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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNITED PARCEL SERVICE, INC.
VND MERGER SUB, INC.
AND
XXXXX COMPANIES, INC.
DATED AS OF JANUARY 10, 2001
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TABLE OF CONTENTS
Article I DEFINITIONS.......................................................................2
Article II THE MERGER...............................................................10
Section 2.1. The Merger..................................................................10
Section 2.2. Effective Time; Closing.....................................................10
Section 2.3. Effect of the Merger........................................................11
Section 2.4. Conversion of Capital Stock.................................................11
Section 2.5. Stock Options...............................................................12
Section 2.6. Exchange of Certificates....................................................12
Section 2.7. Dividends...................................................................13
Section 2.8. No Liability................................................................14
Section 2.9. Lost Certificates...........................................................14
Section 2.10. Withholding Rights.........................................................14
Section 2.11. Shares held by the Company Affiliates......................................14
Section 2.12. Closing of Company Transfer Books..........................................14
Section 2.13. Tax-Free Reorganization....................................................15
Article III THE SURVIVING CORPORATION......................................................15
Section 3.1. Certificate of Incorporation................................................15
Section 3.2. Bylaws......................................................................15
Section 3.3. Directors and Officers......................................................15
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................15
Section 4.1. Organization and Standing...................................................15
Section 4.2. Authority for Agreement.....................................................16
Section 4.3. Capitalization..............................................................16
Section 4.4. Subsidiaries................................................................17
Section 4.5. No Conflict.................................................................18
Section 4.6. Required Filings and Consents...............................................18
Section 4.7. Compliance..................................................................18
Section 4.8. Litigation..................................................................19
Section 4.9. Company Reports; Financial Statements.......................................19
Section 4.10. Absence of Certain Changes or Events.......................................20
Section 4.11. Taxes......................................................................20
Section 4.12. Title to Personal Property.................................................22
Section 4.13. Real Property..............................................................22
Section 4.14. Environmental Compliance and Disclosure....................................23
Section 4.15. Officers and Employees.....................................................24
Section 4.16. Employee Benefit Plans.....................................................25
Section 4.17. Labor Relations............................................................28
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Section 4.18. Contracts and Commitments..................................................30
Section 4.19. Information Supplied.......................................................30
Section 4.20. Intellectual Property......................................................31
Section 4.21. Insurance Policies.........................................................32
Section 4.22. Notes and Accounts Receivable..............................................32
Section 4.23. Transactions with Affiliates...............................................32
Section 4.24. Customer and Supplier Relations............................................33
Section 4.25. Certain Practices..........................................................33
Section 4.26. No Existing Discussions....................................................34
Section 4.27. Merger.....................................................................34
Section 4.28. Antitakeover Statutes; Absence of Dissenters' Rights.......................34
Section 4.29. Brokers....................................................................34
Section 4.30. Vote Required..............................................................34
Section 4.31. Customs Matters............................................................35
Article V REPRESENTATIONS AND WARRANTIES OF BUYERS AND PARENTS.............................36
Section 5.1. Organization and Standing...................................................36
Section 5.2. Authority for Agreement.....................................................37
Section 5.3. No Conflict.................................................................37
Section 5.4. Required Filings and Consents...............................................37
Section 5.5. Capitalization..............................................................38
Section 5.6. Parent Reports; Parent Financial Statements.................................38
Section 5.7. Absence of Certain Changes or Events........................................38
Section 5.8. Information Supplied........................................................39
Section 5.9. No Violation of Law.........................................................39
Section 5.10. Merger.....................................................................39
Section 5.11. Certificate of Incorporation and Bylaws....................................39
Section 5.12. Ownership of Buyer; No Prior Activities....................................39
Section 5.13. Ownership Interest in the Company..........................................40
Section 5.14. Brokers and Finders........................................................40
Article VI COVENANTS......................................................................40
Section 6.1. Conduct of the Business Pending the Merger..................................40
Section 6.2. Access to Information; Confidentiality......................................41
Section 6.3. Notification of Certain Matters.............................................42
Section 6.4. Company Stockholders' Meeting...............................................42
Section 6.5. Board Recommendations.......................................................42
Section 6.6. Stockholder Litigation......................................................43
Section 6.7. Indemnification.............................................................43
Section 6.8. Public Announcements........................................................44
Section 6.9. Acquisition Proposals.......................................................44
Section 6.10. Proxy Statement/Prospectus.................................................45
Section 6.11. Further Assurances.........................................................46
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Section 6.12. NYSE Listing...............................................................47
Section 6.13. Tax Treatment..............................................................47
Section 6.14. Undertakings of Parent.....................................................48
Section 6.15. Director Resignations......................................................48
Section 6.16. Company Affiliates.........................................................48
Section 6.17. Purchase of Company Stock..................................................48
Section 6.18. Rights Plan................................................................48
Section 6.19. Employee Matters...........................................................49
Section 6.20. Customer Visits............................................................50
Section 6.21. Insurance..................................................................51
Article VII CONDITIONS.....................................................................51
Section 7.1. Conditions to the Obligation of Each Party..................................51
Section 7.2. Conditions to Obligations of Parent and Buyer to Effect the Merger..........52
Section 7.3. Conditions to Obligations of Company to Effect the Merger...................53
Article VIII TERMINATION, AMENDMENT AND WAIVER..............................................53
Section 8.1. Termination.................................................................53
Section 8.2. Effect of Termination.......................................................55
Section 8.3. Amendments..................................................................55
Section 8.4. Waiver......................................................................55
Article IX GENERAL PROVISIONS.............................................................56
Section 9.1. No Third Party Beneficiaries................................................56
Section 9.2. Entire Agreement............................................................56
Section 9.3. Succession and Assignment...................................................56
Section 9.4. Counterparts................................................................56
Section 9.5. Headings....................................................................56
Section 9.6. Governing Law...............................................................56
Section 9.7. Severability................................................................56
Section 9.8. Specific Performance........................................................57
Section 9.9. Construction................................................................57
Section 9.10. Non-Survival of Representations and Warranties and Agreements..............57
Section 9.11. Fees and Expenses..........................................................57
Section 9.12. Notices....................................................................57
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TABLE OF EXHIBITS AND SCHEDULES
Exhibit A Affiliates Letter
Company Disclosure Letter
Schedule 4.1 Organization and Standing
Schedule 4.2 Authority for Agreement
Schedule 4.3 Capitalization
Schedule 4.4 Subsidiaries
Schedule 4.5 No Conflict
Schedule 4.6 Required Filings and Consents
Schedule 4.7 Compliance
Schedule 4.8 Litigation
Schedule 4.9 Company Reports; Financial Statements
Schedule 4.10 Absence of Certain Changes or Events
Schedule 4.11 Taxes
Schedule 4.12 Title to Personal Property
Schedule 4.13 Real Property
Schedule 4.14 Environmental Compliance and Disclosure
Schedule 4.15 Officers and Employees
Schedule 4.16 Employee Benefit Plans
Schedule 4.17 Labor Relations
Schedule 4.18 Contracts and Commitments
Schedule 4.19 Information Supplied
Schedule 4.20 Intellectual Property
Schedule 4.21 Insurance Policies
Schedule 4.22 Notes and Accounts Receivable
Schedule 4.23 Transactions with Affiliates
Schedule 4.24 Customer and Supplier Relations
Schedule 4.25 Certain Practices
Schedule 4.26 No Existing Discussions
Schedule 4.27 Merger
Schedule 4.28 Antitakeover Statutes; Absence of Dissenters' Rights
Schedule 4.29 Brokers
Schedule 4.30 Vote Required
Schedule 4.31 Customers Matters
Schedule 6.1(b) Conduct of the Business Pending the Merger
Parent Disclosure Letter
Schedule 5.1 Organization and Standing
Schedule 5.2 Authority for Agreement
Schedule 5.3 No Conflicts
Schedule 5.4 Required Filings and Consents
Schedule 5.7 Absence of Certain Changes or Events
Schedule 5.9 No Violation of Law
Schedule 6.21 Insurance
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 10, 2001, by and among United Parcel Service, Inc., a Delaware
corporation (the "Parent"), VND Merger Sub, Inc., a Delaware corporation (the
"Buyer") and wholly owned subsidiary of the Parent, and Xxxxx Companies, Inc., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the parties to this Agreement desire to effect the acquisition
of the Company by the Parent;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to
the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), the Buyer will merge with and into the Company
(the "Merger") in accordance with the provisions of the DGCL, with the Company
as the surviving corporation;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Parent entering into this Agreement,
the Company has entered into an option agreement with the Parent (the "Company
Option Agreement"), dated as of the date hereof, pursuant to which, among other
things, the Company has granted an option in favor of the Parent with respect to
shares of common stock of the Company, par value $.01 per share (the "Company
Common Stock"), subject to the terms and conditions contained therein;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Parent entering into this Agreement,
each of Xxxx X. Xxxxx the Xxxx X. Xxxxx 1999 Grantor Retained Annuity Trust,
Xxxxxx Xxxxx and the Xxxxxx Xxxxx 1999 Grantor Retained Annuity Trust has
entered into a separate option agreement with the Parent (collectively with the
Company Option Agreement, the "Option Agreements"), dated as of the date hereof,
pursuant to which, among other things, each such individual or trust has granted
an option in favor of Parent with respect to shares of Company Common Stock
beneficially owned by such individual or trust and has agreed to vote such
shares in favor of this Agreement and the Merger, subject to the terms and
conditions contained therein;
WHEREAS, the Board of Directors of the Company has unanimously
determined that the Merger, this Agreement and the Option Agreements are
advisable, fair to, and in the best interests of, the Company and the holders of
the Company Common Stock (the "Company Stockholders");
WHEREAS, the Board of Directors of the Parent and the Buyer have each
approved this Agreement, the Merger and the transactions contemplated herein,
upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement, the Merger and the transactions contemplated herein, which
approval was based in part on the opinion of Xxxxxx Xxxxxxx & Co. Incorporated
(the "Independent Advisor"), independent financial advisor to the Board of
Directors of the Company, that, as of the date of
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such opinion and based on the assumptions, qualifications and limitations
contained therein, the Exchange Ratio (as defined below) is fair, from a
financial point of view, to the Company Stockholders;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended (the "Code"); and
WHEREAS, the Board of Directors of the Company has unanimously resolved
to recommend adoption of the Merger Agreement to the Company Stockholders and
has determined that the Merger, this Agreement and the Option Agreements are
fair to the Company Stockholders and to recommend that the Company Stockholders
approve the Merger, this Agreement and the transactions contemplated herein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Section.
(a) "10-K" shall mean the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 2000.
(b) "Acquisition Agreement" shall mean any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement related to any Acquisition Proposal.
(c) "Acquisition Proposal" shall mean any bona fide proposal or
offer from any Person relating to any direct or indirect acquisition or purchase
of 20% or more of the assets of the Company and the Subsidiaries (as defined
below), taken as a whole, or 20% or more of the combined voting power of the
shares of Company Common Stock, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of the
combined voting power of the shares of Company Common Stock, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any Subsidiary in which the
other party thereto or its stockholders will own 20% or more of the combined
voting power of the parent entity resulting from any such transaction, other
than the transactions contemplated by this Agreement.
(d) "ADA" shall mean the Americans with Disabilities Act.
(e) "ADEA" shall mean the Age Discrimination in Employment Act.
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(f) "Affiliate" of a party shall mean an "affiliate" of such
party as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (as defined below) (including at a minimum, all those Persons
subject to the reporting requirements of Rule 16(a) under the Exchange Act (as
defined below).
(g) "Affiliates Letter" shall mean a written statement in the
form of Exhibit A delivered by each Person identified pursuant to Section 6.16
as an Affiliate of the Company for purposes of Rule 145 under the Securities
Act.
(h) "Agreement" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(i) "Applicable Benefit Laws" means ERISA (as defined below), the
Code and all other applicable laws, regulations, orders or other legislative,
administrative or judicial promulgations, including those of a jurisdiction
outside the United States of America.
(j) "Buyer" shall have the meaning set forth in the introductory
paragraph of this Agreement.
(k) "CERCLA" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
(l) "Certificate" shall mean each certificate representing a
share or shares of Company Common Stock.
(m) "Certificate of Merger" shall mean the certificate of merger
filed with the Secretary of State of the State of Delaware by the parties hereto
in connection with the Merger.
(n) "Closing" shall mean the date on which the Merger becomes
effective.
(o) "Code" shall have the meaning set forth in the Recitals of
this Agreement.
(p) "Company" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(q) "Company Benefit Plans" shall mean each Employee Benefit Plan
(as defined below) sponsored or maintained or required to be sponsored or
maintained at any time by the Company or any Subsidiary or to which the Company
or any Subsidiary makes or has made, or has or has had an obligation to make,
contributions at any time.
(r) "Company Bylaws" shall mean the bylaws of the Company.
(s) "Company Certificate of Incorporation" shall mean the
Company's certificate of incorporation, including any certificates of
designations attached thereto.
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(t) "Company Common Stock" shall have the meaning set forth in
the Recitals of this Agreement.
(u) "Company Disclosure Letter" shall mean the Company Disclosure
Letter delivered by the Company to the Parent concurrently with the execution of
this Agreement. The Company Disclosure Letter shall include specific references
to each provision of this Agreement to which information contained in the
Company Disclosure Letter is intended to apply.
(v) "Company Financial Statements" shall mean all of the
financial statements included in the Company Reports (as defined below).
(w) "Company Licensed Software" shall mean all third party
software (other than Company Proprietary Software or standard, off-the-shelf
third party personal computer or server-based products such as word processing,
accounting, spreadsheet programs, or so forth) used by the Company and the
Subsidiaries.
(x) "Company Material Adverse Effect" shall mean, with respect to
the Company, any change, event, circumstance or effect shall have occurred that,
when taken together with all other adverse changes, events, circumstances or
effects that have occurred is or is reasonably likely to (i) be materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets or liabilities (including contingent liabilities) of the
Company and the Subsidiaries taken as a whole or (ii) prevent or materially
delay the performance by the Company of any of its material obligations under
this Agreement or the consummation of the Merger or the other transactions
contemplated herein; provided, however, that the following shall be excluded
from the definition of "Company Material Adverse Effect" and from any
determination as to whether a Company Material Adverse Effect has occurred:
changes, events, circumstances or effects (A) relating to the economy or
securities markets in general, (B) relating to the industries in which the
Company operates in general and not uniquely to the Company, (C) relating to
changes or disruptions in the business of the Company resulting from the
announcement of the execution of this Agreement and the proposed consummation of
the transactions contemplated by this Agreement or (D) resulting from the public
announcement of the Company's second quarter financial results.
(y) "Company Preferred Stock" shall mean shares of preferred
stock of the Company.
(z) "Company Proprietary Software" shall mean all software owned
by the Company and the Subsidiaries.
(aa) "Company Option Agreement" shall have the meaning set forth
in the Recitals of this Agreement.
(bb) "Company Reports" shall mean all forms, reports, statements
and all other documents required to be filed by the Company with the SEC (as
defined below) from June 1, 1997.
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(cc) "Company Software" shall mean the Company Licensed Software
together with the Company Proprietary Software.
(dd) "Company Stock" shall mean the Company Common Stock together
with the Company Preferred Stock.
(ee) "Company Stockholders" shall have the meaning set forth in
the Recitals of this Agreement.
(ff) "Company Stock Option" shall mean each outstanding option to
purchase shares of Company Common Stock, other than the options granted pursuant
to the Option Agreements.
(gg) "Company Stock Plan" shall mean any stock option plan or
restricted stock plan of the Company, whether established or assumed by the
Company in connection with an acquisition.
(hh) "Confidentiality Agreement" shall mean the confidentiality
agreement with the Company, dated November 10, 2000.
(ii) "Customer Inventory" shall mean the materials, products or
other substances held by the Company or any Subsidiary for the account of a
customer of the Company or any Subsidiary.
(jj) "D&O Insurance" shall mean the Company's current directors'
and officers' liability insurance policies.
(kk) "DGCL" shall have the meaning set forth in the Recitals of
this Agreement.
(ll) "Effective Time" is the time the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
other time as the parties hereto agree shall be specified in such Certificate of
Merger.
