes with respect to accounting policies or
procedures, except as required by changes in GAAP;
(xiii) settle any litigation or other proceedings before a
Governmental Entity for an amount in excess of $100,000 in the
aggregate (net of insurance coverage) or any disputed obligation or
liability of the Company in excess of such amount;
(xiv) amend, modify or terminate any Material Contract, or
cancel, modify or waive any debts or claims held by it or waive any
rights having in each case a value in excess of $500,000 in the
aggregate, other than, in each case, in the ordinary course of
business;
(xv) make or change any Tax election, change an annual accounting
period, file any material amended Tax Return, enter into any material
closing agreement, waive or extend any statute of limitation with
-36-
respect to Taxes, settle or compromise any material Tax liability,
claim or assessment, or surrender any right to claim a refund of
material Taxes;
(xvi) transfer, sell, lease, license, mortgage, pledge,
surrender, encumber, divest, cancel, abandon or allow to lapse or
expire or otherwise dispose of any assets, product lines or businesses
of the Company or its Subsidiaries, including capital stock of any of
its Subsidiaries, except for product sales in the ordinary course of
business, sales of obsolete assets or sales, leases, licenses or other
dispositions of assets with a fair market value not in excess of
$500,000 in the aggregate, other than pursuant to Contracts in effect
prior to the date of this Agreement;
(xvii) except as required pursuant to existing written, binding
agreements in effect prior to the date of this Agreement and set forth
in Section 5.1(h)(i) of the Company Disclosure Letter, or as otherwise
required by applicable Law, (A) grant or provide any severance or
termination payments or benefits to any director, officer or employee
of the Company or any of its Subsidiaries, except, in the case of
employees who are not officers, in the ordinary course of business,
(B) increase the compensation, bonus or pension, welfare, severance or
other benefits of, pay any bonus to, or make any new equity awards to
any director, officer or employee of the Company or any of its
Subsidiaries, except (other than with respect to the grant of new
equity awards), in the case of employees who are not officers, in the
ordinary course of business consistent with past practice, (C)
establish, adopt, amend or terminate any Company Benefit Plan or amend
the terms of any outstanding equity-based awards, (D) take any action
to accelerate the vesting or payment, or fund or in any other way
secure the payment, of compensation or benefits under any Company
Benefit Plan, to the extent not already provided in any such Company
Benefit Plan, (E) change any actuarial or other assumptions used to
calculate funding obligations with respect to any Company Benefit Plan
or to change the manner in which contributions to such plans are made
or the basis on which such contributions are determined, except as may
be required by GAAP; or (F) forgive any loans to directors, officers
or employees of the Company or any of its Subsidiaries;
(xviii) take any action or omit to take any action that is
reasonably likely to (A) result in any of the conditions to the Merger
set forth in Article VIII not being satisfied or (B) prevent or
materially delay the consummation of the Merger; or
(xix) agree, authorize or commit to do any of the foregoing.
(b) Parent shall not knowingly take or permit any of its
Subsidiaries to take any action that is reasonably likely to (i) result in
any of the
-37-
conditions to the Merger set forth in Article VII not being satisfied or
(ii) prevent or materially delay the consummation of the Merger.
6.2. ACQUISITION PROPOSALS.
(a) NO SOLICITATION OR NEGOTIATION. The Company agrees that
neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall use its
reasonable best efforts to instruct and cause its and its Subsidiaries'
employees, investment bankers, attorneys, accountants and other advisors or
representatives (such directors, officers, employees, investment bankers,
attorneys, accountants and other advisors or representatives, collectively,
"REPRESENTATIVES") not to, directly or indirectly:
(i) initiate, solicit or knowingly encourage any inquiries or the
making of any proposal or offer that constitutes, or could reasonably
be expected to lead to, any Acquisition Proposal (as defined below);
or
(ii) engage in, continue or otherwise participate in any
discussions or negotiations regarding, or provide any non-public
information or data to any Person relating to, any Acquisition
Proposal; or
(iii) otherwise knowingly facilitate any effort or attempt to
make an Acquisition Proposal.
Notwithstanding anything in the foregoing to the contrary, prior to
the time, but not after, the Company Requisite Vote is obtained, the Company may
(A) provide information in response to a request therefor by a Person who has
provided the Company with a bona fide written letter not solicited by the
Company or any of its Subsidiaries (or any of their respective officers,
directors or Representatives) stating that such Person would be interested in
making a definitive and binding written Acquisition Proposal providing for the
acquisition of more than 50% of the assets (on a consolidated basis) or total
voting power of the equity securities of the Company if the board of directors
of the Company receives from the Person so requesting such information an
executed confidentiality agreement on terms at least as protective with respect
to the confidentiality of information and nonsolicitation of employees for the
benefit of the Company as those contained in the Confidentiality Agreement (as
defined in Section 9.7), (B) engage in discussions or negotiations with any such
Person or (C) after having complied with the requirements of this Section 6.2 in
connection with an Acquisition Proposal, approve, adopt, recommend, or otherwise
declare advisable or propose to approve, adopt, recommend or declare advisable
(publicly or otherwise) such Acquisition Proposal, if and only to the extent
that, (x) in each such case referred to in clause (A), (B) or (C) above, the
board of directors of the Company determines in good faith after consultation
with outside legal counsel that a failure to take such action would be
reasonably likely to constitute a breach of such directors' respective fiduciary
duties under applicable Law; (y) in each such case referred to in clause (A) or
(B), the board of directors of the Company has determined in good faith based on
the information then
-38-
available and after consultation with its financial advisor either that such
Acquisition Proposal constitutes a Superior Proposal (as defined below) or that
such provision of information, discussions or negotiations are reasonably likely
to result in a Superior Proposal; and (z) in the case referred to in clause (C)
above, the board of directors of the Company determines in good faith (after
consultation with its financial advisor and outside legal counsel) that such
Acquisition Proposal is a Superior Proposal.
(b) DEFINITIONS. For purposes of this Agreement:
"ACQUISITION PROPOSAL" means (i) any proposal or offer with respect to
a merger, joint venture, partnership, consolidation, dissolution, liquidation,
tender offer, recapitalization, reorganization, share exchange, business
combination or similar transaction involving the Company or (ii) any proposal or
offer to acquire in any manner, directly or indirectly, 15% or more of any class
of equity securities of the Company or any of its Subsidiaries or of the
consolidated total assets (including equity securities of its Subsidiaries) of
the Company, in each case other than the transactions contemplated by this
Agreement.
"SUPERIOR PROPOSAL" means an unsolicited bona fide Acquisition
Proposal involving more than 50% of the assets (on a consolidated basis) or
voting power of the equity securities of the Company that the board of directors
of the Company has determined in its good faith judgment is reasonably likely to
be consummated in accordance with its terms, taking into account all legal,
financial, regulatory and other aspects of the proposal and the Person making
the proposal, and if consummated, would result in a transaction more favorable
to the Company's stockholders from a financial point of view than the
transaction contemplated by this Agreement (after taking into account any
revisions to the terms of the transaction contemplated by this Agreement
pursuant to Section 6.2(c) and the time likely to be required to consummate such
Acquisition Proposal).
