Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
dated as of
June 29, 2003
by and
among
INFORMATION RESOURCES, INC.,
GINGKO CORPORATION
and
GINGKO ACQUISITION CORP.
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
Section 1.01. The Offer....................................................................2
Section 1.02. Company Actions..............................................................3
Section 1.03. Directors of the Company.....................................................4
Section 1.04. Top-Up Option................................................................5
ARTICLE II
THE MERGER
Section 2.01. The Merger...................................................................7
Section 2.02. Closing......................................................................7
Section 2.03. Effective Time...............................................................7
Section 2.04. Effects of the Merger........................................................8
Section 2.05. Certificate of Incorporation and By-Laws.....................................8
Section 2.06. Directors....................................................................8
Section 2.07. Officers.....................................................................8
Section 2.08. Effect on Capital Stock......................................................8
Section 2.09. Exchange of Certificates.....................................................9
Section 2.10. Options.....................................................................11
Section 2.11. Restricted Stock............................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 3.01. Organization and Qualification..............................................12
Section 3.02. Authority; Non-Contravention; Approvals.....................................12
Section 3.03. Interim Operations of Merger Sub............................................13
Section 3.04. Capital Resources...........................................................13
Section 3.05. Offer Documents; Proxy Statement............................................14
Section 3.06. Interest in the Company.....................................................14
Section 3.07. Brokers and Finders.........................................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Organization and Qualification..............................................15
Section 4.02. Capitalization..............................................................15
Section 4.03. Subsidiaries................................................................17
Section 4.04. Authority; Non-Contravention; Approvals.....................................18
Section 4.05. Reports and Financial Statements............................................20
Section 4.06. Absence of Undisclosed Liabilities..........................................20
Section 4.07. Absence of Certain Changes or Events........................................20
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Section 4.08. Litigation..................................................................21
Section 4.09. Offer Documents; Proxy Statement............................................21
Section 4.10. No Violation of Law.........................................................22
Section 4.11. Material Contracts; Compliance With Agreements..............................22
Section 4.12. Taxes.......................................................................23
Section 4.13. Employee Benefit Plans; ERISA...............................................24
Section 4.14. Labor Controversies.........................................................26
Section 4.15. Environmental Matters.......................................................27
Section 4.16. Intellectual Property.......................................................28
Section 4.17. Opinion of Financial Advisor................................................29
Section 4.18. Brokers and Finders.........................................................29
Section 4.19. Insurance...................................................................29
Section 4.20. Takeover Statutes...........................................................29
Section 4.21. Receivables and Customers...................................................29
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business Pending the Merger......................................30
Section 5.02. Restrictions on Parent and the Company......................................32
Section 5.03. No Solicitation.............................................................33
Section 5.04. Access to Information; Confidentiality......................................34
Section 5.05. Merger Sub..................................................................35
Section 5.06. Employee Benefits...........................................................35
Section 5.07. Proxy Statement.............................................................37
Section 5.08. Company Meeting.............................................................37
Section 5.09. Public Announcements........................................................38
Section 5.10. Expenses and Fees...........................................................38
Section 5.11. Agreement to Cooperate......................................................38
Section 5.12. Directors' and Officers' Indemnification....................................39
Section 5.13. Section 16 Matters..........................................................40
Section 5.14. Further Assurances..........................................................40
Section 5.15. Notices of Certain Events...................................................41
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. Conditions to the Obligations to Consummate the Merger......................42
ARTICLE VII
TERMINATION
Section 7.01. Termination.................................................................42
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ARTICLE VIII
MISCELLANEOUS
Section 8.01. Effect of Termination.......................................................44
Section 8.02. Non-Survival of Representations and Warranties..............................45
Section 8.03. Notices.....................................................................46
Section 8.04. Interpretation..............................................................47
Section 8.05. Miscellaneous...............................................................47
Section 8.06. Counterparts................................................................48
Section 8.07. Amendments; Extensions......................................................48
Section 8.08. Entire Agreement............................................................48
Section 8.09. Severability................................................................49
Section 8.10. Specific Performance; Limitation on Damages.................................49
Section 8.11. No Admission................................................................49
Section 8.12. Jurisdiction................................................................49
Section 8.13. WAIVER OF JURY TRIAL........................................................49
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 29, 2003 (as the same may be
amended from time to time and together with the schedules, exhibits and annexes
attached hereto, this "AGREEMENT"), by and among Gingko Corporation, a
Delaware
corporation (together with its successors and permitted assigns, "PARENT"),
Gingko Acquisition Corp., a
Delaware corporation and wholly-owned Subsidiary (as
defined in SECTION 3.02 of this Agreement) of Parent (together with its
successors and permitted assigns, "MERGER SUB"), and Information Resources,
Inc., a
Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have determined that it is in the best interests of their
respective stockholders for Merger Sub to acquire the Company on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, Parent and Merger Sub shall make a tender
offer (as it may be amended from time to time as permitted under this Agreement,
and together with the tender offer made during any "subsequent offering period"
(as provided by Rule 14d-11 under the Securities Exchange Act of 1934, as
amended, together with the rules and regulations thereunder (collectively, the
"EXCHANGE ACT")), the "Offer") to purchase all of the outstanding shares of
common stock, par value $0.01, of the Company, together with the associated
Company Rights (as defined herein) (the "COMPANY COMMON STOCK"), at a purchase
price per share of the Company Common Stock of one CVR (as defined below) and
$3.30 per share (the CVR and such price per share or any greater amount paid per
share of Company Common Stock pursuant to the Offer is herein referred to as the
"OFFER PRICE"), net to each seller in cash, without interest, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved and declared advisable the Offer, this Agreement
and the merger of Merger Sub with and into the Company (the "MERGER") following
the consummation of the Offer, on the terms and subject to the conditions set
forth in this Agreement, whereby each issued share of the Company Common Stock
not owned by Parent, Merger Sub or the Company, other than the Appraisal Shares
(as defined herein), shall be converted pursuant to the Merger into the right to
receive the Merger Consideration (as defined herein);
WHEREAS, the Company, Parent and Merger Sub propose to enter into a
Contingent Value Rights Agreement (as the same may be amended from time to time
and together with any schedules, exhibits and annexes attached thereto, the "CVR
Agreement") with the Rights Agents (as defined therein) prior to the Acceptance
Date (as defined herein) pursuant to which, Parent will issue the CVRs (as
defined herein) as part of the Offer Price pursuant to the Offer or as a part of
the Merger Consideration pursuant to the Merger; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements pursuant to this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.01. THE OFFER. (a) Subject to the conditions of this
Agreement and provided that this Agreement shall not have been terminated in
accordance with its terms pursuant to ARTICLE VII hereof and none of the events
set forth in paragraphs (a) through (f) of EXHIBIT A hereto shall have occurred
or be existing, as promptly as reasonably practicable but in no event later than
ten business days after the date of the public announcement of this Agreement,
Parent and Merger Sub shall commence the Offer within the meaning of the
applicable rules and regulations of the Securities and Exchange Commission (the
"SEC"). The obligations of Parent and Merger Sub to accept for payment, and pay
for, any shares of Company Common Stock tendered pursuant to the Offer are
subject to the conditions set forth in EXHIBIT A. The initial expiration date of
the Offer shall be the 20th business day following the commencement of the Offer
(the initial "EXPIRATION DATE," and any expiration time and date established
pursuant to an authorized extension of the Offer as so extended, shall also be
defined herein as an "EXPIRATION DATE"). Parent and Merger Sub expressly reserve
the right to waive any condition to the Offer or modify the terms of the Offer,
except that, without the written consent of the Company, Merger Sub shall not
(i) reduce the number of shares of Company Common Stock subject to the Offer,
(ii) reduce the Offer Price to be paid pursuant to the Offer, (iii) change or
waive the Minimum Tender Condition (as defined in EXHIBIT A), add to the
conditions set forth in EXHIBIT A or modify any condition set forth in EXHIBIT A
in any manner adverse to the holders of Company Common Stock, (iv) except as
provided below in this SECTION 1.01(a), extend the Offer, (v) change the form of
consideration payable in the Offer or (vi) otherwise amend the Offer in any
manner adverse to the holders of Company Common Stock. Notwithstanding the
foregoing, Merger Sub may (but shall not be obligated to), without the consent
of the Company and in its sole and absolute discretion, (A) from time to time
extend the Offer if, at the scheduled Expiration Date, any of the conditions of
the Offer shall not have been satisfied or waived until such time as such
conditions are satisfied or waived to the extent permitted by this Agreement;
(B) extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC applicable to the Offer; or (C) extend the
Offer for a "subsequent offering period" (as provided by Rule 14d-11 under the
Exchange Act) for a period of three to twenty business days in order to acquire
at least 90% of the outstanding shares of the Company Common Stock. On the terms
and subject to the conditions to the Offer that are set forth in this Agreement,
promptly after the Expiration Date, either Parent or Merger Sub shall accept for
payment and purchase, as promptly as practicable after the date on which Parent
or Merger Sub (as the case may be) first accepts shares for payment pursuant to
the Offer (the "ACCEPTANCE DATE"), all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer that Parent and Merger Sub are
permitted to accept and pay for under applicable law.
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(b) On the date of commencement of the Offer, Parent and Merger Sub
shall file with the SEC, and cause to be disseminated to the Company's
stockholders, as and to the extent required by applicable federal securities
laws, a Tender Offer Statement on Schedule TO with respect to the Offer, which
shall contain an offer to purchase and a related letter of transmittal and
summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"). Each of Parent, Merger Sub and the
Company shall promptly correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have originally
been or shall become false or misleading in any material respect (whether by
virtue of a material misstatement, material omission or otherwise), and each of
Parent and Merger Sub shall take all steps necessary to amend or supplement the
Offer Documents and to cause the Offer Documents as so amended or supplemented
to be filed with the SEC and the Offer Documents as so amended or supplemented
to be disseminated to the Company's stockholders, in each case as and to the
extent required by or deemed advisable under applicable federal securities laws.
The Company and its counsel shall be given reasonable opportunity to review and
comment upon the Offer Documents prior to their filing with the SEC or
dissemination to the stockholders of the Company. Parent and Merger Sub shall
provide to the Company and its counsel in writing any written comments (and
orally, any oral comments), Parent, Merger Sub or their counsel may receive from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and shall consult with the Company and its counsel
prior to responding to any such comments.
(c) Parent shall provide or cause to be provided to Merger Sub on a
timely basis the funds necessary to purchase any shares of Company Common Stock
that Merger Sub becomes obligated to purchase pursuant to the Offer.
Section 1.02. COMPANY ACTIONS. (a) The Company hereby approves
of and consents to the Offer, the Merger and the other transactions contemplated
by this Agreement. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Company's board of directors described in
SECTION 4.04(d).
(b) Subject to SECTION 5.03, on the date the Offer Documents are
filed with the SEC, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended or supplemented from time to time, and
together with the information required to be provided by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, the "SCHEDULE 14D-9")
containing the recommendations referred to in SECTION 4.04(d) and shall mail the
Schedule 14D-9 to the holders of Company Common Stock. Each of the Company,
Parent and Merger Sub shall promptly correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
originally been or shall have become false or misleading in any material
respect, (whether by virtue of a material misstatement, material omission or
otherwise), and the Company shall take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by or deemed advisable
under applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company shall provide Parent
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and its counsel in writing with any written comments (and orally, any oral
comments) the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments and
shall consult with Parent and its counsel prior to responding to such comments
and shall give due regard to any comments made by such parties.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Merger Sub promptly with mailing labels
containing the names and addresses of the record holders of Company Common Stock
as of a recent date and of those persons becoming record holders subsequent to
such date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Merger Sub such information and assistance (including
updated lists of stockholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
stockholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer, the Merger and the other
transactions contemplated by this Agreement, Parent and Merger Sub shall hold in
confidence the information contained in any such labels, listings and files,
shall use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, shall, upon request, deliver to the
Company all copies of such information then in their possession.
Section 1.03. DIRECTORS OF THE COMPANY. (a) Upon the Acceptance Date,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product obtained by multiplying the total number of directors on such Board
(giving effect to the directors designated by Parent pursuant to this sentence)
by the percentage that the number of shares of Company Common Stock purchased
and paid for by Parent or Merger Sub pursuant to the Offer, plus any shares
beneficially owned by Parent or its affiliates on the date of such purchase and
payment, bears to the total number of shares of Company Common Stock then
outstanding. On the expiration of any subsequent offering period (as provided by
Rule 14d-11 under the Exchange Act), Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the product obtained by multiplying the
total number of directors on such Board (giving effect to the directors
designated by Parent pursuant to this and the immediately preceding sentence) by
the percentage that the number of shares of Company Common Stock purchased and
paid for by Parent or Merger Sub pursuant to the Offer (including, but not
limited to, the number of shares purchased in any subsequent offering period),
plus any shares beneficially owned by Parent or its Affiliates on the date of
such purchase and payment in the subsequent offering period, bears to the total
number of shares of Company Common Stock then outstanding. In furtherance of the
rights and obligations set forth in the immediately foregoing two sentences, the
Company shall, upon request of Parent, promptly increase the size of its Board
of Directors, or it shall secure the resignations of such number of directors,
or both, as is necessary to enable Parent's designees to be so elected to the
Company's Board and, subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, shall cause Parent's designees to be so elected. At such
time, the Company shall, if requested by Parent, also cause directors designated
by Parent to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of each committee of the
Company's Board of Directors. Notwithstanding the foregoing, if shares
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of Company Common Stock are purchased pursuant to the Offer, there shall be
until the Effective Time at least two members of the Company's Board of
Directors who are directors on the date hereof and are not employees of the
Company.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under SECTION 1.03(a), including mailing to
stockholders together with the Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company's Board of Directors. Parent and Merger Sub will supply
the Company and be solely responsible for any information with respect to them
and their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the election of Parent's designees to the Company's
Board of Directors pursuant to this SECTION 1.03, prior to the Effective Time
(i) any amendment or termination of this Agreement by the Company, (ii) any
extension or waiver by the Company of the time for the performance of any of the
obligations or other acts of Parent or Merger Sub under this Agreement, or (iii)
any waiver of any of the Company's rights hereunder shall, in any such case,
require the concurrence of a majority of the directors of the Company then in
office who neither were designated by Parent nor are employees of the Company
(the "INDEPENDENT DIRECTOR APPROVAL").
Section 1.04. TOP-UP OPTION. (a) Subject to the terms and conditions
herein, the Company hereby grants to Parent an irrevocable option (the "TOP-UP
OPTION") to purchase up to that number of shares of Company Common Stock (the
"TOP-UP OPTION SHARES") equal to the lowest number of shares of Company Common
Stock that, when added to the number of shares of Company Common Stock
collectively owned by Parent, Merger Sub and any of their respective Affiliates
immediately following consummation of the Offer, shall constitute at least 90
percent of the shares of Company Common Stock then outstanding on a fully
diluted basis (assuming the issuance of the Top-Up Option Shares and the
exercise of all Company Options (as defined herein) and any other rights to
acquire Company Common Stock on the date of the Top-Up Exercise Event (as
defined below)) at a purchase price per Top-Up Option Share equal to the Offer
Price.
(b) Parent may, at its election, exercise the Top-Up Option, in
whole, but not in part, at any one time after the occurrence of a Top-Up
Exercise Event and prior to the occurrence of a Top-Up Termination Event (as
defined below).
A "TOP-UP EXERCISE EVENT" shall occur upon Parent's or Merger Sub's
acceptance for payment pursuant to the Offer (which shall include, for sake of
clarity, any subsequent offering period that Parent or Merger Sub may elect to
extend pursuant to the terms and conditions of this Agreement) of shares of
Company Common Stock constituting, together with Company Common Stock owned
directly or indirectly by any other Affiliates of Parent, less than 90 percent
of the shares of the Company Common Stock then outstanding on a fully diluted
basis (assuming the exercise of all Company Options (as defined herein) and any
other rights to acquire Company Common Stock on the date of the Top-Up Exercise
Event), but only if (i) the issuance of the Top-Up Option Shares pursuant
thereto would not require the approval of the stockholders of the Company under
applicable law or regulation (including, but not limited to,
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NASDAQ rules and regulations, including Section 4350(i)1(D) of the NASD Manual)
or (ii) NASDAQ has granted a waiver from any such rule or regulation that is
reasonably acceptable to the parties hereto, and there is no other applicable
law, rule or regulation that would require the approval of the Company's
stockholders for the issuance of the Top-Up Shares. Upon and after the request
of Parent, the Company will use its reasonable best efforts (but without the
payment of any money) to obtain such a waiver from NASDAQ as promptly as
possible after any such request.
The "TOP-UP TERMINATION DATE" shall occur upon the earliest to occur
of (i) the Effective Time, (ii) the termination of this Agreement, (iii) the
date that is ten business days after the occurrence of a Top-Up Exercise Event,
unless the Top-Up Option has been previously exercised in accordance with the
terms and conditions hereof and (iv) the date that is ten business days after
the Top-Up Notice Date unless the Top-Up Closing shall have previously occurred.
(c) If Parent wishes to exercise the Top-Up Option, Parent shall send
to the Company a written notice (a "TOP-UP EXERCISE NOTICE", and the date of
receipt of which notice is referred to herein as the "TOP-UP NOTICE DATE")
specifying the place for the closing of the purchase and sale of shares of
Company Common Stock pursuant to the Top-Up Option (the "TOP-UP CLOSING") and a
date not earlier than one business day nor later than ten business days after
the Top-Up Notice Date for the Top-Up Closing. The Company shall, promptly after
receipt of the Top-Up Exercise Notice, deliver a written notice to Parent
confirming the number of Top-Up Option Shares and the aggregate purchase price
therefor.
(d) At the Top-Up Closing, subject to the terms and conditions of
this Agreement, (i) the Company shall deliver to Parent a certificate or
certificates evidencing the applicable number of Top-Up Option Shares; provided
that the obligation of the Company to deliver Top-Up Option Shares upon the
exercise of the Top-Up Option is subject to the condition that no provision of
any applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up
Option Shares in respect of any such exercise and (ii) Parent shall purchase
each Top-Up Option Share from the Company at the Offer Price. Payment by Parent
of the purchase price for the Top-Up Option Shares may be made, at Parent's
option, by delivery of (i) immediately available funds by wire transfer to an
account designated by the Company or (ii) a demand note issued by Parent in
customary form that is reasonably acceptable to the parties and in a principal
face amount equal to the aggregate amount of the cash portion of the purchase
price for the Top-Up Option Shares, together with, in case of both clauses (i)
and (ii) above, that number of CVRs equal to the number of Top-Up Option Shares
to be issued pursuant to the exercise of the Top Up Option. Any demand note
issued pursuant to the preceding sentence shall be accompanied by a credit
support arrangement reasonably acceptable to the parties hereto.
(e) Upon the delivery by Parent to the Company of the Top-Up Exercise
Notice, and the tender of the consideration described in SECTION 1.04(d), Parent
shall be deemed to be the holder of record of the Top-Up Option Shares issuable
upon that exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing those Top-Up Option
Shares shall not then be actually delivered to
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Parent or the Company shall have failed or refused to designate the bank account
described in SECTION 1.04(d).
(f) Parent shall pay all expenses, and any and all federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this SECTION
1.04.
(g) Certificates evidencing Top-Up Option Shares delivered hereunder
may include legends legally required including a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
ARTICLE II
THE MERGER
Section 2.01. THE MERGER. After the Expiration Date, upon the terms
and subject to the conditions set forth in this Agreement, and in accordance
with the
Delaware General Corporation Law (the "DGCL"), Merger Sub shall be
merged with and into the Company at the Effective Time (as defined in SECTION
2.03). At the Effective Time, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all of the rights and
obligations of Merger Sub in accordance with the DGCL.
Section 2.02. CLOSING. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "CLOSING") shall
take place at 10:00 a.m., New York time, on the second business day after the
satisfaction or (to the extent permitted by applicable law and this Agreement)
waiver of the conditions set forth in ARTICLE VII (other than those conditions
to be satisfied or waived at the Closing), at the offices of Xxxxx Xxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time,
date or place agreed to in writing by Parent and the Company. The date on which
the Closing occurs is referred to in this Agreement as the "CLOSING DATE".
Section 2.03. EFFECTIVE TIME. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or after the
Closing Date, a certificate of merger or other appropriate documents (in any
such case, the "CERTIFICATE OF MERGER") shall be duly prepared, executed,
acknowledged and delivered by Merger Sub and the Company in accordance with the
relevant provisions of the DGCL and filed with the Secretary of State of the
State of
Delaware. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware or at
such subsequent time or date (not later than 90 days after the date of filing)
as Parent and the Company shall agree and specify in the Certificate of Merger.
The time at which the Merger becomes effective is referred to in this Agreement
as the "EFFECTIVE TIME".
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Section 2.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
Section 2.05. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended in its entirety to read as the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter changed or amended as provided therein or by applicable law;
PROVIDED, HOWEVER, that the Certificate of Incorporation of the Surviving
Corporation shall provide that the Surviving Corporation shall be named "
Information Resources, Inc." and shall contain indemnification provisions
consistent with the obligations set forth in SECTION 5.12(a).
(b) The By-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law; PROVIDED
that the By-Laws of the Surviving Corporation shall contain indemnification
provisions consistent with the obligations set forth in SECTION 5.12(a).
Section 2.06. DIRECTORS. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 2.07. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are appointed and qualified, as the case may be.
Section 2.08. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Parent or Merger Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of common
stock of Merger Sub, par value $0.01 per share, that is issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND STOCK OWNED BY PARENT. Each
share of Company Common Stock that is owned by the Company (as treasury stock),
Parent, Merger Sub or any of their respective Subsidiaries immediately prior to
the Effective Time shall automatically be cancelled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common
Stock that is issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with SECTION 2.08(b)) and the
Appraisal Shares (as defined in SECTION 2.08(d)) shall be converted into the
right to receive from the Surviving Corporation (i) in cash, without interest,
$3.30 per share (the "CASH CONSIDERATION") and (ii) one contingent value right
(a "CVR") which shall represent the contingent right to receive an amount
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of cash equal to the CVR Payment Amount (as defined in the CVR Agreement). The
Cash Consideration and the CVR to be received in respect of each such share of
Company Common Stock pursuant to this SECTION 2.08(c) are together defined
herein as the "MERGER CONSIDERATION". At the Effective Time all such shares of
Company Common Stock shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each holder of a certificate that
immediately prior to the Effective Time represented any such shares (a
"CERTIFICATE") shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration (without any interest being payable
thereon).