(mm) "Employee/Consulting Agreements" shall mean any contracts,
consulting agreements, termination or severance agreements, change of control
agreements or any other agreements respecting the terms and conditions of
employment or of an independent contract relationship in respect to any officer,
employee or former employee, consultant or independent contractor.
(nn) "Employee Benefit Plan" shall mean with respect to any
Person each plan, fund, program, agreement, arrangement or scheme, including,
but not limited to each plan, fund, program, agreement, arrangement or scheme
maintained or required to be maintained under the laws of a jurisdiction outside
the United States of America (other than a plan, fund, program, agreement,
arrangement or scheme maintained solely to comply with applicable workers'
compensation or similar laws), in each case, that is at any time sponsored or
maintained or required to be sponsored or maintained by such Person or to which
such Person makes or has
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made, or has or has had an obligation to make, contributions providing for
employee benefits or for the remuneration, direct or indirect, of the employees,
former employees, directors, officers, consultants, independent contractors,
contingent workers or leased employees of such Person or the dependents of any
of them (whether written or oral), including each deferred compensation, bonus,
incentive compensation, pension, retirement, stock purchase, stock option and
other equity compensation plan, "welfare" plan (within the meaning of Section
3(1) of the ERISA, determined without regard to whether such plan is subject to
ERISA); each "pension" plan (within the meaning of Section 3(2) of ERISA,
determined without regard to whether such plan is subject to ERISA); each
severance plan or agreement, health, vacation, summer hours, supplemental
unemployment benefit, hospitalization insurance, medical, dental, legal and each
other employee benefit plan, fund, program, agreement or arrangement.
(oo) "Environmental Laws" shall mean local, state and federal
laws and regulations relating to protection of the environment, pollution
control, product registration and hazardous materials (including asbestos, PCB's
and petroleum infractions thereof).
(pp) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(qq) "ERISA Affiliate" shall mean any Person (whether
incorporated or unincorporated), that together with the Company or any
Subsidiary would be deemed a "single employer" within the meaning of Section 414
of the Code.
(rr) "ERISA Affiliate Plan" shall mean each Employee Benefit Plan
sponsored or maintained or required to be sponsored or maintained at any time by
an ERISA Affiliate or to which such ERISA Affiliate makes or has made, or has or
has had an obligation to make, contributions at any time.
(ss) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(tt) "Exchange Agent" shall mean a commercial bank or trust
company reasonably designated by the Parent.
(uu) "Exchange Ratio" shall mean 0.2.
(vv) "FLSA" shall mean the Fair Labor Standards Act.
(ww) "FMLA" shall mean the Family and Medical Leave Act.
(xx) "Form S-4" shall mean the Registration Statement on Form S-4
to be filed with the SEC by the Parent under the Securities Act in connection
with the issuance of the Parent Class B Common Stock in the Merger.
(yy) "FTC" shall mean the Federal Trade Commission.
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(zz) "GAAP" shall mean generally accepted accounting principles
in the United States.
(aaa) "Governmental Entity" shall mean any United States federal,
state or local or any foreign government or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
(bbb) "Hazardous Materials" shall mean any waste, pollutant,
hazardous substance, toxic, ignitable, reactive or corrosive substance,
hazardous waste, special waste, industrial substance, by-product, process
intermediate product or waste, petroleum or petroleum-derived substance or
waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company is governed by or subject to any applicable Law, rule or
regulation of any Governmental Entity.
(ccc) "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
(ddd) "Indemnified Parties" shall mean each present and former
director, officer, employee and agent of the Company or any Subsidiary with
rights to indemnification by the Company now existing as provided in the Company
Certificate of Incorporation or the Company Bylaws, in each case as in effect on
the date of this Agreement, or pursuant to any other agreements in effect on the
date hereof, copies of which have been provided to the Parent.
(eee) "Independent Advisor" shall have the meaning set forth in
the Recitals of this Agreement.
(fff) "Intellectual Property" shall mean all copyrights, trade
names, trademarks, trade secrets, service marks or patents (or application
therefor) which are used by the Company and the Subsidiaries or as to which the
Company or any Subsidiary claim an ownership interest or as to which the Company
or any Subsidiary is a licensee or licensor.
(ggg) "Labor Laws" shall mean ERISA, the Immigration Reform and
Control Act of 1986, the National Labor Relations Act, the Civil Rights Acts of
1866 and 1964, the Equal Pay Act, ADEA, ADA, FMLA, WARN, the Occupational Safety
and Health Act, the Xxxxx-Xxxxx Act, the Xxxxx-Xxxxx Act, the Service Contract
Act, Executive Order 11246, FLSA and the Rehabilitation Act of 1973 and all
regulations under such acts.
(hhh) "Law" shall mean any United States federal, state or local
or any foreign statute, law, rule, regulation, ordinance, code, order, judgment,
decree or any other requirement or rule of law.
(iii) "Litigation" shall mean claims, suits, actions,
investigations, indictments or information, or administrative, arbitration or
other proceedings.
(jjj) "Merger" shall have the meaning set forth in the Recitals
of this Agreement.
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(kkk) "Necessary Approval" shall have the meaning set forth in
Section 6.11(a).
(lll) "NLRB" shall mean the United States National Labor
Relations Board.
(mmm) "NYSE" shall mean the New York Stock Exchange.
(nnn) "Option Agreements" shall have the meaning set forth in the
Recitals of this Agreement.
(ooo) "OSHA" shall mean the Occupational Safety and Health
Administration.
(ppp) "Parent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(qqq) "Parent Charter Documents" shall have the meaning set forth
in Section 5.11.
(rrr) "Parent Class A Common Stock" shall mean the Class A common
stock of the Parent, par value $.01 per share.
(sss) "Parent Class B Common Stock" shall mean the Class B common
stock of the Parent, par value $.01 per share.
(ttt) "Parent Disclosure Letter" shall mean the Parent Disclosure
Letter delivered by the Parent to the Company concurrently with the execution of
this Agreement.
(uuu) "Parent Financial Statements" shall mean all of the
financial statements included in the Parent Reports (as defined below).
(vvv) "Parent Material Adverse Effect" shall mean, with respect
to the Parent, any change, event, circumstance or effect shall have occurred or
been threatened that, when taken together with all other adverse changes,
events, circumstances or effects that have occurred or been threatened, is or is
reasonably likely to (i) be materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or liabilities (including
contingent liabilities) of the Parent and its subsidiaries taken as a whole or
(ii) prevent or materially delay the performance by the Parent of any of its
obligations under this Agreement or the consummation of the Merger or the other
transactions contemplated herein; provided, however, that the following shall be
excluded from the definition of "Parent Material Adverse Effect" and from any
determination as to whether a Parent Material Adverse Effect has occurred:
changes, events, circumstances or effects (A) relating to the economy or
securities markets in general, (B) relating to the industries in which the
Parent operates in general and not uniquely to the Parent or (C) relating to
changes or disruptions in the business of the Parent resulting from the
announcement of the execution of this Agreement and the proposed consummation of
the transactions contemplated by this Agreement.
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(www) "Parent Reports" shall mean all forms, reports, statements
and all other documents required to be filed by the Parent with the SEC since
November 10, 1999.
(xxx) "Person" shall mean any individual, corporation,
partnership (general or limited), limited liability company, limited liability
partnership, trust, joint venture, joint-stock company, syndicate, association,
entity, unincorporated organization or government or any political subdivision,
agency or instrumentality thereof.
(yyy) "Proxy Statement/Prospectus" shall have the meaning set
forth in Section 6.10.
(zzz) "Regulatory Law" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other Federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to regulate mergers, acquisitions or other
business combinations.
(aaaa) "Representatives" shall mean officers, directors,
employees, auditors, attorneys, financial advisors, lenders and other agents.
(bbbb) "Required Vote" shall have the meaning set forth in
Section 4.30.
(cccc) "Rights Plan" shall mean the Rights Agreement between the
Company and a rights agent mutually agreeable to the parties to be entered into
in accordance with Section 6.18.
(dddd) "SEC" shall mean the Securities and Exchange Commission.
(eeee) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ffff) "Stockholders' Meeting" shall mean the meeting of the
Company Stockholders to be called to consider the Merger.
(gggg) "Subsidiary" shall mean any corporation, partnership,
joint venture or other legal entity of which the Company (either directly or
through or together with any other Subsidiary of the Company), beneficially or
of record owns, directly or indirectly, 50% or more of the capital stock or
other equity interests.
(hhhh) "Superior Proposal" shall mean any proposal made by a
third party (i) relating to any direct or indirect acquisition or purchase of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, or 100% of the combined voting power of the shares of Company
Common Stock, or any tender offer or exchange offer that if consummated would
result in any Person beneficially owning 100% or more of the combined voting
power of the shares of Company Common Stock and (ii) otherwise on terms which
the Board of Directors of Company determines in its good faith judgment (based
upon the advice of a financial advisor of nationally recognized reputation),
taking into account the Person making the proposal and the legal, financial,
regulatory and other aspects of the proposal deemed
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appropriate by the Board of Directors of the Company, (x) is more favorable from
a financial point of view than the Merger to the Company Stockholders taken as a
whole, (y) is reasonably capable of being completed and (z) for which financing,
to the extent required, is then committed or is capable of being obtained by
such third party.
(iiii) "Surviving Corporation" shall mean the corporation
surviving the Merger.
(jjjj) "Tax" (and, with correlative meaning, "Taxes") means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, excise, franchise, value-added tax, unclaimed property, employment,
payroll, premium, custom, withholding, duty, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax of any kind whatsoever,
together with any interest or penalty or addition thereto, whether disputed or
not, imposed by any Governmental Entity.
(kkkk) "Tax Opinion" shall mean a written opinion of King &
Spalding, counsel to the Parent, addressed and reasonably acceptable to the
Parent and the Company (the "Tax Opinion"), to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
that the exchange in the Merger of Parent Class B Common Stock for Company
Common Stock will not give rise to gain or loss to the Company Stockholders with
respect to such exchange (except to the extent of any cash paid in lieu of
fractional shares).
(llll) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules)
with respect to any Tax jurisdiction, including any information return, claim
for refund, amended return or declaration of estimated Tax.
(mmmm) "Termination Fee" shall mean $13,500,000.
(nnnn) "WARN" shall mean the United States Worker Adjustment and
Retraining Notification Act.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the DGCL, at the Effective Time, the
Buyer shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of the Buyer shall cease and the Company shall
continue as the Surviving Corporation. The corporate existence of the Company,
with all its purposes, rights, privileges, franchises, powers and objects, shall
continue unaffected and unimpaired by the Merger and, as the Surviving
Corporation, it shall be governed by the laws of the State of Delaware.
Section 2.2. Effective Time; Closing. As promptly as practicable (and in
any event within five business days) after the satisfaction or waiver of the
conditions set forth in Article VII hereof, the parties hereto shall cause the
Merger to be consummated by filing the Certificate
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of Merger with the Secretary of State of the State of Delaware and by making all
other filings or recordings required under the DGCL in connection with the
Merger, in such form as is required by, and executed in accordance with the
relevant provisions of, the DGCL. The Merger shall become effective at the
Effective Time. The Closing shall be held at 10:00 a.m., local time, at the
offices of King & Spalding, located at 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000-0000, or at such other time and location as the parties hereto shall
otherwise agree.
Section 2.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Buyer shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and the Buyer shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
Section 2.4. Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Parent, the
Buyer, the Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
Section 2.4(b)) shall be canceled and shall by virtue of the Merger and without
any action on the part of the holder thereof be converted automatically into the
right to receive a number of shares of Parent Class B Common Stock calculated in
accordance with the Exchange Ratio upon the surrender of the Certificate
representing such share in the manner set forth in Section 2.6. All such shares
of Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a Certificate representing such shares shall cease to have any rights
with respect thereto, except the right to receive that number of shares of
Parent Class B Common Stock into which such shares of Company Common Stock have
been converted, cash in lieu of fractional shares as provided in Section 2.6(c)
and any dividends or other distributions payable pursuant to Section 2.7.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by the Parent or the Buyer
and each share of Company Common Stock that is owned by the Company as treasury
stock shall be canceled and retired and cease to exist and no payment or
distribution shall be made with respect thereto.
(c) Each share of common stock, par value $.01 per share, of the
Buyer issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(d) If after the date hereof and prior to the Effective Time, the
Parent shall have declared a stock split (including a reverse split) of Parent
Class B Common Stock or a dividend payable in Parent Class B Common Stock or
effected any recapitalization or
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reclassification of its common stock or any other similar transaction, then the
Exchange Ratio shall be appropriately adjusted to reflect such stock split,
dividend, recapitalization, reclassification or similar transaction.
Section 2.5. Stock Options. At the Effective Date, each Company Stock
Option shall be assumed by the Parent in such manner that it is converted into
an option to purchase shares of Parent Class A Common Stock, as provided below.
Following the Effective Time, each Company Stock Option shall continue to have,
and be subject to, the same terms and conditions set forth in the relevant
Company Stock Plan and applicable award agreement immediately prior to the
Effective Time; except that (i) each such Company Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent Class A Common Stock equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise of
such the Company Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, rounded down to the nearest whole number of Shares of
Parent Class A Common Stock and (ii) the per share exercise price for Parent
Class A Common Stock issuable upon exercise of such Company Stock Option will be
equal to the quotient determined by dividing the exercise price per share of the
Company Common Stock at which such Company Stock Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent.
Section 2.6. Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall appoint the
Exchange Agent for the purpose of exchanging Certificates. At or prior to the
Effective Time, the Parent shall deposit with the Exchange Agent, for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article II through the Exchange Agent, certificates
representing Parent Class B Common Stock issuable pursuant to Section 2.4 in
exchange for outstanding shares of Company Common Stock. The Parent agrees to
make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.6(c)
and any dividends or other distributions payable pursuant to Section 2.7.
(b) As soon as reasonably practicable after the Effective Time,
the Parent and the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of one or more Certificates (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent accompanied by a properly executed letter of transmittal and
shall be in such form and have such other provisions as the Parent may
reasonably specify), and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Class B Common Stock. Upon the surrender to the Exchange Agent of one or more
Certificates for cancellation, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Exchange
Agent, the holder will be entitled to receive certificates representing that
number of whole shares of Parent Class B Common Stock to be issued in respect of
the aggregate number of such shares of Company Common Stock previously
represented by the Certificates surrendered based upon the Exchange Ratio and
cash in an amount equal to that which the holder is entitled to receive
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pursuant to Section 2.6(c) or Section 2.7. No interest will be paid or will
accrue on cash payable pursuant to Section 2.6(c) or 2.7.
(c) No certificate or scrip representing fractional shares of
Parent Class B Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights as a stockholder of the Parent. All fractional
shares of Parent Class B Common Stock that a holder of Company Common Stock
would otherwise be entitled to receive as a result of the Merger shall be
aggregated and if a fractional share results from such aggregation, such holder
shall be entitled to receive, in lieu thereof, an amount in cash determined by
multiplying (i) the per share closing price of Parent Class B Common Stock
quoted on the NYSE on the date of the Closing by (ii) the fraction of a share of
Parent Class B Common Stock to which such holder would otherwise have been
entitled. The Parent shall timely make available to the Exchange Agent any cash
necessary to make payments in lieu of fractional shares as aforesaid. No such
cash in lieu of fractional shares of Parent Class B Common Stock shall be paid
to any holder of Company Common Stock until Certificates are surrendered and
exchanged in accordance with Section 2.6(a).
(d) If a certificate for Parent Class B Common Stock is to be
sent to a Person other than the Person in whose name the Certificates for shares
of Company Common Stock surrendered for exchange are registered, it shall be a
condition of the exchange that the Person requesting such exchange shall pay to
the Exchange Agent any transfer or other taxes required by reason of the
delivery of such Certificate to a Person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(e) The cash paid and shares of Parent Class B Common Stock
issued upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid and issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock.