(c) NO CHANGE IN RECOMMENDATION OR ALTERNATIVE ACQUISITION
AGREEMENT. The board of directors of the Company and each committee thereof
shall not:
(i) except as permitted by this Section 6.2, withhold, withdraw,
qualify or modify (or publicly propose or resolve to withhold,
withdraw, qualify or modify), in a manner adverse to Parent, the
Company Recommendation with respect to the Merger (it being understood
that any "stop-look-and-listen" communication to stockholders pursuant
to Rule 14d-9(f) promulgated under the Exchange Act shall not be
considered an adverse modification); or
(ii) except as expressly permitted by, and after compliance with,
Section 8.3(a), cause or permit the Company to enter into any letter
of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement or other agreement (other than
a
-39-
confidentiality agreement referred to in Section 6.2(a) entered into
in the circumstances referred to in Section 6.2(a)) (an "ALTERNATIVE
ACQUISITION AGREEMENT") relating to any Acquisition Proposal.
Notwithstanding anything to the contrary set forth in this Agreement, prior to
the time, but not after, the Company Requisite Vote is obtained, the board of
directors of the Company may withhold, withdraw, qualify or modify the Company
Recommendation or approve, adopt, recommend or otherwise declare advisable any
Superior Proposal made after the date hereof and not solicited, initiated or
encouraged in breach of this Agreement, if, subject to compliance with Section
6.2(f), the board of directors of the Company determines in good faith, after
consultation with outside counsel, that the failure to do so would be reasonably
likely to constitute a breach of such directors' respective fiduciary duties
under applicable Law (a "CHANGE OF RECOMMENDATION"); PROVIDED, HOWEVER, that no
Change of Recommendation may be made until after at least three business days
following Parent's receipt of written notice from the Company advising that the
board of directors of the Company intends to take such action. In determining
whether to make a Change of Recommendation in response to a Superior Proposal or
otherwise, the Company board of directors shall consider in good faith any
changes to the terms of this Agreement irrevocably committed to by Parent and
any other information provided by Parent in response to, and in each case within
three business days after receipt of, such notice.
(d) CERTAIN PERMITTED DISCLOSURE. Without limiting the right of
Parent to terminate this Agreement in accordance with Section 8.4, nothing
contained in this Section 6.2 shall be deemed to prohibit the Company from
complying with its disclosure obligations under U.S. federal or state law
with regard to an Acquisition Proposal.
(e) EXISTING DISCUSSIONS. The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal. The Company agrees that it will take
the necessary steps to promptly inform the individuals or entities referred
to in the first sentence hereof of the obligations undertaken in this
Section 6.2 and in the Confidentiality Agreement. The Company also agrees
that it will promptly request each Person that executed a confidentiality
agreement after January 1, 2001 and prior to the date hereof in connection
with its consideration of acquiring it to return or destroy all
confidential information heretofore furnished to such Person by or on
behalf of it or any of its Subsidiaries.
(f) NOTICE. The Company agrees that it will promptly (and, in any
event, within 48 hours) notify Parent if any inquiries, proposals or offers
with respect to an Acquisition Proposal are received by, any material
nonpublic information is requested from, or any such discussions or
negotiation are sought to be initiated or continued with, it or any of its
Representatives indicating, in
-40-
connection with such notice, the name of such Person and the material terms
and conditions of any proposals or offers (including, if applicable, copies
of any written requests, proposals or offers, including proposed
agreements) and thereafter shall keep Parent informed, on a reasonably
current basis, of any material developments affecting the status and terms
of any such proposals or offers (including any amendments thereto) and the
status of any such discussions or negotiations, including any change in the
Company's intentions as previously notified.
6.3. INFORMATION SUPPLIED. The Company shall prepare and file with the
SEC, as promptly as practicable after the date of this Agreement, and in any
event within 21 days after the date hereof, a proxy statement in preliminary
form relating to the Stockholders Meeting (as defined in Section 6.4) (such
proxy statement, including any amendment or supplement thereto, the "PROXY
STATEMENT"). The Company agrees, as to it and its Subsidiaries, that (i) the
Proxy Statement will comply in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations thereunder and (ii)
none of the information supplied by it or any of its Subsidiaries for inclusion
or incorporation by reference in the Proxy Statement will, at the date of
mailing to stockholders of the Company or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent shall cooperate, and shall cause Koninklijke Philips
Electronics N.V. ("ROYAL PHILIPS") and its Subsidiaries to cooperate, with the
Company in preparing the Proxy Statement. Parent agrees that none of the
information supplied by it or any Subsidiaries of Royal Philips for inclusion or
incorporation by reference in the Proxy Statement will, at the date of mailing
to stockholders of the Company or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.4. STOCKHOLDERS MEETING. The Company will take, in accordance with
applicable Law and its certificate of incorporation and bylaws, all action
necessary to convene a meeting of holders of Shares (the "STOCKHOLDERS MEETING")
as promptly as practicable after the execution of this Agreement to consider and
vote upon the adoption of this Agreement. Subject to Section 6.2, the board of
directors of the Company shall recommend such adoption and shall take all lawful
action to solicit such adoption of this Agreement. In the event that subsequent
to the date hereof, the board of directors of the Company determines that this
Agreement is no longer advisable and makes a Change of Recommendation, the
Company shall nevertheless submit this Agreement to the holders of the Shares
for adoption at the Stockholders Meeting unless this Agreement shall have been
terminated in accordance with its terms prior to the Stockholders Meeting.
Notwithstanding anything to the contrary contained in this Agreement, the
Company, after consultation with Parent, may adjourn or postpone the
Stockholders Meeting to the extent necessary to ensure that any required
supplement or amendment to the Proxy
-41-
Statement is provided to the Company's stockholders or, if as of the time for
which the Stockholders Meeting is originally scheduled (as set forth in the
Proxy Statement) there are insufficient shares of the Company's common stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Stockholders Meeting.
6.5. FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) PROXY STATEMENT. The Company shall promptly notify Parent of
the receipt of all comments of the SEC with respect to the Proxy Statement
and of any request by the SEC for any amendment or supplement thereto or
for additional information and shall promptly provide to Parent copies of
all correspondence between the Company and/or any of its Representatives
and the SEC with respect to the Proxy Statement. The Company and Parent
shall each use its reasonable best efforts to promptly provide responses to
the SEC with respect to all comments received on the Proxy Statement by the
SEC and the Company shall cause the definitive Proxy Statement to be mailed
as promptly as practicable after the date the SEC staff advises that it has
no further comments thereon or that the Company may commence mailing the
Proxy Statement.