(d) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares (the "APPRAISAL SHARES") of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and are held by
any holder who is entitled to demand and properly demands appraisal of such
shares pursuant to, and who complies in all respects with, the provisions of
Section 262 of the DGCL ("SECTION 262"), if Section 262 provides for appraisal
rights for such shares, shall not be converted into the right to receive the
Merger Consideration as provided in SECTION 2.08(c), but instead such holder
shall be entitled to payment of the fair value of such shares in accordance with
the provisions of Section 262. At the Effective Time, all Appraisal Shares shall
no longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Section 262. Notwithstanding the foregoing, if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to appraisal under Section 262 or a court of competent jurisdiction
shall determine that such holder is not entitled to the relief provided by
Section 262, then the right of such holder to be paid the fair value of such
holder's Appraisal Shares under Section 262 shall cease, and each such Appraisal
Share shall be deemed to have been converted into, and shall have become, in
each case at the Effective Time, the right to receive the Merger Consideration
only (without any interest being payable thereon) as provided in SECTION
2.08(c). The Company shall serve prompt notice to Parent of any demands for
appraisal of any shares of Company Common Stock, and Parent shall have the
opportunity to participate in and direct all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
without the prior written consent of Parent, make any payment with respect to,
or settle or offer to settle, any such demands, or agree to do any of the
foregoing.
Section 2.09. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to
the Effective Time, Parent shall designate, or shall cause to be designated, a
bank or trust company reasonably acceptable to the Company to act as agent for
the payment of the Merger Consideration upon surrender of Certificates (the
"PAYING AGENT"), and, from time to time after the Effective Time, Parent shall
provide, or cause the Surviving Corporation to provide, to the Paying Agent
funds in amounts and at the times necessary for the payment of the Cash
Consideration pursuant to SECTION 2.08(c) promptly after the surrender of
Certificates, it being understood that any and all interest or income earned on
funds made available to the Paying Agent pursuant to this Agreement shall be
turned over to, and shall be deemed to be the property of, Parent.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of
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transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such person shall pass, only upon
proper delivery of the Certificates to the Paying Agent and shall be in
customary form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may reasonably be required by
the Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of the Cash Consideration and the number of CVRs
into which the shares formerly represented by such Certificate shall have been
converted pursuant to SECTION 2.08(c), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the stock transfer books of the Company,
the proper Merger Consideration may be paid in exchange therefor to a person
other than the person in whose name the Certificate so surrendered is registered
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not applicable. No interest shall be paid or
shall accrue on the Cash Consideration or the CVR(s) payable upon surrender of
any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All Merger
Consideration paid or issued upon the surrender of a Certificate in accordance
with the terms of this ARTICLE II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
formerly represented by such Certificate. Upon and after the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
transfer or any other reason, they shall be cancelled and exchanged as provided
in this ARTICLE II.
(d) NO LIABILITY. None of Parent, Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. All funds held by the Paying Agent for payment to the holders of
unsurrendered Certificates and unclaimed at the end of one year after the
Effective Time shall be returned to the Surviving Corporation, after which time
any holder of unsurrendered Certificates shall look as a general creditor only
to Parent for payment and issuance of the Merger Consideration (without any
interest being payable thereon) to which such holder may be due, subject to
applicable law. Any amounts remaining unclaimed by holders of shares of Company
Common Stock seven years after the Effective Time (or such earlier date
immediately before that time when the amounts would otherwise escheat to or
become property of any governmental authority) shall become, to the extent
permitted by applicable law, the property of Parent free and clear of any claims
or interest of any person previously (or subsequently claiming to be) entitled
thereto. Any portion of the Merger Consideration made available to the Paying
Agent pursuant to SECTION 2.09(a) to pay for Appraisal Shares shall be returned
to Parent, upon demand.
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(e) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the holder
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall pay and issue the Merger Consideration in respect of each
share of Company Common Stock represented by such lost, stolen or destroyed
Certificate.
(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement or the CVR Agreement to any holder
of shares of Company Common Stock (or of CVRs, a Company Option (as defined in
SECTION 2.10) or Restricted Shares (as defined in SECTION 2.11)) such amounts as
Parent, the Surviving Corporation or the Paying Agent is required to deduct and
withhold with respect to the making of any such payment under the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "CODE"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority by Parent, the Surviving Corporation or the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock (or of CVRs, a
Company Option or Restricted Shares) in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.
Section 2.10. OPTIONS. At the Effective Time, all outstanding and
unexercised options to purchase shares of Company Common Stock granted under any
of the Company Option Plans (each, a "COMPANY OPTION"), whether or not
exercisable or vested, shall be cancelled, and each holder of a Company Option
shall be entitled to receive, in full satisfaction of such Company Option, (i)
cash in an amount equal to the product of (A) the excess, if any, of the Cash
Consideration over the exercise price per share thereof and (B) the number of
shares of Company Common Stock subject to such Company Option and (ii) if cash
is paid pursuant to clause (i) hereof, one CVR per share of Company Common Stock
subject to such Company Option.
Section 2.11. RESTRICTED STOCK. At the Effective Time, any restricted
shares of Company Common Stock held by current or former employees and awarded
pursuant to the Company's Nonqualified Defined Contribution Plan or any
individual employment agreement (collectively, the "RESTRICTED SHARES") which
are outstanding immediately prior to the Effective Time shall be converted into
the right to receive the Merger Consideration in accordance with SECTION 2.08(c)
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
the Company that:
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Section 3.01. ORGANIZATION AND QUALIFICATION. Each of Parent and
Merger Sub is a corporation duly organized and validly existing under the laws
of the state of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted or as contemplated herein. Merger Sub
is a wholly-owned Subsidiary of Parent.
Section 3.02. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Each of
Parent and Merger Sub has full corporate power and authority to enter into this
Agreement and the CVR Agreement and to consummate the transactions contemplated
hereby and thereby. This Agreement and the CVR Agreement have been unanimously
approved by the Board of Directors of each of Parent and Merger Sub, and by
Parent as sole stockholder in Merger Sub, and no other corporate proceedings on
the part of either Parent or Merger Sub are necessary to authorize the execution
and delivery of this Agreement or the CVR Agreement or the consummation by each
of Parent and Merger Sub of the transactions contemplated hereby and thereby.
Each of this Agreement and the CVR Agreement has been duly executed and
delivered by each of Parent and Merger Sub, and, assuming the due authorization,
execution and delivery hereof and thereof by the Company, constitutes a valid
and legally binding agreement of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
(b) The execution, delivery and performance of this Agreement and the
CVR Agreement by each of Parent and Merger Sub and the consummation of the
transactions contemplated hereby and thereby do not and will not violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
require any offer to purchase or any prepayment of any debt or result in the
creation of any lien, security interest or encumbrance upon any of the
properties or assets of Parent or any of its Subsidiaries under any of the
terms, conditions or provisions of (i) the respective certificates of
incorporation or by-laws or similar organizational documents of Parent, Merger
Sub or any Subsidiary of Parent, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Parent, Merger Sub or any
Subsidiary of Parent or any of their respective properties or assets, subject in
the case of consummation, to obtaining the Parent Required Statutory Approvals
(as defined in SECTION 3.02(c)) prior to the Acceptance Date, or (iii) any loan
or credit agreement, bond, debenture, note, mortgage, indenture, guarantee,
lease or other agreement, contract, commitment, obligation, undertaking, permit,
concession, franchise or license or other binding instrument, whether oral or
written (each, including all amendments thereto, a "CONTRACT") to which Parent,
Merger Sub or any Subsidiary of Parent is a party or by which Parent, Merger Sub
or any Subsidiary of Parent or any of their respective properties or assets may
be bound or affected, other than, in the case of (ii) and (iii) above, such
violations, conflicts, breaches, defaults, terminations, accelerations, offers,
prepayments or creations of liens, security interests or encumbrances that are
not reasonably likely to prevent or materially impede or delay the consummation
of the Offer, the Merger or the other transactions contemplated hereby and
thereby. For purposes of this Agreement the term "SUBSIDIARY" means, with
respect to any
- 12 -
Person (as defined in SECTION 3.06), any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at any time
directly or indirectly owned by that Person.
(c) Except for (i) any filings by Parent and Merger Sub that may be
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), (ii) any filings by Parent and Merger Sub required by, and
approvals under, foreign antitrust and competition laws ("FOREIGN ANTITRUST
LAWS"), (iii) the applicable requirements of the Exchange Act and the Securities
Act of 1933, as amended and together with the rules and regulations promulgated
thereunder (collectively, the "SECURITIES ACT"), if any, (iv) the filing and
recordation of appropriate merger documents as required by the DGCL, (v) any
filings with or approvals from authorities required solely by virtue of the
jurisdictions in which the Company or its Subsidiaries conduct any business or
own any assets and (vi) any required filings with or approvals from applicable
domestic or foreign environmental authorities (the filings and approvals
referred to in clauses (i) through (vi) collectively referred to as the "PARENT
REQUIRED STATUTORY APPROVALS"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and delivery of this
Agreement or the CVR Agreement by Parent or Merger Sub or the consummation by
Parent and Merger Sub of the transactions contemplated hereby and thereby, other
than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be,
whether individually and in the aggregate, would not prevent or materially
impair or delay the ability of Parent or Merger Sub to perform its obligations
under this Agreement or the CVR Agreement (including, but not limited to the
consummation of the Offer, the Merger and the other transactions contemplated
hereby and thereby) or subject Parent or any of its Subsidiaries or any of its
or their officers, directors or employees to any criminal liability.
Section 3.03. INTERIM OPERATIONS OF MERGER SUB. Parent and Merger Sub
were formed solely for the purpose of engaging in the transactions contemplated
hereby and by the CVR Agreement, and neither such entity has engaged in any
business or incurred any liabilities other than in connection with the
transactions contemplated by this Agreement and the CVR Agreement.
Section 3.04. CAPITAL RESOURCES. On or prior to the expiration of the
Offer Parent and Merger Sub will have sufficient cash resources to pay for all
shares of Company Common Stock validly tendered into and not withdrawn from the
Offer and all associated costs and expenses. On or prior to the consummation of
the Merger, Parent and Merger Sub will have sufficient cash resources to pay the
Merger Consideration for all remaining shares of Company Common Stock and all
associated costs and expenses. Parent has received and provided accurate and
complete copies to the Company of commitment letters (collectively, the
"COMMITMENT LETTERS") from each of entities managed by Xxxxxxxxxx Capital
Partners, LLC (collectively, "XXXXXXXXXX") any Symphony Technology II-A, L.P.
("Symphony") dated as of the date of this Agreement pursuant to which Xxxxxxxxxx
and Symphony have, severally and not jointly, committed, pursuant to the terms
and subject to the conditions stated in the Commitment Letter of such Person, to
provide the respective equity and debt capital amounts described in the
Commitment Letter of such Person to Parent to be used by Parent to pay the cash
portion of the Merger Consideration and the Offer Price. The Commitment Letters
and other assets and rights
- 13 -
of Parent are sufficient to provide the funds that are necessary to consummate
the Offer, the Merger and the transactions contemplated hereby, and have been
duly accepted by Parent and are in full force and effect. All fees required to
be paid by Parent or Merger Sub on or prior to the date hereof in respect of the
Commitment Letters have been paid by Parent or Merger Sub.
Section 3.05. OFFER DOCUMENTS; PROXY STATEMENT. Neither the Offer
Documents nor any information supplied by Parent or Merger Sub for inclusion in
the Schedule 14D-9 will, at the time that the Offer Documents, the Schedule
14D-9, or any amendments or supplements thereto, are filed with the SEC or are
first published, sent or given to stockholders of the Company, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The information supplied by Parent for inclusion in any
proxy or information statement to be sent to stockholders of the Company in
connection with a meeting of the Company's stockholders to consider and vote on
the Merger (the "COMPANY MEETING") (such proxy or information statement, as
amended or supplemented, the "PROXY STATEMENT"), on the date that the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company and at the time of the Company Meeting, will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, Parent and Merger Sub make no
representation or warranty with respect to any information supplied by or on
behalf of the Company which is contained in any of the Offer Documents, the
Proxy Statement or any amendment or supplement thereto. The Offer Documents
shall comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act, if applicable.
Section 3.06. INTEREST IN THE COMPANY. Immediately prior to the
execution and delivery of this Agreement, neither Parent nor any of its
Subsidiaries beneficially owned any shares of Company Common Stock. As of the
date hereof, neither Parent nor any of its Affiliates is an "Interested
Stockholder" as such term is defined in Section 203 of the DGCL, or an
"Acquiring Person" as such term is defined in the Company Rights Agreement. For
purposes of this Agreement, the term "AFFILIATE" means, with respect to any
Person, any other Person directly or indirectly, controlling, controlled by, or
under common control with, the first such Person. As used in the preceding
sentence, (A) "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise and (B) "PERSON" means any natural person, corporation, partnership,
limited liability company, joint venture, trust, association, unincorporated
entity of any kind or governmental authority.
Section 3.07. BROKERS AND FINDERS. Neither Parent nor Merger Sub has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of Parent or Merger Sub to pay any investment
banking fees, finder's fees, brokerage or agent commissions or other like
payments in connection with the transactions contemplated hereby, for which, or
with respect to which, the Company is or might be liable.
- 14 -
Section 3.08. SETTLEMENT NEGOTIATIONS. None of Parent nor any of its
Affiliates (including Merger Sub) have had any settlement negotiations or other
discussions with the parties to the Litigation (as defined in the CVR Agreement)
other than the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the disclosure schedule dated as of the date hereof and
attached to this Agreement (which disclosure schedule shall make a specific
reference to the particular Section of this Agreement to which exception is
being taken or to which the relevant disclosure relates, as applicable) (the
"COMPANY DISCLOSURE SCHEDULE"):
Section 4.01. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized and validly existing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted or as contemplated hereby or by the CVR Agreement. The Company
is qualified to transact business and, where applicable, is in good standing in
each jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. True, accurate and complete copies
of the Company's Amended and Restated Certificate of Incorporation and Bylaws,
in each case as in effect on the date hereof, including all amendments thereto,
have heretofore been filed with the SEC or delivered to Parent.
For purposes of this Agreement, the term "COMPANY MATERIAL ADVERSE
EFFECT" shall mean any effect or change that is materially adverse to (i) the
business, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform
its obligations hereunder or under the CVR Agreement or to consummate the
transactions contemplated hereby or thereby, except, in each case, for any such
effect or change resulting from or arising out of (x) any loss of customers or
revenue resulting from the fact that Parent will become the owner of the Company
upon consummation of the transactions contemplated by this Agreement, (y) the
condition of the United States economy or financial markets generally or (z) a
condition generally affecting participants in the industry in which the Company
competes, unless in the case of clauses (y) and (z) such condition has a
disproportionate effect on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, in which case
such condition shall be taken into account in determining whether or not there
has been, or there would reasonably be expected to be a Company Material Adverse
Effect.
Section 4.02. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 60,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $0.01 (the "COMPANY PREFERRED SHARES"). As
of May 31, 2003, (i) 29,861,295 shares of Company Common Stock, including in
each case the associated Company Rights (as defined in SECTION 4.02(b)), no
stock appreciation rights (the "SAR'S") and no Company
- 15 -
Preferred Shares, were issued and outstanding, all of which shares of Company
Common Stock were validly issued and are fully paid, nonassessable and free of
preemptive rights, (ii) no shares of Company Common Stock were held in the
treasury of the Company, (iii) 9,767,185 shares of Company Common Stock were
reserved for issuance upon exercise of Company Options issued and outstanding,
(iv) 1,082,750 Restricted Shares were outstanding and (v) 257,043 shares of
Company Common Stock that were reserved for issuance under the Directors' Plan
(as defined below). Since May 31, 2003 except after the date hereof as permitted
by this Agreement, (i) no shares of Company Common Stock or Company Preferred
Shares have been issued, except for shares of Company Common Stock issued
pursuant to the exercise of Company Options outstanding on May 31, 2003 and
except for shares of Company Common Stock required to be issued in connection
with the Company's Amended and Restated 401(k) Retirement Savings Plan (the
"401(k) PLAN"), the Company's 2000 Employee Stock Purchase Plan (the "ESPP"),
the Company's Nonqualified Defined Contribution Plan (the "DCP") and the
Company's 1996 Directors' Plan (the "DIRECTORS' PLAN") and (ii) no options,
warrants, securities convertible into, or exchangeable for, or commitments with
respect to the issuance of, shares of capital stock of the Company have been
issued, granted or made, except the Company Rights in accordance with the terms
of the Company Rights Agreement that are issued in connection with the Company
Common Stock pursuant to the exercise of Company Options outstanding on May 31,
2003.
(b) As of the date hereof, except for (i) the Preferred Share
Purchase Rights (the "COMPANY RIGHTS") issued pursuant to the Rights Agreement,
as amended and restated (the "COMPANY RIGHTS AGREEMENT"), dated as of March 2,
1989, by and between the Company and Xxxxxx Trust and Savings Bank (the "COMPANY
RIGHTS AGENT"), (ii) the 8,897,422 Company Options that were issued and
outstanding on May 31, 2003, (iii) rights that were outstanding on May 31, 2003
under the 401(k) Plan, the ESPP, and the Directors' Plan and (iv) the 1,082,750
Restricted Shares, there were no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement and also including any rights plan or
other anti-takeover agreement, obligating the Company or any Subsidiary of the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of Company Common Stock or Company Preferred Shares (or any
securities, directly or indirectly, convertible into, or exchangeable or
exercisable for, any other shares of the capital stock or other equity interests
of the Company) or obligating the Company or any Subsidiary of the Company to
grant, extend, perform or enter into any such agreement or commitment. As of the
date hereof, there are no obligations, contingent or otherwise, of the Company
or any of its Subsidiaries to (i) repurchase, redeem or otherwise acquire any
shares of Company Common Stock, any Company Preferred Shares or the capital
stock or other equity interests of the Company or any of its Subsidiaries (or
any securities, directly or indirectly, convertible into, or exchangeable or
exercisable for, any other shares of the capital stock or other equity interests
of the Company), except in connection with the issuance of shares of Company
Common Stock and the associated Company Rights upon the exercise of Company
Options issued and outstanding on May 31, 2003 or (ii) other than as set forth
in SECTION 4.02(b) of the Company Disclosure Schedule, provide material funds
to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to or security
for the obligations of, any Subsidiary of the Company or any other Person. There
are no outstanding stock appreciation rights or similar derivative securities or
rights of the Company or any of its Subsidiaries. There are no bonds,
debentures, notes or other indebtedness of the
- 16 -
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote. Except as otherwise expressly contemplated by this Agreement,
there are no voting trusts, irrevocable proxies or other agreements or
understandings to which the Company or any Subsidiary of the Company is a party
or is bound with respect to the voting of any shares of Company Common Stock.
The Board of Directors of the Company has taken all action (subject only to
execution of such amendment by the Company Rights Agent which the Company has
obtained or will obtain as soon as practicable after the date hereof) to amend
the Company Rights Agreement to provide that, for so long as this Agreement is
in full force and effect, (i) none of the Parent and its Affiliates (including,
but not limited to, Merger Sub) shall become an "ACQUIRING PERSON" and no "STOCK
ACQUISITION DATE" shall occur as a result of the announcement, execution,
delivery or performance of this Agreement or the CVR Agreement or the
consummation of the Offer, the Top-Up Closing or the Merger or any other action
or transaction contemplated hereby or thereby or in connection herewith or
therewith, (ii) no "DISTRIBUTION DATE" shall occur as a result of the
announcement, execution, delivery or performance of this Agreement or the CVR
Agreement or the consummation of the Offer, the Top-Up Closing or the Merger or
any other action or transaction contemplated hereby or thereby or in connection
herewith or therewith.
(c) The Company has filed with the SEC or previously made available
to Parent complete and correct copies of the Amended and Restated 1992 Stock
Option Plan, the Amended and Restated 1992 Executive Stock Option Plan, the 1984
Non-Qualified Stock Option Plan and the Amended and Restated 1994 Employee
Nonqualified Stock Option Plan (the "COMPANY OPTION PLANS") and the Directors'
Plan, including all amendments thereto. SECTION 4.02(c) of the Company
Disclosure Schedule contains a correct and complete list as of May 31, 2003 of
each outstanding Company Option and Restricted Share, including the holder, date
of grant, expiration date, exercise price, vesting schedule and aggregate number
of Company Common Shares subject thereto (vested and unvested) and setting forth
the weighted average exercise price for all outstanding Company Options.
(d) Since December 31, 2002, there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock of the Company, (ii) any repurchase, redemption or
other acquisition by the Company of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or (iii) any
amendment of any material term of any outstanding security of the Company or any
of its Subsidiaries.
Section 4.03. SUBSIDIARIES. Each Subsidiary of the Company is duly
organized, validly existing and, where applicable, in good standing under the
laws of its jurisdiction of organization and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted and each Subsidiary of the Company is
qualified to transact business, and is in good standing, in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary; except in all cases
as would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. (i) All of the outstanding shares of capital
stock of each Subsidiary of the Company are validly issued, fully paid,
nonassessable and free of preemptive rights, liens and any other limitation or
restriction, (ii) all such shares are owned directly or indirectly by the
Company, and (iii) there are no outstanding
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(A) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock of or other voting securities or
ownership interests in any such Subsidiary or (B) options or other rights to
acquire from the Company or any of its Subsidiaries, or other obligation of the
Company or any such Subsidiary to issue, any capital stock of or other voting
securities or ownership interests in, or any securities convertible into or
exchangeable for any capital stock of or other voting securities or ownership
interests in, any such Subsidiary (the outstanding shares of the capital stock
of each Subsidiary of the Company, together with the items in clauses (A) and
(B) being referred to collectively as the "COMPANY SUBSIDIARY SECURITIES").
There are no subscriptions, options, warrants, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting or transfer of any Company Subsidiary Securities, and
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any of the Company Subsidiary
Securities. The Company has no material investment in any entity, other than its
Subsidiaries, and no other entity in which the Company has an investment is
material to the Company or any of its business segments. Since December 31,
2002, there has not been any making of any loan, advance or capital
contributions by the Company or any of its Subsidiaries to or any other
investment in any Person, other than loans, advances or capital contributions to
or investments in its wholly owned Subsidiaries made in the ordinary course of
business consistent with past practices.
Section 4.04. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) The
Company has full corporate power and authority to enter into this Agreement and
the CVR Agreement and, subject to the approval of the stockholders of the
Company if required by the DGCL (the "COMPANY STOCKHOLDER APPROVAL"), to
consummate the transactions contemplated hereby and thereby. This Agreement and
the CVR Agreement have been approved by the Board of Directors of the Company,
and no other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or the CVR Agreement or,
except for the Company Stockholder Approval (if required by the DGCL), the
consummation by the Company of the transactions contemplated hereby and thereby.