Section 2.7. Dividends. No dividends or other distributions that are
declared or made after the Effective Time with respect to Parent Class B Common
Stock payable to holders of record thereof after the Effective Time shall be
paid to a Company Stockholder entitled to receive certificates representing
Parent Class B Common Stock until such stockholder has properly surrendered such
stockholder's Certificates. Upon such surrender, there shall be paid to the
stockholder in whose name the certificates representing such Parent Class B
Common Stock shall be issued any dividends which shall have become payable with
respect to such Parent Class B Common Stock between the Effective Time and the
time of such surrender, without interest. After such surrender, there shall also
be paid to the stockholder in whose name the certificates representing such
Parent Class B Common Stock shall be issued any dividend on such Parent Class B
Common Stock that shall have a record date subsequent to the Effective Time and
prior to such surrender and a payment date after such surrender; provided that
such dividend payments shall be made on such payment dates. In no event shall
the stockholder entitled to receive such dividends be entitled to receive
interest on such dividends.
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Section 2.8. No Liability. None of the Parent, Buyer, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person in
respect of any Parent Class B Common Stock, any dividends or distributions with
respect thereto or any cash in lieu of fractional shares of applicable Parent
Class B Common Stock, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to six months after the Effective Time (or
immediately prior to such earlier date on which any Parent Class B Common Stock,
any dividends or distributions payable to the holder of such Certificate or any
cash payable in lieu of fractional shares of Parent Class B Common Stock
pursuant to this Article II, would otherwise escheat to or become the property
of any Governmental Entity), any such Parent Class B Common Stock, dividends or
distributions in respect thereof or such cash shall, to the extent permitted by
applicable law, be delivered to the Parent, upon demand, and any holders of
Company Common Stock who have not theretofore complied with the provisions of
this Article II shall thereafter look only to the Parent for satisfaction of
their claims for such Parent Class B Common Stock, dividends or distributions in
respect thereof or such cash.
Section 2.9. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
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
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the Parent Class B Common Stock to be issued pursuant to Section 2.4
with respect to the shares of Company Common Stock formerly represented thereby,
any cash in lieu of fractional shares of Parent Common Stock, and unpaid
dividends and distributions on shares of Parent Class B Common Stock deliverable
in respect thereof, pursuant to this Agreement.
Section 2.10. Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any Company Stockholder such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Company Stockholder in
respect of which such deduction and withholding was made by the Surviving
Corporation.
Section 2.11. Shares held by the Company Affiliates. Anything to the
contrary in this Agreement notwithstanding, no shares of Parent Class B Common
Stock (or certificates therefor) shall be issued in exchange for any certificate
to any Person who may be an "affiliate" of the Company (identified pursuant to
Section 6.16) until the Person shall have delivered to Parent and the Company a
duly executed letter as contemplated by Section 6.16.
Section 2.12. Closing of Company Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall, when
accompanied by proper documentation, be exchanged for Parent
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Class B Common Stock in the manner provided in this Article II, any cash in lieu
of fractional shares payable pursuant to Section 2.6(c) and any dividends or
distributions payable pursuant to Section 2.7.
Section 2.13. Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368(a) of the Code, and this
Agreement is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368(a) of the Code and for the purpose of
qualifying as a tax-free transaction for federal income tax purposes. The
parties hereto will agree to report the Merger as a tax-free reorganization
under the provisions of Section 368(a) of the Code. None of the parties hereto
will take or cause to be taken any action which would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under Section
368(a) of the Code.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Certificate of Incorporation.
Section 3.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation or such Bylaws.
Section 3.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of the Buyer at the Effective Time shall be
the directors of the Surviving Corporation, and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter delivered by the
Company to the Parent prior to the execution of this Agreement, the Company
represents and warrants to each of the other parties hereto as follows:
Section 4.1. Organization and Standing. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has full corporate power and authority
and all necessary governmental approvals to own, lease and operate its
properties and assets and to conduct its business as presently conducted and
(iii) is duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary
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except where failure to be so qualified or licensed would not, individually or
in the aggregate, have a Company Material Adverse Effect. The Company has
furnished or made available to the Parent true and complete copies of the
Company Certificate of Incorporation and the Company Bylaws, each as amended to
date. Such Company Certificate of Incorporation and Company Bylaws are in full
force and effect, and the Company is not in violation of any provision therein.
Section 4.2. Authority for Agreement.
(a) The Company has all necessary power and authority to execute
and deliver this Agreement and the Company Option Agreement and, subject to
obtaining the Required Approval, to consummate the Merger and the other
transactions contemplated by this Agreement and the Company Option Agreement.
The execution, delivery and performance by the Company of this Agreement and the
Company Option Agreement, and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement and the Company Option
Agreement, have been duly authorized by all necessary corporate action
(including the unanimous approval of the Board of Directors of the Company) and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Company Option Agreement or to consummate the
Merger or the other transactions contemplated herein or therein (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
Required Vote and the filing and recordation of appropriate merger documents as
required by the DGCL). Each of this Agreement and the Company Option Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Parent and the Buyer, constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.
(b) At a meeting duly called and held on January 9, 2001, the
Board of Directors of the Company unanimously (i) determined that this
Agreement, the Option Agreements and the transactions contemplated herein and
therein, including the Merger, are advisable, fair to and in the best interests
of the Company and the Company Stockholders, (ii) approved, authorized and
adopted this Agreement, the Option Agreement, the Merger and the other
transactions contemplated herein and therein and (iii) recommended approval and
adoption of this Agreement and the Merger by the Company Stockholders.
(c) The Independent Advisor has delivered to the Board of
Directors of the Company its written opinion, dated as of the date of this
Agreement, that, as of such date and based on the assumptions, qualifications
and limitations contained therein, the Exchange Ratio is fair, from a financial
point of view, to the Company Stockholders. A copy of such opinion has been
provided to the Parent. The Board of Directors of the Company has received as of
the date hereof from the Independent Advisor consent to the inclusion of its
name in any documents to be delivered to the Company Stockholders in connection
with the transactions contemplated by this Agreement.
Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock and 1,000,000 shares of
Company Preferred Stock. As of the date hereof, (i) 36,708,991 Company Common
Stock, all of which are validly
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issued, fully paid and nonassessable and free of preemptive rights, (ii) 87,100
of Company Common Stock are held in the treasury of the Company and (iii)
3,555,397 Company Stock Options are outstanding pursuant to the Company Stock
Plans, each such option entitling the holder thereof to purchase one share of
Company Common Stock, and 5,903,542 shares of Company Common Stock are
authorized and reserved for future issuance pursuant to the exercise of such
Company Stock Options and (iv) no shares of Company Preferred Stock are issued
and outstanding. The Company Disclosure Letter sets forth a true and complete
list of the outstanding Company Stock Options with the exercise prices and
periods of exercisability. Except as set forth above or in the Company
Disclosure Letter, there are no options, warrants, convertible securities,
subscriptions, stock appreciation rights, phantom stock plans or stock
equivalents or other rights, agreements, arrangements or commitments (contingent
or otherwise) of any character issued or authorized by the Company relating to
the issued or unissued capital stock of the Company or obligating the Company to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company. All shares
of capital stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in the Company Disclosure Letter, there are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of Company Stock or to pay any dividend or make any other distribution in
respect thereof or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Person. As of the date hereof,
there are no voting trusts or other agreements or understandings to which the
Company is a party with respect to the voting of stock of the Company.
Section 4.4. Subsidiaries.
(a) The Company Disclosure Letter sets forth the name and state
or jurisdiction of incorporation of each Subsidiary. Each of the Subsidiaries
(i) is a corporation or other business entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has full corporate power and authority and all necessary government
approvals to own, lease and operate its properties and assets and to conduct its
business as presently conducted and (iii) is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary except
where failure to be so qualified or licensed would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has furnished or
made available to the Parent true and complete copies of the certificate of
incorporation, bylaws or comparable organizational documents of each Subsidiary,
each as amended to date. Such organizational documents are in full force and
effect, and no Subsidiary is in violation of any provision therein.
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(b) Except as set forth in the Company Disclosure Letter, the
Company or its Subsidiaries own beneficially and of record all of the issued and
outstanding capital stock or other securities of each Subsidiary and does not
own an equity interest in any other corporation, partnership or entity, other
than in the Subsidiaries. Each outstanding share of capital stock or other
securities of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share or other equity interest owned by the Company
or another Subsidiary is free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
the Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
Section 4.5. No Conflict. The execution and delivery of this Agreement
and the Company Option Agreement by the Company do not, and the performance of
this Agreement and the Company Option Agreement by the Company and the
consummation of the Merger (subject to the adoption of this Agreement by the
Required Vote) and the other transactions contemplated by this Agreement and the
Company Option Agreement will not, (i) conflict with or violate the Company
Certificate of Incorporation or Company Bylaws or equivalent organizational
documents of any of the Subsidiaries, (ii) subject to Section 4.6, conflict with
or violate any Law applicable to the Company or any of the Subsidiaries or by
which any property or asset of the Company or any of the Subsidiaries is bound
or affected, or (iii) result in a breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, give
to others any right of termination, amendment, acceleration or cancellation of,
result in triggering any payment or other obligations, or result in the creation
of a lien or other encumbrance on any property or asset of the Company or any of
the Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries or any property or asset of any of them is
bound or affected, except in the case of clauses (ii) and (iii) above for any
such conflicts, violations, breaches, defaults or other occurrences which could
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 4.6. Required Filings and Consents. The execution and delivery
of this Agreement by the Company do not, and the performance of this Agreement
by the Company will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, or
state securities laws or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL, (ii) for those required by
the HSR Act, (iii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
reasonably be expected to prevent or materially delay consummation of the Merger
or otherwise prevent or materially delay the Company from performing its
material obligations under this Agreement, and would not otherwise reasonably be
expected to have individually or in the aggregate, a Company Material Adverse
Effect and (iv) for those which have heretofore been obtained by the Company.
Section 4.7. Compliance. Except as disclosed in the Company Reports
filed by the Company with the SEC prior to the date of this Agreement, the
businesses of the Company and the Subsidiaries are not being conducted in
violation of any law, ordinance, regulation,
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judgment, order, decree, writ, injunction, license or permit of any Governmental
Entity, except for violations which have not had, and would not reasonably be
expected to have, individually or in the aggregate a Company Material Adverse
Effect. No investigation or review by any Governmental Entity with respect to
the Company or any Subsidiary is pending or, to the knowledge of the Company
threatened, nor has any Governmental Entity indicated to the Company or any
Subsidiary an intention to conduct the same in each case other than those the
outcome of which have not had, and would not reasonably be expected to have,
either individually or in the aggregate, a Company Material Adverse Effect.
Section 4.8. Litigation. Except as set forth in the Company Disclosure
Letter, there is no claim, suit, action, proceeding or investigation pending,
or, to the knowledge of the Company, threatened, against or affecting the
Company or any Subsidiary which, either individually or in the aggregate, has
had, or would be reasonably expected to have, a Company Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator, outstanding against the Company or any Subsidiary, either
individually or in the aggregate, which has had, or would be reasonably expected
to have, a Company Material Adverse Effect.
Section 4.9. Company Reports; Financial Statements.
(a) The Company has filed all Company Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Company Reports (including, but not
limited to, any financial statements or schedules included or incorporated by
reference therein) contained when filed any untrue statement of a material fact
or omitted or omits 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.
(b) All of the Company Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Company and the
Subsidiaries at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated except that the
unaudited interim financial statements are subject to normal recurring year-end
adjustments consistent with past practices and not material in amount.
(c) There are no liabilities of the Company or any of the
Subsidiaries of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that are material to the Company and the Subsidiaries,
taken as a whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and the Subsidiaries at May 31, 2000,
including the notes thereto, (ii) liabilities disclosed in the Company Reports,
(iii) liabilities incurred on behalf of the Company under this Agreement and the
contemplated Merger, and (iv) liabilities incurred in the ordinary course of
business consistent with past practice since May 31, 2000, none of which in the
case of clause (iv) are, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
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(d) The Company has heretofore furnished or made available to the
Parent a complete and correct copy of any amendments or modifications, which
have not yet been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC as
exhibits to the Company Reports pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
Section 4.10. Absence of Certain Changes or Events. Except for any
Subsidiary liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, since May 31, 2000, the Company and its
Subsidiaries have conducted their business only in the ordinary course or as
disclosed in any Company Reports, and there has not been (i) any change or event
having, or that would reasonably be expected to have, a Company Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock, (iii) any split, combination or reclassification of any
of the Company's capital stock or any substitution for shares of the Company's
capital stock, except for issuances of Company Common Stock upon the exercise of
options awarded prior to the date hereof in accordance with the Company Stock
Plans, (iv) except as set forth in the Company Disclosure Letter (a) any
granting by the Company or any Subsidiary, to any current or former director,
executive officer or other key employee of the Company or any Subsidiary of any
increase in compensation, bonus or other benefits, except for increases in the
ordinary course of business or as was required under any employment agreements
in effect as of the date of the most recent audited financial statements
included in the Company Reports filed and publicly available prior to the date
of this Agreement which have been disclosed to Parent in the manner described in
Section 4.15, (b) any granting by the Company or any Subsidiary, to any such
current or former director, executive officer or key employee of any increase in
severance or termination pay or (c) any entry by the Company or any Subsidiary,
into, or any amendment of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current or
former director, executive officer or key employee, (v) except insofar as may
have been disclosed in the Company Reports or required by a change in GAAP, any
change in accounting methods, principles or practices by the Company or any
Subsidiary, materially affecting its assets, liabilities or business or (vi)
except insofar as may have been disclosed in the Company Reports, any tax
election that individually or in the aggregate would reasonably be expected to
have a Company Material Adverse Effect.
Section 4.11. Taxes.
(a) Each of the Company and the Subsidiaries has filed all
material Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by any of the
Company and the Subsidiaries (whether or not shown on any Tax Return) have been
paid, except where the failure to pay such Taxes does not exceed, in the
aggregate, $250,000. None of the Company and the Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the Company or
any Subsidiary does not file Tax Returns that it is or may be subject to
taxation in that jurisdiction. There are no security
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interests on any of the assets of any of the Company and the Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) Each of the Company and the Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party, except where the failure to pay such Taxes
does not exceed, in the aggregate, $50,000.
(c) There is no audit, dispute or claim concerning any Tax
liability of any of the Company or the Subsidiaries either (i) claimed or raised
by any authority in writing or (ii) as to which any of the directors, officers
and employees responsible for Tax matters of the Company and the Subsidiaries
has knowledge based upon personal contact with any agent of such authority. The
Company Disclosure Letter lists all United States domestic income, franchise,
sales, use, business license, and personal property Tax Returns filed with
respect to any of the Company and the Subsidiaries for the current taxable
periods, indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. The Company and the
Subsidiaries have provided to the Parent access to correct and complete copies
of all income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by any of the Company and the Subsidiaries since
the taxable year ended May 31, 1998 with respect to federal and state income Tax
Returns, since the taxable year ended May 31, 1996 with respect to federal
income Tax notice of deficiencies, since the taxable year ended May 31, 1995
with respect to federal income Tax audit reports and since the taxable year
ended May 31, 1996 with respect to federal income Tax closing documents.
(d) None of the Company and the Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency that remains in effect.
(e) None of the Company and the Subsidiaries has filed a consent
under Section 341(f) of the Code concerning collapsible corporations. None of
the Company and the Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Sections 280G
and 162(m) of the Code. None of the Company and the Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Each of the Company and the Subsidiaries has
disclosed on its federal income Tax Returns all information necessary to avoid
the imposition of a penalty for substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code. None of the Company and the
Subsidiaries is a party to any Tax allocation or sharing agreement (other than
by and between the Company and the Subsidiaries). None of the Company and the
Subsidiaries (A) has been a member of an affiliated group filing a consolidated
federal income Tax Return (other than a group the common parent of which was the
Company) or (B) has knowledge of any liability for the Taxes of any Person
(other than any of the Company and the Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
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(f) The Company Disclosure Letter sets forth the following
information with respect to each of the Company and the Subsidiaries as of the
most recent practicable date: (i) the amount of any excess loss account; (ii)
the amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution allocable to
the Company or the Subsidiaries; and (iii) the amount of any deferred gain or
loss allocable to the Company or the Subsidiaries arising out of any deferred
intercompany transaction.
(g) The unpaid Taxes of the Company and the Subsidiaries did not,
as of August 31, 2000, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the balance sheet (disregarding
any notes thereto) included in the Company's unaudited interim financial
statements as of and for the three months ended August 31, 2000 included in the
Form 10-Q as filed with the SEC.