(b) COOPERATION. The Company and Parent shall cooperate with each
other and use (and take any action necessary to cause their respective
Affiliates to use) their respective reasonable best efforts to take or
cause to be taken all actions, and do or cause to be done all things,
reasonably necessary, proper or advisable on its part under this Agreement
and applicable Laws to consummate and make effective the Merger and the
other transactions contemplated by this Agreement as soon as practicable,
including
(i) preparing and filing, as promptly as practicable, all
documentation to effect all necessary notices, reports and other
filings and to obtain as promptly as practicable all consents,
registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental
Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement,
(ii) making, as promptly as practicable, and in any event within
five business days following the date of this Agreement, an
appropriate filing of a Notification and Report Form pursuant to the
HSR Act with respect to the Merger and the other transactions
contemplated by this Agreement,
(iii) making, as promptly as practicable, appropriate filings
under the Dutch Competition Act, if required, or upon Parent's and the
Company's agreement, appropriate filings and notifications to the EC
Commission's Directorate-General for Competition;
-42-
(iv) making, as promptly as practicable, appropriate filings
under any other antitrust, competition, premerger notification, or
trade regulation Law, regulation, or Order;
(v) defending, in oral and written communications with
appropriate Governmental Entities, the merits and competitive
efficiencies of the Merger and the other transactions contemplated by
this Agreement in order to resolve any antitrust concerns, whether
federal, state, foreign or private;
(vi) subject to first having used all reasonable efforts to
negotiate a resolution of any objections underlying such lawsuits or
other legal proceedings, defending, contesting and resisting any
lawsuits, other legal proceedings, decisions, determinations or
rulings, whether judicial or administrative, initiated by the U.S.
Federal Trade Commission ("FTC") or the Antitrust Division of the U.S.
Department of Justice ("ANTITRUST DIVISION"), challenging this
Agreement or the consummation of the Merger and the other transactions
contemplated by this Agreement, including seeking to have vacated,
lifted, reversed, or overturned any statute, rule, regulation, decree,
judgment, injunction, or other Order, whether temporary, preliminary,
or permanent, entered by any Governmental Entity that is in effect and
that prohibits, prevents, or restricts consummation of the Merger or
the other transactions contemplated by this Agreement, and to have
such statute, rule, regulation, decree, judgment, injunction, or other
Order repealed, rescinded, or made inapplicable so as to permit
consummation of the Merger and the other transactions contemplated by
this Agreement;
PROVIDED, HOWEVER, that nothing in this Agreement, including this Section 6.5,
shall require, or be construed to require, Parent to proffer to, or agree to,
sell, divest, lease, license, transfer, dispose of or otherwise hold separate
and agree to sell, divest, lease, license, transfer, dispose of or otherwise
encumber before or after the Effective Time, any assets, licenses, operations,
rights, product lines, businesses or interest therein of Parent, the Company or
any of their respective Affiliates (or to consent to any sale, divestiture,
lease, license, transfer, disposition or other encumberment by Parent, the
Company or any of their assets, licenses, operations, rights, product lines,
businesses or interest therein or to consent to any agreement to take any of the
foregoing actions) or to agree to any material changes (including through a
licensing arrangement) or restriction on, or other impairment of Parent's
ability to own or operate, any such assets, licenses, product lines, businesses
or interests therein or Parent's ability to vote, transfer, receive dividends or
otherwise exercise full ownership rights with respect to the stock of the
Surviving Company, except for proffers and agreements to amend or modify supply
contracts between the Company and/or its Subsidiaries and their third party
customers, even if such amendments or modifications require the provision of
proprietary information or non-exclusive licenses to Intellectual Property of
the Company and/or its Subsidiaries
-43-
(including molds and the like) to permit manufacture, that did not individually
or in the aggregate account for more than $45,000,000 in gross revenues for the
fiscal year ended May 28, 2006, subject in each case to receipt of the consent
of such third parties, so long as, in the case of any such contract, such
amendments or modifications would not cause the terms of such contract to be
commercially unreasonable when compared to other similar contracts of the
Company and its Subsidiaries. The Company and Parent (a) will each request early
termination of the waiting period with respect to the Merger and the HSR Act;
(b) will not extend any waiting period under the HSR Act or any other antitrust
or competition Law or enter into any agreement with any Governmental Entity not
to consummate the Merger or the other transactions contemplated by this
Agreement, except with the prior written consent of the other party hereto.
Subject to applicable Laws relating to the exchange of information, Parent, with
the advice and participation of the Company, shall have the right to direct all
matters with any Governmental Entity consistent with its obligations hereunder;
provided that Parent and the Company and their respective outside antitrust
counsel shall have the right to review in advance, and to the extent practicable
each will consult with the other on and consider in good faith the views of the
other in connection with, any proposed substantive written communication with
any third party and/or any Governmental Entity in connection with the Merger and
the other transactions contemplated by this Agreement (including the Proxy
Statement). Parent and the Company will provide counsel for the other party with
copies of all filings and submissions made by such party and all correspondence
between such party (and its advisors) with any Governmental Entity and any other
information supplied by such party and such party's Affiliates to a Governmental
Entity or received from such a Governmental Entity in connection with the
transactions contemplated by this Agreement; provided, however, that the
material may be redacted (x) as necessary to comply with contractual
arrangements, and (y) as necessary to address good faith legal privilege
concerns, and (z) to preserve the confidentiality of any information relating to
any valuation of the Company. Each of Parent and the Company will promptly
inform the other party upon receipt of any material communication from the FTC,
the Antitrust Division or any other Governmental Entity regarding the Merger or
any other transactions contemplated by this Agreement. If Parent or the Company
(or any of their respective Affiliates) receives a request for additional
information or documentary material from any such Governmental Entity that is
related to the transactions contemplated by this Agreement, then such party will
endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. Each party agrees not to participate in any
substantive meeting or discussion with any Governmental Entity in connection
with the transactions contemplated by this Agreement unless, to the extent
feasible, it consults with the other party in advance and, to the extent
feasible, provides Company or Parent, and their respective advisors, as the case
may be, the opportunity to attend and to participate. To preserve claims of
attorney-client privilege and attorney work product and to enable confidential
exchanges of documents and information pursuant to this Section 6.5, each of the
Company and Parent agree to enter into a joint defense agreement on reasonable
terms, including terms providing for the designation of appropriate documents
and information as "outside antitrust counsel only." In exercising
-44-
the foregoing rights, each of the Company and Parent shall act reasonably and as
promptly as practicable.
(c) INFORMATION. The Company and Parent each shall, upon request
by the other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters
as may be reasonably necessary or advisable in connection with the Proxy
Statement or any other statement, filing, notice or application made by or
on behalf of Parent, the Company or any of their respective Subsidiaries to
any third party and/or any Governmental Entity in connection with the
Merger and the transactions contemplated by this Agreement.
(d) STATUS. Subject to applicable Laws and the instructions of
any Governmental Entity, the Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other
with copies of notices or other communications received by Parent or the
Company, as the case may be, or any of its Subsidiaries, from any third
party and/or any Governmental Entity with respect to the Merger and the
other transactions contemplated by this Agreement. The Company shall give
prompt notice to Parent of any change, fact or condition that is reasonably
expected to result in a Material Adverse Effect or of any failure of any
condition to Parent's obligations to effect the Merger.
(e) Parent shall cause Royal Philips and its Subsidiaries to
comply with this Section 6.5 as if Royal Philips and such Subsidiaries were
parties to this Agreement.