Each of this Agreement and the CVR Agreement has been duly executed and
delivered by the Company, and, assuming the due authorization, execution and
delivery hereof and thereof by Parent and Merger Sub, constitutes a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) The execution, delivery and performance of this Agreement and the
CVR Agreement by the Company and the consummation of the transactions
contemplated hereby and thereby do not and will not violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or require any offer to
purchase or any prepayment of any debt or result in the creation of any lien,
security interest or encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries, or the loss of any asset, right or benefit
of the Company or any of its Subsidiaries under any of the terms, conditions or
provisions of (i) the respective certificates of incorporation or bylaws or
similar organizational documents of the Company or any of its Subsidiaries, (ii)
any statute, law,
- 18 -
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to the Company or
any of its Subsidiaries or any of their respective properties or assets, subject
in the case of consummation, to obtaining (prior to the Acceptance Date) the
Company Required Statutory Approvals and prior to the Effective Time, the
Company Stockholder Approval, or (iii) any Contract to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound or
affected, other than, in the case of (ii) and (iii) above, such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests or encumbrances that would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect or
prevent or materially impede or delay the consummation of the Offer, the Merger
or the other transactions contemplated hereby and thereby.
(c) Except for (i) any filings by the Company that may be required by
the HSR Act, (ii) any filings by the Company required by, and approvals under,
Foreign Antitrust Laws, (iii) the applicable requirements of the Exchange Act
and the Securities Act, if any, (iv) the filing and recordation of appropriate
merger documents as required by the DGCL, (v) any filings with or approvals from
authorities required solely by virtue of the jurisdictions in which Parent or
its Subsidiaries conduct any business or own any assets and (vi) any required
filings with or approvals from applicable domestic or foreign environmental
authorities (the filings and approvals referred to in clauses (i) through (vi)
are collectively referred to herein as the "COMPANY REQUIRED STATUTORY
APPROVALS"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement or the
CVR Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby or thereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not made or obtained, as the case may be, (x) individually and in the aggregate,
would not prevent or materially impede or delay the ability of the Company to
perform its obligations under this Agreement or the CVR Agreement or prevent or
materially impede or delay the consummation of the Offer, the Merger and the
other transactions contemplated hereby or thereby, (y) would not reasonably be
expected to have a Company Material Adverse Effect or (z) subject the Company or
any of its Subsidiaries or any its or their officers, directors or employees to
any criminal liability.
(d) The Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions that are still in full force
and effect as of the date hereof and, subject to SECTION 5.03 of this Agreement,
will remain in full force and effect, (i) approving and declaring advisable the
Offer, the Merger, this Agreement, the CVR Agreement and the transactions
contemplated hereby and thereby, (ii) declaring that it is in the best interests
of the Company's stockholders that the Company enter into this Agreement and the
CVR Agreement and consummate the Offer, the Merger and the other transactions
contemplated hereby and thereby, on the terms and subject to the conditions set
forth in this Agreement, (iii) recommending that the Company's stockholders
accept the Offer, tender their shares pursuant to the Offer and approve and
adopt this Agreement (if required by applicable law), (iv) approving the
acquisition of the shares of the Company Common Stock by Parent or Merger Sub
pursuant to the Offer, the Top-Up Option and the Merger and the other
transactions contemplated by this
- 19 -
Agreement and by the CVR Agreement and (v) exempting this Agreement and the
transactions contemplated hereby from the restrictions of Section 203 of the
DGCL.
Section 4.05. REPORTS AND FINANCIAL STATEMENTS. Since January 1,
2000, the Company has filed with the SEC all material forms, statements, reports
and documents (including all exhibits, posteffective amendments and supplements
thereto) (the "COMPANY SEC REPORTS") required to be filed by it under each of
the Securities Act and the Exchange Act, all of which, as amended if applicable,
complied in all material respects with all applicable requirements of the
appropriate act. As of their respective filing dates except as amended or
supplemented prior to the date hereof, in which case as of the filing date of
that amendment or supplement, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements of the Company included in the Company's
Annual Report on Form 10-K for the twelve months ended December 31, 2002 and the
unaudited financial statements of the Company included in the Company's
Quarterly Report on Form 10-Q (the "COMPANY 10-Q") for the quarterly period
ended March 31, 2003 (collectively, the "COMPANY FINANCIAL STATEMENTS") have
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present in all material respects the
financial position of the Company and its Subsidiaries as of the dates thereof
and the results of their operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited financial statements,
to normal year-end adjustments). The Company's Annual Report on Form 10-K for
the twelve months ended December 31, 2002, the Company 10-Q and the Current
Report on Form 8-K filed by the Company on April 24, 2003 are collectively
referred to as the "COMPANY RECENT SEC REPORTS". Since December 31, 2002, there
has not been any change in any method of accounting or accounting principles or
practice by the Company or any of its Subsidiaries, except for any such change
required by reason of a concurrent change in GAAP or Regulation S-X under the
Exchange Act.
Section 4.06. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the unaudited financial statements included in the Company 10-Q or in the
Company Recent SEC Reports, neither the Company nor any of its Subsidiaries had
at March 31, 2003, or has incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities, obligations or contingencies which are accrued or
reserved against in the balance sheet of the Company 10-Q or reflected in the
notes thereto, (b) account or trade payables that were incurred in the ordinary
course of business and consistent with past practices or (c) liabilities,
obligations or contingencies which (i) would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, or (ii)
have been discharged or paid in full prior to the date hereof.
Section 4.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 2002, (a) the business of the Company and its Subsidiaries has been
conducted in the ordinary course consistent with past practices, (b) there has
not been any event, occurrence or development, and there has not arisen any
state of circumstances or facts that has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (c)
any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of
- 20 -
any indebtedness for borrowed money, other than in the ordinary course of
business and in amounts and on terms that are consistent with past practices;
(d) any creation or other incurrence by the Company or any of its Subsidiaries
of any lien on any asset other than in the ordinary course of business
consistent with past practices, (e) any damage, destruction or other casualty
loss (whether or not covered by insurance) affecting the business or assets of
the Company or any of its Subsidiaries that has had or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or (f) any transaction or commitment made, or any Contract entered into,
by the Company or any of its Subsidiaries relating to its assets or business
(including the acquisition or disposition of any assets) or any relinquishment
by the Company or any of its Subsidiaries of any contract or other right, in
either case, that would reasonably be expected to be material to the Company and
its Subsidiaries, taken as a whole, other than transactions and commitments in
the ordinary course of business consistent with past practices and those
contemplated by this Agreement or the CVR Agreement.
Section 4.08. LITIGATION. Except as disclosed in the Company Recent
SEC Reports, as of the date hereof, there are no claims, suits, actions or
proceedings pending, or, to the Company's Knowledge, threatened against,
relating to or affecting the Company or any of its Subsidiaries, before any
court, governmental department, commission, agency, instrumentality or
regulatory or other authority, or any arbitrator that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect or that are reasonably likely to prevent or materially impede or delay
the consummation of the Offer, the Merger or any of the other transactions
contemplated by this Agreement or the CVR Agreement. Neither the Company nor any
of its Subsidiaries is subject to any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or regulatory or other authority, or any arbitrator which prohibits or could
materially impair or delay the consummation of the transactions contemplated
hereby or by the CVR Agreement or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.09. OFFER DOCUMENTS; PROXY STATEMENT. Neither the Schedule
14D-9 nor any information supplied by the Company for inclusion in the Offer
Documents will, at the respective times that the Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement will not, on the date the Proxy Statement (or
any amendment or supplement thereto) is first mailed to stockholders of the
Company, and at the time of the Company 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 made therein, in the light
of the circumstances under which they are made, not misleading. The Schedule
14D-9 and the Proxy Statement will, when filed by the Company with the SEC,
comply as to form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to
information supplied by or on behalf of Parent or Merger Sub which is contained
in any of the foregoing documents.
- 21 -
Section 4.10. NO VIOLATION OF LAW. Neither the Company nor any of its
Subsidiaries is in violation of, or since June 30, 2000 has violated any law,
statute, order, rule, regulation, ordinance or judgment (including, without
limitation, any applicable environmental law, ordinance or regulation) of any
governmental or regulatory body or authority, except for violations that would
not reasonably be expected to be material to the Company and its Subsidiaries,
taken as a whole, or to result in a material liability to the Company or any of
its Subsidiaries. No investigation or review by any governmental or regulatory
body or authority is pending or, to the Company's Knowledge, threatened, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each case, those the outcome of which, as far
as reasonably can be foreseen, would not reasonably be expected to be material
to the Company and its Subsidiaries, taken as a whole, or to result in a
material liability to the Company or any of its Subsidiaries. The Company and
its Subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (collectively, the "COMPANY
PERMITS"), except for permits, licenses, franchises, variances, exemptions,
orders, authorizations, consents and approvals the absence of which would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company and its Subsidiaries are not in violation
of the terms of any Company Permit, except for violations which would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 4.11. MATERIAL CONTRACTS; COMPLIANCE WITH AGREEMENTS.
(a) Neither the Company nor any of its Subsidiaries is a party to or bound by:
(i) (A) any real property lease providing for annual base
rentals of $1,000,000 or more and (B) any operating and capital leases
providing for annual rentals of $750,000 or more;
(ii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets providing for annual
payments by the Company and/or its Subsidiaries of $1,500,000 or more;
(iii) any sales, distribution or other similar agreement
providing for the sale by the Company and/or its Subsidiaries of
materials, supplies, goods, services, equipment or other assets that
provides for annual revenue to the Company and/or its Subsidiaries of
$3,000,000 or more;
(iv) any material shareholder, partnership, joint venture,
joint operating or development agreement or any other similar
agreement or arrangement;
(v) any agreement entered into within the three-year period
prior to the date of this Agreement relating to the acquisition or
disposition of any material amount of assets outside the ordinary
course of business or the stock of any Subsidiary or business (whether
by merger, purchase or sale of stock, purchase or sale of assets or
otherwise);
- 22 -
(vi) any agreement relating to the indebtedness for borrowed
money or the deferred purchase price of property (in either case,
whether incurred, assumed, guaranteed or secured by an asset), except
any such agreement (A) with an aggregate outstanding principal amount
not exceeding $1,000,000 and which may be prepaid on not more than 30
days' notice without the payment of any penalty, (B) entered into
after the date of this Agreement as permitted by SECTION 5.01, or (C)
constituting inter-company receivables in its entirety.
(vii) any material intellectual property license or other
similar agreement;
(viii) any material agency, dealer, sales representative,
marketing or other similar agreement;
(ix) any agreement that limits in any material respect the
freedom of the Company and/or any of its Subsidiaries to compete in
any line of business or with any Person or in any area or which would
so limit in any material respect the freedom of the Company and/or any
of its Subsidiaries after the Closing Date; or
(x) any material agreement with any director or executive
officer of the Company or any Subsidiary or with any "associate" or
any member of the "immediate family" (as such terms are respectively
defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any such
director or executive officer.
(b) The Company and each of its Subsidiaries (and, to the Company's
Knowledge, each other party to any such Contract) are not in breach or violation
of or in default in the performance or observance of any term or provision of,
and no event has occurred which, with lapse of time or action by a third party,
would result in a default under, (i) the respective articles or certificates of
incorporation, bylaws or similar organizational instruments of the Company or
any of its Subsidiaries or (ii) any Contract to which the Company or any of its
Subsidiaries is a party or by which any of them is bound or to which any of
their property is subject, other than as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. Each
Contract disclosed in any portion of the Company Disclosure Schedule or required
to be disclosed pursuant to this Section 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, other than as would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. For the purposes of this
Agreement, the "COMPANY'S KNOWLEDGE" means, with respect to any given action,
event, occurrence, fact, information or circumstance, that any of Xxxxxx
Xxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxxx X. Xxxxxxxx, Xxxx
Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxx Xxxx, Xxxxx Xxxxxxxx,
Xxxxxx XxXxxxxx or Xxx Xxxxx had actual knowledge of that action, event,
occurrence, fact, information or circumstance.
Section 4.12. TAXES. (a) The Company and its Subsidiaries have (i)
duly filed with the appropriate governmental authorities all Tax Returns
required to be filed by them, and such Tax Returns are true, correct and
complete, and (ii) duly paid in full all Taxes shown as due on such Tax Returns,
except in each case where the failure to file such Tax Returns or pay such
- 23 -
Tax or the failure of such Tax Returns to be true, correct and complete would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. There are no material liens for Taxes upon any property
or asset of the Company or any Subsidiary thereof, except for liens for Taxes
not yet due or Taxes contested in good faith and reserved against in accordance
with GAAP. There are no unresolved issues of law or fact arising out of a notice
of deficiency, proposed deficiency or assessment from the Internal Revenue
Service (the "IRS") or any other governmental taxing authority with respect to
Taxes of the Company or any of its Subsidiaries which would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) For purposes of this Agreement, "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, communications services, severance, stamp, sales, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect to such
amounts, and "TAX RETURN" means any return, report or similar statement
(including attached schedules) required to be filed with respect to any Tax,
including without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
(c) Since December 31, 2002, there has not been any material Tax
election made or changed, any annual tax accounting period changed, any method
of tax accounting adopted or changed, any material amended Tax Returns or claims
for material Tax refunds filed, any material closing agreement entered into, any
material Tax claim, audit or assessment settled, or any right to claim a
material Tax refund, offset or other reduction in Tax liability surrendered.
Section 4.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) SECTION 4.13(a) of
the Company Disclosure Schedule includes a complete list of each employee
benefit plan, program or policy (written or oral) providing benefits to any
current or former employee, consultant, officer or director of the Company or
any of its Subsidiaries or any beneficiary or dependent thereof that is
sponsored, maintained, or administered by the Company or any of its ERISA
Affiliates or to which the Company or any of its ERISA Affiliates contribute or
is obligated to contribute (other than those programs or policies that do not
provide material benefits), or with respect to which the Company or any of its
ERISA Affiliates has any liability, including without limitation any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA, and including any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN")), any employee
benefit plan within the meaning of Section 3(3) of ERISA, and any material
compensation, bonus, profit sharing incentive, deferred compensation, vacation,
insurance (including any self-insured arrangements), health or medical benefits,
employee assistance, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance benefits),
stock purchase, stock option, stock based, severance, employment, change of
control or fringe benefit agreement, plan, program or policy in each case,
whether or not written (collectively, the "COMPANY EMPLOYEE BENEFIT PLANS"). For
purposes of this Agreement, "ERISA Affiliate" of any entity
- 24 -
means any other entity which, together with such entity, would be treated as a
single employer under Section 414 of the Code.
(b) With respect to each Company Employee Benefit Plan, the Company
has delivered or made available to Parent a true, correct and complete copy of:
(i) all plan documents and related trust or funding agreements or insurance
policies; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description, if any; (iv) the
most recent annual financial report, if any; (v) the most recent actuarial
report, if any; and (vi) the most recent determination letter from the IRS, if
any. Except as specifically provided in the foregoing documents, or in other
documents, delivered or made available to Parent, there are no amendments to any
Company Employee Benefit Plan that have been adopted or approved.
(c) The IRS has issued a favorable determination letter with respect
to each Company Employee Benefit Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code and its related trust that has
not been revoked, and the Company is not aware of any circumstances or events
that have occurred that would reasonably be expected to result in a revocation
of such letter.
(d) The Company and its ERISA Affiliates have materially complied,
and are now in material compliance, with all provisions of ERISA, the Code and
all laws, rules and regulations applicable to each Company Employee Benefit Plan
and each Company Employee Benefit Plan has been administered in all material
respects in accordance with its terms. None of the Company and its ERISA
Affiliates nor any other person, including any fiduciary, has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code or Section 406
of ERISA), which could subject any of the Company Employee Benefit Plans or
their related trusts, the Company, any of its ERISA Affiliates or any person
that the Company or any of its ERISA Affiliates has an obligation to indemnify,
to any tax or penalty imposed under Section 4975 of the Code or Section 502 of
ERISA. There are no pending or, to the Company's Knowledge, threatened claims
(other than claims for benefits in the ordinary course), lawsuits, audits,
actions or arbitrations which have been asserted or instituted against the
Company Employee Benefit Plans, any fiduciaries thereof with respect to their
duties to the Company Employee Benefit Plans or the assets of any of the trusts
under any of the Company Employee Benefit Plans which could reasonably be
expected to result in any liability of the Company or any of its ERISA
Affiliates to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Company Employee Benefit Plan.
(e) Neither the execution and delivery of this Agreement or the CVR
Agreement nor the consummation of the transactions contemplated hereby or
thereby will entitle any employee to severance pay or result in, cause the
accelerated vesting, funding or delivery of, or increase or enhance any benefit
or the amount or value of, any material payment or benefit to any current or
former employee, officer or director of the Company or any of its Subsidiaries,
or result in any limitation on the right of the Company or any of its
Subsidiaries to amend, merge, terminate or receive a reversion of assets from
any Company Employee Benefit Plan or related trust.
- 25 -
(f) No Company Employee Benefit Plan is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code, and none of the Company
and its ERISA Affiliates, has, at any time during the last six years sponsored,
maintained or contributed to or been obligated to contribute to any plan subject
to Title IV of ERISA. No employees of the Company or any of its Subsidiaries
located outside of the United States participate in or are eligible to
participate in any Company Employee Benefit Plans providing pension or
retirement benefits, and neither the Company nor any of its Subsidiaries has any
liability with respect to or arising under any such plans, whether or not
currently in existence or effective.
(g) No Company Employee Benefit Plan is a Multiemployer Plan, none of
the Company and its ERISA Affiliates has, at any time during the last six years,
contributed to or been obligated to contribute to any Multiemployer Plan, and
none of the Company and its ERISA Affiliates has incurred any withdrawal
liability to a Multiemployer Plan that has not been satisfied in full.
(h) Neither the Company nor any of its Subsidiaries has any
obligations for or any current or projected liability in respect of
post-employment or post-retirement health, medical or life benefits under any
Company Employee Benefit Plan or otherwise, except for obligations under Section
601 et. seq. of ERISA and Section 4980B of the Code ("COBRA").
(i) Since December 31, 2002, other than in the ordinary course of
business consistent with past practice, with respect to any director, executive
officer (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the
Exchange Act) or key employee (meaning an employee with the title Executive Vice
President or above) of the Company or any of its Subsidiaries, there has not
been any (i) grant of any severance or termination pay to (or amendment to any
existing arrangement with), (ii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements, (iii) any
entering into any employment, deferred compensation or other similar agreement
(or any amendment to any such existing agreement), (iv) establishment, adoption
or amendment (except as required by applicable law) of any collective
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit plan
or arrangement, or (v) increase in compensation, bonus or other benefits
payable.
(j) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of the Company or any of its
Subsidiaries that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to the terms of SECTION 280G
or 162(m) of the Code.
(k) Neither the Company nor any of its ERISA Affiliates has any
commitment or obligation to establish or adopt any new or additional employee
benefit plans or to increase the benefits under any existing Company Employee
Benefit Plan.
Section 4.14. LABOR CONTROVERSIES. (a) The Company and its
Subsidiaries are in compliance with all currently applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice, failure to
comply with which or engagement in which, as the case may be, would reasonably
be expected to have, individually or in the aggregate, a Company Material
- 26 -
Adverse Effect. (i) There is not pending or, to the Company's Knowledge,
threatened, any labor strike, material dispute, walk-out, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries, (ii)
there are no controversies pending or, to the Company's Knowledge, threatened
between the Company or its Subsidiaries and any representatives (including
unions) of any of their employees, and (iii) to the Company's Knowledge, there
are no organizational efforts being made involving any of the presently
unorganized employees of the Company or its Subsidiaries. Neither the Company
nor any of its Subsidiaries is a party to or subject to, or is currently
negotiating in connection with entering into, any collective bargaining
agreement or other contract or understanding with a labor union or organization.
(b) Since December 31, 2002, there has not occurred and there has not
been any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any of its Subsidiaries, which employees were
not subject to a collective bargaining agreement at December 31, 2002, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees.
Section 4.15. ENVIRONMENTAL MATTERS. (a) (i) The Company and its
Subsidiaries have conducted their respective businesses in compliance with all
applicable Environmental Laws, including, without limitation, having all
permits, licenses and other approvals and authorizations necessary for the
operation of their respective businesses as presently conducted, (ii) none of
the properties owned by the Company or any of its Subsidiaries contain any
Hazardous Substance as a result of any activity of the Company or any of its
Subsidiaries or, to the Company's Knowledge or the knowledge of any of its
Subsidiaries, as a result of any other activity, in any case in amounts
requiring any investigation or remediation or which may lead to any liability to
the Company or any of its Subsidiaries under any applicable Environmental Laws,
(iii) neither the Company nor any of its Subsidiaries has received any notices,
demand letters or requests for information from any federal, state, local or
foreign governmental entity or from any third party indicating that the Company
or any of its Subsidiaries may be in violation of, or liable under, any
Environmental Law in connection with the ownership or operation of their
businesses or of any real property, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
Subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law, or in a manner
giving rise to any liability under Environmental Law, from or on any properties
owned or operated by the Company or any of its Subsidiaries at any time and (vi)
neither the Company, its Subsidiaries nor any of their respective properties are
subject to any liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law, except for
violations of the foregoing clauses (i) through (vi) that would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) As used herein, "ENVIRONMENTAL LAW" means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment, decree, injunction,
requirement or agreement with any governmental entity relating to (x) the
protection, preservation or restoration of the environment (including,
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without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect at the date hereof.
(c) As used herein, "HAZARDOUS SUBSTANCE" means any hazardous, toxic
or radioactive substance or waste including, without limitation, any pollutant,
contaminant, special waste, industrial substance or petroleum or any derivative
or byproduct thereof, radon, asbestos, or asbestos-containing material, urea
formaldehyde foam insulation or polychlorinated biphenyls.
Section 4.16. INTELLECTUAL PROPERTY. The Company and its Subsidiaries
own, or are licensed to use, all Intellectual Property used in and material to
the conduct of the Company's business as it is currently conducted, and the
consummation of the transactions herein will not materially alter, materially
impair or extinguish any of the Company's or its Subsidiaries' rights in any
such Intellectual Property. To the Company's Knowledge, all material patents and
patent applications, material registered trademarks, material registered trade
names, material registered service marks and material registered copyrights (the
"COMPANY IP") are valid and subsisting. A true and complete list of the Company
IP is provided in SECTION 4.16 of the Company Disclosure Schedule. To the
Company's Knowledge, the Company and its Subsidiaries own or are licensed to use
all Intellectual Property necessary to exploit the Company's or its
Subsidiaries' projects in development that have been disclosed in the Company
SEC Reports or otherwise publicly announced. Except as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (i) to the Company's Knowledge, the use of the Intellectual Property by
the Company and its Subsidiaries does not infringe on or other otherwise violate
the rights of any third party, and is in accordance in all material respects
with the applicable license pursuant to which the Company acquired the right to
use such Intellectual Property, (ii) to the Company's Knowledge, no third party
is challenging, infringing on or otherwise violating any right of the Company in
the Intellectual Property, and (iii) neither the Company nor any of its
Subsidiaries has received any written notice of any offer to license, assertion
of infringement, pending claim, order or proceeding with respect to any
unlicensed third party Intellectual Property used in and material to the conduct
of the Company's business as it is currently conducted, and to the Company's
Knowledge, no Intellectual Property is being used or enforced by the Company in
a manner that would reasonably be expected to result in the abandonment,
cancellation or unenforceability of any Intellectual Property used in and
material to the conduct of the Company's business as it is currently conducted.