Section 4.12. Title to Personal Property. Except as set forth in the
10-K or in the Company Disclosure Letter, the Company and each of the
Subsidiaries have good and marketable title to, or a valid leasehold interest
in, all of their tangible personal properties and assets reflected in the 10-K
or acquired after May 31, 2000 (other than assets disposed of since May 31, 2000
in the ordinary course of business consistent with past practice), in each case
free and clear of all mortgages, liens, pledges, security interests, charges,
claims, restrictions and encumbrances of any nature whatsoever, except for (i)
liens, encumbrances or restrictions which secure indebtedness and which are
properly reflected in the 10-K; (ii) liens for Taxes accrued but not yet
payable; (iii) liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after May 31, 2000, provided that
the obligations secured by such liens are not delinquent; and (iv) such other
liens, encumbrances and restrictions, if any, as individually or in the
aggregate are not reasonably likely to have a Company Material Adverse Effect.
The Company and the Subsidiaries either own, or have valid leasehold interests
in, all tangible personal properties and assets used by them in the conduct of
their business, except where the absence of such ownership or leasehold interest
could not individually or in the aggregate have a Company Material Adverse
Effect. Each of the Company and the Subsidiaries has on hand the items of
Customer Inventory it is required to have on hand pursuant to the terms and
conditions of the applicable agreement between the Company and its customers
subject to immaterial shrinkage. Neither the Company nor any of the Subsidiaries
has any legal obligation, absolute or contingent, to any other Person to sell or
otherwise dispose of any of its tangible personal properties or assets with an
individual value of $500,000 or an aggregate value in excess of $1,000,000.
Section 4.13. Real Property. Except as set forth in the 10-K or in the
Company Disclosure Letter, the Company and the Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real
properties reflected in the 10-K or acquired after May 31, 2000, in each case
free and clear of all title defects, liens, encumbrances and restrictions,
except for (i) liens, encumbrances or restrictions which secure indebtedness and
which are properly reflected in the 10-K; (ii) liens for Taxes accrued but not
yet payable; (iii) liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after May 31, 2000, provided that
the obligations secured by such liens are not delinquent; and (iv) such
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other title defects, liens, encumbrances and restrictions, if any, as
individually or in the aggregate are not reasonably likely to have a Company
Material Adverse Effect. The Company Disclosure Letter sets forth a true,
correct and complete list of all real property owned by the Company or a
Subsidiary at any time during the past three years and a true and correct list
of all real property leased by each of the Company and the Subsidiaries
identifying with respect to each lease of such real property the date of, the
parties to, and any amendments, modifications, extensions or other supplements
to such lease. Each of the real properties owned by the Company or any
Subsidiary as of the date hereof or leased by the Company or any of its
Subsidiaries and in either case listed in the Company Disclosure Letter, and
each building and improvement located thereon, is, and has at all times been, in
compliance with all applicable federal, state and local laws, rules,
regulations, ordinances and statutes, including those relating to zoning,
building, land use, health and safety, fire, air sanitation and noise control
except as would not have a material impact on the Company's ability to maintain
its operations at such real property. The improvements on the real properties
owned by the Company as of the date hereof or leased by the Company and in
either case listed in the Company Disclosure Letter are adequate and suitable
for the purposes for which they are presently being used. Since January 1, 2000,
neither the Company nor any Subsidiary has sent or received any written notice
of any material default under any of the leases of real property to which it is
party. Neither the Company nor any Subsidiary has breached or is in default in
any material respect under any covenant, agreement, term or condition of or
contained in any material lease of real property to which it is a party and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default or breach.
Section 4.14. Environmental Compliance and Disclosure. Except as set
forth in the Company Disclosure Letter,
(a) each of the Company and the Subsidiaries possesses, and is in
compliance in all material respects with, all material permits, licenses and
government authorizations and has filed all notices that are required under
Environmental Laws applicable to the Company and the Subsidiaries, and each of
the Company and the Subsidiaries is in material compliance with all applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any Law, regulation, code, plan, order, decree, judgment, notice, permit or
demand letter issued, entered, promulgated or approved thereunder;
(b) neither the Company nor any Subsidiary has received notice of
actual or threatened liability under CERCLA or any similar state or local
statute or ordinance from any governmental agency or any third party and, to the
knowledge of the Company, there are no facts or circumstances which could
reasonably be expected to form the basis for the assertion of any claim against
the Company or any Subsidiary under any Environmental Laws including CERCLA or
any similar local, state or foreign Law with respect to any on-site or off-site
location;
(c) neither the Company nor any Subsidiary has entered into or
agreed to, or does it contemplate entering into any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree or
judicial or administrative order relating to
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compliance with, or the cleanup of Hazardous Materials under, any applicable
Environmental Laws;
(d) neither the Company nor any Subsidiary has been subject to
any administrative or judicial proceeding pursuant to and, to the knowledge of
the Company, neither the Company nor any Subsidiary has been alleged to be in
violation of applicable Environmental Laws or regulations either now or any time
during the past five years;
(e) neither the Company nor any Subsidiary has received notice
that it is subject to any claim, obligation, liability, loss, damage or expense
of whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any act or
omission of the Company or any Subsidiary, its employees, agents or
representatives or, to the knowledge of the Company, arising out of the
ownership, use, control or operation by the Company or any Subsidiary of any
plant, facility, site, area or property (including any plant, facility, site,
area or property currently or previously owned or leased by the Company or any
Subsidiary) from which any Hazardous Materials were released into the
environment (the term "release" meaning any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment, and the term "environment" meaning any surface
or ground water, drinking water supply, soil, surface or subsurface strata or
medium, or the ambient air);
(f) the Company has heretofore provided the Parent with true,
correct and complete copies of all files of the Company and the Subsidiaries
relating to environmental matters (or an opportunity to review such files) that
have arisen in the last five years;
(g) neither the Company nor any Subsidiary has paid any fines,
penalties or assessments within the last five years with respect to
environmental matters;
(h) to the knowledge of the Company, none of the owned or leased
real property, improvements and equipment of the Company and the Subsidiaries
contain any asbestos, PCBs, underground storage tanks, open or closed pits,
sumps or other containers on or under any such real property, improvements or
equipment; and
(i) none of the Company and the Subsidiaries has imported,
manufactured, stored, used, operated, transported, treated or disposed of any
Hazardous Materials other than in compliance with all Environmental Laws.
Section 4.15. Officers and Employees. The Company Disclosure Letter
contains a true and complete list of all of the (a) executive officers the
Company and the Subsidiaries and (b) all other key employees of the Company and
the Subsidiaries with annual salary for calendar year 2000 in excess of
$200,000, and with respect to individuals identified in clause (b), specifying,
by individual, their position, current annual base salary, bonus plans and for
U.S. employees only, Company Benefit Plans in which they are currently eligible
to participate. Except as set forth in the Company Disclosure Letter, none of
the Company and the Subsidiaries is a party to or bound by any
Employee/Consulting Agreement. The Company has provided to the Parent true,
correct and complete copies of each such Employee/Consulting Agreement. The
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Company has provided the Parent with true, correct and complete copies of each
written consent by an officer, employee or former employee, consultant or
independent contractor to background checks or drug testing by the Company or
any Subsidiary and any arbitration agreements or confidentiality agreements
between the Company or any Subsidiary and an officer, employee, or former
employee, consultant or independent contractor of the Company or any Subsidiary.
None of the Company and the Subsidiaries has received a claim from any
Governmental Entity to the effect that the Company or any Subsidiary has
improperly classified as an independent contractor any person named in the
Company Disclosure Letter. None of the Company and the Subsidiaries has made any
written, or to the knowledge of the Company, oral commitments to any such
officers, employees or former employees, consultants or independent contractors
with respect to compensation, promotion, retention, termination, severance or
similar matters in connection with the transactions contemplated by this
Agreement or otherwise.
Section 4.16. Employee Benefit Plans.
(a) The Company Disclosure Letter contains a true and complete
list of each Company Benefit Plan sponsored, maintained or contributed to by the
Company or any Subsidiary within the last six calendar years. Each Company
Benefit Plan currently in effect is identified as a "current plan" on the
Company Disclosure Letter and any special tax status enjoyed by such plan is
noted on the Company Disclosure Letter.
(b) With respect to each Company Benefit Plan identified on the
Company Disclosure Letter, the Company has heretofore delivered or made
available to the Parent true and complete copies of (i) the plan documents and
any amendments thereto (or if the plan is not written, a written description
thereof), (ii) any related trust or other funding vehicle, (iii) annual reports
required to be filed with any Governmental Entity with respect to such plan,
(iv) actuarial reports, (v) funding and financial information returns and
statements, (vi) all contracts with any parties providing services or insurance
to such plan, (vii) copies of material correspondence with all Governmental
Entities, (viii) plan summaries or summary plan descriptions, (ix) summary
annual reports, (x) booklets and personnel manuals, (xi) any other reports or
summaries required under Applicable Benefit Laws, each of the documents
described in (i) through (xi) only to the extent effective in or with respect to
the last six years of the date hereof, (xii) the most recent determination
letter received from the Internal Revenue Service with respect to each such plan
intended to qualify under Section 401 of the Code, and (xiii) such other
documentation with respect to any Company Benefit Plan as is reasonably
requested by the Parent, including all professional opinions (whether or nor
internally prepared) and all material internal memoranda regarding any
compliance issues identified by Parent.
(c) The Company and the Subsidiaries have maintained all employee
data necessary to administer each Company Benefit Plan, including data required
to be maintained under Sections 107 and 209 of ERISA, and such data is true and
correct and is maintained in a usable form.
(d) No Company Benefit Plan or ERISA Affiliate Plan is or was
subject to Title IV of ERISA or Section 412 of the Code, nor is any Company
Benefit Plan or ERISA Affiliate Plan a "multiemployer pension plan", as defined
in Section 3(37) of ERISA, or subject
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to Section 302 of ERISA. Neither the Company, any Subsidiary, an ERISA Affiliate
nor a predecessor in interest of any of them has or has had an obligation to
make contributions or reimburse another employer, either directly or indirectly,
including through indemnification or otherwise, for making contributions to a
plan that is or was subject to Title IV of ERISA. Neither the Company nor any
Subsidiary has incurred, and no facts exist which reasonably could be expected
to result in, liability to the Company or any Subsidiary as a result of a
termination, withdrawal or funding waiver with respect to any ERISA Affiliate
Plan or Company Benefit Plan.
(e) Each Company Benefit Plan has been established, registered,
qualified, invested, operated and administered in all respects in accordance
with its terms in compliance with all Applicable Benefit Laws and in accordance
with all understandings, written or oral, between the Company and each
Subsidiary and their respective current or former employees, directors,
officers, consultants, independent contractors, contingent workers or leased
employees, as applicable. None of the Company and the Subsidiaries has incurred,
and no facts exist which reasonably could be expected to result in any liability
to the Company or any Subsidiary with respect to any Company Benefit Plan or any
ERISA Affiliate Plan, including any liability, tax, penalty or fee under ERISA,
the Code or any Applicable Benefit Law (other than to pay premiums,
contributions or benefits in the ordinary course).
(f) All obligations to pay premiums, contributions or benefits
under each Company Benefit Plan have been satisfied, and there are no
outstanding defaults or violations by any party to any Company Benefit Plan. No
taxes, penalties or fees are owed by any Company Benefit Plan.
(g) No fact or circumstance exists that could adversely affect
the tax-exempt status of a Company Benefit Plan that is intended to be
tax-exempt. Further, each Company Benefit Plan intended to be "qualified" within
the meaning of Section 401(a) of the Code and the trusts maintained thereunder
that are intended to be exempt from taxation under Section 501(a) of the Code
has received a favorable determination or other letter indicating that it is so
qualified, or is otherwise within the remedial amendment period under Section
401(b) of the Code and revenue rulings, procedures, announcements or notices of
the Internal Revenue Service.
(h) The assets of each Company Benefit Plan are reported at their
fair market value on the financial statements of each such plan.
(i) No Company Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for current
or former employees, directors, officers, consultants, independent contractors,
contingent workers or leased employees (or any of their dependents, spouses or
beneficiaries) of the Company or any Subsidiary or any predecessor in interest
of such Company or Subsidiary for periods extending beyond their retirement or
other termination of service, other than continuation coverage mandated by any
Applicable Benefit Law and only to the extent required under such law.
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(j) All contributions or premiums required to be made by the
Company or any Subsidiary under the terms of each Company Benefit Plan or by
Applicable Benefit Laws have been made in a timely fashion in accordance with
Applicable Benefit Laws and the terms of the Company Benefit Plan. Contributions
or premiums will be paid by the Company or a Subsidiary for the period up to the
Closing even though not otherwise required to be made until a later date.
(k) No insurance policy or any other contract or agreement
affecting any Company Benefit Plan requires or permits a retroactive increase in
premiums or payments due thereunder.
(l) There have been no improper withdrawals, applications or
transfers of assets from any Company Benefit Plan or the trusts or other funding
media relating thereto, and neither the Company, any Subsidiary nor any of their
agents has been in breach of any fiduciary obligation with respect to the
administration of any Company Benefit Plan or the trusts or other funding media
relating thereto.
(m) The Company or a Subsidiary has the right under the terms of
each Company Benefit Plan and under Applicable Benefit Law to amend, revise,
merge or terminate such plan (or its participation in such plan) or transfer the
assets of such plan to another arrangement, plan or fund at any time exclusively
by action of the Company or such Subsidiary, and no additional contributions
would be required to properly effect such termination.
(n) Except as disclosed in the Company Disclosure Letter, the
execution, delivery and performance of, and consummation of the transactions
contemplated by, this Agreement will not (i) entitle any current or former
employee, director, officer, consultant, independent contractors, contingent
worker or leased employee (or any of their dependents, spouses or beneficiaries)
of the Company or any Subsidiary to severance pay, unemployment compensation or
any other payment, (ii) accelerate the time of payment or vesting or (iii)
increase the amount of compensation due any such individual.
(o) None of the Company and the Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate the Company or any Subsidiary to make
any payments that will not be deductible for federal income tax purposes by
reason of Section 280G of the Code.
(p) There are no pending, anticipated or to knowledge of the
Company, threatened claims, investigations, examinations, audits or other
proceedings or actions against or involving any Company Benefit Plan, by any
current or former employee, director, officer, consultant, independent
contractors, contingent worker or leased employee (or any of their dependents,
spouses or beneficiaries) of the Company or any Subsidiary or any predecessor in
interest covered under such Company Benefit Plan, by any Governmental Entities
or otherwise involving any such Company Benefit Plan (other than routine claims
for benefits) and to the knowledge of the Company after due inquiry, there
exists no state of facts which after notice or lapse of time or both reasonably
could be expected to give rise to any such claim, investigation,
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examination, audit or other proceeding or to affect the registration of any
Company Benefit Plan required to be registered.