6.6. ACCESS AND REPORTS. Subject to applicable Law, upon reasonable
notice, the Company shall (and shall cause its Subsidiaries to) afford Parent's
officers and other authorized representatives reasonable access, during normal
business hours and in a manner which does not disrupt or interfere with business
operations throughout the period prior to the Effective Time, to its employees,
properties, books, contracts and records and, during such period, the Company
shall (and shall cause its Subsidiaries to) furnish promptly to Parent all
information concerning its business, properties and personnel as may reasonably
be requested, PROVIDED that no investigation pursuant to this Section 6.6 shall
affect or be deemed to modify any representation or warranty made by the Company
herein, and PROVIDED, FURTHER, that the foregoing shall not require the Company
(i) to permit any inspection, or to disclose any information, that in the
reasonable judgment of the Company would (A) result in the disclosure of any
trade secrets of third parties, (B) violate the specific provisions of any Law,
or (C) violate any of its obligations with respect to confidentiality if the
Company shall have used commercially reasonable efforts to obtain the consent of
such third party to such inspection or disclosure or (ii) to disclose any
privileged information of the Company or any of its Subsidiaries. All requests
for information made pursuant to this Section 6.6 shall be directed to an
executive officer of the Company or such Person as may be
-45-
designated by the Company's executive officers. All such information shall be
governed by the terms of the Confidentiality Agreement.
6.7. PUBLICITY. The initial press release regarding the Merger shall
be a joint press release and thereafter the Company and Parent each shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities exchange
or interdealer quotation service) with respect thereto, except as may be
required by Law or by obligations pursuant to any listing agreement with or
rules of any national securities exchange or interdealer quotation service or by
the request of any Governmental Entity.
6.8. EMPLOYEE BENEFITS.
(a) Parent agrees that, during the period commencing at the
Effective Time and ending on the first anniversary thereof, the United
States-based employees of the Company and its Subsidiaries immediately
prior to the Effective Time (the "U.S. COMPANY EMPLOYEES") will continue to
be provided with pension and welfare benefits under employee benefit plans
(but excluding equity based benefits) that are no less favorable in the
aggregate, and a base salary or base rate of compensation that is equal to
or greater, than provided by the Company and its Subsidiaries to such
employees immediately prior to the Effective Time. Parent will cause any
employee benefit plans in which the U.S. Company Employees are eligible to
participate (the "NEW PLANS") to take into account for purposes of
eligibility and vesting thereunder (except (i) for purposes of subsidized
early retirement benefits, (ii) for purposes of any defined benefit plan
for which Parent does not grant credit for past service to its employees
generally or (iii) to the extent it would result in a duplication of
benefits), service by U.S. Company Employees as if such service were with
Parent, to the same extent such service was credited under a comparable
plan of the Company. Parent shall provide to each U.S. Company Employee
full credit for purposes of Parent's vacation and severance programs for
service by such U.S. Company Employee to the Company and its Subsidiaries
prior to the Effective Time. In addition, (A) each U.S. Company Employee
shall be eligible to participate as soon as reasonably practicable
following the Effective Time, without any waiting time, in any and all New
Plans to the extent coverage under such New Plan is comparable to a Company
Plan in which such U.S. Company Employee participated immediately before
the consummation of the Merger (such plans, collectively, the "OLD PLANS"),
and (B) for purposes of each New Plan providing medical, dental,
pharmaceutical and/or vision benefits to any U.S. Company Employee, Parent
shall cause all pre-existing condition exclusions and actively at work
requirements of such New Plan to be waived for such employee and his or her
covered dependents, unless such conditions would not have been waived under
the comparable Company Plan in which such employee participated immediately
-46-
prior to the Effective Time and Parent shall cause any eligible expenses
incurred by such employee and his or her covered dependents during the
portion of the plan year of the Old Plan ending on the date such employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance
and maximum out-of-pocket requirements applicable to such employee and his
or her covered dependents for the applicable plan year as if such amounts
had been paid in accordance with such New Plan. Notwithstanding the
foregoing, nothing contained herein shall obligate Parent, the Surviving
Corporation or any of their Affiliates to (i) maintain any particular
Company Benefit Plan or (ii) retain the employment of any particular
employee.
(b) Prior to the Effective Time, if requested by Parent in
writing prior to the Effective Time, to the extent permitted by applicable
Law and the terms of the applicable plan or arrangement, the Company shall
(1) cause to be amended the employee benefit plans and arrangements of it
and its Subsidiaries to the extent necessary to provide that no employees
of Parent and its Subsidiaries shall commence participation therein
following the Closing unless Parent or such Subsidiary explicitly
authorizes such participation and (2) to cause the Company 401(k) Plan to
be terminated effective immediately prior to the Closing; provided, that
Parent permits, or causes on of its Subsidiaries to permit the qualified
401(k) plan of Parent or one of its Subsidiaries ("PARENT'S 401(K) PLAN")
to accept rollovers or plan-to-plan transfers of assets (and any
then-outstanding loans) and employees of the Company and its Subsidiaries
who are not represented by labor unions or similar collective bargaining
entities will be permitted to participate in Parent's 401(k) Plan in
accordance with its terms.
(c) Parent shall cause the Company's severance plans set forth in
Section 6.8(c) of the Company Disclosure Letter to be continued without
adverse amendment for a period of one year following the Effective Time.
Parent shall pay to the Company Employees who participate in the annual
bonus plans listed in Section 6.8(c) of the Company Disclosure Letter an
annual bonus in respect of the Company's 2007 fiscal year; provided, that
that amount of and the performance targets with respect to such bonus shall
be pro-rated based on the portion of such fiscal year that occurs prior to
the Effective Time.
(d) The Company will reasonably cooperate with Parent in
developing a communication plan relating to communications with Company
Employees arising out of the transactions contemplated by this Agreement.
6.9. SUPERPOWER OPTIONS. The Company, SuperPower, Inc. ("SUPERPOWER"),
the board of directors of the Company and SuperPower and the compensation
committee of the board of directors of the Company and SuperPower, as
applicable, shall adopt any resolutions and take any actions which are
reasonably necessary to ensure that, effective as of the Effective Time, the
SuperPower 2003 Equity
-47-
Compensation Plan (the "SuperPower Plan") and all outstanding options (the
"SUPERPOWER OPTIONS") and other awards, including without limitation restricted
stock and restricted stock unit awards (the "SUPERPOWER AWARDS") issued under
the SuperPower Plan shall be terminated in accordance with the terms of the
SuperPower Plan and in accordance with the provisions on Section 6.9 of the
Company Disclosure Schedule. The Company shall and shall cause SuperPower to
take all actions reasonably necessary to ensure that from and after the
Effective Time neither Parent nor the Surviving Company will be required to
deliver shares or other capital stock of SuperPower to any person pursuant to or
in settlement of SuperPower Options or SuperPower Awards after the Effective
Time. Additionally, the Company shall take all actions reasonably necessary to
ensure that as of the Effective Time that SuperPower is a wholly-owned
subsidiary of the Company and no shares of capital stock of SuperPower are
outstanding that are not held by the Company. The Company and SuperPower shall
not expend more than the amount set forth on Schedule 6.9 to effect the
provisions of this Section 6.9.
6.10. EXPENSES. Except as otherwise provided in Section 8.5, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated by
this Agreement shall be paid by the party incurring such expense.