Except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company has taken reasonable
and customary steps to protect its rights in its own confidential information
and trade secrets, protect any confidential information provided to it by any
other Person, and obtain ownership of works of authorship and inventions made by
its employees, consultants and contractors and which are material to the
Company's business. With respect to all computer software programs owned by the
Company and material to the conduct of its business as it is currently conducted
("COMPANY SOFTWARE"), except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and except
as disclosed in SECTION 4.16 of the Company Disclosure Schedule: (i) no parties,
other than the Company and its Subsidiaries, possess any current or contingent
rights to license, sell, or
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otherwise distribute products or services utilizing the Company IP or the
Company Software, and (ii) no parties, other than the Company and its
Subsidiaries, possess any current or contingent rights to any source code that
is part of the Company Software. The Company has taken commercially reasonable
steps to protect the Company Software from becoming infected by any computer
code designed to disrupt, disable, harm, distort or otherwise impede in any
material manner the normal operation of such software by or for the Company or
its authorized users, or any other of the Company's associated software,
firmware, hardware, computer system or network (including without limitation
what are sometimes referred to as "viruses," "worms," unauthorized "time bombs,"
and/or unauthorized "back doors") and, to the Company's Knowledge (but without
representing that any inspection has been made other than by normal use of the
Company's virus detection software), the Company Software contains no such
computer code, except as would not be reasonably expected to have, individually
or in the aggregate, a Company Material Adverse Effect. For purposes of this
Agreement, the term "INTELLECTUAL PROPERTY" means all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, technology,
know-how, computer software programs or applications, and tangible or intangible
proprietary information or materials.
Section 4.17. OPINION OF FINANCIAL ADVISOR. The Company's financial
advisor, Xxxxxxx Xxxxx & Company (the "COMPANY FINANCIAL ADVISOR"), has
delivered to the Board of Directors of the Company an oral opinion, to be
confirmed in writing, to the effect that, as of the date of this Agreement, the
consideration to be received by the Company's stockholders in the Offer and the
Merger is fair to such holders from a financial point of view.
Section 4.18. BROKERS AND FINDERS. There is no obligation on the part
of the Company or any of its Subsidiaries to pay any investment banking fees,
finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby, other than fees payable to
the Company Financial Advisor pursuant to a fee agreement. The calculation of
such fee is set forth on Section 4.18 of the Company Disclosure Schedule.
Section 4.19. INSURANCE. All material fire and casualty, general
liability, business interruption, directors' and officers', product liability,
and sprinkler and water damage insurance policies maintained by the Company or
any of its Subsidiaries are with reputable insurance carriers, provide full and
adequate coverage for all normal risks incident to the business of the Company
and its Subsidiaries and their respective properties, businesses and assets.
Section 4.20. TAKEOVER STATUTES. The Board of Directors of the
Company has taken all actions necessary to exempt the Offer, the Top-Up Option,
the Merger, this Agreement and the other transactions contemplated hereby under
Section 203 of the DGCL. No other state takeover or similar statute or
regulation is applicable to this Agreement, the CVR Agreement, the Offer, the
Top-Up Option, the Merger or the other transactions contemplated hereby or
thereby.
Section 4.21. RECEIVABLES AND CUSTOMERS. Except as would not
reasonably be expected to have, whether individually or in the aggregate, a
Company Material Adverse Effect:
(a) All accounts, notes receivable and other receivables (other than
receivables collected since March 31, 2003) reflected on the consolidated
balance sheet of the
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Company as of that date that is contained in the Company 10-Q are, and all
accounts, notes and other receivables arising from or otherwise relating to the
business of the Company and its Subsidiaries since that date will be, valid,
genuine and fully collectible in the aggregate amount thereof, subject to normal
and customary trade discounts, less any reserves for doubtful accounts recorded
on that balance sheet.
(b) All accounts, notes receivable and other receivables arising out
of or relating to the business of the Company and its Subsidiaries as of March
31, 2003 have been included in the consolidated balance sheet of the Company as
of that date that is contained in the Company 10-Q in accordance with generally
accepted accounting principles applied on a consistent basis.
(c) Since December 31, 2002, there has not been any termination,
cancellation or curtailment of the business relationship of the Company or any
of its Subsidiaries with any customer or group of affiliated customers (nor has
any such customer or group been subject to any voluntary or involuntary
bankruptcy or similar filing under applicable law since that date), and neither
the Company nor any of its Subsidiaries has received any written notice of an
intent to so terminate, cancel or curtail.
ARTICLE V
COVENANTS
Section 5.01. CONDUCT OF BUSINESS PENDING THE MERGER. Except as
otherwise expressly contemplated by this Agreement, required by law or disclosed
in SECTION 5.01 of the Company Disclosure Schedule, after the date hereof and
prior to the Effective Time, without Parent's consent (which shall not be
unreasonably withheld), the Company shall, and shall cause its Subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective certificates
of incorporation or bylaws or equivalent constitutional documents, (ii) split,
combine or reclassify their outstanding capital stock or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions to the Company
or a Subsidiary of the Company by another Subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any class or
any debt or equity securities convertible into or exchangeable for such capital
stock, except that the Company may issue shares of capital stock of the Company
(A) upon exercise of Company Options outstanding on May 31, 2003 and (B) as
required by the 401(k) Plan, the ESPP, the Directors' Plan, the DCP and the
Company Rights Agreement as in effect on the date hereof;
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(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money (including, for the sake of clarity, any letters
of credit), other than borrowings in the ordinary course of business or
borrowings to fund working capital needs in the ordinary course of business
under the existing credit facilities of the Company or any of its Subsidiaries
on the terms of those facilities as they exist on the date of this Agreement
(the "EXISTING CREDIT FACILITIES") in an aggregate amount for all such permitted
borrowings not to exceed $20,000,000 for any consecutive four business day
period, (ii) redeem, purchase, acquire or offer to purchase or acquire any
shares of its capital stock or any options, warrants or rights to acquire any of
its capital stock or any security convertible into or exchangeable for its
capital stock other than in connection with the exercise of outstanding Company
Options pursuant to the terms of the Company Option Plans and the relevant
written agreements evidencing the grant of Company Options, or to use for the
401(k) Plan, the ESPP or the Directors' Plan, (iii) make any material
acquisition of any assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for fixed or capital
assets in the ordinary course of business with a value that is less than (A)
$2,500,000 in the aggregate during the forty-five (45) day period commencing on
the date of this Agreement and (B) $4,500,000 in the aggregate during the ninety
(90) day period commencing on the date of this Agreement or (iv) sell, pledge,
lease, license dispose of or encumber any material assets or businesses other
than (A) any such transactions disclosed in SECTION 5.01 of the Company
Disclosure Schedule, (B) pledges or encumbrances pursuant to Existing Credit
Facilities or (C) sales of inventory and other current assets in the ordinary
course of business consistent with past practices.
(e) use reasonable best efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees (other than terminations of
services for cause), and preserve the goodwill and business relationships with
customers and others having business relationships with them;
(f) not enter into or amend or modify any employment, consulting,
severance, retirement or special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or key employees or with any other persons, except (i) as required by
previously existing contractual arrangements or applicable law or (ii) other
employment agreements entered into with a person who is hired or promoted by the
Company or one of its Subsidiaries after the date hereof in the ordinary course
of business whose annual base salary does not exceed $175,000;
(g) not increase the salary, bonus, benefits or other compensation of
any person except for increases in the ordinary course of business consistent
with past practice or except pursuant to contractual arrangements existing on
the date of this Agreement;
(h) not adopt, enter into or amend or modify, in each of the latter
two cases to materially increase benefits or obligations of any Company Employee
Benefit Plan, except as required pursuant to existing contractual arrangements,
this Agreement or applicable law;
(i) (A) not enter into any new contract or commitment providing for
the purchase of goods or services by the Company or any of its Subsidiaries that
is inconsistent with the Company's April 2003 forecast (a true, accurate,
complete and current copy of which has been provided to Parent prior to the date
of this Agreement) or has a term of more than one year
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and which is reasonably expected to involve payments to retailers of more than
$3,000,000 per annum or payments to other third parties of more than $2,000,000
per annum, (B) not amend, modify or change in any material respect, or waive any
material rights of the Company or any of its Subsidiaries or any material
obligation of any third party under, any contract listed in SECTION 4.11 of the
Company Disclosure Schedule;
(j) not make, change or revoke any material Tax election unless
required by law or make any agreement or settlement with any taxing authority
regarding any material amount of Taxes or which is reasonably likely to
materially increase the obligations of the Company or the Surviving Corporation
to pay Taxes in the future;
(k) not defer the payment of accounts or trade payables, or seek to
accelerate the payment of, or factor or otherwise similarly monetize, accounts
or trade receivables, of the Company or any of its Subsidiaries, in either such
case beyond or in advance (as the case may be) of the customary payment periods
of the Company, such Subsidiary(ies) or such third parties for those payables or
receivables;
(l) not enter into any interest rate, currency or other swap or
derivative transaction, other than in the ordinary course of business consistent
with past practices and for BONA FIDE hedging purposes;
(m) not take any action that would make any representation or
warranty of the Company inaccurate in any material respect at any time before
the Effective Time;
(n) not (i) propose or make, or engage in any discussions or
negotiations with respect to, any Settlement Decision (as defined in the CVR
Agreement) or (ii) enter into any confidentiality agreement with any third party
to the Litigation (as defined in the CVR Agreement) with respect thereto; or
(o) not enter into an agreement, commitment or arrangement with
respect to any of the foregoing.
Section 5.02. RESTRICTIONS ON PARENT AND THE COMPANY. (a) Parent
agrees that, from and after the date hereof and prior to the Acceptance Date,
and except as may be agreed in writing by the Company or as may be expressly
permitted pursuant to this Agreement (including the exercise of termination
rights under this Agreement), Parent shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any action which would
materially delay the consummation of the Offer, including by application of Rule
14e-5 under the Exchange Act.
(b) The Company agrees that, from and after the date hereof and prior
to the Acceptance Date, and except as may be agreed in writing by Parent or as
may be expressly permitted pursuant to this Agreement (including any actions
pursuant to SECTION 5.03 and including the exercise of termination rights under
this Agreement), the Company shall not, and shall not permit any of its
Subsidiaries to agree, in writing or otherwise, to take any action which would
materially delay the consummation of the Offer.
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Section 5.03. NO SOLICITATION. (a) The Company shall not and shall
not permit its Subsidiaries or any officer, director, employee, attorney,
accountant, investment banker, financial advisor or other agent retained by it
or any of its Subsidiaries to, directly or indirectly, (i) solicit, initiate or
take any action to facilitate or knowingly encourage the submission of any
Acquisition Proposal, (ii) enter into or participate in any discussions or
negotiations with, or furnish any information relating to the Company or any of
its Subsidiaries or afford access to the business, properties, assets, books or
records of the Company or any of its Subsidiaries to, any Third Party that is
seeking to make or has made an Acquisition Proposal, (iii) grant any waiver or
release under any standstill or similar agreement with respect to any class of
equity securities of the Company or any of its Subsidiaries or (iv) enter into
any agreement with respect to an Acquisition Proposal, unless the Company shall
have terminated this Agreement in compliance with SECTION 7.01(d). For purposes
of this Agreement, the term, "ACQUISITION PROPOSAL" means any proposal or offer
(other than any proposal or offer by Parent or any of its Subsidiaries) to
acquire all or 15% or more of the business, properties or capital stock of the
Company or any of its Subsidiaries, whether by merger, purchase of assets,
tender offer or otherwise, whether for cash, securities or any other
consideration or combination thereof, other than any transaction involving
Parent or any of its Subsidiaries.
(b) Notwithstanding the provisions of paragraph (a) above or any
other provision of this Agreement, subject to compliance with SECTION 5.03(c),
the Company may, in response to an unsolicited bona fide written Acquisition
Proposal from any Person or group (a "POTENTIAL ACQUIROR") which the Company's
Board of Directors determines, in good faith and after consultation with its
independent financial advisor and legal counsel, could reasonably be expected to
lead to a Superior Proposal, furnish confidential or nonpublic information
pursuant to a confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement to, and engage in
discussions and negotiate with, such Potential Acquiror, PROVIDED that the
Company Board of Directors determines in good faith after consultation with
outside legal counsel, that such action is necessary in order for its directors
to comply with their fiduciary duties under applicable law. For purposes of this
Agreement, "SUPERIOR PROPOSAL" means an unsolicited BONA FIDE written
Acquisition Proposal for at least a majority of the voting power of the shares
of the Company Common Stock then outstanding or all or substantially all of the
assets of the Company and its Subsidiaries which the Company's Board of
Directors determines, in good faith and after consultation with its independent
financial advisor and outside legal counsel, would be more favorable to and
provide consideration to the holders of Company Common Stock with greater
financial value than the consideration payable in the Offer and the Merger,
taking into account all the terms and conditions of the Acquisition Proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation and for which financing is then fully committed; PROVIDED that, for
the sake of clarity, an Acquisition Proposal shall only be deemed to have been
solicited for purposes of this definition as a result of actions taken on or
after the date of this Agreement, and not as a result of any actions taken
before the date of this Agreement (for example, and by way of illustration, in
connection with the auction of the Company to other prospective bidders before
the date hereof). 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 shall also use its reasonable best efforts to cause any such party (or
its agents or advisors) in possession of confidential information about the
Company or any of its Subsidiaries that was furnished by or on behalf of the
Company to return or destroy all
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of that information. The Company agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in SECTION 5.03(a) that
have been engaged in connection with the evaluation of a possible Acquisition
Transaction of the obligations undertaken in this SECTION 5.03.
(c) The Company shall promptly (but in no event later than 24 hours)
notify Parent after receipt by it, any of its Subsidiaries or any of their
respective advisors of any Acquisition Proposal, any communication (whether
written or oral) from any Potential Acquiror or its advisor that such Potential
Acquiror is considering making an Acquisition Proposal or any request for
information relating to the Company or any of its Subsidiaries or for access to
the business, properties, assets, books or records of the Company or any of its
Subsidiaries by any Potential Acquiror that may be considering making or has
made an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror and
the material terms and conditions of such proposal, to the extent known. The
Company shall thereafter keep Parent informed, on a reasonably current basis, on
the status and terms of any such Acquisition Proposal and the status of any
discussion or negotiations with any Potential Acquiror related thereto.
(d) Notwithstanding SECTION 5.03(a), following receipt of a Superior
Proposal and after providing written notice to Parent at least three business
days before doing so, the Board of Directors of the Company may withdraw or
modify (or alter or modify in a manner adverse to Parent) the recommendation by
the Board of Directors of the Company of this Agreement, the Offer or the
Merger, if the Board of Directors of the Company determines in good faith (after
consultation with its outside counsel) that its fiduciary obligations require it
to do so.
(e) Nothing contained in this SECTION 5.03 or any other provision of
this Agreement shall prohibit the Company or the Board of Directors of the
Company from taking and disclosing to the Company's stockholders a position with
respect to a tender or exchange offer by a third party pursuant to Rule 14d-9
and 14e-2 promulgated under the Exchange Act.
Section 5.04. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to
applicable law, the Company and its Subsidiaries shall afford to Parent, Merger
Sub and their financing sources and their respective accountants, counsel,
financial advisors and other representatives (the "PARENT REPRESENTATIVES")
reasonable access during normal business hours upon reasonable notice throughout
the period prior to the Effective Time to their respective properties, books,
contracts, commitments and records and, during such period, shall furnish
promptly such information concerning its businesses, properties and personnel as
Parent or Merger Sub shall reasonably request; PROVIDED, HOWEVER, such
investigation shall not unreasonably disrupt the Company's operations. All
nonpublic information provided to, or obtained by, Parent, Merger Sub or any
such financing source in connection with the transactions contemplated hereby
shall be "CONFIDENTIAL INFORMATION" for purposes of the Confidentiality
Agreement dated February 19, 2003 between Parent and the Company (the
"CONFIDENTIALITY AGREEMENT"), the terms of which shall continue in force until
the Effective Time; PROVIDED that Parent, Merger Sub and the Company may
disclose such information as may be necessary in connection with seeking the
Parent Required Statutory Approvals and the Company Required Statutory
Approvals. Notwithstanding the foregoing, the Company shall not be required to
provide any information
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which it reasonably believes it may not provide to Parent by reason of
applicable law, rules or regulations, which constitutes information protected by
attorney/client privilege, or which the Company or any Subsidiary is required to
keep confidential by reason of contract, agreement or understanding with third
parties; PROVIDED that, with respect to any such information, the Company shall,
or shall cause the relevant Subsidiary to, provide the maximum amount of that
information (or shall endeavor to otherwise convey that information in a manner)
that is consistent with the applicable law, rule or regulation, the maintenance
of that privilege or the terms of the relevant contract, as applicable. No
investigation pursuant to this SECTION 5.04(a) shall affect or be deemed to
modify any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. Notwithstanding anything
herein to the contrary, any party to this Agreement (and each employee,
representative, or other agent of such parties) may disclose to any and all
persons, without limitation of any kind, the U.S. "tax treatment" or "tax
structure" (in each case, within the meaning of Treasury Regulation section
1.6011-4) of the transactions contemplated hereunder and all materials of any
kind (including opinions or other tax analysis, but without disclosure of
identifying information or, except to the extent relating to such U.S. "tax
treatment" or "tax structure," any non-public commercial or financial
information) that are provided to such parties relating to such U.S. "tax
treatment" and "tax structure" (in each case, within the meaning of Treasury
Regulation section 1.6011-4); PROVIDED, that such disclosure may not be made
until the earlier of (x) the date of public announcement of discussions relating
to the transactions contemplated by this Agreement, (y) the date of the public
announcement of the transactions contemplated by this Agreement, or (z) the date
of execution of this Agreement. Moreover, notwithstanding anything herein to the
contrary, there shall be no limitation on any party's ability to consult any tax
adviser, whether or not independent from the parties, regarding the U.S. "tax
treatment" or "tax structure" of the transactions contemplated by this
Agreement. The intent of this provision is that the transactions contemplated by
the Agreement are not treated as having been offered under conditions of
confidentiality for purposes of Treasury Regulation section 1.6011-4(b)(3) and
shall be construed in a manner consistent with such purpose.
Section 5.05. MERGER SUB. Parent will take all action necessary (a)
to cause Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement
and (b) to ensure that, prior to the Effective Time, Merger Sub shall not
conduct any business or make any investments other than as specifically
contemplated by or in furtherance of this Agreement, or incur or guarantee any
indebtedness other than as necessary for the consummation of the transaction
contemplated hereby.
Section 5.06. EMPLOYEE BENEFITS. (a) Until December 31, 2004, Parent
shall provide, or shall cause to be provided, to each employee of the Company
and its Subsidiaries, who is an employee thereof as of the Acceptance Date (the
"COMPANY EMPLOYEES") cash compensation and employee benefits that are
substantially comparable, in the aggregate, to those provided to Company
Employees immediately before the Acceptance Date (excluding benefits provided
under any plan, program or policy providing severance or termination benefits
and benefits provided under any stock option or other stock-based plan, program
or policy). The foregoing shall not be construed to prevent the termination of
employment of any Company Employee or the amendment or termination of any
particular Company Employee Benefit Plan to the extent permitted by its terms
and under any applicable law.
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(b) For purposes of eligibility and vesting and levels of benefits
under the employee benefit plans of Parent and its Affiliates providing benefits
to any Company Employees after the Acceptance Date (the "NEW PLANS"), each
Company Employee shall be credited with his or her years of service with the
Company and its Affiliates before the Acceptance Date, to the same extent as
such Company Employee was entitled, before the Acceptance Date, to credit for
such service under any corresponding Company Employee Benefit Plans in which
such employee participated, except to the extent such credit would result in a
duplication of benefits. In addition, and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Company
Employee Benefit Plan in which such Company Employee participated immediately
before the Acceptance Date; and (ii) for purposes of each New Plan providing
medical, dental, pharmaceutical and/or vision benefits to any 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 to the extent such exclusions or requirements were not
applicable under the corresponding Company Employee Benefit Plan in which such
employee participated, 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 Company Employee Benefit 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 to the extent that those
expenses were incurred during a period in which the employee or covered
dependent was covered under a corresponding Company Employee Benefit Plan.
(c) Prior to and as of the Acceptance Date, the Company shall
terminate each Company Option Plan, the DCP, the Directors' Plan, the ESPP, the
1999 Restricted Stock Plan and each other Company Employee Benefit Plan
providing for the grant of stock-based awards or under which grants of
stock-based awards have been made. The Company shall freeze the ESPP effective
July 1, 2003 so that a new Accumulation Period under the ESPP does not begin on
July 1, 2003. The Company shall not take any action to set or otherwise commence
a new Accumulation Period or Exercise Date (each as defined in the ESPP) unless
this Agreement shall have been terminated in accordance with ARTICLE VII hereof.
(d) Prior to the Acceptance Date, the Company shall cause all shares
of Company Common Stock that are then held in the Unallocated Stock Account (as
such term is defined in the DCP) under the DCP to be allocated, or reallocated,
as the case may be, to Stock Accounts (as such term is defined in the DCP) under
the DCP.
(e) With respect to the Directors' Plan, the Company shall distribute
shares of Company Common Stock payable for services rendered in second quarter
2003 and that portion of the third quarter 2003 ending on the Payment Date (as
defined below) by participants in such plan on the date (the "PAYMENT DATE")
that is the earlier of (i) August 1, 2003 and (ii) the day that is immediately
prior to the Acceptance Date.
(f) No provision of this SECTION 5.06 shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent
- 36 -
thereof) of the Company or any of its Affiliates in respect of continued
employment with, or any benefits which may be provided by, either Parent or any
of its Affiliates.
Section 5.07. PROXY STATEMENT. As promptly as practicable after the
consummation of the Offer and if required by the Exchange Act, the Company shall
prepare and file with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to stockholders, the
Proxy Statement. Parent and Merger Sub agree to cooperate with the Company in
the preparation of the Proxy Statement and other proxy solicitation materials of
the Company. The Company shall provide Parent and its counsel with a reasonable
opportunity to review the draft Proxy Statement each time before it is filed
with the SEC and shall give reasonable and good faith consideration to any
comments from Parent and its counsel on such draft(s). The Proxy Statement shall
contain the recommendation of the Company's Board of Directors that the
Company's stockholders approve and adopt this Agreement and the Merger, unless
the fiduciary duties of the Company's Board of Directors require that the Board
withdraw or adversely alter or modify that recommendation or that the Board
recommend against approval and adoption. Unless this Agreement is previously
terminated in accordance with SECTION 7.01, the Company shall, if required,
submit this Agreement to its stockholders at the Company Meeting, even if the
Board of Directors of the Company determines at any time after the date of this
Agreement that it is no longer advisable, adversely alters its recommendation or
recommends that the Company stockholders reject it. The Company shall promptly
provide Parent and its counsel in writing with any written comments (and orally,
any oral comments) that the Company or its counsel may receive from the SEC or
its staff with respect to the Proxy Statement promptly after the receipt of
those comments and shall consult with (and shall duly consider in good faith any
comments of) Parent and its counsel before responding to those comments. The
Company and its counsel will provide Parent and its counsel with a reasonable
opportunity to participate in all communications, if any, with the SEC and its
staff, including any meetings and telephone conferences relating to the Proxy
Statement, this Agreement, the CVR Agreement or the matters or transactions
contemplated hereby or thereby.