Section 4.17. Labor Relations. Except as set forth in the Company
Disclosure Letter, with respect to the three (3) year period ending on the date
hereof:
(a) the employees of the Company and the Subsidiaries have not
been, and currently are not, represented by a labor organization or group which
was either certified or voluntarily recognized by any labor relations board,
including the NLRB or certified or voluntarily recognized by any other
Governmental Entity;
(b) neither the Company nor any Subsidiary has been, or is, a
signatory to a collective bargaining agreement with any trade union, labor
organization or group;
(c) no representation election petition or application for
certification has been filed by employees of the Company or any Subsidiary or is
pending with the NLRB or any other Governmental Entity and no union organizing
campaign or other attempt to organize or establish a labor union, employee
organization or labor organization or group involving employees of the Company
or any Subsidiary has occurred, is in progress or, to the knowledge of the
Company, is threatened;
(d) neither the Company nor any Subsidiary has engaged in any
unfair labor practice and neither the Company nor any Subsidiary is aware of any
pending or threatened labor board proceeding of any kind, including any such
proceeding against the Company, any Subsidiary or any trade union, labor union,
employee organization or labor organization representing the employees of the
Company or any Subsidiary;
(e) no grievance or arbitration demand or proceeding, whether or
not filed pursuant to a collective bargaining agreement, has been filed or is
pending, or, to the knowledge of the Company, threatened, against the Company or
any Subsidiary;
(f) no labor dispute, walk out, strike, slowdown, hand billing,
picketing, work stoppage (sympathetic or otherwise), or other "concerted action"
involving the employees of the Company or any Subsidiary has occurred, is in
progress or, to the knowledge of the Company, has been threatened;
(g) no breach of contract and/or denial of fair representation
claim has been filed or is pending or, to the knowledge of the Company,
threatened against the Company, any Subsidiary and/or any trade union, labor
union, employee organization or labor organization representing the employees of
the Company or any Subsidiary;
(h) no claim, complaint, charge or investigation for unpaid
wages, bonuses, commissions, employment withholding taxes, penalties, overtime
or other compensation, benefits, child labor or record keeping violations is
pending or, to the knowledge of the Company, threatened under the FLSA,
Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx Act, or Service Contract Act or any other federal,
state, local, provincial or foreign law, regulation or ordinance;
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(i) no discrimination and/or retaliation claim, complaint, charge
or investigation is pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary under the 1866 or 1964 Civil Rights Acts,
the Equal Pay Act, the ADEA, the ADA, the FMLA, the FLSA, ERISA or any other
federal law or comparable state fair employment practices act or foreign law,
including any provincial law regulating discrimination in the workplace;
(j) if the Company or any Subsidiary is a federal or state
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanction or
debarment proceeding has been, to the knowledge of the Company, threatened or is
pending with the Office of Federal Contract Compliance Programs or any other
federal agency or any comparable state or foreign agency or court and no desk
audit or on-site review is in progress;
(k) no citation has been issued by OSHA against the Company or
any Subsidiary and no notice of contest, claim, complaint, charge, investigation
or other administrative enforcement proceeding involving the Company is pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary under OSHA or before any provincial or federal occupational health
and safety ministry or department pursuant to any other applicable law relating
to occupational safety and health;
(l) no workers' compensation or retaliation claim, complaint,
charge or investigation the liability for which, individually, is reasonably
expected to exceed $75,000 is pending against the Company or any Subsidiary and
the aggregate liability under all other pending workers' compensation or
retaliation claims, complaints, charges or investigations would not have a
Material Adverse Effect;
(m) no investigation or citation of the Company or any Subsidiary
has occurred and no enforcement proceeding has been initiated or is pending or,
to the knowledge of the Company, threatened under federal or foreign immigration
law;
(n) neither the Company nor any Subsidiary has taken any action
that would constitute a "mass layoff", "mass termination" or "plant closing"
within the meaning of WARN or otherwise trigger notice requirements or liability
under any federal, local, state or foreign plant closing notice or collective
dismissal law;
(o) no wrongful discharge, retaliation, libel, slander or other
claim, complaint, charge or investigation that arises out of the employment
relationship between the Company or any Subsidiary and its respective employees
is pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary under any applicable law;
(p) each of the Company and the Subsidiaries has maintained and
currently maintains adequate insurance as required by applicable law with
respect to workers' compensation claims and unemployment benefits claims;
(q) each of the Company and the Subsidiaries is in compliance
with all applicable laws, regulations and orders and all contracts or collective
bargaining agreements
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governing or concerning labor relations, union and collective bargaining,
conditions of employment, employment discrimination and harassment, wages, hours
or occupations safety and health, including the Labor Laws;
(r) neither the Company nor any Subsidiary is liable for any
liabilities, judgments, decrees, orders, arrearage of wages or taxes, fines or
penalties for failure to comply with any of the Labor Laws;
(s) the Company has provided the Parent with a copy of the policy
of each of the Company and the Subsidiaries for providing leaves of absence
under the FMLA; and
(t) each of the Company and the Subsidiaries has paid or accrued
all current assessments under workers' compensation legislation, and neither the
Company nor any Subsidiary has been subject to any special or penalty assessment
under such legislation which has not been paid.
Section 4.18. Contracts and Commitments. Except as set forth in the
Company Disclosure Letter or disclosed in the Company Reports, neither the
Company nor any Subsidiary is a party to, or is bound or affected by, or
receives benefits under any (a) contracts of employment providing for total
annual base salary in excess of $200,000; (b) contracts or agreements containing
covenants limiting the freedom of the Company, or any Subsidiary, to engage in
any line of business or to compete with any entity; (c) any joint venture,
partnership or similar agreement; (d) exchange traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract, or any other
interest rate or foreign currency protection contract; (e) agreement providing
for aggregate payments to any director, officer or consultant of the Company or
any Subsidiary in any calendar year in excess of $200,000; (f) any agreement
providing rights of indemnification in favor of any Indemnified Party; or (g)
other contract or agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company with the SEC as of the
date of this Agreement. Neither the Company nor any Subsidiary is in breach or
default under any such contracts, agreements, instruments or arrangements, which
default or breach has had or would reasonably be expected to have, either
individually or in the aggregate, a Company Material Adverse Effect, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default.
Section 4.19. Information Supplied.
(a) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in (A) the Form S-4 to be
filed with the SEC by the Parent in connection with the issuance of the Parent
Class B Common Stock in the Merger will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (B) the Proxy
Statement/Prospectus included in the Form S-4 related to the Stockholders'
Meeting and the Parent Class B Common Stock to be issued in the Merger will, on
the date it is first mailed to the Company Stockholders or at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or
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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. The Proxy Statement/Prospectus will comply as to
form in all material respects with the requirements of the Exchange Act.
(b) Notwithstanding the foregoing provisions of this Section
4.19, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by the Parent or Buyer for
inclusion or incorporation by reference therein.
Section 4.20. Intellectual Property.
(a) The Company Disclosure Letter sets forth a true and correct
list of all Intellectual Property that is the subject of registration or of an
application for a registration and the jurisdictions where each is registered
(if any). The Company and the Subsidiaries have good and marketable title to or
possesses adequate licenses or other valid rights to use such Intellectual
Property, free and clear of all Liens and has paid all maintenance fees,
renewals or expenses related to such Intellectual Property that the Company
owns. Neither the use of such Intellectual Property nor the present conduct of
the Company and the Subsidiaries misappropriates, infringes upon or conflicts
with any copyright, trade name, trade secret or trademark rights of any third
party or, to the knowledge of the Company, any patent or any other intellectual
property rights of any third party. No party has filed a claim, or, to the
knowledge of the Company, threatened to file a claim, against the Company or any
Subsidiary alleging that it has violated, infringed on or otherwise improperly
used the intellectual property rights of such party and neither the Company nor
any Subsidiary has violated or infringed any trademark, trade name, service
xxxx, service name, copyright or trade secret held by others, or, to the
knowledge of the Company, violated or infringed any patent.
(b) The Company Disclosure Schedule sets forth a true and
complete list of: (i) all Company Proprietary Software; and (ii) all Company
Licensed Software constituting the Company's Global Business System, or any
other Company Licensed Software material to the operations of the Company as
presently conducted.
(c) The Company and the Subsidiaries have all right, title and
interest in and to all intellectual property rights in the Company Proprietary
Software. The Company and the Subsidiaries have developed the Company
Proprietary Software through their own efforts, as described in Section 4.20(e),
and for their own account, and the Company Proprietary Software is free and
clear of all Liens. The use of the Company Licensed Software and the use of the
Company Proprietary Software does not breach any terms of any license or other
contract between the Company or any Subsidiary and any third party. Each of the
Company and the Subsidiaries is in compliance with the terms and conditions of
all license agreements in favor of the Company and the Subsidiaries relating to
the Company Licensed Software.
(d) The Company Proprietary Software does not infringe any
copyright or trade secret right of any third party or, to the knowledge of the
Company, any patent or other intellectual property rights of the any third
party.
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(e) The Company Proprietary Software was: (i) developed by the
employees of the Company and the Subsidiaries working within the scope of their
employment at the time of such development; (ii) developed by agents,
consultants, contractors or others who have executed appropriate instruments of
assignment in favor of the Company or a Subsidiary as assignee that have
conveyed to the Company or such Subsidiary ownership of all of its intellectual
property rights in the Company Proprietary Software; or (iii) acquired by the
Company or a Subsidiary in connection with acquisitions in which the Company or
such Subsidiary obtained appropriate representations, warranties and indemnities
from the transferring party relating to the title to such Company Proprietary
Software. Neither the Company nor any Subsidiary has received notice from any
third party claiming any right, title or interest in the Company Proprietary
Software.
(f) Neither the Company nor any Subsidiary has granted rights in
Company Software to any third party.
Section 4.21. Insurance Policies. The Company and the Subsidiaries
maintain insurance with reputable insurers for the business and assets of the
Company and the Subsidiaries against all risks normally insured against, and in
amounts normally carried, by corporations of similar size engaged in similar
lines of business and such coverage is sufficient. The Company and each
Subsidiary maintain all insurance with respect to the inventory of each customer
in the possession of the Company or a Subsidiary which insurance is required
pursuant to any contract, agreement or other arrangement with such customer to
be maintained. All insurance policies and bonds with respect to the business and
assets of the Company and the Subsidiaries are in full force and effect and will
be maintained by the Company and the Subsidiaries in full force and effect as
they apply to any matter, action or event relating to the Company and the
Subsidiaries occurring through the Closing Date and neither the Company nor any
Subsidiary has reached or exceeded its policy limits for any insurance policies
in effect at any time during the past five years.
Section 4.22. Notes and Accounts Receivable.
(a) Except as disclosed in the Company Disclosure Letter, there
are no notes receivable for amounts in excess of $500 of the Company or any
Subsidiary owing by any director, officer, stockholder or employee of the
Company or any Subsidiary.
(b) Except as disclosed in the Company Disclosure Letter, all
material accounts receivable of the Company and any Subsidiary are current or
covered by reserves for uncollectability which the Company believes to be
adequate, and there are no material disputes regarding the collectibility of any
such accounts receivable that would reasonably be expected to have a Company
Material Adverse Effect.
Section 4.23. Transactions with Affiliates. Except as set forth in the
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or the
Subsidiaries), no director, officer or other "affiliate" or "associate" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of the Company or any
Subsidiary or any entity in which, to the knowledge of the Company, any
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such director, officer or other affiliate or associate, owns any beneficial
interest (other than a publicly held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than 1%
of the stock of which is beneficially owned by any such Persons), has any
interest in: (i) any contract, arrangement or understanding with, or relating to
the business or operations of the Company or any Subsidiary; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any Subsidiary; or (iii) any property (real,
personal or mixed), tangible, or intangible, used or currently intended to be
used in, the business or operations of the Company or any Subsidiary.
Section 4.24. Customer and Supplier Relations. Since May 31, 2000, no
customer of the Company or any Subsidiary has canceled, terminated, or made any
threat to cancel or otherwise terminate its contract, or in writing to decrease
its usage of the Company's or any Subsidiary's services or products that would
result in a Company Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice, and the Company has no knowledge, to the
effect that any current customer or supplier may terminate or materially alter
its business relations with the Company or any Subsidiary, either as a result of
the transactions contemplated herein or otherwise that would result in a Company
Material Adverse Effect.
Section 4.25. Certain Practices. Other than actions taken that do not
violate the Foreign Corrupt Practices Act or any other applicable laws, none of
the Company, the Subsidiaries and any Representative of the Company or any
Subsidiary has offered or given, and the Company has no knowledge of any Person
that has offered or given on its behalf, anything of value to: (i) any official
of a Governmental Entity, any political party or official thereof, or any
candidate for political office; (ii) any customer or member of a government; or
(iii) any other Person, in any such case while knowing or having reason to know
that all or a portion of such money or thing of value may be offered, given or
promised, directly or indirectly, to any customer, member of the government or
candidate for political office for the purpose of the following: (x) influencing
any action or decision of such Person, in such Person's official capacity,
including a decision to fail to perform such Person's official function; (y)
inducing such Person to use such Person's influence with any government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality to assist the Company or any Subsidiary in
obtaining or retaining business for, or with, or directing business to, any
Person; or (z) where such payment would constitute a bribe, kickback or illegal
or improper payment to assist the Company or any Subsidiary in obtaining or
retaining business for, or with, or directing business to, any Person. The
Company represents and warrants that neither the Company nor any of its
Subsidiaries has, within the last five years, taken any actions that would
violate United States Laws against cooperation with unsanctioned foreign
boycotts, including 15 C.F.R. Section 760 and 26 U.S.C. Section 999. The Company
further represents and warrants that the Company and its Subsidiaries are in
compliance in all material respects with all Laws of the United States that
require the reporting of requests to cooperate with unsanctioned foreign
boycotts. The Company represents and warrants that neither the Company nor any
of its Subsidiaries has, within the last five years, taken any actions that
would violate Laws of the United States regarding the exporting of goods and
technology, including the licensing, use, resale, reexport, or deemed export of
such goods and technology. The Company further represents and warrants that the
Company and its Subsidiaries are in compliance in all material respects with all
Laws of the United States regarding the importing of goods into the customs
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territory of the United States, whether as a licensed customs broker or as the
importer of record. The Company represents and warrants that neither the Company
nor any of its Subsidiaries has, within the last five years, taken any actions
that would violate Laws of the United States regarding United States embargoes
of Afghanistan, Angola, Cuba, Iran, Iraq, Libya, North Korea, Serbia, and Sudan.
The Company further represents and warrants that neither the Company nor any of
its Subsidiaries owns, in whole or in part, manages, operates, uses, or benefits
from property in Cuba that was nationalized by the Cuban Government after
January 1, 1959.
Section 4.26. No Existing Discussions. As of the date hereof, the
Company is not engaged, directly or indirectly, in any negotiation, discussion
or exchange of information with any other party with respect to or in
contemplation of an Acquisition Proposal.
Section 4.27. Merger. Neither the Company nor any Subsidiary has taken
any action or failed to take any action which action or failure to take action
would jeopardize the Merger as a reorganization within the meaning of Section
368(a) of the Code.
Section 4.28. Antitakeover Statutes; Absence of Dissenters' Rights. Each
of the Company and the Board of Directors of the Company has taken all action
required to be taken by it to exempt this Agreement and the Option Agreements
and the transactions contemplated hereby and thereby from, and this Agreement
and the Option Agreements and the transactions contemplated hereby and thereby
are exempt from the requirements of, any "moratorium", "control share", "fair
price", "affiliate transaction", "business combination" or other antitakeover
laws and regulations of any state, including the provisions of Section 203 of
the DGCL. No holder of any capital stock of the Company or any other securities
of the Company is entitled to any dissenters' rights, appraisal rights or
similar rights by virtue of this Agreement, the Merger or any of the other
transactions contemplated hereby (including those contemplated by the Option
Agreements).
Section 4.29. Brokers. No broker, finder or investment banker (other
than the Independent Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company Disclosure Letter includes a complete and
correct copy of all agreements between the Company and the Independent Advisor
pursuant to which such firm would be entitled to any payment relating to this
Agreement, the Merger or the other transactions contemplated by this Agreement.
Section 4.30. Vote Required. The affirmative vote of the holders of
shares representing a majority of the shares of Company Common Stock entitled to
vote on the approval and adoption of this Agreement and the Merger (the
"Required Vote") is the only vote or approval of the holders of any class or
series of capital stock of the Company necessary to adopt this Agreement and to
approve the transactions contemplated hereby.