6.11. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, each of Parent and the
Surviving Corporation agrees that it will indemnify and hold harmless each
present and former director and officer of the Company or any of its
Subsidiaries (in each case, when acting in such capacity), determined as of
the Effective Time (the "INDEMNIFIED PARTIES"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that the Company would have been permitted under Delaware
law and its certificate of incorporation or bylaws in effect on the date
hereof to indemnify such Person (and Parent or the Surviving Corporation
shall also advance expenses as incurred to the fullest extent permitted
under applicable Law, PROVIDED that the Person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification); and
PROVIDED, FURTHER, that any determination required to be made with respect
to whether an officer's or director's conduct complies with the standards
set forth under Delaware law and the Company's certificate of incorporation
and bylaws shall be made by independent counsel selected by the Surviving
Corporation. The certificate of incorporation and bylaws of the Surviving
Corporation shall continue to contain provisions no less
-48-
favorable with respect to indemnification, advancement of expenses and
exculpation of the Indemnified Parties than are presently set forth in the
Company's certificate of incorporation and by-laws, which provisions shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of any such individuals.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.11, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent
thereof, but the failure to so notify shall not relieve Parent or the
Surviving Corporation of any liability it may have to such Indemnified
Party except to the extent such failure prejudices the indemnifying party.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right to assume the defense thereof
and Parent and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them,
and Parent or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; PROVIDED, HOWEVER, that Parent and the Surviving
Corporation shall be obligated pursuant to this paragraph (b) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present
such counsel with a conflict of interest; PROVIDED that the fewest number
of counsels necessary to avoid conflicts of interest shall be used; (ii)
the Indemnified Parties will cooperate in the defense of any such matter,
and (iii) Parent and the Surviving Corporation shall not be liable for any
settlement effected without their prior written consent; and PROVIDED,
FURTHER, that Parent and the Surviving Corporation shall not have any
obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable Law.
(c) Prior to the Effective Time, the Company shall use its
reasonable best efforts to, and if the Company is unable to, Parent shall
cause the Surviving Corporation as of the Effective Time to, obtain and
fully pay for "tail" insurance policies (providing only for Side A coverage
for Indemnified Parties where the existing policies also include Side B
coverage for the Company) with a claims period of at least six years from
and after the Effective Time from an insurance carrier with the same or
better credit rating as the Company's current insurance carrier with
respect to directors' and officers' liability insurance and
-49-
fiduciary liability insurance (collectively, "D&O INSURANCE") with benefits
and levels of coverage at least as favorable as the Company's existing
policies with respect to matters existing or occurring at or prior to the
Effective Time (including in connection with this Agreement or the
transactions or actions contemplated hereby but excluding Side B coverage
as provided above); PROVIDED, HOWEVER, that in no event shall the Company
expend for such policies a premium amount in excess of 250% of the last
annual premium paid by the Company for D&O Insurance prior to the date
hereof. If the Company and the Surviving Corporation for any reason fail to
obtain such "tail" insurance policies as of the Effective Time, the
Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, continue to maintain in effect for a period of at least six
years from and after the Effective Time the D&O Insurance in place as of
the date hereof with benefits and levels of coverage at least as favorable
as provided in the Company's existing policies as of the date hereof (but
providing only for Side A coverage for Indemnified Parties where the
existing policies also include Side B coverage for the Company), or the
Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, use reasonable best efforts to purchase comparable D&O
Insurance for such six-year period with benefits and levels of coverage at
least as favorable as provided in the Company's existing policies as of the
date hereof (but providing only for Side A coverage for Indemnified Parties
where the existing policies also include Side B coverage for the Company),
PROVIDED, HOWEVER, that in no event shall Parent or the Surviving
Corporation be required to expend for such policies an annual premium
amount in excess of 250% of the annual premiums currently paid by the
Company for such insurance; and, provided further that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall obtain a policy with the greatest coverage available for
a cost not exceeding such amount.
(d) If Parent or the Surviving Corporation or any of their
respective successors or assigns (i) shall consolidate with or merge into
any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case,
proper provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation, as the case may be, shall assume all
of the obligations set forth in this Section 6.11.
(e) The provisions of this Section 6.11 are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties and their respective heirs and legal representatives.
6.12. OTHER ACTIONS BY THE COMPANY.
(a) TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
-50-
Agreement, the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by
this Agreement and otherwise act to eliminate or minimize the effects of
such statute or regulation on such transactions.
(b) SECTION 16 MATTERS. The board of directors of the Company
shall, prior to the Effective Time, take all such actions as may be
necessary or appropriate pursuant to Rule 16b-3(e) under the Exchange Act
to exempt the conversion to cash of all Shares, Company Options and Company
Awards by officers and directors of the Company who are subject to the
reporting requirements of Section 16(a) of the Exchange Act or by employees
or directors of the Company who may become an officer or director of Parent
subject to the reporting requirements of Section 16(a) of the Exchange Act.
Each of Parent and the Company shall provide to counsel for the other party
for its review copies of such resolutions to be adopted by its board of
directors prior to such adoption and the Company shall provide Parent with
such information as shall be reasonably necessary for Parent's board of
directors to set forth the information required in the resolutions of
Parent's board of directors.
6.13. OTHER ACTIONS BY PARENT AND MERGER SUB. Parent shall adopt this
Agreement in its capacity as sole stockholder of Merger Sub as soon as
practicable following the execution of this Agreement.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been duly
approved by holders of Shares constituting the Company Requisite Vote in
accordance with applicable Law and the certificate and bylaws of the
Company.
(b) REGULATORY CONSENTS. (i) The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
earlier terminated, and (ii) all approvals and licenses required in
connection with the Dutch Competition Act, the German Act against
Restrictions of Competition of 1958, and the Italian Antitrust Law (or (if
the parties have determined, pursuant to Section 6.5(b)(iii), to make a
filing with the EC Commission) the regulations of the European Union) shall
have been obtained.
-51-
(c) NO ORDERS; NO LITIGATION. No court or other Governmental
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law (whether temporary, preliminary or permanent)
that is in effect and restrains, enjoins or otherwise prohibits
consummation of the Merger or the other transactions contemplated by this
Agreement (collectively, an "ORDER") and there shall be no lawsuit pending
in which the FTC, the Antitrust Division, the Dutch Competition Authority
or the European Union seeks to restrain, enjoin or otherwise prohibit
consummation of the Merger or other transactions contemplated by this
Agreement.
(d) PROXY STATEMENT. No order suspending the use of the Proxy
Statement shall have issued and no proceeding for that purpose shall have
been initiated by the SEC.
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Company set forth in this Agreement that are qualified by
reference to Material Adverse Effect shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as
of such date and time (except to the extent that any such representation
and warranty expressly speaks as of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier
date); (ii) the representations and warranties of the Company set forth in
this Agreement that are not qualified by reference to Material Adverse
Effect shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made on and as of such date and time (except to
the extent that any such representation and warranty expressly speaks as of
an earlier date, in which case such representation and warranty shall be
true and correct as of such earlier date), PROVIDED, HOWEVER, that
notwithstanding anything herein to the contrary, the condition set forth in
this Section 7.2(a)(ii) shall be deemed to have been satisfied even if any
representations and warranties of the Company (other than Section 5.1(b)
(Capital Structure), Section 5.1(c)(i) (Corporate Authority; Approval and
Opinion of Financial Advisor) and 5.1(l) (Takeover Statutes) hereof, which
must be true and correct in all material respects) are not so true and
correct unless the failure of such representations and warranties of the
Company to be so true and correct, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect; and (iii)
Parent shall have received at the Closing a certificate signed on behalf of
the Company by the Chief Executive Officer and Chief Financial Officer of
the Company to the effect that such officers have read this Section 7.2(a)
and the conditions set forth in this Section 7.2(a) have been satisfied.