Section 5.08. COMPANY MEETING. Following the consummation of the
Offer, the Company shall promptly take all action necessary in accordance with
the DGCL and its Certificate of Incorporation and By-Laws to convene the Company
Meeting, if such meeting is required, as soon as reasonably practicable. The
stockholder vote required for approval of the Merger will be no greater than
that set forth in the DGCL. The Company shall use its reasonable efforts to
solicit from stockholders of the Company proxies in favor of the Merger and
shall take all other action necessary or, in the reasonable opinion of Parent,
advisable to secure any vote of stockholders required by the DGCL to effect the
Merger. Notwithstanding the foregoing, if Parent, Merger Sub or any other
subsidiary of Parent shall acquire at least 90 percent of the outstanding shares
of Company Common Stock, and PROVIDED that the conditions set forth in ARTICLE
VI shall have been satisfied or waived, the Company shall, at the request of
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without the approval of
the stockholders of the Company, in accordance with Section 253 of the DGCL.
Parent shall vote, or shall cause to be voted, all of the shares of Company
Common Stock acquired in the Offer or otherwise owned by it or any of its
Subsidiaries (including Merger Sub) in favor of the approval and adoption of
this Agreement and the Merger.
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Section 5.09. PUBLIC ANNOUNCEMENTS. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement, the CVR Agreement or the transactions
contemplated hereby or thereby and, except as may be required by applicable law
or any listing agreement with NASDAQ, will not issue any such press release or
make any such public statement prior to such consultation; provided that, if the
Company, any Subsidiary or any of their respective directors, officers,
employees or advisors receives an offer or proposal from any third party to the
Litigation (as defined in the CVR Agreement) with respect to any Settlement
Decision (whether or not conditional), then Parent shall have the right, in its
discretion, to publicize the terms and conditions of that offer or proposal.
Section 5.10. EXPENSES AND FEES. All costs and expenses incurred in
connection with this Agreement and the CVR Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that those expenses incurred in connection with printing and
filing the Offer Documents, the Schedule 14D-9 and the Proxy Statement shall be
equally borne by Parent and the Company.
Section 5.11. AGREEMENT TO COOPERATE. (a) Subject to the terms and
conditions of this Agreement and applicable law, Parent and the Company shall
use their respective best efforts (but without the obligation on the part of any
party to pay any money, to divest, sell or hold separate any assets or agree to
any behavioral modifications with any Governmental Agency) to take, or cause to
be taken, all actions and do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including to obtain
all necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve contractual relationships of Parent and the
Company and their respective Subsidiaries, all necessary or appropriate waivers,
consents and approvals to effect all necessary registrations, filings and
submissions and to lift any injunction or other legal bar to consummation of the
Offer or the Merger (and, in such case, to proceed with the consummation of the
Offer and the Merger as expeditiously as possible), including through all
possible appeals.
(b) In addition to and without limitation of the foregoing, each of
Parent and the Company undertakes and agrees to file (and Parent agrees to cause
any Person that may be deemed to be the ultimate parent entity or otherwise to
control Parent to file, if such filing is required by law) as soon as
practicable, (x) if required by the HSR Act, a Notification and Report Form
under the HSR Act with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice (and shall file as
soon as practicable any form or report required by any other Governmental Agency
relating to antitrust matters) and (y) any and all filings that may be required
to be made under Foreign Antitrust Laws in respect of this Agreement, the CVR
Agreement or any transaction contemplated hereby or thereby. Each of Parent and
the Company shall (and Parent shall cause any such parent entity to) (i) respond
as promptly as practicable to any inquiries or requests received from any
domestic or foreign government or governmental agency or authority (each, a
"GOVERNMENTAL AGENCY") for additional information or documentation, and (ii) not
extend any waiting period under the HSR Act (if deemed to apply to the
transactions contemplated hereby) or enter into any agreement with any
Governmental Agency not to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other parties hereto (which
shall not be
- 38 -
unreasonably withheld or delayed). Each party shall (i) promptly notify the
other party of any written communication to that party or its Affiliates from
any Governmental Agency and, subject to applicable law, permit the other party
to review in advance any proposed written communication to any of the foregoing;
(ii) not participate, or to permit its Affiliates to participate, in any
substantive meeting or discussion with any Governmental Agency in respect of any
filings, investigation or inquiry concerning this Agreement, the CVR Agreement,
the Offer or the Merger unless it consults with the other party in advance and,
to the extent permitted by such Governmental Agency, gives the other party the
opportunity to attend and participate thereat; and (iii) to the extent permitted
under applicable law, furnish the other party with copies of all correspondence,
filings, and communications (and memoranda setting forth the substance thereof)
between them and their Affiliates and their respective representatives on the
one hand, and any government or regulatory authority or members or their
respective staffs on the other hand, with respect to this Agreement, the CVR
Agreement, the Offer and the Merger.
Section 5.12. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The
indemnification provisions of the Company's Certificate of Incorporation or
Bylaws as in effect at the Acceptance Date shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
or prior to the Effective Time were directors, officers, employees or agents of
the Company with respect to matters arising or events occurring before the
Effective Time. From and after the Acceptance Date, Parent shall assume, be
jointly and severally liable for, and honor, guaranty and stand surety for, and
shall cause the Company to honor, in accordance with their respective terms,
each of the covenants contained in this SECTION 5.12.
(b) From and after the Acceptance Date, each of Parent and the
Company and, from and after the Effective Time, the Surviving Corporation shall,
to the fullest extent permitted under applicable law, indemnify and hold
harmless each present and former director, officer, employee and agent of the
Company or any of its Subsidiaries (each, together with such person's heirs,
executors or administrators, an "INDEMNIFIED PARTY" and collectively, the
"INDEMNIFIED PARTIES") against any costs or expenses (including advancing
attorneys' fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law), judgments, fines, losses, claims, damages, liabilities
and amounts paid in settlement in connection with any actual or threatened
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of, relating to or in connection
with any action or omission occurring or alleged to occur prior to the Effective
Time (including, without limitation, acts or omissions in connection with such
persons serving as an officer, director or other fiduciary in any entity if such
service was at the request or for the benefit of the Company) or the Merger or
the other transactions contemplated by this Agreement or arising out of or
pertaining to the transactions contemplated by this Agreement to the fullest
extent that the Company would have been permitted under
Delaware law and the
Company's Certificate of Incorporation and By-laws in effect on the date of this
Agreement.
(c) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company and its Subsidiaries
(PROVIDED that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are no less
- 39 -
advantageous to the Indemnified Parties, and which coverages and amounts shall
be no less than the coverages and amounts provided at that time for Parent's
directors and officers) with respect to matters arising on or before the
Effective Time; PROVIDED, HOWEVER, that if the existing current policies expire,
are terminated or cancelled during such six-year period, Parent will use its
reasonable efforts to obtain as much coverage as can be obtained for the
remainder of such period for a premium not in excess of the amount set forth in
SECTION 5.12 of the Company Disclosure Schedules.
(d) Parent shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this SECTION 5.12.
(e) The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the Certificate of Incorporation or Bylaws of the Company, any
other indemnification arrangement, the DGCL or otherwise. The provisions of this
SECTION 5.12 shall survive the consummation of the Merger and expressly are
intended to benefit each of the Indemnified Parties.
Section 5.13. SECTION 16 MATTERS. Prior to the Acceptance Date,
Parent and the Company shall take all such steps as may be required and
permitted to cause the transactions contemplated by this Agreement, including
any dispositions of shares of Company Common Stock (including derivative
securities with respect to shares of Company Common Stock) by each individual
who is or will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act.
Section 5.14. FURTHER ASSURANCES. (a) Each party hereby agrees to
perform any further acts and to execute and deliver any documents which may be
reasonably necessary to carry out the provisions of this Agreement. At and after
the Effective Time, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of the
Company or Merger Subsidiary, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company or
Merger Subsidiary, any other actions and things to vest, perfect or confirm of
records or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets of the Company
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
(b) Upon Parent's request, the Company shall, and shall cause its
Subsidiaries and its and their respective officers and employees to provide all
customary assistance, cooperation and support that Parent may reasonably request
in order to assist in raising private bank or mezzanine debt financing for the
Company, Parent or Merger Sub (which financing shall, for the sake of clarity,
be conditioned upon the Closing); PROVIDED that (i) such assistance, cooperation
and support shall not unreasonably disrupt the Company's operations, (ii) any
such assistance, cooperation and support shall be at Parent's expense and (iii)
in no event shall the receipt or consummation of the financing described in this
SECTION 5.14(b) be deemed to be a condition to the consummation of the Offer,
the Merger or any other transaction contemplated by this Agreement or by the CVR
Agreement.
- 40 -
Section 5.15. NOTICES OF CERTAIN EVENTS. Each of Parent and the
Company shall promptly notify the other of:
(a) any notice or other communication received by that party from (i)
any Person alleging that the consent of that Person is or may be required in
connection with the transactions contemplated by this Agreement or by the CVR
Agreement or (ii) subject to applicable law, court order and applicable
privilege considerations, any party to the Litigation (as defined in the CVR
Agreement) relating to the Litigation;
(b) any notice or other communication received by that party from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement or by the CVR Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting the Company or any of its Subsidiaries that, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to any of SECTIONS 4.08, 4.10, 4.12, 4.13, 4.14, 4.15 OR 4.16, as the
case may be, or that relate to the consummation of the transactions contemplated
by this Agreement.
(d) the occurrence or non-occurrence of any event or the discovery of
any fact that would be reasonably expected to cause any representation or
warranty of that party that is contained in this Agreement to be untrue or
inaccurate such that the condition set forth in clause (c) of Exhibit A hereto
would at any time be unsatisfied on and as of any date after the date of this
Agreement; and
(e) any failure of such party to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement or the CVR Agreement.
Section 5.16. CVR AGREEMENT. (a) The parties hereto covenant and
agree that immediately prior to the issuance of the first CVR to be issued under
the CVR Agreement, they will, and will cause their respective Rights Agents
(which Parent and the Company will appoint prior to such execution and delivery)
to, execute and deliver the CVR Agreement substantially in the form attached
hereto as EXHIBIT B.
(b) Within 15 days after the execution and delivery of the CVR
Agreement, Parent and the Company will use all commercially reasonable efforts
to cause the Rights Agents to (i) agree on the Independent Rights Agent (as
defined in the CVR Agreement) and the compensation of such person, (ii) decide
which Rights Agent will preside over the meetings of the Rights Agents and (iii)
agree on all other provisions of the CVR Agreement that require prompt
concurrence (including, without limitation, addresses for notice and the name of
the tie-breaking accounting firm.)
(c) Parent and Merger Sub covenant and agree that, during the period
from the date hereof to the Acceptance Date, neither they nor any of their
respective Affiliates shall entertain or initiate any settlement discussions
regarding the Litigation.
- 41 -
Section 5.17 COMMITMENT LETTERS; NO DISTRIBUTIONS BY PARENT. Neither
Parent nor Merger Sub shall take any action to terminate either Commitment
Letter or to amend or modify either Commitment Letter in any manner adverse to
Parent, Merger Sub or the Company, without the prior written consent of each
such Person. Furthermore, without limiting Parent's ability in any way to effect
the Recapitalization (as defined in the Commitment Letter of Xxxxxxxxxx) on or
after the Effective Time (except as expressly limited by the terms of the
Commitment Letter of Xxxxxxxxxx) Parent shall not (i) declare, set aside or pay
any dividend or distribution in respect of any shares of its capital stock or
(ii) repurchase, redeem or otherwise acquire any shares of capital stock or
other securities of, or other ownership interests in, Parent.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. CONDITIONS TO THE OBLIGATIONS TO CONSUMMATE THE MERGER.
The respective obligations of the Company, Parent and Merger Sub to consummate
the Merger are subject to the satisfaction on or prior to the Closing Date of
the following conditions:
(a) Merger Sub shall have purchased shares of Company Common Stock
pursuant to the Offer, except that this condition shall not be a condition to
Parent's and Merger Sub's obligation to effect the Merger if Merger Sub shall
have failed to purchase shares of Company Common Stock pursuant to the Offer in
breach of (or as a result of Parent's breach of) this Agreement;
(b) this Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if required by
the DGCL;
(c) no law, rule or regulation or judgment, injunction, order or
decree of a court or governmental agency or authority of competent jurisdiction
shall be in effect which has the effect of making the Merger illegal or
otherwise restraining or prohibiting the consummation of the Merger; and
(d) (A) any waiting period applicable to consummation of the Merger
under the HSR Act or any Foreign Antitrust Laws shall have expired or been
terminated and (B) any approvals required under Foreign Antitrust Laws before
consummation of the Merger shall have been obtained.
ARTICLE VII
TERMINATION
Section 7.01. TERMINATION. This Agreement may be terminated and the
Offer and the Merger contemplated hereby may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
- 42 -
(a) by mutual written consent of the Company and Parent (including,
from and after the Acceptance Date, the Independent Director Approval
contemplated by SECTION 1.03(c));
(b) prior to the Acceptance Date by Parent if the Company shall have
breached in any material respect any of its obligations contained in this
Agreement or if its representations and warranties shall not be true and
correct, except for such failures to be true and correct that, individually and
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect, and which breach has not been or is incapable of being cured by
the Company within thirty (30) days after the giving of written notice of such
breach by Parent;
(c) prior to the Acceptance Date by the Company if Parent or Merger
Sub shall have breached in any material respect any of its obligations to be
performed by either of them under this Agreement, or if the representations and
warranties of Parent and Merger Sub contained in this Agreement shall not be
true and correct, except for such failures to be true and correct that,
individually and in the aggregate, are not reasonably likely to have a material
adverse effect on Parent, and which breach has not been or is incapable of being
cured by Parent or Merger Sub, as applicable, within thirty (30) days after the
giving of written notice of such breach by the Company;
(d) prior to the Acceptance Date by the Company if (i) the Board of
Directors of the Company authorizes the Company, subject to complying with the
terms of this Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company gives Parent
notice (which may be revoked by the Company by a subsequent notice to that
effect) in writing that it intends to enter into such an agreement, specifying
the material terms and conditions of such Superior Proposal and the identity of
the Potential Acquiror, PROVIDED that the Board of Directors may only take those
actions if it has determined, in good faith after consultation with its
financial advisor and based on the advice of its outside counsel, that doing so
is necessary in order for the directors to comply with their fiduciary duties
under applicable law, (ii) 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 providing for the Superior Proposal, an offer that is at least
as favorable from a financial point of view, to the stockholders of the Company
as the Superior Proposal and (iii) the Company prior to or concurrently with
such termination pays to Parent in immediately available funds the Termination
Fee (as defined in SECTION 8.01(b));
(e) prior to the Acceptance Date by Parent, if (i) the Board of
Directors of the Company shall have failed to recommend, or shall have
withdrawn, adversely modified or adversely amended in any material respect its
approval or recommendation of the Offer, the Merger or this Agreement to the
Company's stockholders, it being understood that disclosure of the existence of
and the material terms and conditions of any Acquisition Proposal that is not
being recommended by the Board of Directors of the Company, shall not be
considered to be a withdrawal, adverse modification or adverse amendment in any
material respects of such approval or recommendation, or (ii) there shall have
been a material breach of SECTION 5.03;
- 43 -
(f) by either Parent or the Company if (i) the Acceptance Date shall
not have occurred on or before December 31, 2003; provided that the right to
terminate this Agreement under this SECTION 7.01(f) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Acceptance Date to occur on or
before such date or (ii) if there shall be any law or regulation or any
governmental entity shall have issued an order, injunction or other decree or
ruling or taken any other action permanently enjoining, restraining, making
illegal or otherwise prohibiting the payment for the Company Common Stock
pursuant to the Offer and/or Merger and that order, injunction, decree or ruling
or other action shall have become final and nonappealable; or
(g) by the Company if Parent or Merger Sub shall have failed to
commence the Offer in accordance with the SECTION 1.01; PROVIDED, HOWEVER, that
the Company may not terminate this Agreement pursuant to this SECTION 7.01(g) if
such failure to have commenced the Offer shall have been caused by (i) the
Company's failure to perform any of its obligations under this Agreement, (ii)
facts or circumstances that constitute a breach of any representation or
warranty of the Company under this Agreement or (iii) the occurrence of any of
the events specified in any of paragraphs (a) through (g) of EXHIBIT A.
The party desiring to terminate this Agreement pursuant to any clause of this
SECTION 7.01 (other than pursuant to SECTION 7.01(a)) shall give notice of that
termination to the other party.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. EFFECT OF TERMINATION. (a) In the event of termination
of this Agreement by either Parent and/or the Company prior to the Acceptance
Date pursuant to the provisions of SECTION 7.01, this Agreement shall forthwith
become void, and there shall be no liability or further obligation on the part
of the Company, Parent, Merger Sub, their respective Affiliates or their
respective officers or directors (except as set forth in any of this ARTICLE
VIII, in the second sentence of SECTION 5.04 and in SECTION 5.10, all of which
shall survive the termination). Nothing in this SECTION 8.01 shall relieve any
party from liability for any (i) willful or material breach of any covenant or
agreement of such party contained in this Agreement or (ii) willful failure of
that party to fulfill a condition to the performance of the obligations of the
other party.
(b) In the event that this Agreement is terminated by Parent pursuant
to SECTION 7.01(e)(ii) prior to the Company Meeting, and within 12 months after
any such termination the Company enters into a definitive agreement with respect
to or consummates a transaction that constitutes an Acquisition Proposal
(whether or not with the same Potential Acquiror with respect to which the
Company committed a material breach of SECTION 5.03, then the Company shall
promptly, but in no event later than two days after the date of entering into
(or, if earlier, consummating) such agreement or transaction, as applicable, pay
Parent a termination fee of $4,000,000 the ("TERMINATION FEE") by wire transfer
of same day funds.
- 44 -
(c) In the event that this Agreement is terminated by the Company
pursuant to SECTION 7.01(d) or by Parent pursuant to SECTION 7.01(e)(i), the
Company shall, in the case of termination by the Company, prior to or
concurrently with such termination, and in the case of termination by Parent,
promptly but in no event later than two days after the date of such termination,
pay Parent the Termination Fee by wire transfer of same day funds.
(d) If this Agreement is terminated pursuant to SECTION 7.01(f)(i)
and prior to any such termination:
(i) any Potential Acquiror shall have publicly announced an
intention to make or actually makes an Acquisition Proposal (whether or not
conditional) and, within 12 months after any such termination, the Company
or any of its Subsidiaries enters into a definitive agreement with respect
to or consummates a transaction constituting an Acquisition Proposal
(whether or not with the same Potential Acquiror), then the Company shall
promptly, but in no event later than two days after the date of entering
into (or, if earlier, consummating) that agreement or transaction, as
applicable, pay Parent the Termination Fee by wire transfer of same day
funds; or
(ii) any third party to the Litigation shall have publicly
announced an intention to make or actually makes any proposal or offer with
respect to any Settlement Decision (whether or not conditional) and, within
12 months after any such termination, the Company or any of its
Subsidiaries enters into a definitive agreement with respect to any
Settlement Decision, then the Company shall, by wire transfer of same day
funds, pay Parent the Termination Fee and also reimburse Parent for all
reasonable and documented out-of-pocket expenses incurred by or on behalf
of Parent in connection with the due diligence investigation of the Company
and its subsidiaries and the negotiation and performance of this Agreement
and the CVR Agreement and the taking of all actions contemplated by or in
connection with any such agreement up to a maximum possible amount of such
expenses of $2,000,000. The Company shall pay that Termination Fee
promptly, but any event within two days after the date of entering into any
such agreement, and it shall so reimburse Parent promptly (but in any event
within three business days) after being invoiced therefor.
(e) The Company acknowledges that the agreements contained in this
SECTION 8.01 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 or the CVR Agreement. Accordingly, if the Company
fails promptly to pay any Termination Fee (or reimburse any expenses) due to
Parent pursuant to this SECTION 8.01, it shall also pay any costs and expenses
incurred by or on behalf of Parent or Merger Sub in connection with any legal
action(s) to enforce this SECTION 8.01.
Section 8.02. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Acceptance Date, with respect to
representations and warranties of the Company, or the Effective Time with
respect to representations and warranties of Parent and Merger Sub. This SECTION
8.02 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after such time.
- 45 -
Section 8.03. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Parent or Merger Sub, to:
Gingko Corporation
c/o Symphony Technology Group
0000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Managing Partner
Facsimile: (000) 000-0000
with copies to:
Symphony Technology Group
0000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Managing Partner
Facsimile: (000) 000-0000
Xxxxxxxxxx Capital Partners, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxxx
Xxxxx El-Xxxxx
Facsimile: (000) 000-0000
If to the Company, to:
- 46 -
Information Resources, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
Section 8.04. INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 8.05. MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) shall not be assigned by operation of law or
otherwise except that (a) Merger Sub may assign its rights and obligations under
this Agreement to any other wholly-owned Subsidiary of Parent and (b) with the
prior written consent of the Company (which shall not be unreasonably withheld
or delayed), Parent may assign its rights and obligations under this Agreement
to any other Person that is an Affiliate of Symphony and Xxxxxxxxxx; PROVIDED
that, in connection with any such assignment, Parent also assigns to the
assignee Parent's rights and obligations under the Commitment Letters and the
issuers of such Commitment Letters shall have consented in writing to such
assignment. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF
DELAWARE
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE.
- 47 -
Section 8.06. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 8.07. AMENDMENTS; EXTENSIONS. (a) This Agreement may be
amended by the parties hereto, by action taken or authorized by their respective
Boards of Directors at any time; provided that, (i) after the Acceptance Date,
(A) no amendment shall be made which decreases the Merger Consideration and (B)
any such amendment will require the Independent Director Approval contemplated
by SECTION 1.03 and (ii) after the Company Stockholder Approval has been
obtained (if required by the DGCL), there shall be made no amendment that by law
requires further approval by stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended or waived
except by an instrument in writing signed (in the case of an amendment) by each
of the parties hereto or (in the case of a waiver) by the party(ies) against
whom the waiver is to be effective.