Section 4.31. Customs Matters. The Company and its Subsidiaries are
licensed to conduct the businesses currently conducted by them. The Company and
the Subsidiaries possess all valid permits, licenses and authorizations from
Government Entities (the "Permits") required
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to conduct their businesses in accordance with 19 U.S.C. Section 1641 and 19
C.F.R. Section 111. All such Permits are currently in full force and effect and
no misrepresentations were made by the Company or the Subsidiaries of any
material fact in obtaining such licenses. No administrative or judicial
proceedings have been instituted or, to the Company's knowledge, threatened or
are contemplated seeking the suspension, termination, modification, revocation,
alteration or amendment of any such Permits or to declare any of them invalid in
any respect. The Company and each of its Subsidiaries are in material compliance
with all applicable laws and regulations enforced by the United States Customs
Service governing the operation of the business of the Company and the
Subsidiaries, including those contained in 19 C.F.R. Section 111. In particular,
the Company and its Subsidiaries maintain records of customs transactions in
accordance with 19 C.F.R. Sections 111.21 and 111.23. The officers of the
Company that are licensed under 19 U.S.C. Section 1641(b) exercise responsible
supervision and control over the transaction of customs business by the Company
as required by 19 C.F.R. Section 111.28. The Company has submitted a list of
employees to the Customs authority in each port in which it conducts customs
business, as required by 19 C.F.R. Section 111.28(b), and has complied with all
applicable reporting requirements. The Company exercises reasonable due
diligence in making financial settlements, answering correspondence, and in
preparing and assisting in the preparation and filing of records relating to its
business as those activities are described in 19 C.F.R. Section 111.29. Neither
the Company nor any of its Subsidiaries is engaged in any activities that could
result in the cancellation, suspension, or revocation of its licenses or
permits, or the imposition of a material monetary penalty, including:
(a) filing documents that contain false information, as
prohibited by 19 C.F.R. Section 111.32;
(b) the procurement of information from government sources
to which access is not granted by proper authority, as
prohibited by 19 C.F.R. Section 111.33;
(c) the exertion of undue influence on any representative of
the Department of Treasury by threat, false accusation,
or offer of special inducement, gift, or anything of
value, as prohibited by 19 C.F.R. Section 111.34;
(d) demanding or accepting from an attorney fees in excess
of an amount commensurate with the time, effort and
skill expended by the Company in performing its
services, as prohibited by 19 C.F.R. Section 111.35;
(e) an improper relationship with an unlicensed person, as
prohibited by 19 C.F.R. Section 111.36;
(f) the use of any Permits or the Company name by persons,
other than employees authorized to act on behalf of the
Company, in the solicitation, promotion or performance
of any customs business, as prohibited by 19 C.F.R.
Section 111.37;
(g) the knowing use of false or misleading representations
to procure employment in any customs matter, as
prohibited by 19 C.F.R. Section 111.38;
(h) the withholding of information from a client regarding
any customs
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transaction to which that client is entitled, as
prohibited by 19 C.F.R. Section 111.39;
(i) the suggestion to a client or potential client of an
illegal plan for evasion of any duty, tax, or other debt
or obligation owing to the U.S. government, as
prohibited by 19 C.F.R. Section 111.39;
(j) the endorsement or acceptance, without the authority of
the client, of any U.S. Government draft, check or
warrant drawn to the order of the client, as prohibited
by 19 C.F.R. Section 111.41;
(k) relations with persons, other than bona fide importers
or exporters for whom the Company is conducting customs
business, who are notoriously disreputable or whose
licenses are under suspension, cancelled with prejudice,
or revoked, as prohibited by 19 C.F.R. Section 111.42;
(l) the conviction of any officer of a felony or misdemeanor
that arose out of the conduct of the business of the
Company, or involved larceny, theft, robbery, extortion,
forgery, counterfeiting, fraudulent concealment,
embezzlement, fraudulent conversion, or misappropriation
of funds, as prohibited by 19 C.F.R. Section 111.53;
(m) employment of any person who has been convicted of a
felony without written approval of that employment from
the appropriate Assistant Commissioner of the Customs
Service, as prohibited by 19 C.F.R. Section 111.53; or
(n) counseling any person to violate the Customs Service
laws or regulations, as prohibited by 19 C.F.R. Section
111.53.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Except as disclosed in the Parent Disclosure Letter delivered by the
Parent to the Company prior to the execution of this Agreement, each of the
Parent and the Buyer represents and warrants to the Company as follows:
Section 5.1. Organization and Standing. Such Person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate its properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
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Section 5.2. Authority for Agreement. Such Person has all necessary
corporate power and authority to execute and deliver this Agreement and the
Option Agreements, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated by this Agreement and the Option
Agreements. The execution, delivery and performance by such Person of this
Agreement and the Option Agreements, and the consummation by each such Person of
the Merger and the other transactions contemplated by this Agreement and the
Option Agreements, have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of such Person are necessary to
authorize this Agreement or the Option Agreements or to consummate the Merger or
the other transactions contemplated by this Agreement and the Option Agreements
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by the DGCL). Each of this Agreement
and the Option Agreements has been duly executed and delivered by such Person
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of such Person
enforceable against such Person in accordance with its terms.
Section 5.3. No Conflict. The execution and delivery of this Agreement
and the Option Agreements by such Person do not, and the performance of this
Agreement and the Option Agreements by such Person and the consummation of the
Merger and the other transactions contemplated by this Agreement and the Option
Agreements will not, (i) conflict with or violate the certificate of
incorporation or bylaws of such Person, (ii) subject to Section 5.4, conflict
with or violate any Law applicable to such Person or by which any property or
asset of such Person is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of such Person pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Person is a party or
by which such Person or any property or asset of either of them is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay the performance by
such Person of its respective obligations under this Agreement or the Option
Agreements or the consummation of the Merger or the other transactions
contemplated by this Agreement and the Option Agreements.
Section 5.4. Required Filings and Consents. The execution and delivery
of this Agreement by such Person do not, and the performance of this Agreement
by such Person will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Securities Act, Exchange Act, state
securities laws or "blue sky" laws and filing and recordation of appropriate
merger documents as required by the DGCL, (ii) for those required by the HSR
Act, (iii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, reasonably be
expected to prevent or materially delay consummation of the Merger or otherwise
prevent or materially delay such Person from performing its material obligations
under this Agreement and (iv) for those which have heretofore been obtained by
such Person.
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Section 5.5. Capitalization. As of the date hereof, the authorized
capital stock of the Parent consists of 4,600,000,000 shares of Parent Class A
Common Stock and 5,600,000,000 shares of Parent Class B Common Stock and
200,000,000 shares of Parent preferred stock. All of the shares of Parent Class
B Common Stock to be issued in exchange for Company Common Stock at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in the Parent Disclosure Letter, free of preemptive rights. As of the
close of business on December 31, 2000, (i) 935,873,745 shares of Parent Class A
Common Stock were duly authorized, validly issued and outstanding, fully paid
and nonassessable; (ii) 198,819,384 shares of Parent Class B Common Stock were
duly authorized, validly issued and outstanding, fully paid and nonassessable;
(iii) no shares of preferred stock of the Parent were issued and outstanding;
(iv) no shares of Parent Class A Common Stock, Parent Class B Common Stock or
Parent preferred stock were held in the Parent's treasury; and (v) 29,314,802
shares of Parent Class A Common Stock were reserved for issuance upon exercise
of employee stock options under the Parent's stock option plans. Except as set
forth in the Parent Reports, there are no outstanding options, warrants or
rights to purchase or acquire from the Parent any capital stock of the Parent,
and there are no convertible securities or other contracts, commitments,
agreements, understandings, arrangements or restrictions by which the Parent is
bound to issue any additional shares of its capital stock or other equity
securities.
Section 5.6. Parent Reports; Parent Financial Statements.
(a) The Parent has filed all Parent Reports, each of which has
complied in all material respects with the applicable requirements of the
Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Parent Reports (including, but not
limited to, any financial statements or schedules included or incorporated by
reference therein) contained when filed any untrue statement of a material fact
or omitted or omits 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.
(b) All of the Parent Financial Statements, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Parent and its
subsidiaries at the respective date thereof and the consolidated results of its
operations and changes in cash flows for the periods indicated except that the
unaudited interim financial statements are subject to normal recurring year-end
adjustments consistent with past practices and not material in amount.
Section 5.7. Absence of Certain Changes or Events. Except as disclosed
in the Parent Disclosure Letter and the Parent Reports and except for the
transactions contemplated by this Agreement, since September 30, 2000, there has
not been (i) any change in the business, financial condition or results of
operations of the Parent and its subsidiaries which has or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, or (ii) any split, combination or reclassification of any of the
Parent's outstanding capital
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stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Parent's outstanding capital stock.
Section 5.8. Information Supplied.
(a) None of the information supplied or to be supplied by the
Parent for inclusion in the Form S-4 will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Form S-4 will
comply as to form in all material respects with the requirements of the
Securities Act.
(b) Notwithstanding the foregoing provisions of this Section 5.8,
no representation or warranty is made by the Parent or Buyer with respect to
statements made or incorporated by reference in the Form S-4 based on
information supplied by the Company for inclusion or incorporation by reference
therein.
Section 5.9. No Violation of Law. Except as set forth in the Parent
Reports, the business and operations of the Parent and its subsidiaries have
been conducted in compliance with all applicable Laws, except where the failure
to be in compliance does not have and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Except as
set forth in the Parent Reports or in the Parent Disclosure Letter, (i) neither
the Parent nor any subsidiary of the Parent has been charged with or, to the
knowledge of the Parent, is now under investigation with respect to, a violation
of any applicable Law that has or would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and (ii) the
Parent has filed all reports required to be filed with any governmental entity
or other regulatory body on or before the date hereof, except where the failure
to do so does not and would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
Section 5.10. Merger. Neither the Parent nor any of its subsidiaries has
taken any action or failed to take any action which action or failure to take
action would jeopardize the Merger as a reorganization within the meaning of
Section 368(a) of the Code.
Section 5.11. Certificate of Incorporation and Bylaws. Parent has
heretofore made available to the Company a complete and correct copy of its
Restated Certificate of Incorporation and Bylaws as amended to date (the "Parent
Charter Documents"). Such Parent Charter Documents are in full force and effect.
Parent is not in violation of any of the provisions of Parent Charter Documents,
except for violations of Parent Charter Documents which do not and are not
reasonably likely to have a Parent Material Adverse Effect.
Section 5.12. Ownership of Buyer; No Prior Activities.
(a) Buyer was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) Except for obligations or liabilities incurred by Buyer in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and
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except for this Agreement and any other agreements or arrangements contemplated
by this Agreement, Buyer has not incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
Section 5.13. Ownership Interest in the Company. Other than by reason of
this Agreement or the transactions contemplated hereby, neither Parent nor any
of its Affiliates is, or has been for the previous three years, an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.
Section 5.14. Brokers and Finders. No broker, finder or investment
banker (other than Xxxxxxx Xxxxx Xxxxxx Inc.) is entitled to any brokerage,
finder's or other fee or commission payable by such Person in connection with
this Agreement, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of such Person.
ARTICLE VI
COVENANTS
Section 6.1. Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of
this Agreement and the Effective Time, unless the Parent shall otherwise agree
in writing (and except as expressly contemplated, permitted or required by this
Agreement), (i) the business of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with prior practice, (ii) the Company and the Subsidiaries shall use all
commercially reasonable efforts to preserve substantially intact their business
organizations, to keep available the services of their current officers and
employees and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other Persons with which the Company
or the Subsidiaries has significant business relations, and (iii) the Company
will comply in all material respects with all applicable Laws and regulations
wherever its business is conducted, including the timely filing of all reports,
forms or other documents with the SEC required pursuant to the Securities Act or
the Exchange Act.
(b) Except as set forth in the Company Disclosure Letter, the
Company covenants and agrees that between the date of this Agreement and the
Effective Time, the Company shall not, nor shall the Company permit any of the
Subsidiaries to, (i) declare or pay any dividends on or make other distributions
(whether in cash, stock or property) in respect of any of its capital stock,
except for dividends by a wholly owned Subsidiary of the Company to the Company
or another wholly owned Subsidiary of the Company; (ii) execute or cause to be
executed any transactions that may result in a deemed dividend under the Code;
(iii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (iv) repurchase or
otherwise acquire any shares of its capital stock; (v) issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any
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securities convertible into any such shares of its capital stock, or any rights,
warrants or options to acquire any such shares or convertible securities or any
stock appreciation rights, phantom stock plans or stock equivalents, other than
the issuance of shares of Company Common Stock pursuant to (A) the exercise of
Company Stock Options outstanding as of the date of this Agreement, (B) employee
deferrals, after tax contributions and matching contributions under the Xxxxx
Companies, Inc. Salary Investment and Retirement Plan or the Xxxxx Companies,
Inc. Employee Stock Purchase Plan as in effect on the date hereof, (C) new
Company Stock Options granted at fair market value and consistent with past
practices under the Xxxxx Companies, Inc. 1992 Omnibus Equity Incentive Plan in
the ordinary course, which shall not exceed in the aggregate options to purchase
1,000,000 shares of Company Common Stock, (D) new Company Stock Options granted
at fair market value and in the ordinary course consistent with past practices
to new employees, which shall not exceed in the aggregate per month options to
purchase 25,000 shares of Company Common Stock or 10,000 shares to any
individual, or (E) the Rights Plan; (vi) take any action that would make the
Company's representations and warranties set forth in Article III not true and
correct in all material respects; (vii) take any action that would, or could
reasonably be expected to, result in any of the conditions set forth in Article
VII not being satisfied; (viii) amend its certificate of incorporation
(including any certificate of designations attached thereto) or bylaws or other
equivalent organizational documents; (ix) incur any indebtedness for borrowed
money or guaranty any such indebtedness of another Person, other than (A)
borrowings under existing lines of credit (or under any refinancing of such
existing lines) or (B) indebtedness owing to, or guaranties of indebtedness
owing to, the Company; (x) make any loans or advances to any other Person other
than loans or advances between the Company and any Subsidiary and other than
loans or advances less than $100,000 made in the ordinary course of business
consistent with past practice; (xi) merge or consolidate with any other entity
in any transaction, or sell any business or assets in a single transaction or
series of transactions in which the aggregate consideration is $1,000,000 or
greater; (xii) change its accounting policies except as required by GAAP; (xiii)
make any change in employment terms for any of its directors or officers; (xiv)
alter, amend or create any obligations with respect to compensation, severance,
benefits, change of control payments or any other payments to employees,
directors or Affiliates of the Company or the Subsidiaries, other than with
respect to alterations or amendments made with respect to non-officers and
non-directors in the ordinary course of business consistent with past practice
or as expressly contemplated by this Agreement or consented to in writing by the
Parent; (xv) make any change to the Company Benefit Plans, except those changes
required by applicable Laws; (xvi) sell, license, mortgage or otherwise encumber
or subject to any lien or otherwise dispose of any material properties or
assets, other than in the ordinary course of business consistent with past
practice; or (xvii) commit or agree to take any of the actions described in this
Section 6.1(b).
Section 6.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the Representatives of the Company to, afford the Representatives of
the Parent and the Buyer, upon reasonable notice, reasonable access at all
reasonable times to the officers, employees, agents, properties, offices and
other facilities, books and records, including Tax Returns of the Company and
the Subsidiaries, and shall furnish the Parent and the Buyer with all financial,
operating and other data and information as the Parent or the Buyer, through its
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Representatives, may reasonably request. The Parent will remain subject to the
terms of the Confidentiality Agreement.
(b) No investigation pursuant to this Section 6.2 shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(c) The Company shall cooperate in Parent's determination and
calculation of Subsidiaries' tax basis.
Section 6.3. Notification of Certain Matters. The Company shall give
prompt notice to the Parent, and the Parent shall give prompt notice to the
Company, of (i) the occurrence, or nonoccurrence, of any event which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate and (ii) any failure by such party (or the Buyer, in the
case of the Parent) to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.3 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. If any event or matter arises after the date of this Agreement which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in the Company Disclosure Letter or which is necessary
to correct any information in the Company Disclosure Letter which has been
rendered inaccurate thereby, then the Company shall promptly supplement, or
amend, and deliver to the Parent the Company Disclosure Letter which it has
delivered pursuant to this Agreement.
Section 6.4. Company Stockholders' Meeting. The Company shall, as
promptly as practicable following the execution of this Agreement, duly call,
give notice of, convene and hold the Stockholders' Meeting for the purpose of
obtaining the Required Vote with respect to the Merger and this Agreement, shall
use its reasonable best efforts to solicit the approval of this Agreement by the
Required Vote (regardless of whether the Board of Directors of the Company
modifies its recommendation of the Merger and this Agreement) and, subject to
Section 6.5, the Board of Directors of the Company shall recommend the approval
of this Agreement by the Company Stockholders. Without limiting the generality
of the foregoing but subject to its rights pursuant to Sections 6.5 and 8.1(e),
the Company agrees that its obligations pursuant to the first sentence of this
Section 6.4 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
Section 6.5. Board Recommendations.