-52-
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and Chief Financial Officer of the Company to
such effect.
7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of such date and time (except to the
extent that any such representation and warranty expressly speaks as of an
earlier date, in which case such representation and warranty shall be true
and correct as of such earlier date). The Company shall have received at
the Closing a certificate signed on behalf of Parent and Merger Sub by an
authorized representative of Parent and Merger Sub to the effect that the
conditions set forth in this Section 7.3(a) have been satisfied.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and the Company shall have received a certificate
signed on behalf of Parent and Merger Sub by an authorized representative
of Parent and Merger Sub to such effect.
ARTICLE VIII
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by the stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective boards of directors.
8.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Parent or the Company if (a)
the Merger shall not have been consummated by (i) December 31, 2006, or (ii) if
the conditions set forth in Section 7.1(b) have not been satisfied by December
31, 2006, but all other conditions set forth in Article VII are capable of being
satisfied as of such date, then March 31, 2007, whether such date is before or
after the date of approval by the
-53-
stockholders of the Company referred to in Section 7.1(a) (the "TERMINATION
DATE"), (b) the adoption of this Agreement by the stockholders of the Company
referred to in Section 7.1(a) shall not have been obtained at the Stockholders
Meeting or at any adjournment or postponement thereof or (c) any Order
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger shall become final and non-appealable (whether before or after the
approval by the stockholders of the Company); PROVIDED that the right to
terminate this Agreement pursuant to this Section 8.2 shall not be available to
any party that has breached its obligations under this Agreement in any manner
that shall have proximately contributed to the occurrence of the failure of a
condition to the consummation of the Merger.
8.3. TERMINATION BY THE COMPANY. This Agreement may be terminated and
the Merger may be abandoned:
(a) by action of the board of directors of the Company at any
time prior to obtaining the Company Requisite Vote if (i) the Company is
not in breach of the covenants contained in Section 6.2 and is not in
material breach of any other covenants set forth in this Agreement, (ii)
the board of directors of the Company authorizes the Company, subject to
complying with the terms of this Agreement, to enter into an Alternative
Acquisition Agreement with respect to a Superior Proposal and the Company
notifies Parent in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice, (iii)
Parent does not make, within three business days of receipt of the
Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, a binding, irrevocable written offer
that the board of directors of the Company determines, in good faith after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of the Company as the Superior
Proposal (it being understood that, if accepted by the board of directors
of the Company, such an offer shall become an enforceable amendment to this
Agreement without further action by Parent or the Company) and (iv) the
Company prior to such termination pays or causes to be paid to Parent in
immediately available funds any fees required to be paid pursuant to
Section 8.5. The Company agrees (x) that it will not enter into the binding
agreement referred to in clause (ii) above until after the third business
day after it has provided the notification to Parent required thereby, (y)
to notify Parent promptly if its intention to enter into the written
agreement referred to in its notification shall change at any time after
giving such notification, and (z) during such three business day period, to
negotiate with Parent with respect to any revisions to the terms of the
transaction contemplated by this Agreement proposed by Parent in response
to a Superior Proposal, if any; or
(b) at any time prior to the Effective Time, whether before or
after obtaining the Company Requisite Vote, if (i) there has been a breach
of any representation, warranty, covenant or agreement made by Parent or
Merger Sub in
-54-
this Agreement, or any such representation and warranty shall have become
untrue after the date of this Agreement, such that Section 7.3(a) or 7.3(b)
would not be satisfied and such breach or condition is not curable or, if
curable, is not cured within 30 days after written notice thereof is given
by the Company to Parent.
8.4. TERMINATION BY PARENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
board of directors of Parent if (a)(i) the board of directors of the Company
shall have made a Change of Recommendation, (ii) the Company shall have failed
to take a vote of stockholders on the Merger prior to the Termination Date,
(iii) the board of directors of the Company shall have failed to reaffirm its
approval or recommendation of this Agreement and the Merger within 48 hours
after the later of (A) the fifteenth business day following the receipt of an
Acquisition Proposal, if the Company has received Parent's request therefor on
or prior to such fifteenth business day, or (B) the time when the Company
receives Parent's request therefor, if the Company has not received such request
on or prior to such fifteenth business day, or (iv) a tender offer or exchange
offer for outstanding shares of Company Common Stock shall have been publicly
disclosed (other than by Parent or an Affiliate of Parent) and (A) the Company
board of directors recommends that the stockholders of the Company tender their
shares in such tender or exchange offer, or (B) the Company board of directors
fails to recommend against acceptance of such tender offer or exchange offer
within 48 hours after the later of (x) the fifteenth business day following such
public disclosure, if the Company has received Parent's request therefor on or
prior to such fifteenth business day, or (y) the time when the Company receives
Parent's request therefor, if the Company has not received such request on or
prior to such fifteenth business day; or (b) there has been a breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement, or any such representation and warranty shall have become untrue
after the date of this Agreement, such that Section 7.2(a) or 7.2(b) would not
be satisfied and such breach or condition is not curable or, if curable, is not
cured within 30 days after written notice thereof is given by Parent to the
Company.
8.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement shall become void and of no effect with no
liability on the part of any party hereto (or of any of its Representatives or
Affiliates); PROVIDED, HOWEVER, that (i) except as otherwise provided herein, no
such termination shall relieve any party hereto of any liability or damages
resulting from any breach of this Agreement and (ii) the provisions set forth in
the second sentence of Section 9.1 shall survive the termination of this
Agreement.
(b) In the event that Parent shall be entitled to terminate this
Agreement pursuant to Section 8.4(a)(iii) or 8.4(a)(iv)(B), the Company
shall pay to Parent $1,000,000 by wire transfer of same day funds on each
calendar day beginning with the calendar day that includes the first hour
following the end of
-55-
the 48 hour period referred to in Section 8.4(a)(iii) or 8.4(a)(iv)(B), as
the case may be, and ending with and including the calendar day on which
(i) the board of directors of the Company reaffirms its approval or
recommendation of this Agreement and the Merger (in the case of Parent's
termination right pursuant to Section 8.4(a)(iii)), or (ii) the board of
directors of the Company recommends against acceptance of the tender offer
or exchange offer (in the case of Parent's termination right pursuant to
Section 8.4(a)(iv)(B)), or (iii) this Agreement is terminated by either
Parent or the Company pursuant to this Agreement, whichever event described
in clauses (i), (ii) or (iii) of this Section 8.5(b) first occurs.
Notwithstanding the foregoing, the amounts payable by the Company pursuant
to this Section 8.5(b) (collectively, the "EXPENSES") shall not exceed
$5,000,000 in the aggregate. Expenses payable on any calendar day that is
not a business day shall be paid on the next business day.