(b) At any time prior to the Effective Time, by action taken or
authorized by (i) the respective Boards of Directors of the parties hereto
(which after the Acceptance Date will require, with respect to the Company, the
Independent Director Approval contemplated by SECTION 1.03), the parties hereto
may, to the extent legally allowed, extend the time for the performance of any
of the obligations or other acts of the other parties hereto and (ii) its Board
of Directors (which after the Acceptance Date will require, with respect to the
Company, the Independent Director Approval contemplated by SECTION 1.03), any
party(ies) hereto may waive (A) any inaccuracies in the representations and
warranties of any other party(ies) contained herein or in any document delivered
pursuant hereto or (B) compliance by any other party(ies) with any of the
covenants or agreements of such other party(ies) or any conditions contained in
this Agreement (including, for the sake of clarity, Exhibit A hereto) to the
performance of any of its or their obligations hereunder; PROVIDED that after
the Company Stockholder Approval has been obtained (if required by the DGCL),
there shall be made no waiver that by law requires further approval by
stockholders of the Company without the further approval of such stockholders.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party. The failure or delay of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights. Additionally, no single or partial exercise of any right shall
preclude any other or further exercise of that right or the exercise of any
other right, power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 8.08. ENTIRE AGREEMENT. This Agreement, the CVR Agreement and
the Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. Neither
this Agreement nor any provision hereof is intended to confer upon any Person
(other than the parties hereto) any rights or remedies hereunder except for the
provisions of SECTION 5.12, which are intended for the benefit of the
Indemnified Parties.
- 48 -
Section 8.09. SEVERABILITY. If any term or other provision of this
Agreement is held by a court or other Governmental Agency of competent
jurisdiction to be invalid, illegal or unenforceable, all other provisions of
this Agreement shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such a determination, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
Section 8.10. SPECIFIC PERFORMANCE; LIMITATION ON DAMAGES. The
parties hereto agree that irreparable damage would occur in the event any of the
provisions of this Agreement were not to be performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of
the terms hereof in addition to any other remedies at law or in equity. IN NO
EVENT SHALL ANY PARTY BE LIABLE IN RESPECT OF THIS AGREEMENT FOR ANY PUNITIVE OR
EXEMPLARY DAMAGES OR ANY CONSEQUENTIAL DAMAGES, OTHER THAN THOSE CONSEQUENTIAL
DAMAGES THAT WERE REASONABLY FORESEEABLE AS OF THE DATE OF THIS AGREEMENT (BUT
EXCLUDING, IN ALL CASES, DAMAGES IN THE FORM OF GOODWILL, LOST FUTURE PROFITS
AND LOST CUSTOMERS).
Section 8.11. NO ADMISSION. Nothing herein, including SECTION 4.11,
shall be deemed an admission by the Company, in any action or proceeding by or
on behalf of a third-party, that such third-party is not in breach or violation
of, or in default in, the performance or observance of any term or provision of
any contract.
Section 8.12. JURISDICTION. The parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement, the Confidentiality
Agreement or the CVR Agreement or the transactions contemplated hereby or
thereby shall be brought in any federal court located in the State of
Delaware
or any Delaware state court, and each of the parties hereby irrevocably consents
to the exclusive jurisdiction of those courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in SECTION 8.03 shall be deemed effective service of process on such party.
Section 8.13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
- 49 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
INFORMATION RESOURCES, INC.
By: /s/ XXXXXX XXXXXXX
-------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
GINGKO CORPORATION
By: /s/ XXXXXXX XXXXXXX
--------------------
Name: Xxxxxxx Xxxxxxx
Title: Executive Vice President
GINGKO ACQUISITION CORP.
By: /s/ XXXXXXX XXXXXXX
--------------------
Name: Xxxxxxx Xxxxxxx
Title: Executive Vice President
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Agreement, Merger
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Merger Sub's obligation to pay for or return tendered shares of
Company Common Stock promptly after the termination or withdrawal of the Offer),
to pay for any shares of Company Common Stock tendered pursuant to the Offer,
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Company Common Stock which,
when added together with all other shares of Company Common Stock owned by
Parent and its subsidiaries, would represent at least a majority of the
outstanding Company Common Stock (determined on a fully diluted basis for all
outstanding stock options and any other rights (other than Company Rights, if
such Company Rights are not at such time exercisable) to acquire Company Common
Stock outstanding on the date of purchase) (the "MINIMUM TENDER CONDITION"),
(ii) any requisite waiting period under the HSR Act applicable to the purchase
of shares of Company Common Stock pursuant to the Offer or to the Merger shall
have been terminated or shall have expired, and (iii) the applicable waiting
periods under the Foreign Antitrust Laws shall have been terminated or shall
have expired. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Merger Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, if, immediately prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, any of the
following conditions exists:
(a) there shall have been entered, enforced or issued by any
Governmental Agency of competent jurisdiction any judgment, order, injunction or
decree that (i) makes illegal, restrains or prohibits, or imposes any material
limitation on, the making of the Offer, the acceptance for payment of, or
payment for, any shares of Company Common Stock by Parent or Merger Sub, or the
consummation of the Merger, (ii) prohibits, or imposes any material limitation
on, the ownership, control or operation by Parent or any of its Subsidiaries of
the Company or any of its material Subsidiaries or assets; or (iii) renders the
CVR Agreement unenforceable in any material respect;
(b) there shall have been any statute, rule, regulation, legislation
or interpretation enacted, enforced, promulgated, amended or issued by any
Governmental Agency or deemed by any Governmental Agency applicable to (i)
Parent, the Company or any subsidiary or Affiliate of Parent or the Company or
(ii) any transaction contemplated by this Agreement or by the CVR Agreement,
other than the HSR Act and any Foreign Antitrust Laws which would reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in any of clauses (i), (ii) or (iii) of paragraph (a) above;
(c) the representations and warranties of the Company contained in
this Agreement (excluding, for the purpose of this condition only, any
qualifications contained therein with respect to materiality or Company Material
Adverse Effect) shall not be true and correct as of such time (as if made at and
as of such time), except for such failures to be true and
correct that, whether individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect;
(d) the Company shall have failed to perform in any material respect
any material obligation required to be performed by it at or prior to such time
under this Agreement;
(e) no change or development shall have occurred in the business,
financial condition or results of operations of the Company or any of its
Subsidiaries, and no fact or circumstance that occurred or arose after December
31, 2002 shall become known to Parent for the first time after the date of this
Agreement, that, whether individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect; or
(f) this Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to such condition or may be waived by Merger Sub and
Parent in whole or in part at any time and from time to time in their reasonable
discretion. The failure by Parent, Merger Sub or any other affiliate of Parent
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right; the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
Any capitalized term that is used, but not defined, in this Exhibit A
has the meaning that is assigned to that term in the Agreement to which this
Exhibit is attached.
EXHIBIT B
FORM OF CONTINGENT VALUE RIGHTS AGREEMENT
CONTINGENT VALUE RIGHTS AGREEMENT
This CONTINGENT VALUE RIGHTS AGREEMENT, dated as of ______, 2003 (this
"Agreement"), is entered into by and among RIVER, Inc. a Delaware corporation
("River") Parent Corporation, a _____________ corporation, ("Parent") and River
Acquisition Corp., a Delaware corporation ("Merger Sub"), and ___________,
_____________, ____________, and _____________ (individually, a "Rights Agent"
and collectively, the "Rights Agents").
RECITALS:
WHEREAS, River, Parent, and Merger Sub have entered into an
Agreement and
Plan of Merger dated as of June ____, 2003 (the "Merger Agreement"), pursuant to
which at the Effective Time River and Merger Sub will be merged with River
continuing as the Surviving Corporation;
WHEREAS, upon consummation of the Merger, River will become a wholly-owned
subsidiary of Parent;
WHEREAS, the consideration that shall be paid by Parent pursuant to the
Merger Agreement includes contingent value rights as hereinafter described; and
WHEREAS, all things necessary have been done to make the contingent value
rights, when issued pursuant to the Merger Agreement and hereunder, the valid
obligations of Parent and to make this Agreement a valid agreement of the
Parent, in accordance with its terms, and to ensure that payment in the form of
such contingent value rights will not require registration under the Securities
Act.
NOW, THEREFORE, for and in consideration of the premises and the
consummation of the transactions referred to above, it is mutually covenanted
and agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions.
(a) For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(ii) all accounting terms used herein and not expressly defined
shall have the meanings assigned to such terms in accordance with generally
accepted accounting principles, and the term "generally accepted accounting
principles"
means such accounting principles as are generally accepted in the United
States at the time of any computation;
(iii) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(iv) unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, words denoting any
gender shall include all genders and words denoting natural Persons shall
include corporations, partnerships and other Persons and vice versa.
(b) Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Merger Agreement. The following
additional terms shall have the meanings ascribed to them as follows:
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.2.
"Affiliate" of a Person means a Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person.
"After-Tax Litigation Proceeds" with respect to any Litigation Proceeds
means (i) the amount of such Litigation Proceeds LESS (ii) the Assumed Tax
Liability with respect to such Litigation Proceeds.
"Assumed Tax Liability" with respect to any Litigation Proceeds means an
amount equal to the product of (i) Assumed Tax Rate TIMES (ii) the amount of
such Litigation Proceeds.
"Assumed Tax Rate" shall mean 34%.
"Board of Directors" means the board of directors of the Parent.
"Board Resolution" means a copy of a resolution certified by the secretary
or an assistant secretary of the Parent to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Rights Agents.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Chicago, Illinois are authorized or obligated by
law or executive order to remain closed.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (b) certificates of deposit with maturities of six months
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
commercial bank organized and in existence under the laws of the United States
and having capital and surplus in excess of $500 million, (c) repurchase
obligations with a term of not more than seven days for
2
underlying securities of the types described in clauses (a) and (b) above
entered into with any financial institution meeting the qualifications specified
in clause (b) above, (d) commercial paper having the highest rating obtainable
from Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings Services and
in each case maturing within 180 days after the date of acquisition, (e)
investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation organized and in existence under the
laws of the United States or any foreign country recognized by the United States
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Xxxxx'x Investor Service, Inc. or "A-1" (or higher)
according to Standard & Poor's Ratings Services, and (f) money market mutual
funds substantially all of the assets of which are of the type described in the
foregoing clauses (a) through (e) above.
"Cash Proceeds" means all compensation, damages, penalties, interest and
other payments in the form of cash or Cash Equivalents, if any, recovered or
received by River and the River Subsidiaries or any of their Affiliates as a
result of the Litigation, whether such compensation, damages, penalties,
interest or other payments are recovered or received pursuant to court order at
trial or upon appeal or pursuant to the terms of any settlement agreement.
"Claims Expenses" means the sum of all direct expenses paid after the date
of the Merger Agreement by the Parent, River, River Subsidiaries and their
Affiliates (i) including any amounts paid to or on behalf of the Rights Agents
pursuant to Section 3.4 of this Agreement but (ii) excluding (A) contingency
fees paid in exchange for services provided by outside counsel in connection
with prosecuting the Litigation and (B) any payment of Firm Expenses.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission of the United
States of America.
"Compliance Commitments" shall mean any Non-Cash Proceeds that provide
River, River Subsidiaries, and their Affiliates with no substantial benefits or
protections other than the benefits and protections to which they are entitled
under applicable law.
"Control" (including the terms "controlled", "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock, including the
power to dispose of or vote such stock, as trustee or executor, by contract or
otherwise.
"CVR Payment Amount" for each CVR on any CVR Payment Date equals the
quotient of the Aggregate CVR Payment Amount for such CVR Payment Date DIVIDED
BY the total number of CVRs outstanding on such CVR Payment Date. The "Aggregate
CVR Payment Amount" for any CVR Payment Date equals the quotient of (A) the
Preliminary CVR Payment Amount for such CVR Payment Date DIVIDED BY (B) the sum
of (i) 100 percent PLUS (ii) the product of (I) the CVR Percentage MULTIPLIED BY
(II) the Xxxxxxx Xxxxx Fee Percentage. "Preliminary CVR Payment Amount" for any
CVR Payment Date equals (before any adjustments required under Section
5.1(f)(ii)) (x) the CVR Percentage TIMES the amount of Litigation Proceeds
actually
3
received by River and the River Subsidiaries or their Affiliates, MINUS
(y) the CVR Percentage TIMES the Assumed Tax Liability with respect to all
Litigation Proceeds actually received through the date of the Litigation
Proceeds Certificate applicable to such CVR Payment Date; PROVIDED, HOWEVER, the
Preliminary CVR Payment Amount for the Last CVR Payment Date shall be increased
by the amount by which the Claims Expenses are less than $10,000,000.
"CVR Payment Date" means any date that any CVR Payment Amount is paid by
the Parent to the Holders, which shall be established pursuant to Section
2.5(a).
"CVR Percentage" means 60%; PROVIDED THAT if the Merger Agreement is
terminated after the Acceptance Date but prior to the Effective Time, the CVR
Percentage shall be 60% TIMES the quotient of (i) the number of shares of
Company Common Stock that were accepted for payment pursuant to the Offer
DIVIDED BY (ii) the sum of (A) number of shares of Company Common Stock
outstanding immediately prior to commencement of the Offer (including any shares
of Restricted Stock) PLUS (B) the number of shares of Company Common Stock that
would be acquired upon exercise of all of the Company Options which would have
been paid amounts under Section 2.10 of the Merger Agreement if the Merger had
been completed.
"CVR Register" and "CVR Registrar" have the respective meanings specified
in Section 2.3(b).
"CVRs" means the contingent value rights to be issued by the Parent
pursuant to the Merger Agreement and this Agreement.
"Escrow Agreement" means any agreement entered into with an escrow agent
pursuant to Section 5.1(e) on terms that are acceptable to a majority of the
Rights Agents.
"Firm Expenses" has the meaning specified in Section 2.4(e) of this
Agreement.
"Holder" means a Person in whose name a CVR is registered in the CVR
Register.
"Independent Rights Agent" means such person that is selected within 15
days following the first issuance of the CVR by a majority of the Rights Agents
(other than the Independent Rights Agent). Once selected, the Independent Rights
Agent shall be joined to this Agreement pursuant to an agreement reasonably
acceptable to the majority of the Rights Agents (other than the Independent
Rights Agent), River, Parent, and the Independent Rights Agent.
"Last CVR Payment Date" shall mean the last date on which a CVR Payment is
to made under this Agreement (or the date on which it is determined that no CVR
Payment shall be made pursuant to this Agreement).
"Litigation" means the litigation and claims that River and the River
Subsidiaries have filed or asserted as described on Exhibit A to this Agreement
and any amendments thereto and any similar future lawsuits, claims or appeals
brought by the Parent, River, the River Subsidiaries or their Affiliates related
to such matters or arising out of the conduct involved in such litigation and
claims.
4
"Litigation Proceeds" means the (A) sum of (i) any and all Cash Proceeds
PLUS (ii) the fair market value of any and all Non-Cash Proceeds (as determined
pursuant to Section 2.4 or 5.1(b), as applicable) LESS (B) any contingency fees
paid for services provided by outside counsel in connection with prosecuting the
Litigation.
"Litigation Proceeds Certificate" has the meaning specified in Section
2.4(a) of this Agreement.
"Merger Agreement" has the meaning set forth in the recitals to this
Agreement.
"Non-Cash Proceeds" means all compensation, damages, penalties, interest,
agreements, commitments, undertakings and other benefits and protections
(whether provided by contract, court order or applicable law and including,
without limitation, Compliance Commitments (having a fair market value of zero
in accordance with Section 2.4(a))) not in the form of cash or Cash Equivalents,
if any, recovered or received by River or the River Subsidiaries or any of their
Affiliates as a result of the Litigation, whether such compensation, damages,
penalties, interest, agreements, commitments, undertakings or other benefits or
protections are recovered or received pursuant to court order at trial or upon
appeal or pursuant to the terms of any settlement agreement.
"Officer's Certificate" means a certificate signed by the chairman of the
Board of Directors or the president, any vice president, the controller, the
treasurer, the secretary or any assistant secretary, in each case of the Parent,
in his or her capacity as such an officer, and delivered to the Rights Agents.
"Opinion of Counsel" means a written opinion of counsel, who shall be
selected by a majority of the Rights Agents.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Rights Agents" means ____________________ and ___________________
and their respective successors pursuant to the applicable provisions of this
Agreement.
"Person" means any individual, corporation, partnership, joint venture,
limited liability Parent, business trust, association, joint-stock company,
trust, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Resolution" has the meaning specified in Section 2.4(e) of this Agreement.
"Rights Agent" means one of the Persons named as the "Rights Agents" in the
first paragraph of this Agreement or the Independent Rights Agent, until a
successor Rights Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "Rights Agent" shall mean such
successor Rights Agent.
"River Rights Agents" means ____________ and __________ and their
respective successors pursuant to the applicable provisions of this Agreement.
5
"Settlement Decision" means any decision to grant consent to the settlement
of any aspect or portion of the Litigation or otherwise to dismiss with
prejudice any claim of River or a River Subsidiary against any party in the
Litigation (and any other determination specified in Section 5.1(b) relating to
such a decision).
"Strategic Decision" means, with respect to the Litigation, any decision
that involves the appeal of any aspect of the case (whether after a verdict or
on a interlocutory basis), the addition of any claim or party, changing legal
counsel or the basis for payment of attorney's fees, any admission of liability
with respect to any claim against River in the Litigation, or any other proposed
decision or determination that in the opinion of outside counsel representing
River and River Subsidiaries in the Litigation would represent a material change
or development in strategy with respect to the Litigation and result in a
substantial likelihood that the recovery or receipt by River and River
Subsidiaries of any amount of Litigation Proceeds (whether pursuant to a court
order at trial or upon appeal or pursuant to the terms of any settlement
agreement) will be delayed; PROVIDED, HOWEVER, a Strategic Decision shall not
include any action that constitutes (in whole or in part) a Settlement Decision.
"Subsidiary" when used with respect to any Person means any corporation or
other organization, whether incorporated or unincorporated, of which such Person
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such Person
is a general partner.
"Surviving Person" has the meaning set forth in Section 7.1(a)(1).
"Xxxxxxx Xxxxx Fee Percentage" shall mean 0.84375%.
Section 1.2 Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments, executed by
the requisite percentage of the Holders in accordance with this Agreement, are
delivered to one or more Rights Agents and, where it is hereby expressly
required, to the Parent. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Unless otherwise expressly
provided to the contrary herein, the Act of the Holders of a majority of the
outstanding CVRs shall constitute the Act of the Holders.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Rights
Agents deem sufficient.
(c) The ownership of CVRs shall be proved by the CVR Register.
6
Section 1.3 Notices to Rights Agents and Parent. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with:
(a) the Rights Agents by any Holder or the Parent shall be
sufficient for every purpose hereunder if in writing and delivered personally,
or mailed first-class postage prepaid or sent by a nationally recognized
overnight courier to the Rights Agents addressed to them at ________________, or
at any other address previously furnished in writing to the Holders and the
Parent by the Rights Agents; or
(b) the Parent by the Rights Agents or by any Holder shall be
sufficient for every purpose hereunder if in writing and delivered personally,
telecopied or mailed first-class postage prepaid or sent by a nationally
recognized overnight courier to the Parent addressed to it at
_____________________ or at any other address previously furnished in writing to
the Rights Agents and the Holders by the Parent.
Section 1.4 Notice to Holders. Where this Agreement provides for notice
to Holders, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his, her or its address as it appears in
the CVR Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.
Section 1.5 Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 1.6 Successors and Assigns. All covenants and agreements in this
Agreement by the Parent shall bind its successors and assigns, whether so
expressed or not.
Section 1.7 Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person (other than the parties hereto, the Holders
and their successors and permitted assigns hereunder) any benefit or any legal
or equitable right, remedy or claim under this Agreement or under any covenant
or provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto, the Holders and their successors and
permitted assigns.
Section 1.8 Governing Law. This Agreement and the CVRs shall be governed
by and construed in accordance with the laws of the State of Delaware.
Section 1.9 Legal Holidays. In the event that a CVR Payment Date shall
not be a Business Day, then (notwithstanding any provision of this Agreement to
the contrary) any payment required to be made in respect of the CVRs on such
date need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the applicable CVR
Payment Date.
Section 1.10 Severability Clause. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any
7
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein. Upon such determination that any term or other provision is invalid,
illegal or unenforceable, the court or other tribunal making such determination
is authorized and instructed to modify this Agreement so as to effect the
original intent of the parties as closely as possible so that the transactions
and agreements contemplated herein are consummated as originally contemplated to
the fullest extent possible.
Section 1.11 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed to constitute but one and the same
instrument.
Section 1.12 Effectiveness. This Agreement shall be effective from and
after the first issuance of CVRs in payment for shares of Company Common Stock
pursuant to the Offer. This Agreement shall be deemed terminated and of no force
or effect, and the parties hereto shall have no liability hereunder, if the
Merger Agreement is terminated in accordance therewith prior to the Acceptance
Date.
Section 1.13 Entire Agreement. This Agreement and the Merger Agreement
represent the entire understanding of the parties hereto with reference to the
transactions and matters contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements hereto made except for
the Merger Agreement. If and to the extent that any provision of this Agreement
is inconsistent or conflicts with the Merger Agreement, this Agreement shall
govern and be controlling.
ARTICLE II
CONTINGENT VALUE RIGHTS
Section 2.1 Issuance of CVRs. The CVRs shall be issued pursuant to the
Offer and the Merger at the times and in the manner set forth in the Merger
Agreement.
Section 2.2 Nontransferable. The CVRs shall not be assignable or
otherwise transferable by Holders, except by will, upon death or by operation of
law.
Section 2.3 No Certificate; Registration; Registration of Transfer;
Change of Address.
(a) The CVRs shall not be evidenced by a certificate or other
instrument.
(b) The Parent shall cause to be kept at the Parent's principal
office a register (the register maintained in such office and in any other
office designated pursuant to this Section 2.3 being herein sometimes referred
to as the "CVR Register") in which the Parent shall provide for the registration
of CVRs. The Secretary of the Parent is hereby initially appointed "CVR
Registrar" for the purpose of registering CVRs and transfers of CVRs as herein
provided.
(c) Subject to the restriction on transferability set forth in
Section 2.2, every request made to the Parent to transfer a CVR must be in
writing and accompanied by a written instrument of transfer in form reasonably
satisfactory to the Parent and the CVR Registrar, duly executed by the Holder
thereof, his attorney duly authorized in writing, personal representative or
survivor and setting forth in reasonable detail the circumstances relating to
the transfer. Upon
8
receipt of such written notice by the Parent, the CVR Registrar shall, subject
to his reasonable determination that the transfer instrument is in proper form
and the transfer otherwise complies with the other terms and conditions herein,
register the transfer of the CVRs in the CVR Register. All transfers of CVRs
registered in the CVR Register shall be the valid obligations of the Parent,
evidencing the same right, and shall entitle the transferee to the same benefits
and rights under this Agreement, as those held by the transferor. No transfer of
a CVR shall be valid until registered in the CVR Register and any transfer not
duly registered in the CVR Register will be void ab initio.
(d) A Holder may make a written request to the CVR Registrar or
the Parent to change such Holder's address of record in the CVR Register. The
written request must be duly executed by the Holder. Upon receipt of such
written notice by the CVR Registrar or the Parent, the CVR Registrar shall
promptly record the change of address in the CVR Register.
Section 2.4 Payment Procedures.