(a) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw, or propose publicly to withdraw, in a
manner adverse to the Parent, the approval or recommendation of such Board of
Directors or such committee of the Merger or this Agreement, (ii) subject to
Section 6.5(b), modify, or propose publicly to modify in a manner adverse to the
Parent, the approval or recommendation of such Board of Directors or such
committee of the Merger or this Agreement, (iii) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal or (iv)
approve or recommend or propose to approve or recommend, or execute or enter
into any Acquisition Agreement related to any
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Acquisition Proposal. Notwithstanding the foregoing, if, prior to the date that
is the earlier of the 60th day following the date of execution of this Agreement
and the date of the Stockholders' Meeting, in response to a Superior Proposal
that did not result from a breach of Section 6.9, the Board of Directors of the
Company, in exercise of its fiduciary duties, reasonably determines in good
faith, based upon the written advice of independent outside legal counsel, that
the Board of Directors of the Company is required to do so to comply with its
fiduciary duties to the Company Stockholders under applicable Law, the Board of
Directors of the Company may, after providing the Parent with at least 72 hours
advance written notice of its decision to take such action, modify or propose
publicly to modify, in a manner adverse to the Parent, the approval or
recommendation of the Merger or this Agreement by the Board of Directors of the
Company.
(b) Nothing contained in this Section 6.5 or any other provision
hereof shall prohibit the Company or the Board of Directors of the Company from
(A) taking and disclosing to the Company Stockholders pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act a position with respect to a tender
or exchange offer by a third party, which is consistent with its obligations
hereunder or (B) making such disclosure to the Company Stockholders as, in the
reasonable good faith judgment of the Board of Directors of the Company, after
receiving advice from independent outside legal counsel, is consistent with its
obligations hereunder and is required by applicable law; provided, that the
Company may not, except as provided by this Section 6.5, modify, or propose
publicly to modify, in a manner adverse to the Parent, the approval or
recommendation of such Board of Directors of the Merger or this Agreement or
approve or recommend an Acquisition Proposal, or propose publicly to approve or
recommend an Acquisition Proposal.
Section 6.6. Stockholder Litigation. The Company shall give the Parent
the opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement or the Merger; provided, however, that no such
settlement shall be agreed to without the Parent's consent, which consent will
not be unreasonably withheld; and, provided, further, that to the extent Parent
seeks Company's cooperation in the defense or settlement of such Litigation,
Parent shall enter into an appropriate joint defense agreement with the Company.
Section 6.7. Indemnification.
(a) It is understood and agreed that all rights to
indemnification by the Company now existing in favor of the Indemnified Parties
shall survive the Merger and the Parent shall (i) cause the Surviving
Corporation to continue in full force and effect for a period of at least six
years from the Effective Time and (ii) perform, or cause the Surviving
Corporation to perform, in a timely manner, the Surviving Corporation's
obligation with respect thereto. The Parent and the Buyer agree that any claims
for indemnification hereunder as to which they have received written notice
prior to the sixth anniversary of the Effective Time shall survive, whether or
not such claims shall have been finally adjudicated or settled.
(b) The Parent shall cause the Surviving Corporation to, and the
Surviving Corporation shall, maintain in effect for six years from the Effective
Time, if available, the D&O Insurance (provided that the Surviving Corporation
may substitute therefor policies of at least the
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same coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 6.7(b) more than an amount per year equal to
two hundred percent (200%) of current annual premiums paid by the Company for
such insurance. In the event that, but for the proviso to the immediately
preceding sentence, the Surviving Corporation would be required to expend more
than two hundred percent (200%) of current annual premiums, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to two hundred percent (200%) of current annual
premiums. If the Surviving Corporation elects to reduce the amount of insurance
coverage pursuant to the preceding sentence, it will furnish to the officers and
directors currently covered by such D&O Insurance reasonable notice of such
reduction in coverage and shall, to the extent additional coverage is available,
afford such Persons the opportunity to pay such additional premiums as may be
necessary to maintain the existing level of D&O Insurance coverage. Parent shall
cause the Surviving Corporation to honor and perform the obligations of the
Company with respect to rights of indemnification existing in favor of the
Indemnified Parties pursuant to indemnification agreements and employment
agreements with the Company's directors and officers existing on or before the
Effective Time and which are set forth on the Company Disclosure Schedule.
(c) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 6.7.
(d) From and after the Effective Time, Parent shall
unconditionally guarantee the timely performance of all obligations of the
Surviving Corporation under this Section 6.7.
(e) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 6.8. Public Announcements. The Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the Merger and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by Law or any listing agreement with a
national securities exchange or trading system to which the Parent or the
Company is a party.
Section 6.9. Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of the Subsidiaries or Representatives of the Company
to, directly or indirectly through another Person, (a) solicit, initiate or
encourage (including by way of furnishing information) or otherwise take any
action to facilitate, the making of any proposal that constitutes an Acquisition
Proposal or (b) participate in any discussions or negotiations
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regarding, any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that if, at any time prior to
the date that is the earlier of the 60th day following the date of execution of
this Agreement and the date of the Stockholders' Meeting, the Board of Directors
of the Company, in exercise of its fiduciary duties, reasonably determines in
good faith, based upon the written advice of independent outside legal counsel,
that the Board of Directors of the Company is required to do so to comply with
its fiduciary duties to the Company Stockholders under applicable Law, the Board
of Directors of the Company and its Representatives may, in response to a
Superior Proposal that did not result in a breach of this Section 6.9, and
subject to providing contemporaneous notice of its decision to take such action
to the Parent, (i) furnish information with respect to the Company and the
Subsidiaries to any Person making a Superior Proposal pursuant to a customary
confidentiality agreement and (ii) participate in discussions or negotiations
regarding such Superior Proposal. The Company shall provide immediate oral and
written notice to the Parent of (a) the receipt of any such Acquisition Proposal
or any inquiry which could reasonably be expected to lead to any Acquisition
Proposal, (b) the material terms and conditions of such Acquisition Proposal or
inquiry, and (c) the identity of such Person or entity making any such
Acquisition Proposal or inquiry. The Company shall continue to keep the Parent
informed of the status and details of any such Acquisition Proposal or inquiry,
as well as any related discussions or negotiations permitted under this Section
6.9.
Section 6.10. Proxy Statement/Prospectus. As promptly as practicable
following the date hereof, the Parent and the Company shall jointly prepare and
file with the SEC preliminary proxy materials and any amendments or supplements
thereof which shall constitute the proxy statement/prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Proxy
Statement/Prospectus") and the Parent shall prepare and file with the SEC the
Form S-4 and take any action required to be taken under applicable state
securities laws with respect to the issuance of Parent Class B Common Stock in
the Merger in which the Proxy Statement/Prospectus will be included as a
prospectus. The Form S-4 and the Proxy Statement/Prospectus shall comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act. Each of the Parent and the Company shall use all
reasonable efforts to have the Form S-4 declared effective under the Securities
Act as promptly as practicable after filing it with the SEC and to keep the Form
S-4 effective as long as is necessary to consummate the Merger. The Parties
shall promptly provide copies, consult with each other and prepare written
responses with respect to any written comments received from the SEC with
respect to the Form S-4 and the Proxy Statement/Prospectus and promptly advise
the other party of any oral comments received from the SEC. The Parent agrees
that none of the information supplied or to be supplied by the Parent for
inclusion or incorporation by reference in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the Stockholders' Meeting, will contain an 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 light of the circumstances under
which they were made, not misleading. The Company agrees that none of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
Stockholders' Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements
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therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood and agreed
that information concerning or related to the Parent will be deemed to have been
supplied by the Parent and information concerning or related to the Company and
the Stockholders' Meeting shall be deemed to have been supplied by the Company.
Section 6.11. Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each
party hereto will use its commercially reasonable efforts to (i) take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement as soon as practicable after the
date hereof and (ii) obtain and maintain all approvals, consents, waivers,
registrations, permits, authorizations, clearances and other confirmations
required to be obtained from any third party and/or any Governmental Entity that
are necessary, proper or advisable to consummate the Merger and the transactions
contemplated hereby (each a "Necessary Approval"). In furtherance and not in
limitation of the foregoing, each party hereto agrees to make as promptly as
practicable, to the extent it has not already done so, (i) an appropriate filing
of a Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby (which filing shall be made in any event within
five Business Days of the date hereof), and (ii) all necessary filings with
other Governmental Entities relating to the Merger, and, in each case, to supply
as promptly as practicable any additional information and documentary material
that may be requested pursuant to the such laws and to use its commercially
reasonable efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act and the receipt of Necessary Approvals under
such other laws as soon as practicable. Notwithstanding the foregoing, nothing
in this Section 6.11 shall require, or be deemed to require, the Parent to agree
to or effect any divestiture (including divestitures of assets of the Parent or
the Company) or take any other action which would reasonably be expected to
impair the Parent's ability to achieve in any material respect the overall
benefits expected, as of the date hereof, to be realized from the consummation
of the Merger.
(b) Each of the Parent and the Company shall, in connection with
the efforts referenced in Section 6.11(a) to obtain all Necessary Approvals, use
its commercially reasonable efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other party of any communication received by
such party from, or given by such party to, the FTC or any other Governmental
Entity and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iii) permit the other party to review any
communications given by it to the FTC or any such other Governmental Entity or,
in connection with any proceeding by a private party, with any other Person.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.11(a) and 6.11(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted)
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challenging any transaction contemplated by this Agreement as violative of any
Regulatory Law (as hereinafter defined), or if any statute, rule, regulation,
executive order, decree, injunction or administrative order is enacted, entered,
promulgated or enforced by a Governmental Entity which would make the Merger or
the transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of the Merger or the transactions
contemplated hereby, each of the Parent and the Company shall cooperate in all
respects with each other and use its respective commercially reasonable efforts
to contest and resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other action or
order, whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the Merger or the transactions
contemplated by this Agreement and to have such statute, rule, regulation,
executive order, decree, injunction or administrative order repealed, rescinded
or made inapplicable. Notwithstanding any provision of this Agreement to the
contrary, neither the Parent nor the Surviving Corporation shall be required
under the terms of this Agreement to dispose of or hold separate all or any
portion of the businesses or assets of the Parent or any of its subsidiaries or
of the Company or any Subsidiary in order to remedy or otherwise address the
concerns (whether or not formally expressed) of any Governmental Entity under
the HSR Act or any other antitrust statute or regulation.
(d) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no antitakeover
statute or similar statute or regulation is or becomes operative with respect to
this Agreement, the Merger, the Option Agreements or any other transactions
contemplated by this Agreement and (ii) if any antitakeover statute or similar
statute or regulation of any jurisdiction is or becomes operative with respect
to this Agreement, the Merger, the Option Agreements or any other transaction
contemplated by this Agreement, take all actions necessary to ensure that this
Agreement, the Merger and any other transactions contemplated by this Agreement
and the Option Agreements may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Option Agreements and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(e) Each party hereto agrees to consider efficient integration of
business operations. Each party hereto further agrees to cooperate with each
other in connection with efficiently integrating the business operations.
Section 6.12. NYSE Listing. The Parent will use commercially reasonable
efforts to cause to be approved for listing on the NYSE, subject to official
notice of issuance, a sufficient number of shares of Parent Class B Common Stock
to be issued in the Merger.
Section 6.13. Tax Treatment.
(a) Each of the Parent and the Company and their respective
subsidiaries shall use reasonable efforts to cause the Merger to qualify as a
"reorganization" under the provisions of Section 368(a) of the Code and to
obtain the opinion of counsel referred to in Section 7.1(f), including the
execution of the letters of representation containing representations that are
customarily given in similar merger transactions, updated as necessary. The
Company
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and the Parent (and their subsidiaries) shall treat the Parent Class B Common
Stock received in the Merger by Company Stockholders as property permitted to be
received by Section 354 of the Code without the recognition of gain. Each of the
Company and the Parent covenants and agrees to, and agrees to cause its
affiliates to, vigorously and in good faith defend all challenges to the
treatment of the reorganization as described in this Section 6.13. Each of the
Company and the Parent agrees that if it becomes aware of any such fact or
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization described in Section 368(a) of the Code, it will promptly
notify the other party in writing.
(b) The Parent, in its sole discretion, may make an election
under Section 338 of the Code, in which case the Company will cooperate in
facilitating such election, and shall grant all consents, waivers and
authorizations necessary to effect such election by the Parent.
(c) The Company and the Subsidiaries will not waive any statute
of limitations in respect of Taxes or agree to any extension of time beyond 90
days with respect to a Tax assessment or deficiency without the consent of the
Parent.
Section 6.14. Undertakings of Parent. The Parent shall perform, or cause
to be performed, when due all obligations of the Buyer and, following the
Closing, the Surviving Corporation, under this Agreement.
Section 6.15. Director Resignations. The Company shall cause to be
delivered to the Parent resignations of all the directors of the Company and the
Subsidiaries to be effective upon the consummation of the Merger. The Company
shall cause such directors, prior to resignation, to appoint new directors
nominated by the Parent to fill such vacancies.
Section 6.16. Company Affiliates. The Company shall deliver to the
Parent a letter identifying all Persons who are, at the time the Merger is
submitted to a vote of the stockholders of the Company, Affiliates of the
Company for purposes of Rule 145 under the Securities Act. The Company shall use
its commercially reasonable efforts to cause each Person who is identified as a
possible Affiliate in such letter to deliver to the Parent on or prior to the
Effective Time an Affiliate Letter. The Parent shall be entitled to place
legends on any certificates of Parent Class B Common Stock issued to such
possible Affiliates to restrict transfer of such shares.
Section 6.17. Purchase of Company Stock. The Company shall in no way
prohibit the Parent or any of its affiliates from purchasing shares of Company
Stock or entering into option, lock-up, voting or proxy agreements or any other
similar agreements with respect to Company Stock at any time prior to the
consummation of the Merger.
Section 6.18. Rights Plan. The Board of Directors of the Company shall
as promptly as practicable, and in any event prior to 5:00 p.m., California
time, on the third Business Day following the date hereof, adopt the Rights Plan
providing that a Person will become an "Acquiring Person" (as such term is
defined in the Rights Plan) if they become the "Beneficial Owner" (as such term
is defined in the Rights Plan) of at least 15% of Company
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Common Stock and shall approve the appropriate resolutions so that (i) neither
the Parent nor the Buyer will become an Acquiring Person as a result of the
consummation of the transactions contemplated herein or in the Option Agreements
or the Merger, (ii) no "Stock Acquisition Date" or "Distribution Date" (as such
terms are defined in the Rights Plan) will occur as a result of this Agreement,
the Option Agreements or the Merger or the consummation of the transactions
contemplated herein or in the Option Agreements and (iii) all outstanding rights
to purchase issued and outstanding Company Common Stock under the Rights Plan
will expire at the Effective Time.
Section 6.19. Employee Matters.
(a) The Company shall (i) take all commercially reasonably
actions necessary to correct any compliance deficiencies identified to the
Company by the Parent with respect to any Company Employee Benefit Plan in a
manner reasonably satisfactory to the Parent and provide evidence reasonably
satisfactory to the Parent of such corrections; (ii) take all appropriate
corporate action to cease, effective upon Closing, all benefit accruals under
and terminate the Xxxxx Companies, Inc. Salary Investment and Retirement Plan;
(iii) take all appropriate corporate action to terminate, effective prior to the
Closing, the Xxxxx Companies, Inc. Employee Stock Purchase Plan ("Company
Employee Stock Purchase Plan") and all outstanding options under such plan; and
(iv) take all appropriate action to prevent any adjustment of stock options
under any Company Stock Plan or under the Company Employee Stock Purchase Plan
in anticipation of the transactions contemplated by this Agreement (other than
as expressly described in this Agreement).
(b) The Company will provide to the Parent as promptly as
practicable after the date hereof (and in any event, for individuals employed in
the United States within 30 days hereof and for all other individuals within 45
days hereof) a true and complete list of all of the (a) officers, (b) employees
(whether full-time, part-time or otherwise) and (c) consultants or independent
contractors of each of the Company and the Subsidiaries, in each case,
specifying, by individual, their position, annual salary, hourly wages,
consulting or other independent contractor fees, date of birth, date of hire,
social security number, home address, work location, length of service, hours of
service, tax withholding history for the current calendar year, other amounts
paid, benefits provided and any other information reasonably requested by the
Parent, together with an appropriate notation next to the name of any officer or
other employee on such list who is subject to any written employment agreement
or any other written term sheet or other document describing the terms and/or
conditions of employment of such employee or of the rendering of services by
such consultant or independent contractor and any other information reasonably
requested by the Parent.