(c) In the event that (i) an Acquisition Proposal shall have been
made to the Company or any of its Subsidiaries or made publicly to any of
its stockholders or any Person shall have publicly announced an intention
(whether or not conditional) to make an Acquisition Proposal with respect
to the Company or any of its Subsidiaries and such Acquisition Proposal or
publicly announced intention shall not have been publicly withdrawn at
least (A) ten business days prior to termination of this Agreement, with
respect to any termination of this Agreement pursuant to Section 8.2(a), or
(B) five business days prior to termination of this Agreement, with respect
to termination of this Agreement pursuant to Section 8.2(b) and thereafter
this Agreement is terminated by either Parent or the Company pursuant to
Section 8.2(a) or 8.2(b), (ii) this Agreement is terminated (A) by Parent
pursuant to Section 8.4(a), or, with respect to a breach of a covenant or
agreement (but not with respect to a breach of a representation or
warranty), by Parent pursuant to Section 8.4(b) or (B) by the Company
pursuant to Section 8.2(b) and, on or prior to the date of the Stockholders
Meeting, any event giving rise to Parent's right to terminate under Section
8.4 shall have occurred or (iii) this Agreement is terminated by the
Company pursuant to Section 8.3(a), then the Company shall promptly, but in
no event later than two days after the date of such termination, pay Parent
a termination fee of $38,970,000, less any Expenses previously paid (the
"TERMINATION FEE"), by wire transfer of immediately available funds;
PROVIDED, HOWEVER, that the Termination Fee to be paid pursuant to clause
(iii) shall be paid as set forth in Section 8.3; PROVIDED, FURTHER, that no
Termination Fee shall be payable to Parent pursuant to clause (i) or clause
(ii) of this Section 8.5(c) unless and until (x) within 12 months of such
termination the Company or any of its Subsidiaries shall have entered into
an Alternative Acquisition Agreement with respect to, or shall have
consummated or shall have approved or recommended to the Company's
stockholders or otherwise not opposed, an Acquisition Proposal and (y) the
transaction contemplated by such Alternative Acquisition Agreement or
Acquisition Proposal, as the case may be, has been consummated (with "15%"
in the definition of "Acquisition Proposal" being replaced by "50%" for
purposes of
-56-
these clauses (x) and (y), including with respect to any Alternative
Acquisition Agreement which for such purposes shall refer only to an
Alternative Acquisition Agreement with respect to such an Acquisition
Proposal); PROVIDED that for purposes of this Agreement, an Acquisition
Proposal shall not be deemed to have been "publicly withdrawn" by any
Person if, within 12 months of such termination, the Company or any of its
Subsidiaries shall have entered into an Alternative Acquisition Agreement
with respect to, or shall have consummated or shall have approved, adopted
or recommended to the Company's stockholders or otherwise not opposed, an
Acquisition Proposal made by or on behalf of such Person or any of its
Affiliates. The Company acknowledges that the agreements contained in this
Section 8.5(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent and Merger Sub
would not enter into this Agreement; accordingly, if the Company fails to
promptly pay any amount due pursuant to Section 8.5(b) or this Section
8.5(c), and, in order to obtain such payment, Parent or Merger Sub
commences a suit which results in a judgment against the Company for such
amount, the Company shall pay to Parent or Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank N.A.
in effect on the date such payment was required to be made through the date
of payment. Notwithstanding anything to the contrary in this Agreement, the
parties hereby acknowledge that in the event that the Termination Fee
becomes payable and is paid by the Company pursuant to this Section 8.5(c),
the Termination Fee shall be Parent's and Merger Sub's sole and exclusive
remedy for monetary damages under this Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. SURVIVAL. This Article IX and the agreements of the Company,
Parent and Merger Sub contained in Article IV and Sections 6.8 (Employee
Benefits), 6.10 (Expenses) and 6.11 (Indemnification; Directors' and Officers'
Insurance) shall survive the consummation of the Merger. This Article IX and the
agreements of the Company, Parent and Merger Sub contained in Section 6.10
(Expenses) and Section 8.5 (Effect of Termination and Abandonment) and the
Confidentiality Agreement shall survive the termination of this Agreement. All
other representations, warranties, covenants and agreements in this Agreement
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of the
applicable Laws, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
-57-
9.3. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Laws.
9.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC
PERFORMANCE. (a) 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 LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the personal
jurisdiction of the courts of the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State court. The parties hereby
consent to and grant any such court jurisdiction over the person of such parties
and, to the extent permitted by law, over the subject matter of such dispute and
agree that mailing of process or other papers in connection with any such action
or proceeding in the manner provided in Section 9.6 or in such other manner as
may be permitted by Law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS
-58-
WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.5.
(c) The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in the Court of
Chancery of the State of Delaware, this being in addition to any other
remedy to which such party is entitled at law or in equity.
9.6. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, by
facsimile or by overnight courier:
IF TO PARENT OR MERGER SUB:
Philips Medical Systems
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Fax: x0 (000) 000-0000
with a copy (which shall not constitute notice) to:
Philips Medical Systems
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Senior Vice President and Chief Legal Officer
Fax: x0 (000) 000-0000
and:
Xx. Xxxxxxx X. Xxxx
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: x0 (000) 000-0000
-59-
IF TO THE COMPANY:
Intermagnetics General Corporation
000 Xxx Xxxxxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Fax: x0 (000) 000-0000
with a copy (which shall not constitute notice) to:
Xx. Xxxx X. Xxxxxxxx
Xx. Xxxxxx X. Xxxxxxx
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: x0 (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above. Any notice, request, instruction
or other document given as provided above shall be deemed given to the receiving
party upon actual receipt, if delivered personally; three business days after
deposit in the mail, if sent by registered or certified mail; upon confirmation
of successful transmission if sent by facsimile (PROVIDED that if given by
facsimile such notice, request, instruction or other document shall be followed
up within one business day by dispatch pursuant to one of the other methods
described herein); or on the next business day after deposit with an overnight
courier, if sent by an overnight courier.
9.7. ENTIRE AGREEMENT. This Agreement (including any exhibits hereto),
the Company Disclosure Letter and the Mutual Non-Disclosure Agreement, dated
November 9, 2005, between the Company and the Philips Medical Systems division
of Parent (the "CONFIDENTIALITY AGREEMENT") constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof.
9.8. NO THIRD PARTY BENEFICIARIES. Except with respect to the matters
provided for in Sections 4.2 (Exchange of Certificates) and 4.3 (Treatment of
Stock Plans) (each of which may be enforced by, but only by, any of the
individuals who are currently directors of the Company, as representatives of
the Company's stockholders and option holders), and as provided in Section 6.10
(Indemnification; Directors' and Officers' Insurance) only, Parent and the
Company hereby agree that their respective representations, warranties and
covenants set forth herein are solely for the benefit of the other party hereto,
in accordance with and subject to the terms of this Agreement, and this
Agreement is not intended to, and does not, create any third party beneficiaries
or otherwise confer upon any Person other than the parties hereto any rights or
remedies
-60-
hereunder, including the right to rely upon the representations, warranties and
covenants set forth herein.
9.9. OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. DEFINITIONS. Each of the terms set forth in ANNEX A is defined
in the Section of this Agreement set forth opposite such term.
9.11. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.12. INTERPRETATION; CONSTRUCTION. (a) The table of contents and
headings herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms. In
this Agreement, unless otherwise specified, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section, Exhibit or other subdivision.