(a) As promptly as practicable but in no event later than 30
days after each receipt by River or the River Subsidiaries or any of their
Affiliates of any Litigation Proceeds (other than Litigation Proceeds received
as a result of a Settlement Decision) or after a determination that no
Litigation Proceeds shall be received, the Parent shall deliver to the Rights
Agents a certificate (the "Litigation Proceeds Certificate") setting forth in
reasonable detail (i) the amount of any Cash Proceeds received by River or the
River Subsidiaries or their Affiliates, if any, (ii) a detailed description of
Non-Cash Proceeds received by the River or the River Subsidiaries or their
Affiliates, if any, (iii) the fair market value of any Non-Cash Proceeds and the
methodology used, and calculations made, to determine such fair market value (it
being understood that fair market value shall be determined on an arm's-length
basis and without regard to any liens or other encumbrances on the Non-Cash
Proceeds granted or created by Parent, River, the River Subsidiaries, or their
Affiliates and that Compliance Commitments shall have a fair market value of
zero), (iv) an itemized list in reasonable detail of the Claims Expenses
incurred to date and any Claim Expenses reasonably expected to be incurred
before the Last CVR Payment Date, (v), the calculation of the Preliminary CVR
Payment Amount and CVR Payment Amount, if any, through the date of such
Litigation Proceeds Certificate, (vi) any assumptions underlying the
determination of any item used in making the necessary calculations for such
calculations, and (vii) any financial or other documentation reasonably
necessary to sufficiently support such calculations.
(b) Within 30 days of delivery of the Litigation Proceeds
Certificate, each Rights Agent (other than the Independent Rights Agent) shall
give written notice to Parent and each other Rights Agent specifying whether he
or she agrees with or objects (a "Notice of Agreement" and a "Notice of
Objection", respectively) to the Litigation Proceeds Certificate, and the CVR
Payment Amount.
(c) If all of the Rights Agents (other than the Independent
Rights Agent) delivers a Notice of Agreement and any CVR Payment Amount is
payable, the Parent shall establish a CVR Payment Date in accordance with
Section 2.5(a).
9
(d) If any of the Rights Agents (other than the Independent
Rights Agent) delivers a Notice of Objection within such 30-day period, the
Parent shall continue to hold the amount of cash equal to the CVR Payment Amount
in a separate bank account invested in Cash Equivalents until a Resolution is
obtained pursuant to the procedures set forth in Section 2.4(e). Any interest
generated by such investments or accretions in value resulting from such
investments shall be for the benefit of the Holders and shall be used to pay
expenses incurred on their behalf, if any, or paid out together with the CVR
Payment Amount.
(e) Any Rights Agent (other than the Independent Rights Agent)
that delivers a Notice of Objection shall as promptly as practicable following
delivery of such Notice of Objection deliver to the Parent a certificate (a
"Rights Agent Objection Certificate") setting forth in reasonable detail each of
the objections to the calculations, valuations, methodologies, lists,
computations, assumptions and other information, including, without limitation,
the fair market value of any Non-Cash Proceeds (collectively, the
"Determinations") that such Rights Agent has to the applicable Litigation
Proceeds Certificate. If none of the other Rights Agents (other than the
Independent Rights Agent) agrees with such Rights Agent's objections to such
Litigation Proceeds Certificate, then the CVR Payment Amount shall be as set
forth in such Litigation Proceeds Certificate and the Parent shall establish a
CVR Payment Date in accordance with Section 2.5(a). If within ten days of the
delivery of the Rights Agents Objection Certificate, any other Rights Agent
agrees, in whole or in part, with the Rights Agent Objection Certificate, the
Rights Agents shall submit the portions of the Determinations set forth in the
Litigation Proceeds Certificate that are in dispute to a mutually agreed upon
independent public accounting firm of national standing that shall have
expertise in the valuation of assets and properties (the "Firm"). If a majority
of the Rights Agents cannot agree upon the Firm, then the Firm shall be
________________. The Firm shall be instructed to determine whether the
Determinations set forth in the Litigation Proceeds Certificate that are in
dispute are correct in all material respects. If the Firm determines that such
Determinations are correct, the CVR Payment Amount shall be as set forth in the
Litigation Proceeds Certificate, and each Rights Agent shall be deemed to have
delivered a Notice of Agreement with respect to such Litigation Proceeds
Certificate and the Parent shall establish a CVR Payment Date in accordance with
Section 2.5(a). If the Firm determines that any of the Determinations set forth
in the Litigation Proceeds Certificate are incorrect in any respect (whether or
not material), the Firm's resulting calculation of the CVR Payment Amount shall
be binding on all parties hereto (the "Resolution") and the Parent, upon notice
of such Resolution, shall set a CVR Payment Date in accordance with Section
2.5(a). If the Resolution results in the CVR Payment Amount determined by the
Parent to be less than the CVR Payment Amount determined by the Firm, the CVR
Payment Amount payable to Holders shall be increased by the interest on such
differential calculated from the date 45 days after delivery of the Litigation
Proceeds Certificate at an interest rate equal to the average rate actually
earned on the CVR Payment Amount determined by the Parent and invested in Cash
Equivalents pursuant to Section 2.4(d). All costs and expenses billed by the
Firm in connection with the performance of its duties described herein ("Firm
Expenses") shall be paid by the Parent; PROVIDED, HOWEVER, that if no Parent
Rights Agents object to the Litigation Proceeds Certificate and Parent's
determination of the CVR Payment Amount is:
(i) greater than or equal to 95% of the CVR Payment
Amount determined by the Firm, then 100% of the Firm Expenses
shall be deducted from the CVR Payment Amount and applied to
reimburse the Parent;
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(ii) greater than or equal to 85% of the CVR Payment
Amount determined by the Firm, but less than 95% of the CVR
Payment Amount determined by the Firm, then 50% of the Firm
Expenses shall be deducted from the CVR Payment Amount and
applied to reimburse the Parent; or
(iii) less than 85% of the CVR Payment Amount determined
by the Firm, then the Parent shall not be reimbursed for any
portion of the Firm Expenses.
(f) If any Rights Agent does not deliver a Notice of Agreement
or a Notice of Objection to the Litigation Proceeds Certificate within the
30-day period described above, such Rights Agent shall be deemed to have
delivered a Notice of Agreement with respect to such Litigation Proceeds
Certificate.
(g) Any Litigation Proceeds received after the Acceptance Date
but prior to the Effective Time shall, for all purposes under the Agreement, be
deemed to have been received on the Closing Date. If the Merger Agreement is
terminated after the Acceptance Date but prior to the Effective Time, any
Litigation Proceeds received after the Acceptance Date but prior to such
termination shall, for all purposes under the Agreement, be deemed to have been
received on the date of such termination.
(h) Notwithstanding the foregoing, the provisions of this
Section 2.4 (other than Section 2.4(g) and the definition of Litigation Proceeds
Certificate) shall not apply to any Litigation Proceeds Certificate received as
a result of a Settlement Decision.
Section 2.5 Payments on CVRs.
(a) If any CVR Payment Amount is determined to be payable in
accordance with Section 2.4 or Section 5.1(b), the Parent shall establish a CVR
Payment Date with respect to such CVR Payment Amount that is within 15 days
following the date on which it is determined that a CVR Payment Amount is
payable. On such CVR Payment Date, the Parent shall then promptly cause the CVR
Payment Amount to be delivered to each of the Holders by check mailed to the
address of each Holder as reflected in the CVR Register as of the close of
business on the last Business Day prior to such CVR Payment Date.
(b) In the event that River and the River Subsidiaries or their
Affiliates receive payments of Litigation Proceeds on more than one date, then
the CVR Payment Amount with respect to any such Litigation Proceeds shall be
paid with respect to each such receipt of Litigation Proceeds and the procedures
described in Section 2.4 and Section 2.5(a) shall apply to each such receipt of
Litigation Proceeds. Subject to the required adjustment for the Last CVR Payment
Date as required under the definition of CVR Payment Amount, the calculation of
the CVR Payment Amount following the calculation of the initial CVR Payment
Amount shall be made on a cumulative basis to reflect the receipt of all
Litigation Proceeds, the prior payment of any CVR Payment Amounts and the
calculation of all Assumed Tax Liabilities from the date of this Agreement to
the date of determination of each such subsequent CVR Payment Amount (it being
understood, however, that in no event shall the Holders be obligated or required
to refund
11
to the Parent or any of its Affiliates any portion of any CVR Payment Amount
previously paid to the Holders).
(c) The determination by the Parent and the Rights Agents of any
CVR Payment Amount pursuant to the procedures set forth in Section 2.4, absent a
mathematical error, shall be final and binding on the Parent and each Holder.
(d) Except in the specific cases specified in this Agreement,
no interest shall accrue on any amounts payable on the CVRs to any Holder.
(e) The Parent shall be entitled to deduct and withhold, or
cause to be deducted or withheld, from the CVR Payment Amount otherwise payable
pursuant to this Agreement such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld or
paid over to or deposited with the relevant governmental entity, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the Holder in respect of which such deduction and withholding was made.
ARTICLE III
THE RIGHTS AGENTS
Section 3.1 Certain Duties and Responsibilities.
(a) The Rights Agents undertake to perform such duties and only
such duties as are specifically set forth in this Agreement. The Rights Agents
shall exercise such of the rights and powers vested in them by this Agreement,
and use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs;
PROVIDED, HOWEVER, that the Rights Agents shall not be liable for any acts or
omissions except to the extent that the Rights Agents have engaged in willful
misconduct or bad faith.
(b) No provision of this Agreement shall be construed to relieve
the Rights Agents from liability for their own willful misconduct or bad faith,
except that no provision of this Agreement shall require the Rights Agents to
expend or risk their own funds or otherwise incur any financial liability in the
performance of any of their duties hereunder or in the exercise of any of their
rights or powers.
(c) The Rights Agents shall have the sole power and duty to
direct and supervise all matters involving the Litigation (including trial
strategy and planning and settlement strategy) on behalf of Parent, River, and
the River Subsidiaries; PROVIDED that all decisions and determinations with
respect to the Litigation (including, without limitation, any Settlement
Decision or Strategic Decision) shall be made in accordance with Section 5.1(b)
hereof. Either one or both of the River Rights Agents (as they may mutually
decide in their discretion) shall have primary responsibility for the day-to-day
direction and supervision of the Litigation and may, without the approval of any
of the Parent, River, the River Subsidiaries or any of the other Rights Agents,
make decisions and determinations in accordance with Section 5.1(b) hereof with
respect to the day-to-day conduct of the Litigation and such decisions shall be
12
deemed to made on behalf of all of the Rights Agents. Notwithstanding the
foregoing, (i) the approval of a majority of the Rights Agents (including the
Independent Rights Agent) shall be required for any Strategic Decision and (ii)
the approval of a majority of the Rights Agents (other than the Independent
Rights Agent) shall be required for any Settlement Decision; PROVIDED, however,
if there is a vacancy with respect to any Rights Agent (other than the
Independent Rights Agent), the approval of all Rights Agents (other than the
Independent Rights Agent) shall be required for any Settlement Decision.
(d) The Rights Agents shall confer in person or by telephone at
least once per month, but in any event as frequently as necessary to keep all
Rights Agents and the Independent Rights Agent informed about material
developments in the Litigation, on at least three days' prior notice. At least
one such conference per month shall include a briefing by the River Rights
Agents that describes the progress of the Litigation and summarizes any material
decisions or determinations that were made without seeking the approval of the
Independent Rights Agent or either of the Parent Rights Agents.
(e) ______________(1) shall preside at all meetings or
conferences of Rights Agents, unless he is removed by majority vote of the other
Rights Agents then in office. In the event he or she is removed or is unwilling
or unable to serve, his or her successor shall be elected by majority vote of
the Rights Agents then in office.
(f) The Rights Agents shall establish procedures for making
decisions in an expedited manner in the case of exigent or emergency
circumstances arising in connection with the Litigation.
(g) The Rights Agents shall be deemed to be agents of the
Holders, Parent and River for all purposes relating to evidentiary privileges,
including attorney-client privileges.
(h) Any Rights Agent that receives a notice provided by the
Holders or Parent or any other Person pursuant to this Agreement shall provide
such notice to all other Rights Agents.
Section 3.2 Certain Rights of Rights Agents; Actions of the Rights
Agents. The Rights Agents undertake to perform such duties and only such duties
as are specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Rights Agents. In
addition:
(a) the Rights Agents may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or other
paper or document believed by them to be genuine and to have been signed or
presented by the proper party or parties;
----------
(1) Insert name of River Rights Agent.
13
(b) whenever the Rights Agents shall deem it desirable that a
matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Rights Agents may, in the absence of bad faith or willful
misconduct on their part, rely upon an Officer's Certificate;
(c) the Rights Agents may engage and consult with counsel of
their selection and the written advice of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by them hereunder in good faith and in reliance thereon;
(d) the Rights Agents may engage and consult with accounting
firms, tax experts, valuation firms and other experts and third parties that
they, in their sole and absolute discretion, deem appropriate or necessary to
enable them to discharge their duties hereunder;
(e) the Rights Agents may direct employees of Parent, River, and
River Subsidiaries, and their Affiliates to respond to discovery requests,
attend and prepare for depositions, prepare for and testify at trial, or take
any other action that the Rights Agents believe is necessary or prudent in
prosecuting the Litigation. If an employee of Parent, River, the River
Subsidiaries, or their Affiliates takes any action in accordance with this
Section 3.2(e), Parent shall be entitled to be paid an amount equal to (I) (i)
the hours that the employees are required to work in connection with such
engagement TIMES (ii) the hourly rate of such employee (determined by dividing
(A) the sum (without duplication) of (1) the employee's annual salary payable in
cash at the time of the engagement PLUS (2) the employee's annual bonus for the
prior fiscal year PLUS (3) the employment taxes that the employer is required to
pay with respect to such amounts PLUS (4) the out-of-pocket costs of Parent,
River, the River Subsidiaries, or their Affiliates, as the case may be, of all
other employee benefits, including employer-paid health care, employer-paid life
insurance premiums, and employer contributions to savings and pension plans, in
respect of the employee, by (B) the product of (x) 52 weeks less the number of
weeks of vacation to which the employee is entitled to during the current
calendar year times (y) if such employee is a full-time employee, 40, or if such
employee is not a full time employee, the number of hours that such employee is
expected to work each week) plus (II) the out-of-pocket expenses incurred in
connection with such engagement. Prior to commencing any engagement, the Parent
shall provide to the engaging Rights Agents an estimate of the number of hours
that Parent expects that its or its Affiliates employees will expend in
connection with the engagement, the position of the employees that it expects to
work on the engagement, an estimate of the hourly rate of such employees, and an
estimate of any material out-of-pocket expenses Parent expects to be incurred in
connection with such engagement. During the course of the engagement Parent
shall submit to the engaging Rights Agents an update of the estimate (including
a statement of actual hours worked by each employee and the hourly rate of such
employee and actual out-of-pocket expenses incurred) not less than monthly (or
any shorter period as reasonably requested by the engaging Rights Agents at the
time of the engagement) or at anytime that Parent knows that the actual amount
of work will materially exceed the initial estimate. Parent shall submit
separate bills for each engagement at the end of each fiscal quarter setting
forth the name of the employee that worked on the engagement, the hours such
employee spent for such fiscal quarter on such engagement (accompanied by
appropriate billing sheets prepared by such employee), the hourly rate for such
employee (accompanied by any reasonable evidence of such rate that the engaging
Rights Agent requests), and the out-of-pocket expenses incurred (accompanied by
receipts for any material item). The Rights Agents shall direct that the
14
xxxx be paid out of the Escrowed Funds. Notwithstanding the foregoing, the
Rights Agents shall not be required to pay for (and shall not treat as Claims
Expenses any amounts allocable to) the following: (A) the first $100,000 billed
and approved by the Rights Agents pursuant to this Section 3.2(e), (B) any
employee time spent personally preparing testifying at a trial, (C) any employee
time spent attending or preparing for his or her depositions; (D) any employee
time spent exercising the rights and duties of a Rights Agent; (E) any employee
time spent defending a claims against River, the River Subsidiaries, the Parent,
or its Affiliates in the Litigation; or (F) other than matters specified in
Section 3.2(e), any employee time spent or out-of-pocket expenses incurred in
the performance of River's or Parent's obligations pursuant to this Agreement.
(f) the Rights Agents shall not be required to give any note
or surety in respect of the execution of the such powers or otherwise in respect
of the premises; and
(g) the initial Rights Agents may be Holders.
Except as otherwise expressly provided in this Agreement, all decisions of the
Rights Agents shall be taken by majority vote of the Rights Agents; PROVIDED,
HOWEVER, that the right to engage parties (including employees of River, the
River Subsidiaries, Parent, or their Affiliates) to perform services (i) with
respect to the day-to-day conduct of the Litigation shall be made by the River
Rights Agent with the primary responsibility for day-to-day conduct as set forth
in Section 3.1(c), (ii) with respect to Strategic Decisions shall be made by the
applicable majority of Rights Agents required for Strategic Decisions as set
forth in Section 3.1(c), and (iii) with respect to Settlement Decisions shall be
made by the applicable majority of Rights Agents required for Settlement
Decisions as set forth in Section 3.1(c).
Section 3.3 Not Responsible for Recitals or Issuance of CVRs. The
recitals contained herein shall be taken as the statements of the Parent, and
the Rights Agents assume no responsibility for their correctness. The Rights
Agents make no representations as to the validity or sufficiency of this
Agreement or the CVRs. The Rights Agents shall not be accountable or liable for
the use or application by the Parent of the Litigation Proceeds or Non-Cash
Proceeds.
Section 3.4 Compensation, Reimbursement and Indemnification of the
Rights Agents. The Parent agrees that the following shall be payable as Claims
Expenses:
(a) to pay to each of the River Rights Agents at least $5,000 on
the first day of each month following the Effective Time until the Last CVR
Payment Date (or such earlier date as determined in accordance with Section 3.7)
and to pay the Independent Rights Agent an fair and reasonable amount of
compensation until the Last CVR Payment Date (or such earlier date as determined
in accordance with Section 3.7) that is agreed to by a majority of the Rights
Agents (other than the Independent Rights Agent);
(b) except as otherwise expressly provided herein, to pay to or
on behalf of the Rights Agents, upon the request of the Rights Agents, all
reasonable expenses and disbursements incurred or to be incurred by the Rights
Agents in connection with the discharge of their duties under this Agreement
(including, without limitation, the reasonable compensation and the expenses and
disbursements of their counsel, tax experts, valuation firms and other
15
experts and third parties as contemplated in Section 3.2 and including premiums
paid from time to time for liability insurance coverage for such Rights Agents);
and
(c) to indemnify the Rights Agents and hold them harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses and reasonable
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable compensation and the expenses and disbursements of their counsel,
tax experts, valuation firms and other experts and third parties as contemplated
in Section 3.2) that may be imposed on, asserted against or incurred by them
under this Agreement, and the Rights Agents shall be so indemnified under this
Agreement for their own ordinary or gross negligence, but the Rights Agents do
not have the right to be indemnified under this Agreement for their own willful
misconduct or bad faith.
Section 3.5 Resignation and Removal; Appointment of Successor.
(a) The Rights Agents may resign at any time by giving written
notice thereof to the Parent.
(b) The Rights Agents or any of them may be removed at any time
by Act of the Holders of a majority of the outstanding CVRs that are delivered
to the Rights Agents and the Parent.
(c) If at any time the Rights Agents shall become incapable of
acting, any Holder of a CVR may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Rights Agents and the appointment of successor Rights Agents.
(d) In the event that any of the Rights Agents resigns, is
removed or becomes incapable of acting, then such Rights Agent shall not be
entitled to any compensation payable pursuant to Section 3.4 from and after the
date of his resignation or removal.
(e) If a Parent Rights Agent shall resign, be removed or become
incapable of acting, the Parent, by a Board Resolution, shall promptly appoint a
qualified successor Parent Rights Agent and may be an officer of the Parent. If
a River Rights Agent shall resign, be removed, or become incapable of acting,
the remaining River Rights Agent shall promptly appoint a qualified successor
River Rights Agent who is a Holder. If the Independent Rights Agent shall
resign, be removed, or become incapable of acting, his or her successor shall be
appointed by the unanimous agreement of the remaining Rights Agents. If, within
90 days after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Rights Agents shall not have been appointed, the
Holders of the CVRs may appoint any Person who is willing to serve as successor
Rights Agent by the Act of the Holders of a majority of the outstanding CVRs
delivered to the Parent. A successor Rights Agent so appointed by the Holders
shall be designated in his appointment as either a River Rights Agent, a Parent
Rights Agent, or an Independent Rights Agent, as the case may be. The successor
Rights Agent so appointed shall under the provisions of the paragraph (e),
forthwith upon his acceptance of such appointment in accordance with this
Section 3.5(e), become a successor Rights Agent. If no successor Rights Agents
shall have been so appointed by the Parent or the Holders of the CVRs
16
and so accepted his or her appointment, the Holder of any CVR may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Rights Agent.
(f) The Parent shall give notice of each resignation and each
removal of a Rights Agent and each appointment of a successor Rights Agent by
mailing written notice of such event by first-class mail, postage prepaid, to
the Holders as their names and addresses appear in the CVR Register. Each notice
shall include the name and address of the successor Rights Agent. If the Parent
fails to send such notice within ten days after acceptance of appointment by a
successor Rights Agent, the successor Rights Agent shall cause the notice to be
mailed at the expense of the Parent.
Section 3.6 Acceptance of Appointment by Successor. Every successor
Rights Agent appointed hereunder shall execute, acknowledge and deliver to the
Parent and to the retiring Rights Agent an instrument accepting such appointment
and a counterpart of this Agreement, and thereupon such successor Rights Agent,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Rights Agent; but, on request
of the Parent or the successor Rights Agent, such retiring Rights Agent shall
execute and deliver an instrument transferring to such successor Rights Agent
all the rights, powers and trusts of the retiring Rights Agent.
Section 3.7 Termination upon Settlement Decision. Once the Rights Agents
have made a Settlement Decision in accordance with Section 3.1(c) and provided
the Litigation Proceeds Certificate in accordance with Section 5.1(b)(i), each
Rights Agent's rights to any reimbursement under this Agreement shall terminate
and, to the extent that all CVR Payment Amounts have not been paid, the Rights
Agents shall appoint one of the River Rights Agents (or any other person as
selected by a majority of the Rights Agents other than the Independent Rights
Agent) to act as a trustee (the "Trustee") to ensure on behalf of the Holders
that the Parent pays the required CVR Payment Amounts in accordance with the
terms of the Litigation Proceeds Certificate and the terms of this Agreement.
Any compensation paid to the Trustee shall be on terms acceptable to a majority
of the Rights Agents (other than the Independent Rights Agent and any Rights
Agent who is named Trustee) and such compensation shall constitute a Claims
Expense.