(c) The Parent and the Company shall take such action as is
necessary, including action under the relevant Company Stock Plan, to effect the
provisions of Section 2.5 hereof.
(d) The Parent shall (i) provide those employees of the Company
who become employees of the Parent (or a business unit of the Parent) 401(k),
medical, group life insurance and accidental death and dismemberment benefits on
such terms and conditions as are
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substantially similar and not substantially less favorable in the aggregate to
similarly situated employees of the business unit of the Parent which employs
such employees and (ii) recognize prior service with the Company for such
employees for the purpose of eligibility to participate in the vacation and
other paid time off, flexible benefits (including medical, dental, life
insurance and disability) and 401(k) benefit plans provided to similarly
situated employees of such business unit.
(e) The Company will provide to the Parent as promptly as
practicable after the date hereof (and in any event within 30 days hereof) a
true and complete list of each employee who as of the date hereof is eligible to
request FMLA leave and the amount of FMLA leave utilized by each such employee
during the current leave year; each employee who prior to the date hereof has
requested FMLA leave to commence on or after the date hereof , his or her job
title and description, salary and benefits; a description of the leave
requested; and a copy of all notices provided to such employee regarding that
leave.
(f) The Company will provide to the Parent as promptly as
practicable after the date hereof (and in any event within 14 days hereof) a
true and complete list of any information that would have been disclosed in the
Company Disclosure Letter if the representations in Section 4.17 (h), (i), (k),
(l) and (o) had been drafted so as to request information with respect to any
matter that "has been filed or is pending or threatened" within the United
States during 1999 and 2000.
(g) The Company will provide to the Parent as promptly as
practicable after the date hereof (and in any event within 45 days thereof) (i)
a complete listing on a country by country basis of each Company Benefit Plan
that provides benefits to employees, former employees, directors, officers,
consultants, independent contractors, contingent workers or leased employees of
the Company or any Subsidiary (or the dependents of any of them) whose principal
workplace is outside the United States ("Foreign Employees"), (ii) with respect
to each plan described in (i), the information described in Section 4.16(b) of
this Agreement and (iii) with respect to each workplace or operation of the
Company or a Subsidiary that is located outside the United States (a "Foreign
Workplace"), updated disclosures under Section 4.17 regarding such Foreign
Workplace, any Foreign Employee or the dependents of such Foreign Employee. The
Company shall take all appropriate corporate actions necessary to provide the
information requested in (i)--(iii) above, shall correct any compliance or
funding deficiencies identified to the Company by Parent with respect to any
Company Benefit Plan that provides benefits to Foreign Employees or their
dependents and shall provide evidence of such corrections reasonably
satisfactory to Parent before the Closing.
Section 6.20. Customer Visits. Between the date hereof and the Closing,
and subject to such reasonable limitations as the Company shall deem reasonable
and necessary, the Company shall permit, and shall cause each Subsidiary to
permit, the Parent to discuss and meet, and shall cooperate in such discussions
and meetings, with any customer of the Company and the Subsidiaries that the
Parent so requests. A senior executive of the Company, reasonably satisfactory
to the Parent, shall accompany the Parent's representative to such meetings and
shall participate with the Parent's representative in any such discussions.
Furthermore, the Company
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shall cooperate with the Parent in the preparation of a presentation to such
customers with respect to the Merger.
Section 6.21. Insurance. The Company shall use its commercially
reasonable efforts to purchase and maintain the insurance specified in Schedule
6.21 of the Company Disclosure Schedule from a nationally recognized carrier to
insure against the potential liability set forth on Schedule 6.21 of the Company
Disclosure Schedule.
ARTICLE VII
CONDITIONS
Section 7.1. Conditions to the Obligation of Each Party. The respective
obligations of the Parent, the Buyer and the Company to effect the Merger are
subject to the satisfaction of the following conditions, unless waived in
writing by all parties:
(a) This Agreement and the Merger shall have been approved and
adopted by the Required Vote.
(b) All consents, authorizations, orders and approvals of (or
filings or registrations with) any Governmental Entity required in connection
with the execution, delivery and performance of this Agreement, the failure to
obtain which would prevent the consummation of the Merger or have, individually
or in the aggregate, a Company Material Adverse Effect or Parent Material
Adverse Effect, shall have been obtained without the imposition of any condition
(i) having, individually or in the aggregate, a Company Material Adverse Effect
or Parent Material Adverse Effect or (ii) requiring the Parent or the Surviving
Corporation to effect, or agree to effect, any divestiture (including
divestitures of assets of the Parent or the Company) or to take any other action
which would reasonably be expected to impair the Parent's ability to achieve in
any material respect the overall benefits expected, as of the date hereof, to be
realized from the consummation of the Merger.
(c) All authorizations, consents, waivers and approvals from
parties to contracts or other agreements to which any of the Company or the
Parent (or their respective subsidiaries) is a party, or by which either is
bound, as may be required to be obtained by them in connection with the
performance of this Agreement, the failure to obtain which would prevent the
consummation of the Merger or have, individually or in the aggregate, a Company
Material Adverse Effect or Parent Material Adverse Effect, shall have been
obtained without the imposition of any condition (i) having, individually or in
the aggregate, a Company Material Adverse Effect or Parent Material Adverse
Effect or (ii) requiring the Parent or the Surviving Corporation to effect, or
agree to effect, any divestiture (including divestitures of assets of the Parent
or the Company) or to take any other action which would reasonably be expected
to impair the Parent's ability to achieve in any material respect the overall
benefits expected, as of the date hereof, to be realized from the consummation
of the Merger.
(d) Early termination shall have been granted or applicable
waiting periods shall have expired under the HSR Act and any other Regulatory
Law that imposes such waiting period.
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(e) No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making illegal, materially
restricting or in any way preventing or prohibiting the Merger.
(f) The Parent and the Company each shall have obtained the Tax
Opinion.
(g) The shares of Parent Class B Common Stock to be issued
pursuant to this Agreement shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
(h) The Form S-4 shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
Section 7.2. Conditions to Obligations of Parent and Buyer to Effect the
Merger. The obligations of the Parent and the Buyer to effect the Merger are
further subject to satisfaction or waiver at or prior to the Effective Time of
the following conditions:
(a) (i) The representations and warranties of the Company in this
Agreement that are qualified by Company Material Adverse Effect shall be true
and correct as so qualified in all respects as of the date of this Agreement and
as of the Effective Time, and (ii) the representations and warranties of the
Company in this Agreement that are not qualified by Company Material Adverse
Effect shall be true and correct in all respects as of the date of this
Agreement and as of the Effective Time, except in the case of this clause (ii),
where the failure of such representations and warranties to be so true and
correct would not have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) The Company shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing.
(c) The Company shall furnish the Parent with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 7.2(a) and (b).
(d) The Parent shall have received an Affiliate Letter from each
Affiliate in accordance with Section 6.16.
(e) No suit, investigation, action or other proceeding shall be
overtly threatened or pending against the Parent, the Company or any Subsidiary
before any Governmental Entity which (i) would result in the restraint or
prohibition of any such party, or the obtaining of damages or other relief from
any such party, in connection with this Agreement or the consummation of the
transactions contemplated hereby or thereby which would in any such case,
individually or in the aggregate, have a Parent Material Adverse Effect or a
Company Material Adverse Effect, or (ii) any orders restricting the Company or
any Subsidiary or the
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Parent from conducting its business as now being conducted which, individually
or in the aggregate, would have a Company Material Adverse Effect or a Parent
Material Adverse Effect.
(f) There shall not have occurred any change, condition, event or
development that has resulted in a Company Material Adverse Effect.
Section 7.3. Conditions to Obligations of Company to Effect the Merger.
The obligations of the Company to effect the Merger are further subject to
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) (i) The representations and warranties of the Parent and the
Buyer in this Agreement that are qualified by Parent Material Adverse Effect
shall be true and correct as so qualified in all respects as of the date of this
Agreement and as of the Effective Time, and (ii) the representations and
warranties of the Parent and the Buyer in this Agreement that are not qualified
by Parent Material Adverse Effect shall be true and correct in all respects as
of the date of this Agreement and as of the Effective Time, except in the case
of this clause (ii), where the failure of such representations and warranties to
be so true and correct would not have, individually or in the aggregate, a
Parent Material Adverse Effect.
(b) The Parent and the Buyer each shall have performed in all
material respects all covenants and agreements required to be performed by them
under this Agreement at or prior to the Closing.
(c) The Parent shall furnish the Company with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 7.3(a) and (b).
(d) There shall not have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result in,
a Parent Material Adverse Effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
Company Stockholders:
(a) By mutual written consent duly authorized by the Boards of
Directors of the Parent and the Company;
(b) By any of the Parent, the Buyer or the Company if any court
of competent jurisdiction or other Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; provided however, that
the party terminating this Agreement pursuant to this Section 8.1(b) shall have
used all commercially reasonable efforts to have such order, decree, ruling or
action vacated;
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(c) By any of the Parent, the Buyer or the Company if the Merger
shall not have been consummated on or before November 30, 2001; provided,
however, that the right to terminate this Agreement under this Section 8.1(c)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the primary cause of, or resulted in, the failure
to consummate the Merger on or before such date;
(d) By the Parent if the Board of Directors of the Company takes
any of the actions set forth in the second sentence of Section 6.5(a);
(e) By any of the Company, the Parent or the Buyer, if the
approval of the Company Stockholders required for consummation of the Merger
shall not have been obtained by reason of the failure to obtain the Required
Vote at the Stockholders' Meeting or at any adjournment or postponement thereof;
(f) By the Parent or the Buyer, if (i) any of the conditions set
forth in Section 7.2 shall have become incapable of fulfillment and shall not
have been waived by the Parent and the Buyer, (ii) the Company shall breach in
any material respect any of its covenants or other obligations hereunder or
(iii) the Company shall breach (A) the representations or warranties hereunder
that are qualified by Company Material Adverse Effect or (B) the representations
and warranties hereunder that are not qualified by Company Material Adverse
Effect where, for purposes of this clause (B), such breach, individually or in
the aggregate, has a Company Material Adverse Effect. The foregoing
notwithstanding, if in the case of clauses (ii) or (iii), the breach giving rise
to the right of termination is capable of being cured, neither Parent nor Buyer
shall exercise its right of termination with respect to such breach unless
within ten days after written notice of such breach to the Company from the
Parent, such breach shall not have been cured in all material respects or waived
by the Parent or the Buyer and the Company shall not have provided reasonable
assurance to the Parent and the Buyer that such breach will be cured in all
material respects on or before the Effective Time; or
(g) By the Company, if (i) any of the conditions set forth in
Section 7.3 shall have become incapable of fulfillment and shall not have been
waived by the Company, (ii) the Parent or the Buyer shall breach in any material
respect any of its covenants or other obligations hereunder or (iii) the Parent
or the Buyer shall breach (A) the representations or warranties hereunder that
are qualified by Parent Material Adverse Effect or (B) the representations and
warranties hereunder that are not qualified by Parent Material Adverse Effect
where, for purposes of this clause (B), such breach, individually or in the
aggregate, has a Parent Material Adverse Effect. The foregoing notwithstanding,
if in the case of clauses (ii) or (iii), the breach giving rise to the right of
termination is capable of being cured, the Company shall not exercise its right
of termination with respect to such breach unless within ten days after written
notice of such breach to the Parent from the Company, such breach shall not have
been cured in all material respects or waived by the Company and the Parent or
the Buyer, as the case may be, shall not have provided reasonable assurance to
the Company that such breach will be cured in all material respects on or before
the Effective Time.
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party that (i) is in material breach
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of its obligations hereunder or (ii) whose failure to fulfill its obligations or
to comply with its covenants under this Agreement has been the cause of, or
resulted in, the failure to satisfy any condition to the obligations of either
party hereunder.
Section 8.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 8.1 hereof, this Agreement shall forthwith be terminated and have no
further effect except as specifically provided herein and in Section 9.10 and,
except as provided in this Section 8.2 and in Section 9.11, there shall be no
liability on the part of any party hereto, provided that nothing herein shall
relieve any party from liability for any willful breach hereof.
(b) If the Parent exercises its right to terminate this Agreement
under Section 8.1(d), the Company shall pay to the Parent the Termination Fee,
payable in same-day funds, as liquidated damages and not as a penalty to
reimburse the Parent for its time, expense and lost opportunity costs of
pursuing the Merger, upon entering into any agreement relating to such
Acquisition Proposal.
(c) If within nine months after termination of this Agreement,
the Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal with a Person other than the Parent or the Buyer, then
immediately upon entering into such agreement, the Company shall pay to the
Parent upon demand the Termination Fee, payable in same-day funds, as liquidated
damages and not as a penalty, to reimburse the Parent for its time, expense and
lost opportunity costs of pursuing the Merger; provided that no such amount
shall be payable if the Termination Fee shall have become payable or have been
paid in accordance with Section 8.2(b) of this Agreement or if this Agreement
shall have been terminated by the Company in accordance with clause (ii) of
Section 8.1(g).
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to the Parent any amounts due
under this Section 8.2, the Company shall pay the costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee or obligation at the publicly
announced prime rate of Citibank, N.A. in effect from time to time from the date
such fee or obligation was required to be paid.
Section 8.3. Amendments. This Agreement may not be amended except by
action taken or authorized by the board of directors of each of the parties
hereto set forth in an instrument in writing signed on behalf of each of the
parties hereto; provided, however, that after approval of the Merger by the
Company Stockholders, no amendment may be made without the further approval of
the Company Stockholders if such further approval is required by Law or the
rules of any relevant stock exchange or other trading system.
Section 8.4. Waiver. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any
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other party hereto or (ii) waive any inaccuracy of any representations or
warranties or compliance with any of the agreements, covenants or conditions of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party by its
duly authorized officer. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights. The waiver of any such right with respect to particular
facts and other circumstances shall not be deemed a waiver with respect to any
other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. No Third Party Beneficiaries. Other than the provisions of
Sections 6.7 hereof, nothing in this Agreement shall confer any rights or
remedies upon any Person other than the parties hereto.
Section 9.2. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire Agreement among the parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, with respect to the
subject matter hereof.
Section 9.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other parties; provided, however, that the Buyer may freely assign its rights to
another wholly owned subsidiary of the Parent without such prior written
approval but no such assignment shall relieve the Buyer of any of its
obligations hereunder.
Section 9.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 9.7. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or
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unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 9.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
Section 9.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
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 9.10. Non-Survival of Representations and Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (i) the agreements set
forth in Articles II and IX and Sections 6.11, 6.6 and 6.7 shall survive the
Effective Time and (ii) the agreements set forth in Sections 6.6 and 8.2 and in
Article IX shall survive the termination of this Agreement.
Section 9.11. Fees and Expenses. Subject to Sections 8.2(b), (c) and
(d), each party hereto shall pay its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby, except
that costs and expenses incurred in connection with the filing, printing and
mailing of the Form S-4 and the Proxy Statement/Prospectus (including SEC filing
fees) and the filing fees for the premerger notification and report forms under
the HSR Act shall be shared equally by the Parent and the Company.
Section 9.12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in Person, by UPS Next
Day Air or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses, or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.12:
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If to the Parent or United Parcel Service, Inc.
the Buyer 00 Xxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to: United Parcel Service, Inc.
00 Xxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to the Company: Xxxxx Companies, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to: Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
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IN WITNESS WHEREOF, the Company, the Parent and the Buyer have caused
this Agreement to be executed as of the date first written above by their
respective duly authorized officers.
XXXXX COMPANIES, INC.
By: /s/ XXXX X. XXXXX
------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman of the Board
UNITED PARCEL SERVICE, INC.
By: /s/ XXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Assistant Treasurer
VND MERGER SUB, INC.
By: /s/ XXXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Assistant Treasurer
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