(b) The parties have participated jointly in negotiating and
drafting this Agreement. In the event that an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, 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.
(c) Each party hereto has or may have set forth information in
its respective Disclosure Letter in a section thereof that corresponds to
the section
-61-
of this Agreement to which it relates. The fact that any item of
information is disclosed in a Disclosure Letter to this Agreement shall not
be construed to mean that such information is required to be disclosed by
this Agreement.
9.13. ASSIGNMENT. This Agreement shall not be assignable by operation
of Law or otherwise; PROVIDED, HOWEVER, that Parent may designate, by written
notice to the Company, another wholly-owned direct or indirect Subsidiary of
Royal Philips to be a Constituent Corporation in lieu of Merger Sub, in which
event all references herein to Merger Sub shall be deemed references to such
other Subsidiary, except that all representations and warranties made herein
with respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other Subsidiary as of
the date of such designation; PROVIDED that any such designation shall not
impede or materially delay the consummation of the transactions contemplated by
this Agreement or otherwise impede the rights of the stockholders of the Company
under this Agreement. Any purported assignment in violation of this Agreement
will be void AB INITIO.
-62-
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
INTERMAGNETICS GENERAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-Fact
PHILIPS HOLDING USA INC.
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Wiesenhoff
Title: Attorney-in-Fact
JUMBO ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Wiesenhoff
Title: Attorney-in-Fact
-63-
GUARANTEE BY KONINKLIJKE PHILIPS ELECTRONICS N.V.
Koninklijke Philips Electronics, N.V., a corporation organized under
the laws of the Kingdom of the Netherlands (the "Guarantor"), hereby irrevocably
and unconditionally guarantees to Intermagnetics General Corporation the full
and timely performance by Philips Holding USA Inc. and Jumbo Acquisition Corp.
(collectively, the "Philips Companies") of their respective obligations under
the foregoing Agreement and Plan of Merger (the "Merger Agreement"), and agrees
to take all actions, and cause its direct and indirect subsidiaries to take all
actions which the Philips Companies are obligated under the Merger Agreement to
cause the Guarantor and such subsidiaries to take. Sections 9.2, 9.4, 9.5, 9.8
and 9.11 of the Merger Agreement shall apply to this guarantee, mutadis
mutandis, as if they had been fully set forth herein.
Amsterdam, June 14, 2006
/s/ X. X. Kleisterlee /s/ X-X.J. Sivignon
-------------------------------- --------------------------------
X.X. Kleisterlee X-X.J. Sivignon
President and CEO CFO
Koninklijke Philips Electronics, N.V. Koninklijke Philips Electronics, N.V.
ANNEX A
DEFINED TERMS
TERMS SECTION
5% Stockholder...................................................5.1(d)(iv)
Acquisition Proposal.............................................6.2(b)
Affiliate........................................................5.1(e)(ii)
Agreement........................................................Preamble
Alternative Acquisition Agreement................................6.2(c)(ii)
Antitrust Division...............................................6.5(b)
Applicable Date..................................................5.1(e)(i)
Bankruptcy and Equity Exception..................................5.1(c)(i)
business day.....................................................1.2
Bylaws...........................................................2.2
Certificate......................................................4.1(a)
Change of Recommendation.........................................6.2(c)(ii)
Charter..........................................................2.1
Closing..........................................................1.2
Closing Date.....................................................1.2
Code.............................................................4.2(g)
Company..........................................................Preamble
Company Approvals................................................5.1(d)(i)
Company Awards...................................................4.3(b)
Company Benefit Plans............................................5.1(h)(i)
Company Disclosure Letter........................................5.1
Company Option...................................................4.3(a)
Company Recommendation...........................................5.1(c)(ii)
Company Reports..................................................5.1(e)(i)
Company Requisite Vote...........................................5.1(c)(i)
Confidentiality Agreement........................................9.7
Constituent Corporations.........................................Preamble
Contract.........................................................5.1(d)(ii)
Costs............................................................6.11(a)
Delaware Certificate of Merger...................................1.3
DGCL.............................................................1.1
Designated Employees.............................................Recitals
Dissenting Share.................................................4.1(a)
Dissenting Stockholders..........................................4.1(a)
D&O Insurance....................................................6.11(c)
Dutch Competition Act............................................5.1(d)
Effective Time...................................................1.3
Employees........................................................5.1(h)(i)
Encumbrance......................................................5.1(k)(iv)
Environmental Law................................................5.1(m)
ERISA............................................................5.1(h)(i)
ERISA Plan.......................................................5.1(h)(ii)
ERISA Affiliate..................................................5.1(h)(iii)
Exchange Act.....................................................5.1(e)(i)
Exchange Fund....................................................4.2(a)
Excluded Share...................................................4.1(a)
Expenses.........................................................8.5(b)
FDA..............................................................5.1(i)(ii)
FTC..............................................................6.5(b)
GAAP.............................................................5.1(a)
Governmental Consents............................................7.2(d)
Governmental Contract............................................5.1(j)(iii)
Governmental Entity..............................................5.1(d)(i)
Hazardous Substance..............................................5.1(m)
HSR Act..........................................................5.1(b)(ii)
Indemnified Parties..............................................6.11(a)
Insurance Policies...............................................5.1(q)
Intellectual Property............................................5.1(p)
IRS..............................................................5.1(h)(ii)
IT Assets........................................................5.1(p)
knowledge........................................................5.1(d)(iii)
Laws.............................................................5.1(i)(i)
Leased Real Property.............................................5.1(k)(ii)
Licenses.........................................................5.1(i)(i)
Lien.............................................................5.1(b)(i)
Material Adverse Effect..........................................5.1(a)
Material Contracts...............................................5.1(j)(i)
Merger...........................................................Recitals
Merger Sub.......................................................Preamble
Non-U.S. Benefit Plans...........................................5.1(h)(ii)
Open License Terms...............................................5.1(p)
Open Source Software.............................................5.1(p)
Order............................................................7.1(c)
Owned Real Property..............................................5.1(k)(i)
PBGC.............................................................5.1(h)(iii)
Parent...........................................................Preamble
Parent Approvals.................................................5.2(c)(i)
Paying Agent.....................................................4.2(a)
Pension Plan.....................................................5.1(h)(ii)
Per Share Merger Consideration...................................4.1(a)
Person...........................................................4.2(d)
Proxy Statement..................................................6.3
Representatives..................................................6.2(a)
Royal Philips....................................................6.3
Xxxxxxxx-Xxxxx Act...............................................5.1(e)(i)
SEC..............................................................5.1(e)(i)
Schedule Intellectual Property...................................5.1(p)
Securities Act...................................................5.1(e)(i)
Share............................................................4.1(a)
Stock Plans......................................................5.1(b)(i)
Stockholders Meeting.............................................6.4
Subsidiary.......................................................5.1(a)
Superior Proposal ...............................................6.2(b)
Surviving Corporation............................................1.1
Takeover Statute.................................................5.1(l)
Tax..............................................................5.1(n)
Tax Return.......................................................5.1(n)
Termination Date.................................................8.2
Termination Fee..................................................8.5(b)
Trade Secrets....................................................5.1(p)
Treasury Regulations.............................................5.1(n)(vii)
U.S. Company Benefit Plans.......................................5.1(h)(ii)