ARTICLE IV
HOLDERS' LISTS AND REPORTS BY RIGHTS AGENTS AND PARENT
Section 4.1 Parent to Furnish Rights Agents with Names and Addresses of
Holders. The Parent shall furnish or cause to be furnished to the Rights Agents
(a) in such form as the Rights Agents may reasonably require, the names and
addresses of the Holders within 15 days of the Effective Time, and (b) at such
times as the Rights Agents may request in writing, within five days after
receipt by the Parent of any such request, a list, in such form as the Rights
Agents may reasonably require, of the names and the addresses of the Holders as
of a date not more than 15 days prior to the time such list is furnished.
17
ARTICLE V
COVENANTS
Section 5.1 Prosecution of Litigation by Parent; Settlement; Periodic
Reports.
(a) In each case as directed by the Rights Agents pursuant to
Section 3.1(c) hereof, the Parent shall, and shall cause River and the River
Subsidiaries to, prosecute the Litigation and/or seek a settlement of the
Litigation.
(b) (i) None of the Parent, River, or any River Subsidiary shall
make any Settlement Decision without obtaining prior approval from the
applicable majority of the Rights Agents as determined in accordance with the
last sentence of Section 3.1(c). In connection with the approval of any
Settlement Decision, the applicable majority of the Rights Agents for Settlement
Decisions as determined in accordance with the last sentence of Section 3.1(c)
shall determine the amount, or a methodology for determining the amount, of any
Litigation Proceeds resulting from the settlement and the fair market value
(determined on an arm's-length basis and without regard to any liens or
encumbrances granted or created by Parent, River, the River Subsidiaries, or
their Affiliates and with Compliance Commitments having a fair market value of
zero) of any Non-Cash Proceeds. As promptly as practicable (but in no event
later than 30 days after the settlement), the Rights Agents shall deliver to
Parent a Litigation Proceeds Certificate setting forth the matters described in
Section 2.4(a) and, absent mathematical error, the amounts set forth in such
Litigation Proceeds Certificate shall be binding on the Parent and Holders. Upon
receipt of any Litigation Proceeds resulting from the settlement, the Parent
shall establish a CVR Payment Date in accordance with Section 2.5(a) and shall
compute the CVR Payment Amount in a manner consistent with the Litigation
Proceeds Certificate provided pursuant to the preceding sentence.
(ii) In making any decision or determination with respect
to the Litigation (including, without limitation, any Settlement Decision or
Strategic Decision) the Rights Agents shall act in good faith with a view to
maximizing the present value of the Litigation Proceeds to River, the River
Subsidiaries and the Holders. Without limiting the generality of the foregoing,
in connection with any Settlement Decision, the Rights Agents shall consider:
(A) the aggregate amount of After-Tax Litigation Proceeds to be
received in connection with the proposed settlement;
(B) the benefit to River and the River Subsidiaries of any agreements,
commitments or undertakings to be made in connection with such
settlement that restrict future anti-competitive or allegedly
anti-competitive conduct by one or more parties to the Litigation;
(C) if consent to such settlement is withheld, the probability of River
and the River Subsidiaries receiving greater After-Tax Litigation
Proceeds in connection with a subsequent settlement or other
resolution of the Litigation;
18
(D) the probable timing of such subsequent settlement or other
resolution of the Litigation and the probable amount of any
additional After-Tax Litigation Proceeds to be received in
connection therewith; and
(E) the discounted present value of such prospective additional
After-Tax Litigation Proceeds.
The discount rate applicable to the value of such prospective additional
After-Tax Litigation Proceeds shall be determined by the applicable majority of
the Rights Agents as determined in accordance with the last sentence of Section
3.1(c) and shall give due regard to the financial and other costs to River, the
River Subsidiaries and the Holders of postponing settlement or other resolution
of the Litigation.
(c) Until the Litigation has been settled or is final and not
subject to further judicial review (by appeal or otherwise), each of Parent,
River, River Subsidiaries, their Affiliates and the Rights Agents shall
cooperate in order to ensure that (i) all of the Rights Agents receive, by the
last Business Day of each fiscal quarter of the Parent, a report describing the
status of the Litigation, which report shall describe, in summary fashion, the
total Claims Expenses incurred through the date of such report, the status of
all pending court proceedings related to the Litigation, whether any new claims
or proceedings have been brought by River, the River Subsidiaries or their
Affiliates related to the Litigation, the status of any counterclaims brought by
the defendants related to the Litigation, and the status of any settlement
negotiations among River and the River Subsidiaries and their Affiliates and the
defendants with respect to the Litigation and (ii) except as otherwise required
by applicable law or court order, all of the Rights Agents are granted access to
any and all records, documents, personnel and any other sources of information
that are in the possession, custody or control of the Parent and its Affiliates
as the Rights Agents shall determine are reasonably necessary or desirable in
order to review Settlement Decisions and Strategic Decisions, if any. Parent,
River, and River Subsidiaries shall cooperate with the Rights Agents in
providing the assistance of any of their officers and employees (subject to the
requirements of Section 3.2(e)) and, to the extent that Parent or River believes
in its reasonable determination that it is required to have its employees expend
efforts in prosecuting the Litigation, but does not have sufficient time to
obtain prior approval from the applicable Rights Agents for such efforts, Parent
and River shall be entitled to be reimbursed for any reasonable amount of hours
expended in such effort in accordance with the principles of Section 3.2(e).
(d) The CVR Percentage of all Cash Proceeds shall be held in a
separate bank account invested in Cash Equivalents, free of any liens or
encumbrances of any kind, until the Aggregate CVR Payment Amount has been
determined with respect to such Cash Proceeds. The Parent shall hold such
Aggregate CVR Payment Amount in a separate bank account invested in Cash
Equivalents, free of any liens or encumbrances of any kind, until such Aggregate
CVR Payment Amount has been paid to the Holders. To the extent that Parent does
not make a CVR Payment Amount on a CVR Payment Date, the Holders shall be
entitled to any interest earned on the CVR Payment Amount in such separate bank
account from the CVR Payment Date until payment is actually made shall be paid
to the Holders. To the extent that a Holder or Rights Agent incurs any
out-of-pocket expenses (including legal expenses) in successfully pursuing
19
payment of amounts due hereunder, the Parent shall pay such expenses and such
expenses shall not constitute Claims Expenses.
(e) The Parent agrees to provide funds in the amount of
$10,000,000 to support the prosecution of the Litigation and the payment of
Claims Expenses. Upon the first issuance of CVRs in payment for shares of
Company Common Stock pursuant to the Offer, $10,000,000 (the "Escrowed Funds")
shall be placed in an escrow account with a bank organized and in existence
under the laws of the United States (which bank shall be reasonably acceptable
to a majority of the Rights Agents and have capital and surplus in excess of
$500 million (an "Acceptable Bank")), free of any liens or encumbrances of any
kind (except for any liens allowed under Section 5.1(h)), and the Escrowed Funds
shall be drawn down in accordance with the instructions of the Rights Agents, as
provided in the applicable Escrow Agreement; PROVIDED, HOWEVER, that (A) the
Parent may withhold or permit to be withheld up to $5,000,000 of the Escrowed
Funds from the initial escrow deposit, or subsequently withdraw or permit to be
withdrawn such funds from escrow, after giving proper notice to each Rights
Agent, if such funds are replaced with one or more letters of credit issued by
an Acceptable Bank for the benefit of the Rights Agents and (B) the Parent may,
at any time and from time to time, withdraw or permit to be withdrawn Escrowed
Funds, after giving proper notice to each Rights Agent, if an equivalent amount
is deposited as Escrowed Funds in another escrow account with an Acceptable Bank
free of any liens or encumbrances of any kind (except for liens allowed under
Section 5.1(h)) pursuant to terms of the applicable Escrow Agreement; PROVIDED,
FURTHER, that at any time the sum of (i) all Escrowed Funds PLUS (ii) the total
face amount of all letters of credit issued for the benefit of the Rights Agents
shall be at least equal to (iii) $10,000,000 MINUS (iv) the cumulative amount of
Claims Expenses paid as of the time. To the extent that letters of credit have
replaced Escrowed Funds pursuant to clause (A) of the preceding sentence or
another escrow account has been funded pursuant to clause (B) of the preceding
sentence, the Rights Agents shall, to the extent it is required to pay certain
Claims Expenses, first use Escrowed Funds, to the extent available, not in the
additional escrow account and then shall draw on the letters of credit or the
additional escrow account (in an amount equal to the amounts not paid plus
$250,000), as the case may be, if after first requesting that Parent pay such
Claims Expenses directly, such expenses are not paid within five (5) business
days of the request. The parties hereto agree that nothing in this Agreement
shall obligate Parent or its Affiliates or prevent Parent or its Affiliates from
providing in their sole and absolute discretion (upon terms to be agreed at that
time), aggregate funds in excess of $10,000,000 to support the prosecution of
the Litigation and the Claims Expenses.
(f) (i) The costs of Parent in connection with the Escrowed
Funds as set forth on Exhibit B (the "Credit Support Costs") shall be paid by
Parent; PROVIDED, HOWEVER, that until the earlier of (1) the date on which the
cumulative Claim Expenses paid equal $5,000,000 and (2) the date the principal
trial proceeding with respect to the Litigation commence, the Credit Support
Costs shall be Claims Expenses and the Parent be reimbursed for such amounts out
of the Escrowed Funds. To the extent that Parent incurs Credit Support Costs
that are not Claims Expenses, such amounts shall be referred to as "Parent
Credit Support Costs" and to the extent that Parent incurs Credit Support Costs
that are Claims Expenses, such amounts shall be referred to as "CVR Credit
Support Costs."
20
(ii) If any Parent Credit Support Costs or CVR Credit
Support Costs are incurred, the Preliminary CVR Payment Amount for the first CVR
Payment Date after the incurrence of such costs shall be adjusted as follows:
the Preliminary CVR Payment Amount otherwise computed in accordance with this
Agreement shall be (1) increased by an amount equal to the product of (A) 100%
less the CVR Percentage TIMES (B) such CVR Credit Support Costs and (2)
decreased by an amount equal to the product of (A) the CVR Percentage TIMES (B)
such Parent Credit Support Costs. To the extent the adjusted required under this
Section 5.1(f)(ii) would result in a Preliminary CVR Payment Amount that is less
than zero, the Preliminary CVR Payment Amount shall be reduced to zero and the
amount of the excess adjustment shall be carried over and reduce (but not below
zero) any future Preliminary CVR Payment Amounts until the aggregate amount of
such excess adjustment has been utilized to reduce Preliminary CVR Payment
Amounts.
(g) The majority Rights Agents may use any reasonable means
(including borrowing funds or issuing obligations that are only payable upon the
receipt of Litigation Proceeds or entering into new agreements with Parent,
River or its Affiliates) to obtain funds to pay any Claims Expenses not funded
pursuant to Section 5.1(e). Any amounts required to be paid pursuant to any
obligations issued pursuant to this Section 5.1(g) to fund Claim Expenses in
excess of $10,000,000 (whether in the form of principal, interest, contingent
payments based on Litigation Proceeds, or some other obligation) shall reduce
the cumulative amount of Litigation Proceeds received, if any, for purposes of
computing the Preliminary CVR Payment Amounts.
(h) (i) Neither Parent, nor River, nor River Subsidiaries
shall enter into any agreement that would restrict Parent's right to be able to
make the payments to the Holders under this Agreement or restrict the ability or
River or River Subsidiaries to distribute funds to Parent to fund such payments.
As security for prompt and complete payment and performance when due of all CVR
Payment Amounts and all covenant and obligations to be performed by Parent,
River, and River Subsidiaries pursuant to this Agreement (the "Obligations"),
Parent, River and Merger Sub shall hereby as of the first issuance of the CVRs
pledge, hypothecate, and assign and grant to the Rights Agents for the ratable
benefit of the Holders, a continuing security interest in the escrow account
established pursuant to Section 5.1(e), the Litigation and all Litigation
Proceeds (whether such Litigation Proceeds arise before or after the
commencement of a case under the United States Bankruptcy Code or any other
domestic or foreign bankruptcy law by or against Parent, River, or River
Subsidiaries) and Parent, River, and River Subsidiaries shall prepare, execute,
and file any and all forms reasonably requested by any Rights Agent to perfect
and maintain such security interest.
(ii) Without the prior written consent of a majority of the
Rights Agents, Parent shall not, and shall not cause or permit River to, assign
any interest in the Litigation to any Person except (A) at any time after a
trial verdict in the Litigation disposing of all material claims, River and the
River Subsidiaries shall be entitled to assign an interest in any Litigation
Proceeds to any person (other than another party in the Litigation or such other
party's Affiliates, employees or directors) if such assignment (i) would not
result in any encumbrances or other liens on the portion of such Litigation
Proceeds which equals the CVR Payment Amount attributable to such Litigation
Proceeds and (ii) is consented to by the River Rights Agents (which consent
shall not be unreasonably withheld); (B) liens upon and security interests in
the Litigation and the proceeds thereof granted to Xxxxxxxxxx Capital Partners,
LLC (or any
21
affiliate, fund or account managed by Xxxxxxxxxx Capital Partners (together with
their successors and assigns, the "TCP Collateral Agent") as collateral security
for indebtedness incurred by Parent and its subsidiaries in connection with the
contemplated recapitalization of the Parent and its subsidiaries following the
Merger (including any liens or security interests granted in connection with any
refinancing, replacement, restatement, or refunding in whole or in part of such
indebtedness); or (C) liens upon security interests in the Litigation and the
proceeds thereof granted for the benefit of lenders or lending syndicates that
provide senior working capital facilities to the Parent or its subsidiaries from
time to time ("Working Capital Lenders") as collateral security for the
indebtedness incurred by Parent and its subsidiaries under such facilities. No
assignment under this Section 5.1(h)(ii) shall relieve the Parent, River or the
River Subsidiaries of their obligations under this Agreement.
(iii) As a condition to liens or security interests in the
Litigation or the proceeds thereof being granted to the TCP Collateral Agent or
any Working Capital Lenders, the Rights Agents, Parent, River, the TCP
Collateral Agent, and any Working Capital Lenders shall enter into an
intercreditor agreement the principal terms of which provide (A) the liens upon
and security interests in the Litigation and the proceeds thereof granted to the
Rights Agents, the TCP Collateral Agent, and any Working Capital Lenders,
respectively, will be ranked equally and ratably, and (B) that in the event
Litigation Proceeds are received, (1) the Litigation Proceeds shall be held in a
separate bank account as specified in Section 5.1(d) of this Agreement and (2)
once the Aggregate CVR Payment Amount with respect to the Litigation Proceeds is
determined in accordance with this Agreement, the balance of the Litigation
Proceeds shall be deposited solely in one or more restricted blocked accounts
subject solely to security interests therein granted to TCP Collateral Agent and
any Working Capital Lenders pending distribution in accordance with the
agreements between the Parent, certain Affiliates of Parent, River, the TCP
Collateral Agent, and any Working Capital Lenders.
(i) None of the Parent, River, or the River Subsidiaries shall
initiate settlement negotiations or expand settlement negotiations with respect
to any aspect or portion of the Litigation without the prior permission of the
applicable majority of Rights Agents for Settlement Decisions as set forth in
the last sentence of Section 3.1(c) and Parent and River agree that such powers
shall vest with the Rights Agents as provided in Section 3.1(c). No Rights Agent
shall initiate settlement negotiations without first informing each other Rights
Agents of such settlement negotiations and obtaining consent to pursue such
negotiations from the applicable majority of Rights Agents as determined in the
last sentence of Section 3.1(c) for Settlement Decisions. If one or more Rights
Agents are allowed to entertain or initiate settlement negotiations, such Rights
Agents shall keep each other Rights Agent reasonably informed regarding the
status of such negotiations (including any expansion of such negotiations) and
any Rights Agents shall, if such Rights Agents request, be allowed to
participate in the settlement negotiations.
(j) If Parent, River, the River Subsidiaries, their Affiliates,
or any Rights Agent receives any communication from any other party to the
Litigation regarding possible settlement negotiations, the party receiving the
communication shall be entitled to review such other party's proposals, PROVIDED
that such receiving party (i) shall inform each of the Rights Agents regarding
the fact (and content) of such communication and proposals as promptly as
22
possible(and under no circumstances more than three days) thereafter and (ii)
shall not engage in settlement negotiations or expand settlement negotiations
without the required permission of the Rights Agents as set forth in Section
5.1(h).
Section 5.2 Payment of CVR Payment Amount. Parent shall duly and
promptly pay each Holder the CVR Payment Amount in the manner provided for in
Section 2.5 and in accordance with the terms of this Agreement.
Section 5.3 Federal Income Tax Treatment. Parent (and each of its
Affiliates) shall for federal income tax purposes treat any CVR Payment Amounts
as payments made in connection with the acquisition of River Common Stock (and
not as interest except to the extent that Parent is required to treat such
amounts as interest under Code section 483) and neither Parent (nor any of its
Affiliates) shall file a tax return or take any position inconsistent with such
treatment (unless required by a determination that is final after the Parent or
its Affiliate has defended such matter in good faith).
ARTICLE VI
AMENDMENTS
Section 6.1 Amendments Without Consent of Holders.
(a) Without the consent of any Holders, the Parent, when
authorized by a Board Resolution, and the Rights Agents, in the Rights Agents'
sole and absolute discretion, at any time and from time to time, may enter into
one or more amendments hereto, for any of the following purposes:
(i) to evidence the succession of another Person to the
Parent and the assumption by any such successor of the covenants
of the Parent herein; PROVIDED that such succession and
assumption is in accordance with the terms of this Agreement;
(ii) to evidence the succession of another Person as a
successor Rights Agent and the assumption by any successor of the
covenants and obligations of such Rights Agents herein; provided,
that such succession and assumption is in accordance with the
terms of this Agreement;
(iii) to add to the covenants of the Parent such further
covenants, restrictions, conditions or provisions as the Board of
Directors and the Rights Agents shall consider to be for the
protection of the Holders; PROVIDED that in each case, such
provisions shall not adversely affect the interests of the
Holders;
(iv) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any
other provision herein, or to make any other provisions with
respect to matters or questions arising under this Agreement;
PROVIDED that in each case, such provisions shall not materially
adversely affect the interests of the Holders; or
23
(v) as may be necessary or appropriate to ensure that the
CVRs are not subject to registration under the Securities Act or
the Exchange Act, as amended, PROVIDED that that such provisions
shall not materially adversely affect the interests of the
Holders.
(b) Promptly after the execution by the Parent and the Rights
Agents of any amendment pursuant to the provisions of this Section 6.1, the
Parent shall mail a notice thereof by first class mail to the Holders at their
addresses as they shall appear on the CVR Register, setting forth in general
terms the substance of such amendment.
Section 6.2 Amendments with Consent of Holders.
(a) With the consent of the Holders of not less than a majority
of the outstanding CVRs, by Act of such Holders delivered to the Parent and the
Rights Agents, the Parent, when authorized by a Board Resolution, and the Rights
Agents may enter into one or more amendments hereto for the purpose of adding,
eliminating or changing any provisions of this Agreement if such addition,
elimination or change is in any way adverse to the interest of the Holders.
(b) It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such Act shall approve the substance thereof.
(c) Promptly after the execution by the Parent and the Rights
Agents of any amendment pursuant to the provisions of this Section 6.2, the
Parent shall mail a notice thereof by first class mail to the Holders at their
addresses as they shall appear on the CVR Register, setting forth in general
terms the substance of such amendment.
Section 6.3 Execution of Amendments. In executing any amendment
permitted by this Article, the Rights Agents shall be entitled to receive, and
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Rights Agents may, but are not obligated to, enter into any such amendment that
affects the Rights Agents' own rights, privileges, covenants or duties under
this Agreement or otherwise.
Section 6.4 Effect of Amendments. Upon the execution of any amendment
under this Article, this Agreement shall be modified in accordance therewith,
such amendment shall form a part of this Agreement for all purposes and every
Holder shall be bound thereby.
ARTICLE VII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE;
JOINT AND SEVERAL RESPONSIBILITY
Section 7.1 Parent and River May Consolidate, Etc.
24
(a) The Parent and River shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
(1) Parent or River shall consolidate with or merge
into any other Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the Person
formed by such consolidation or into which the Parent or River is
merged or the Person that acquires by conveyance or transfer, or
that leases, the properties and assets of the Parent or River
substantially as an entirety (the "Surviving Person") shall
expressly assume payment of amounts on all the CVRs and the
performance of every duty and covenant of this Agreement on the
part of the Parent or River to be performed or observed;
(2) the Parent or River has delivered to the Rights
Agents an Officer's Certificate, stating that such consolidation,
merger, conveyance, transfer or lease complies with this Article
VII and that all conditions precedent herein provided for
relating to such transaction have been complied with; and
(3) after giving effect to any such transaction, the
Surviving Person shall not be, or be affiliated in any manner
with, the parties adverse to River in the Litigation.
(b) For purposes of this Section 7.1, "convey, transfer or lease
its properties and assets substantially as an entirety" shall mean properties
and assets contributing in the aggregate at least 80% of the Parent's or River's
total consolidated revenues as reported in the Parent's or River's last
available periodic financial report (quarterly or annual, as the case may be).
Section 7.2 Successor Substituted. Upon any consolidation of or merger
by the Parent with or into any other Person, or any conveyance, transfer or
lease of the properties and assets substantially as an entirety to any Person in
accordance with Section 7.1, the Surviving Person shall succeed to, and be
substituted for, and may exercise every right and power of, the Parent under
this Agreement with the same effect as if the Surviving Person had been named as
the Parent herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Agreement and the CVRs.
Section 7.3 Joint and Several Responsibility. Parent, River and Merger
Sub are jointly and severally responsible for the performance of all actions,
and the payment of all sums, required under this Agreement of either such party.
Section 7.4 No Liability. None of Parent, Merger Sub, or River shall be
liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. All funds
held for payment to the Holders and unclaimed at the end of one year after the
applicable CVR Payment Date shall be returned to the Parent, after which time
any Holder shall look as a general creditor only to Parent for payment of the
CVR Payment Amount (without any interest being payable thereon) to which such
Holder may be due,
25
subject to applicable law. Any amounts remaining unclaimed by Holders seven
years after the applicable CVR Payment Date (or such earlier date immediately
before that time when the amounts would otherwise escheat to or become property
of any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any person previously (or subsequently claiming to be) entitled thereto.
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RIVER, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
RIVER ACQUISITION CORP.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
PARENT CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
---------------------------------
as River Rights Agent
----------------------------------
as River Rights Agent
---------------------------------
as Parent Rights Agent
---------------------------------
as Parent Rights Agent
EXHIBIT A
INFORMATION RESOURCES, INC., VS. THE DUN & BRADSTREET
CORPORATION, X.X. XXXXXXX CO. AND IMS INTERNATIONAL, INC., XX. 00
XXX. 0000
XXXXXXX B
LIBOR PLUS 7.5% ON THE PORTION OF THE ESCROWED FUNDS (OR THE FACE AMOUNT OF
LETTER OF CREDITS ESTABLISHED IN LIEU OF THE ESCROWED FUNDS)
EQUAL TO $5,000,000.
